ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :EM HEENAN J
Citation  :STRIKER RESOURCES NL -v- AUSTRALIAN GOLDFIELDS NL (IN LIQ) [2006] WASC 153
File No  :CIV 2377 of 2000

Catchwords:

Contract - Underwriting agreement - Repudiation by underwriter - Certainty and completeness of contractual terms

Estoppel by representation - Whether representations clear and unambiguous - Whether a common assumption, induced by the representor, that the parties would proceed with an underwriting agreement - Whether statements made by a common director of the alleged representor and the representee at a board meeting of the representee constituted representations made on behalf of the alleged representor

Damages - Capital to be raised by the underwritten share issue to be used in conducting a trial mine - Whether expenses incurred by a corporation in exploring for minerals instead of conducting the trial mine were 'wasted' or 'valueless' - Whether exploration expenses incurred after the corporation accepted the underwriter's repudiation were a loss caused or contributed to by the underwriter's repudiation - Exploration expenses incurred by the corporation pursuant to a statutory obligation - Exploration expenses capitalised as a deferred asset in the corporation's financial statements - Corporation did not prove at trial which part of its overall exploration expenses were referable to the particular tenements on which the trial mine was to be conducted

Damages - Corporation issued shares in its capital after accepting the underwriter's repudiation - Average price of the shares issued was materially less than the price for which the shares would have been issued if the underwriter had performed under the underwriting agreement - Corporation obliged to issue a greater number of shares in its capital than it would have issued if the underwriter had not repudiated in order to raise an equivalent amount of capital - Whether the corporation suffered a loss as a result of having to issue a greater number of shares to raise an equivalent amount of capital

Interest - Damages on the corporation's claim exceeded the amount awarded to the underwriter on its counterclaim - Underwriter in liquidation - Trial judge refused to award any interest on the amount of the claim or the counterclaim

Legislation:

Corporations Act 2001 (Cth), s 553C
Mining Act 1978 (WA), s 62, s 102
Supreme Court Act 1935 (WA), s 32

Result:

Appeal dismissed
Cross-appeal dismissed

Category: A

Representation:

Counsel:

Appellant: Mr M L Bennett & Mr W C Zappia
Respondent: Mr D R Williams QC & Mr J A Thomson

Solicitors:

Appellant: Lavan Legal
Respondent: Pullinger Readhead Lucas

Case(s) referred to in judgment(s):

Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd [2008] VSCA 86; (2008) 66 ACSR 325
Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518
Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101
Austotel Pty Ltd v Franklins Selfservice Pty Ltd (1989) 16 NSWLR 582
Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99
Australian Crime Commission v Gray [2003] NSWCA 318
Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622
Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd [1982] HCA 53; (1982) 149 CLR 600
Byron Shire Council v Vaughan [2002] NSWCA 158
Carr v JA Berriman Pty Ltd [1953] HCA 31; (1953) 89 CLR 327
Commissioner of State Taxation v Nischu Pty Ltd (1991) 4 WAR 437
Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64
Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394
Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1
Foran v Wight [1989] HCA 51; (1989) 168 CLR 385
Galaxidis v Galaxidis [2004] NSWCA 111
Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1
Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101
Grincelis v House [2000] HCA 42; (2000) 201 CLR 321
Grundt v The Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641
Gye v McIntyre [1991] HCA 60; (1991) 171 CLR 609
Hadley v Baxendale (1854) 9 Exch 341
Haines v Bendall [1991] HCA 15; (1991) 172 CLR 60
Hammond v Vam Ltd [1972] 2 NSWLR 16
Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503
International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151
Ipex Software Services Pty Ltd v Hosking [2000] VSCA 239
Jumbo King Ltd v Faithful Properties Ltd [1999] 3 HKLRD 757
Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406
LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2001] NSWSC 886
LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74
Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181
March v E & M H Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506
McRae v Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377
Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571
Old Style Confections Pty Ltd v Microbyte Investments Pty Ltd (in liq) [1995] 2 VR 457
Ozecom v Hudson Investment Group [2007] NSWSC 719
Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451
Pagnan SPA v Feed Products Ltd [1987] 2 Lloyds Rep 601
Pancontinental Mining Ltd v Commissioner of Stamp Duties [1989] 1 Qd R 310
Pilmer v Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165
Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257
Re Rossfield Group Operations Pty Ltd [1981] Qd R 372
Riches v Hogben [1985] 2 Qd R 292
Robinson v Harman (1848) 1 Exch 850; (1848) 154 ER 363
Shaddock & Associates Pty Ltd v The Council of the City of Parramatta (No 1) [1981] HCA 59; (1981) 150 CLR 225
Sullivan v Sullivan [2006] NSWCA 312
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418
Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 83 ALJR 390
The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239
Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507
Thorby v Goldberg [1964] HCA 41; (1964) 112 CLR 597
TNT Australia Pty Ltd v Normandy Resources NL (1989) 53 SASR 156
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326
Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603
University of Wollongong v Metwally [No 2] [1985] HCA 28; (1985) 59 ALJR 481
Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429
Uranium Equities Ltd v Fewster [2008] WASCA 33; [2008] 36 WAR 97
Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387
Wenham v Ella [1972] HCA 43; (1972) 127 CLR 454
Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1971] 2 QB 23

Table of Contents

McLure JA's reasons

Contractual uncertainty (grounds 2 ‑ 5)
Estoppel (grounds 6, 6A)
Damages (ground 7)
Interest (ground 8)
Cross‑appeal
Pullin JA's reasons
Grounds 2 to 5
Grounds 6 and 6A
Ground 7
Ground 8
Striker's cross‑appeal
Buss JA's reasons
Some background
The Underwriting Agreement
The Share Sale Agreement
The Financing Agreement
The emergence of the dispute between the parties
Striker's claim
AGF's counterclaim
The issues at the trial
Did cl 10.2 of the Underwriting Agreement constitute an enforceable contract between the parties? - the learned trial judge's decision
If the secondary underwriting obligation contemplated by cl 10.2 was uncertain or incomplete, was there nevertheless an estoppel arising from the representations of AGF and the conduct of the parties which prevented AGF from relying on the unenforceability of cl 10.2? ‑ the learned trial judge's decision
Did AGF breach or repudiate its obligations under cl 10.2 of the Underwriting Agreement? - the learned trial judge's decision
Was AGF in breach of its secondary underwriting obligation before its repudiation was accepted by Striker on 25 August 1998? - the learned trial judge's decision
Was AGF entitled to rely on any of the 'drop‑out' contingencies to relieve it from its obligations under the secondary underwriting agreement? ‑ the learned trial judge's decision
Striker's claim for damages
Summary of the learned trial judge's findings on damages
AGF's counterclaim
Set-off of Striker's claim for damages against AGF's counterclaim: the liquidation of AGF
The declarations and orders made by the learned trial judge
Appeal and cross‑appeal
AGF's grounds of appeal
Striker's grounds of cross‑appeal
Grounds 2 and 3 of the appeal: general
Grounds 2 and 3 of the appeal: AGF's submissions
Grounds 2 and 3 of the appeal: contractual uncertainty
Grounds 2 and 3 of the appeal: the proper approach to contractual construction
Grounds 2 and 3 of the appeal: their merits
Grounds 2 and 3 of the appeal: conclusion
Grounds 4 and 5 of the appeal: general
Grounds 4 and 5 of the appeal: AGF's submissions
Grounds 4 and 5 of the appeal: their merits
Grounds 4 and 5 of the appeal: conclusion
Grounds 6 and 6A of the appeal: general
Grounds 6 and 6A of the appeal: overview of AGF's submissions
Grounds 6 and 6A of the appeal: the pleading of Striker's estoppel claim
Grounds 6 and 6A of the appeal: relevant principles of estoppel
Grounds 6 and 6A of the appeal: AGF's attack on the learned trial judge's findings in relation to the alleged representations
Grounds 6 and 6A of the appeal: their merits
Grounds 6 and 6A of the appeal: conclusion
Ground 7 of the appeal: general
Ground 7 of the appeal: AGF's submissions
Ground 7 of the appeal: Striker's submissions
Ground 7 of the appeal: application for leave to amend
Ground 7 as amended of the appeal: the learned trial judge's decision
Ground 7 as amended of the appeal: the relevant evidence
Ground 7 as amended of the appeal: relevant legal principles
Ground 7 as amended of the appeal: its merits
Ground 7 as amended of the appeal: conclusion
Ground 8 of the appeal: general
Ground 8 of the appeal: AGF's submissions
Ground 8 of the appeal: Striker's submissions
Ground 8 of the appeal: the learned trial judge's decision
Ground 8 of the appeal: its merits
Ground 8 of the appeal: conclusion
The cross‑appeal: general
The cross‑appeal: Striker's submissions
The cross‑appeal: the learned trial judge's decision
The cross‑appeal: Striker's pleaded case
The cross‑appeal: the expert evidence at the trial
The cross‑appeal: the decision in Pilmer
The cross‑appeal: its merits
The cross‑appeal: conclusion

McLURE JA: I would dismiss the appeal and the cross‑appeal. The facts, reasons of the trial judge and grounds of appeal are detailed in the reasons of Buss JA and are not repeated here unless required for an understanding of these reasons.

Contractual uncertainty (grounds 2 ‑ 5)

I agree with Buss JA that the grounds of appeal relating to contractual uncertainty should be dismissed generally for the reasons he gives. I have a number of additional observations.
The appellant contended that cl 10.2 of the agreement in writing dated 2 December 1996 between the appellant and the respondent (Striker) whereby the appellant agreed to underwrite the exercise of options to subscribe for shares in Striker (the Underwriting Agreement) is void for uncertainty. I set out cl 10.2 for ease of reference:
In the event that the Underwriter terminates this Underwriting Agreement because of the occurrence of the contingency referred to in Clause 10.1(u), the Underwriter shall underwrite a new issue of shares by the Company, by pro rata offer, to all members of the Company, to raise a minimum amount of 7.5 million dollars ($7,500,000), by prospectus. That prospectus shall be issued as soon as possible after 30 June 1997. The Shares to be offered by the prospectus shall be offered at a price equal to at least ninety percent (90%) of the average of the closing prices for buying of Shares which are admitted to Official Quotation on ASX, as quoted in the daily trading statistics of ASX for each of the trading days during the month of June 1997. The Underwriting Agreement in respect of that pro rata issue shall contain contingencies for termination which are similar to those contained in this Underwriting Agreement apart from Clause 10.1(u). (emphasis added)
The appellant terminated the Underwriting Agreement under cl 10.1(u). It went into voluntary administration on 6 March 1998 without the underwritten share issue contemplated in cl 10.2 (the secondary underwriting agreement) having taken place. The appellant paid Striker liabilities of $128,580.55 and advanced the sum of $2.2 million to Striker because of the delay in the proposed share issue. In August 1998 Striker accepted the appellant's repudiatory breach of cl 10.2 and terminated the secondary underwriting agreement. The appellant went into liquidation in November 1998.
Clause 10.2 was a term of the Underwriting Agreement. The case was conducted on the basis that cl 10.2 survived the termination of the Underwriting Agreement. The question for determination at trial was whether cl 10.2 was void for uncertainty. As that clause was a term of a binding contract, there could be no doubt the parties intended to be contractually bound by cl 10.2. The only live issue was whether the parties' contractual intention was defeated by operation of the law relating to contractual certainty.
There are two limbs to the uncertainty doctrine. A contract (or a term thereof) is void for uncertainty if (1) all the essential and critical terms of the bargain have not been agreed upon or (2) the language used is so obscure and incapable of any precise or definite meaning that the court is unable to attribute to the parties any particular contractual intention: Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429, 436 ‑ 437; Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101. Under the first limb, the contract is incomplete. Under the second limb, the court is unable to attribute a meaning to the language used by the parties. I refer to the latter as linguistic uncertainty. Both limbs apply only to essential terms.
Where, as in this case, contractual intention is proven, courts should be astute to adopt a construction which will preserve the validity of the contract: Meehan v Jones (1982) 149 CLR 571; Anaconda Nickel.
The appellant claimed that the expressions 'a price equal to at least ninety percent (90%) of the average closing prices for buying of Shares' and 'similar to' in cl 10.2 are linguistically uncertain. The claim is without merit for the reasons given by the trial judge and Buss JA.
The remaining grounds rely on the first limb of the uncertainty doctrine, that of incompleteness. On that subject, two questions arise in no particular order. First, is the contract incomplete in the way contended for. The answer to that question is to be arrived at by applying accepted canons of contractual construction to the identification of the express and implied (in fact and law) terms of the contract. The second question is whether any proven omission constitutes an essential term of the contract. What is essential is a question of fact to be determined by reference to the nature, object and purpose of the intended contract in order to determine what the parties regard, or would ordinarily be expected to regard, as matters to be covered by their contract: Anaconda Nickel (111).
The appellant contended the trial judge erred in characterising as 'incidental' rather than essential the following matters (in addition to price) on which there was said to be no agreement:
(1)the timing of the capital raising (in particular the closing date); and
(2)the terms and content of the prospectus.
The trial judge referred to those matters as 'incidental to, and derivative from, the obligation and its principal terms contained in the [Underwriting Agreement]' [75]. When read in context, I do not understand the trial judge to mean that those matters are not essential.
On my reading of his reasons, the trial judge concluded that the Underwriting Agreement as a whole was intended by the parties as a model or template for the underwriting contemplated in cl 10.2 with such modifications as were necessary to accommodate the change in the nature of the undertaking and the new timing.
That is, the expression 'similar to' in the last sentence of cl 10.2 applies not just to cl 10.1 (except par (u)) and the clauses referred to in cl 10.1 but to the Underwriting Agreement as a whole. In this way the Underwriting Agreement provides an objective reference point for determining the fact and content of what has been agreed between the parties. I agree with the trial judge for the reasons he gives that that was the objectively determined common intention of the parties.
Using the Underwriting Agreement as a model or template and guided by the express agreement in cl 10.2 that the prospectus be issued as soon as possible after 30 June 1997, the respondent proffered an amended definition of 'closing date':
'Closing Date' means the closing date for receipt of ~~acceptance of Exercise Forms~~applications which shall be ~~2 July 1997 or~~ such ~~later~~ date as the Company may determine in accordance with the Listing Rules and with the prior approval of the Underwriter, which approval the Underwriter may not unreasonably withhold.
That definition is consistent with the trial judge's findings.
As to the prospectus, its content will reflect relevant matters the subject of the express and implied terms of the secondary underwriting agreement. As to the balance, the trial judge said:
[I]t is perhaps necessary to observe that the responsibilities for the terms of the prospectus would lie with Striker and with those of its officers or agents who contributed content to the prospectus … No doubt [the appellant] was interested in the terms of the prospectus so long as Striker was willing to accommodate its views or wishes in that respect, but there is nothing in the [Underwriting Agreement] or otherwise to give rise to a necessity that the underwriter must approve the terms of the prospectus or that the underwriting obligation was conditional upon the details of the prospectus which contained all the information and content required by law for a share issue of the kind proposed [93].
There is no challenge to the conclusions in [93]. The appellant has failed to demonstrate that the trial judge erred in his findings relating to the timing of the capital raising and the content of the prospectus.

Estoppel (grounds 6, 6A)

I would also dismiss grounds 6 and 6A. The law in Australia has not reached the stage where there is one overarching doctrine of estoppel incorporating the various common law and equitable doctrines in the field (such as estoppel by representation, estoppel by convention, promissory estoppel, proprietary estoppel, equitable estoppel): Giumelli v Giumelli (1999) 196 CLR 101 [7].
The trial judge approached the estoppel claim as one of equitable estoppel as that doctrine is explained in Waltons Stores (Interstate) v Maher (1988) 164 CLR 387. It is not contended the trial judge erred in doing so.
The pleaded claim was that the appellant, by its conduct, represented to Striker that it was 'bound by and would give effect to the Residual Underwriting Commitment' (defined to mean the appellant's obligation to underwrite a new issue of shares in Striker to raise a minimum of $7.5 million). That in substance is a representation of a binding and enforceable contract. It was accepted by the parties that the pleaded representation was capable of giving rise to an estoppel even if the contract was void for uncertainty. I will proceed on that assumption.

The trial judge's finding at [125] is consistent with the pleaded basis of the estoppel. The appellant contends the evidence was incapable of supporting such a finding. The appellant's claim is fundamentally flawed. As cl 10.2 was a term of a binding contract there could be no doubt the parties intended to be contractually bound by it. The subsequent discussions and negotiations between the parties are solely referable to the trial judge's unchallenged finding that the parties intended that the secondary underwriting agreement be recorded in a further document. This appears to be within the 'fourth class' of a Masters v Cameron type contract as identified by McLelland J in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622, 628; Anaconda Nickel (110). That being the case, both grounds of appeal are without foundation.

Damages (ground 7)

I have concluded that ground 7 should be dismissed. These are my reasons for that conclusion. The appeal is confined to the award of damages for exploration expenses incurred by Striker in relation to its tenements (exploration licences) from the date of the appellant's breach of the secondary underwriting agreement in September 1997 until March 1999 when it obtained substitute capital and the suspension of Striker's shares on the ASX ended.
The trial judge accepted evidence adduced on behalf of Striker that if the secondary underwriting agreement had been performed according to its terms, Striker would have proceeded with its proposal to conduct a trial mine on its Ashmore tenements. The purpose of the trial mine was to conduct pre‑feasibility bulk sampling programs of its diamond fields. The Ashmore trial mine project went ahead some time after March 1999 and showed that mining was not commercially viable at that time.
Implicit in the trial judge's reasons is that if the appellant had performed its obligations under the secondary underwriting agreement, Striker would not have incurred the claimed exploration expenditure. The trial judge said:
Had the underwritten share issue been conducted in the last quarter of 1997 that would have avoided about 18 months of holding costs before the trial diamond mine was commenced … The result of the trial mine at Ashmore, which was undertaken after March 1999, showed that there were diamond resources in the area but that it was not economic to exploit them and, consequently, further investment in those areas ceased. This meant that the decision not to mine or exploit these areas was deferred by approximately 18 months and that the extra holding and operation costs incurred before this conclusion could be reached proved to be of no tangible benefit to [Striker] [252].
There is no challenge to the implied causation finding that the claimed exploration expenditure would not have been incurred but for the breach. Although the trial judge does not identify the 'diamond resources' or the 'area' to which he is referring in [252], it must in context mean all Striker's diamond resources on its various tenements, not just the diamond resources on the Ashmore tenements (in the Beta Creek project area). If that were not so, causation issues would arise because the trial judge found that some of the exploration expenditure was incurred on the Seppelt tenements (in the Forrest River project area) and North King George tenements [251]. However, causation was not in issue at trial.
The only live issue at trial concerning the claimed exploration expenditure (cf administration expenses) was whether the expenditure was of value to Striker. The appellant's existing ground of appeal 7 as amplified by its proposed particulars is confined to the question of value. The ground as particularised is as follows:
His Honour erred in fact and law in finding that the exploration expenses capitalised by [Striker] in its accounts was a loss suffered by [Striker], in that he ought to have found that the capitalisation of this expense in the accounts of [Striker] as an asset constituted a value received by [Striker], and accordingly no loss was suffered.
Particulars
1The Learned Trial Judge erred in law in finding in paragraph 255 that:
'For a publicly listed exploration company the perception of its value is largely determined by the market price of its listed securities, rather than the carrying value of its assets … '
in that the finding was unsupported by any evidence.
2The Learned Trial Judge erred in finding in paragraph 255 that there was no accounting evidence about the conventions followed in the treatment of exploration expenditure when such evidence was tendered in the Annual Reports of the Respondent.
For 1997 [Appeal Book Green Volume 1/120]
For 1998 [Appeal Book Green Volume 2/379]
For 1999 [Appeal Book Green Volume 2/423].
3The Learned Trial Judge erred in finding against the weight of the evidence that the expenditure incurred by the Respondent on exploration from 1997 ‑ 1999 would not be turned to value by the Respondent, the relevant evidence being:
Dodd
XM Volume 3/533 paragraph 256/257;
XXM 676/677.
Hart
XM Volume 2/477 ‑ 479 paragraph 27, 36.
XXM 494, 496, 501, 502.
Schedules
Volume 3/578
Volume 3/579 ‑ 589.
of which evidence was to the effect that the exploration expenditure:
'could not be turned to value'
and where the Annual Reports for the Respondent for 1998 [Green Book volume 2/355, 357 ‑ 365] and 1999 [Green Book volume 2/399 ‑ 400, 402 ‑ 410] reported significant results from such exploration.
Striker opposed the application to include particular 3. Although not apparent from its terms, the substance of the claim was that the evidence of Mr Dodd and Mr Hart was that the expenditure produced no immediate benefit. As the issue was litigated at trial and was in general terms raised in the appellant's written submissions filed before the commencement of the hearing of the appeal, I am not persuaded Striker will be prejudiced by the amendment. Accordingly, I would grant leave to amend.
It is necessary to put the value issue in its proper legal framework. The exploration expenditure was not claimed by Striker as 'reliance losses' as that term is generally understood in the context of a damages claim for breach of contract. Reliance loss covers expenditure incurred in reliance on the contract being performed which expenditure is wasted as a result of the breach: Carr v J A Berriman Pty Ltd (1953) 89 CLR 327; McRae v Commonwealth Disposals Commission (1951) 84 CLR 377.
The exploration expenditure claimed by Striker was a claim for consequential loss incurred after, and as a result of, the breach. However, as with reliance losses, a claimant for consequential loss has to establish, inter alia, that the loss would not have been incurred but for the breach (causation) and that it gained no value from the expenditure. As previously noted, causation was not a live issue at trial and thus is not raised in the appeal. The only issue is the value, if any, of the expenditure to Striker.
The particulars to ground 7 are related. I propose to start with the accounting treatment of Striker's exploration expenditure. Striker capitalised its exploration expenditure and accounted for it as a (non‑current) asset in the balance sheet in its 1997, 1998 and 1999 financial statements. No value is attributed to its mining tenements (individually or collectively) in the financial statements. Striker explained its accounting treatment in its accounts as follows:
Exploration, evaluation and development expenditure
Exploration, evaluation and development expenditure, including costs of acquisition in relation to separate areas of interest for which rights of tenure are current, are brought to account in the year in which they are incurred and are carried at cost.
The exploration expenditure will be carried forward as an asset in the balance sheet where:
(i)it is expected that the expenditure will be recovered through the successful development and exploitation of an area of interest or by it sale; or
(ii)exploration activities are continuing in an area and activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of economically recoverable reserves.
Where a project or an area of interest has been abandoned, the expenditure incurred thereon is written off in the year in which the decision is made.
Where there has been a decision to proceed with development, accumulated expenditure is amortised over the life of the associated resource once mining operations commence.
Neither party called any independent expert to give valuation evidence. Mr Kevin Hart, a chartered accountant and Striker's company secretary, gave evidence on damages. In re‑examination Mr Hart was asked about accounting methods:
Mr Hart, you were asked about the practice of exploration companies in dealing with expenditure on exploration and mining tenements. Can you just outline what methods are used and why those methods are used in preference to others?---There's a number of ways. Some companies do as Striker does and it capitalises its exploration expenditure as a deferred asset until such time as the tenement is dropped, the tenement is sold or sufficient work has been done on the tenement to determine whether the tenement should be dropped, sold or
Or mined?---Or mined. Some exploration companies, some mining exploration companies, write up all their exploration expenses as they're incurred until such time as they perhaps have a resource and then they capitalise expenditure from that period forward. So it depends on the respective companies' accounting policies at the time.
Mr Hart was cross‑examined about a valuation of Striker's tenements as at 28 January 1999 undertaken by expert valuers, Mackay & Schnellmann Pty Ltd (MS). The valuation was provided for inclusion in an information memorandum for shareholders in relation to a proposed placement of Striker shares and options to Diamond Rose NL. On 1 August 1998 Striker entered into a joint venture with Rio Tinto Exploration Pty Ltd and Ashton Mining Ltd (AEJV) for diamond exploration on the Beta Creek project (containing the Ashmore tenements) and the North King George tenements (GAB 2, 402). However, Striker retained 23 km² of the Beta Creek project (known as the 'Ashmore ‑ Lower Bulgurri exclusion area') and the Forrest River tenements. MS used what is described as the 'multiple of exploration expenditure method' to value the Ashmore ‑ Lower Bulgurri exclusion area because of its degree of development. Some exploration expenditure was excluded from the calculations. The valuation method is explained as follows (exhibit Q20 at 224):
This method may be applied to exploration properties which do not host resources or reserves. It requires preparing an estimate of the replacement cost of previous relevant exploration and allocating a premium or discount depending on whether or not expenditure enhanced prospectivity for the occurrence of the target commodity. This premium or discount, the prospectivity enhancement multiplier, is usually in the range 0.5 to 3.0 and is applied to the expenditure to quantify the value of the property.
Other valuation methods (the joint venture and yardstick methods) were used for less developed areas. These methods did not directly depend on the value of exploration expenditure incurred. Mr Hart was cross‑examined as to why Striker had not written off the deferred exploration expenditure in its 1998 and 1999 accounts:
It didn't write off the deferred exploration expenditure because it formed a view, did it not, that the exploration expenditure was reflected in the prospectivity of the results of that exploration and provided a measure upon which the value of the tenement could be calculated?---No.
In other words, the exploration expenditure wasn't wasted?---No. It carried forward that expenditure because it hadn't completed sufficient work on that tenement to determine whether the expenditure it was carrying forward was recoverable by that tenement proving up the resource and that resource become mineable.
Or recoverable in the sense that somebody may seek to buy the tenement from you at a multiplier of the exploration expenditure?---Or recoverable, yes, from future sale.
There followed an exchange between the trial judge and the appellant's counsel:
HEENAN J:   Mr Bennett, my point simply is this: that any experienced market analyst or investor from a mining company would know what a cumulated exploration expenditure meant and would cast a jaundiced eye over that item as a balance sheet asset. When it comes to working out what the real value of the tenements are, it's an index of prospectivity and for that you need an expert report and that's what the McLelland
BENNETT, MR:   Mackay and Schnellmann.
HEENAN J: - - - Mackay and Schnellmann report has done and the two are not the same. The Mackay and Schnellmann estimate is a fraction, maybe a large fraction but still a fraction, of the total accumulation. When you are speaking about the real assets of a company, an expert value for a mining tenement seems to me to carry more weight than accumulated exploration expenditure.
BENNETT, MR:   Yes, I'm with you entirely, your Honour. The significance is that this company commissioned an expert in 1999 who looked at all the exploration expenditure and didn't say it's worthless; in fact, multiplied it by between 2 to 2.6
HEENAN J:   That's not what they did. They said at page 224 certain expenditure was deducted.
BENNETT, MR:   Yes.
HEENAN J:   So until you know what was deducted, this exercise which you are currently pursuing is going to be inconclusive, isn't it?
BENNETT, MR:   Yes, I accept that, your Honour. It won't be
HEENAN J:   I realise that I'm interrupting you, Mr Bennett.
BENNETT, MR:   Not at all.
HEENAN J:   But it's just such a complicated case. Unless we address these difficulties when they arise, they will just get lost.
BENNETT, MR:   Yes. The point I suppose the defendant makes is it's not our position to identify the relationship between the claimed loss and the expenditure that Mackay and Schnellmann estimated at $700,000 excluded because it was outside something called the Ashmore Lower Bugurri exclusion area.
In summary, it was accepted that exploration expenditure is a significant variable in an accepted method of determining the market value of developed exploration tenements.
The trial judge's reasons for concluding that the claimed exploration expenditure was of no benefit or value to Striker are summarised at [255]:
There was no accounting evidence, expert or otherwise, about the conventions followed in the treatment of exploration expenditure by mining or exploration companies apart from some general observations that different companies adopt different conventions and, for those who capitalise such expenditure, it is often the case that, when appropriate later, some or all of that expenditure is written off. That may well be appropriate when a productive mine or other profitable operation is established because of the potential deductibility of such expenditure against income when derived. For a publicly listed exploration company the perception of its value is largely determined by the market price of its listed securities, rather than by the carrying value of its assets, particularly where those assets include intangibles such as accumulated exploration expenditure. I therefore do not see any inconsistency or lack of candour in Messrs Dodd and Hart maintaining that, despite the capitalisation of that expenditure in the accounts, it resulted in no real benefit to the company and should be treated as a loss. No evidence to the contrary was offered by the defendant and, therefore, I accept the explanations of the plaintiff's witnesses that this expenditure was necessarily incurred and paid, at a time when, because of the lack of access to the capital to be raised by the underwritten share issue, it could not be turned to value by the plaintiff.
Against that background, I turn to the particulars. The trial judge's statement that the perception of Striker's value is largely determined by the market price of its listed securities has no foundation in the evidence (nor does logic or experience compel that conclusion). Net asset backing per share is another measure. Further, it was no part of the appellant's case that the full carrying value of the deferred exploration expenditure necessarily reflected the market value of the relevant asset (the mining tenements). However, the evidence did establish that exploration expenditure is a significant variable in calculating the market value of the developed exploration tenements.
Moreover, there was accounting evidence about the conventions followed in the treatment of exploration expenditure both in Mr Hart's evidence and in Striker's financial statements. However, it is not inevitably the case that financial statements accurately reflect the sum to be allowed as damages for breach of contract: Pilmer v Duke Group Ltd (2001) 207 CLR 165 [55].
Finally, the evidence relied on by the appellant in particular 3 is set out in full in the reasons of Buss JA and not repeated here. That evidence establishes that not all the claimed exploration expenditure is appropriately characterised as holding or carrying costs. The exploration activities detailed in the annual reports went beyond mere care and maintenance.
This court was not referred to any evidence as to Striker's accounting treatment of its accumulated exploration expenditure after the Ashmore trial mine results had been analysed and it had been determined that mining was not commercially viable at that time. That assessment occurred at some unspecified time after the publication of Striker's 1999 annual report. However, the evidence established that Striker had retained the mining tenements. It follows that investment in those mining tenements could not cease in the absence of an exemption under the Mining Act 1978 (WA) s 62. The compulsory expenditure has to be expended 'in mining on or in connection with mining on' the exploration licence: Mining Regulations 1981 (WA) reg 21. 'Mining' is defined to include fossicking, prospecting and exploring for minerals, and mining operations: Mining Act s 8.
Regulation 21 imposes an obligation to expend a specified amount during each year of the term of the licence calculated by reference to area during years 1 to 5 and thereafter by reference to a nominated sum. The evidence is silent on the relevant expenditure year for each tenement, whether the costs of the Ashmore trial mine were incurred in the same expenditure year as the claimed exploration expenditure or part thereof, whether there was a material change to the minimum annual expenditure level after the Ashmore trial mine, whether Striker had an exemption from the expenditure conditions or whether third parties were responsible for satisfying the expenditure conditions. I infer these matters were not addressed because causation was not a live issue at trial. There is no challenge to the finding in [252] that further investment ceased after the Ashmore trial mine. Moreover, causation is not within the original or expanded ground of appeal 7 to which I now return.
For the reasons given earlier there is merit in the appellant's particulars of error. The remaining question is whether the errors made by the trial judge affect the outcome. The relevant legal principles are not in dispute. A plaintiff must prove the fact and extent of its damage. It must prove the amount of the loss it sustained with as much precision as the subject matter reasonably permits: Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 [37]. Generally, mere difficulty does not relieve a court from estimating damages as best it can. However, where damages are uncertain for lack of evidence, difficulties of assessment are in general resolved against the party who could or should have provided the evidence: LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 [12].

If considered in isolation, the MS valuation (showing the role of exploration expenditure in determining the value of developed exploration tenements) and the description in the 1998 and 1999 annual reports of the nature and results of the claimed exploration expenditure together support the conclusion that the expenditure added value to at least some of the tenements. (How much value is another question). However, that material pre‑dated the Ashmore trial mine and the assessment that the diamond resources in the area were not commercially viable, at least at that time.
In light of the trial judge's finding that but for the breach, Striker would have conducted the Ashmore trial mine instead of incurring the claimed exploration expenditure, the value of the claimed exploration expenditure should be assessed in hindsight having regard to the knowledge obtained from the Ashmore trial. When viewed in that light, I am not persuaded the trial judge erred in accepting the evidence of Mr Hart and Mr Dodd to conclude that the claimed exploration expenditure was of no benefit or value to Striker. For the purpose of valuing the tenements, exploration expenditure is relevant to an assessment of their prospectivity. It is a speculative assessment of potentiality based on information obtained from exploration results to date. The Ashmore trial mine provided a negative answer on prospectivity in the then prevailing economic conditions.

Interest (ground 8)

The appellant successfully counterclaimed to recover the money it advanced to Striker. The trial judge found that the money became due following a demand made in June 2000 by which time Striker had raised capital well in excess of the $7.5 million the subject of the secondary underwriting agreement.
Like Buss JA, I would confine the appellant to its grounds of appeal as developed in its written submissions in neither of which is mention made of an error based on s 553C of the Corporations Act 2001 (Cth). The only issue before this court is whether the trial judge erred in the exercise of his discretion under s 32 of the Supreme Court Act 1935 (WA) in refusing to award interest on the amount owed from June 2000.
The trial judge's reasons on this subject are detailed in the reasons of Buss JA. In summary, if the appellant's counterclaim had stood alone, the

trial judge would have ordered s 32 interest upon the initial advance of $2.2 million. However, he declined to do so, having decided that it was appropriate to set off the principal amount owed by Striker to the appellant ($2,328,580.55) from the principal amount owed by the appellant to Striker ($3,330,659). Further, as interest was not awarded on the damages owed by the appellant to Striker, the trial judge declined to award interest on the debt owed to the appellant. I see no error in this outcome. At the time the debt became due and payable to the appellant, the appellant was liable to Striker for damages in excess of the debt owed to the appellant. There being a close relationship between the cause of Striker's damage and the advance, a set off without interest payable to either party is within a sound exercise of the discretion. I would dismiss ground 8.

Cross‑appeal

I agree with Buss JA for the reasons he gives that the cross‑appeal should be dismissed. Striker is entitled to damages for its expectancy loss. That would include any increase in its costs of raising capital caused by the appellant's breach. However, applying the reasoning of the High Court in Pilmer v Duke Group Ltd, the issue of more shares at a reduced price to achieve the same amount of capital is not itself a loss to the company issuing the shares although it will occasion a loss to its shareholders. Any loss to Striker resulting from the issue of shares at a discount from the underwriting price is not measured by the cost of the additional shares (calculated in this case by multiplying the number of additional shares issued by the average price paid for them). Nor is this a claim for specific performance. Striker must prove that it suffered a loss. The issue of shares is what is exchanged for the capital the subject of the underwriting agreement. Striker's loss is unaffected by the number of shares it issues to obtain that capital.
The general rule is that in an action for breach of contract, a plaintiff is limited to recovery of its own loss and not that of third persons. There are recognised exceptions to that principle although there is disagreement as to the basis and thus scope of the exceptions: Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518. It was not contended that any relevant exception applied in this case.
PULLIN JA: The respondent 'Striker' in its case at trial, claimed damages for breach by the appellant 'AGF' of a contract whereby AGF was, under cl 10.2 of that contract, obliged to underwrite an issue of shares. The trial judge found that there was a contract, that it had been

breached, amounting to a repudiation, and that Striker had accepted the repudiation.

AGF appealed against those findings. The observations I make below assume that the reader will first have read Buss JA's reasons which set out the relevant evidence, the issues, the trial judge's findings, the grounds of appeal and cross‑appeal, and the submissions of the parties.

Grounds 2 to 5

Grounds 2 to 5 attacked the judge's construction of the underwriting agreement and attacked the conclusion that there was an enforceable contract. My conclusion, contrary to AGF's submissions, is that there was a concluded enforceable underwriting contract and the trial judge correctly construed its terms (which point of construction was in any event a non‑issue because of the concession made by counsel for AGF at the trial). I reach that conclusion for the reasons given by Buss JA in relation to grounds 2 to 5.

Grounds 6 and 6A

AGF advanced two alternative grounds (grounds 6 and 6A) which related to Striker's contention, and the trial judge's findings, that if the underwriting agreement was unenforceable, then there was nevertheless a mutual assumption that there was an enforceable underwriting agreement and that AGF made a series of representations that the underwriting agreement was in place and in the process of being implemented. Buss JA has concluded that the trial judge was correct in his provisional conclusions about estoppel and in consequence would dismiss grounds 6 and 6A. I would prefer not to deal with those grounds for two reasons. First, the trial judge's findings had no effect on the relief granted and were not made the subject of any declaration. Secondly, counsel for AGF acknowledged in this court that if AGF failed on grounds 2 ‑ 5, then it would be 'largely unnecessary', except perhaps in relation to costs, for the court to consider the merits of the estoppel claim.

Ground 7

Ground 7 challenges the trial judge's conclusion that exploration expenditure of $2,180,614 incurred by Striker was loss or damages suffered by Striker. The critical paragraph in his Honour's reasons in relation to this head of claim for damages was in [252] where his Honour said, after observing that March 1999 was when Striker 'actually got the funds from the share placement … and accordingly, when it was in a position to proceed with the delayed major exploration activities':
The result of the trial mine at Ashmore, which was undertaken after March 1999, showed that there were diamond resources in the area but that it was not economic to exploit them and, consequently, further investment in those areas ceased. This meant that the decision not to mine or exploit these areas was deferred by approximately 18 months and that the extra holding and operation costs incurred before this conclusion could be reached proved to be of no tangible benefit to the plaintiff.
I understand his Honour to be saying that if AGF had performed its contract and provided the funds, then the work at Ashmore would have been carried out 18 months earlier, found that the area was not economic, and then ceased incurring any further exploration costs. The award was for the wasted exploration costs. There were many points which AGF may have chosen to raise in defence. For example, AGF may have argued that exploration expenditure was not a loss because it was expenditure necessary to meet statutory obligations. The possibility of such an argument was raised by two members of the bench with counsel for AGF during the hearing of the appeal but not taken up. The ground of appeal took a limited point and proceeded in effect by accepting the trial judge's finding that the decision not to mine or exploit the mine at Ashmore caused loss by causing Striker to defer the decision not to expend moneys. In other words, Striker wasted money by expending it. AGF in its original ground 7 only alleged that the exploration expenses 'constituted a value received' by Striker because the expenses were capitalised in Striker's accounts. The amendment to ground 7 contended that the expenditure could be 'turned to value' for other reasons. However the ground still did not challenge the trial judge's conclusion at [252] in effect that if the funds had been promised under the secondary underwriting agreement, and had been paid, then the expenses would not have been incurred. I agree with McLure JA's reasons for allowing the amendment to ground 7, and for dismissing ground 7 as amended.

Ground 8

Ground 8 relates to the trial judge's decision not to award interest to AGF on the amount of its counterclaim. I agree that ground 8 should be dismissed for the reasons given by McLure JA.

Striker's cross‑appeal

Finally, I refer to Striker's cross‑appeal which relates to the trial judge's dismissal of that part of the claim for damages totalling $2,320,000. That is particularised under the misleading heading reading 'Premium reduction - share value' (see trial judge's reasons [229]). Before explaining how this claim was calculated, it is important to analyse the relevant bargain that was struck between the parties. The bargain, that is, the secondary underwriting agreement, was that contained in cl 10.2 which read:
In the event that the Underwriter terminates this Underwriting Agreement because of the occurrence of the contingency referred to in Clause 10.1(u), the Underwriter shall underwrite a new issue of shares by the Company, by pro rata offer, to all members of the Company, to raise a minimum amount of 7.5 million dollars ($7,500,000), by prospectus. That prospectus shall be issued as soon as possible after 30 June 1997. The Shares to be offered by the prospectus shall be offered at a price equal to at least ninety percent (90%) of the average of the closing prices for buying of Shares which are admitted to Official Quotation on ASX, as quoted in the daily trading statistics of ASX for each of the trading days during the month of June 1997. The Underwriting Agreement in respect of that pro rata issue shall contain contingencies for termination which are similar to those contained in this Underwriting Agreement apart from Clause 10.1(u)
The primary underwriting agreement required AGF to underwrite the exercise of 50,930,673 options at a price of 20 cents, which by simple calculation would have raised $10,186,134.60. In the case of the primary underwriting agreement, the number of securities (options) was expressly stated and the amount of capital, although not expressly stated, was calculable at the time the contract was signed by multiplying the number of options by 20 cents. The secondary underwriting agreement in cl 10.2 identified the amount of capital to be raised and allowed the number of securities (shares) underwritten to be determined by reference to information which had to be gathered at the time of performance. The instructions for this determination were set out in cl 10.2 which stated that the shares to be offered by prospectus should be offered at a price:
[E]qual to at least ninety percent (90%) of the average of the closing prices for buying of Shares which are admitted to Official Quotation on ASX, as quoted in daily trading statistics of ASX for each of the trading days during the month of June 1997.
Mr Edwards gathered the information to allow this calculation to be made and carried it out. His report dated 20 June 2002 stated (green AB 491 ‑ 492 vol 3):
8. … Under the terms of the Underwriting Agreement, the shares were to be offered at a price equal to at least 90% of the average closing prices for buying Striker's shares on the ASX as quoted in the daily trading statistics for each of the trading days during the month of June 1997. I have not been able to obtain the closing buy prices for Striker's shares in June 1997, and for the purposes of this calculation I have used the closing price for the last trade of the day for the trading days in June 1997.
9.… The average closing price for Striker's shares for these days was 13.3 cents. On this basis, the prorata offer should have been made at a minimum price of around 12 cents, being calculated as 90% of 13.3 cents to give 11.97 cents per share and rounded to the nearest whole cent.
The trial judge referred to this evidence without criticism and in the absence of any reference to evidence contrary to it, I infer that his Honour was prepared to accept it. His Honour said at [282]:
The basis of Mr Edwards' evidence is that, had AGF complied with its obligation under the December 1996 underwriting agreement, Striker would have received $7,500,000 of additional capital (less the expenses of the issue) in about September 1997 in return for issuing 62,500,000 new shares at 12 cents each.
Thus if AGF had performed the promise contained in the secondary underwriting agreement, then Striker would have issued 62,500,000 shares and received $7,500,000. AGF breached the agreement and this did not happen. Striker then proceeded to issue 62,500,000 shares. It received not $7,500,000 but $5,180,000, this being a shortfall of $2,320,000. This was set out in Mr Edwards' report under the heading 'Calculation of damages' in the following way (green AB 499 ‑ 500, vol 3):
In accordance with your instructions, I have calculated the loss to Striker from the issue of shares on less favourable commercial terms following the alleged breach of the Underwriting Agreement as $2,320,000. This has been quantified as the difference in the proceeds achieved from the issue of 62,500,000 shares which were to have been issued under the Underwriting Agreement, calculated as follows:

Number of shares

Issue price per share

Gross proceeds from issue

Underwriting Agreement

62,500,000

12 cents

7,500,000

Terms achieved from the issue of the equivalent number of shares in the capital raisings made to replace the shares which were to have been issued under the Underwriting Agreement:

   Convertible notes terms of conversion

6,250,000

     8 cents

   500,000

    Placement to AEJV

4,000,000

12.5 cents

    500,000

   Balance of shares - placed as part the March       1999 issue of 75,825,000 shares to Diamond    Rose, FAI and others

52,250,000

8 cents

4,180,000

62,500,000

5,180,000

                  Quantified Damages
                  - (shortfall)

(2,320,000)

Mr Jones, the expert called by AGF, well understood the basis of Striker's claim. He said that Mr Edwards' report was 'substantially a mechanical calculation based on the implicit assumption that the loss suffered by Striker is the difference between two specified figures'. Unfortunately the evidence then became unnecessarily complicated. Mr Jones added, as Buss JA records at [345], that Mr Edwards' approach 'implicitly assumes that the dilution in the share price as a result of issuing shares at a discount' constituted 'a loss to Striker'. Mr Jones said that he believed this was incorrect in principle since he contended that the loss accrued to the existing shareholders of Striker not to the company itself. Mr Edwards responded to this comment and then advanced, as Buss JA points out at [347] a 'theory which underpinned' Striker's loss. The theory was about the increased cost of capital and the evidence on the point and the trial judge's questions concerning it, are all set out at length in Buss JA's reasons at [347] to [348]. Mr Jones in a second report, expanded on his views and was cross‑examined, once again as recorded in Buss JA's reasons at [349] to [350]. In effect, Mr Jones was contending that Striker suffered no loss because it did receive $7.5 million but it achieved this by issuing 87 million shares rather than 62.5 million shares. Mr Jones' theory was that the issue of the extra shares resulted in a loss to the existing shareholders and not to Striker. Mr Edwards was then led into this debate and began discussing the theory of cost of capital. If Mr Jones is correct then underwriters will often have to pay very little by way of damages if they breach their underwriting agreement.
In my view the experts were unnecessarily distracted by this theorising. To examine the number of shares actually issued or to theorise about whether the issue of shares resulted in loss to Striker or its shareholders was to examine the wrong point. If a farmer sells 10 tonnes of wheat for $3,000, and the purchaser defaults and the farmer then resells the wheat for $2,500, it affords no defence to the defaulting purchaser to argue that the farmer could sell another two tonnes and that he would then have his $3,000 and suffer no loss. Similarly it is no answer for AGF to argue that by selling an extra 24.5 million shares, Striker did raise $7.5 million. It was also no answer to examine the question of whether shares have value to a company or the shareholder as I explain below when discussing Pilmer v Duke Group Ltd [2001] HCA 31; (2001) 207 CLR 165.
In my opinion, the correct approach was the simple approach taken by Mr Edwards in his first report. In my opinion it is the approach sanctioned in Robinson v Harman (1848) 1 Exch 850, 855; (1848) 154 ER 363, 365 by Parke B who said:
The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.
This was approved in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 83 ALJR 390 [13].
If the contract had been performed, Striker would have issued 62.5 million shares. It would have received from those subscribing for the 62.5 million shares (that is from AGF if there were no public or other subscribers), $7.5 million.
Striker did issue 62.5 million shares. It received $5,180,000 for those shares. In other words, it received $2,320,000 less than it would have received for 62.5 million shares if AGF had not breached the secondary underwriting agreement. That is the sum that is necessary to put Striker in the position it would have been in if the contract had been performed.
The only question then is whether the decision of the High Court in Pilmer's case stands in the way of this conclusion. To answer that it is necessary to briefly analyse Pilmer and to bear in mind the limited issues considered in that case (as explained by Kirby J [98] and the majority at [56]) resulting in the fact that, fiduciary issues aside, the only issue before the High Court was whether Kia Ora suffered damage by issuing its shares or whether it 'gave up' or 'lost' anything by the issue of the shares [64]. Kia Ora issued and allotted 67.9 million $1 shares treated as fully paid up and paid $25.696 million in cash to the shareholders of Western United in consideration for those shareholders transferring their shares in Western United to Kia Ora. The offer was accepted. Contrary to the report prepared by accountants (the appellants) this transaction was not for fair value. Western United shares were worthless. Kia Ora sued the report writers for damages for breach of contract and negligence and the claim was upheld. The loss claimed was in part for $56 million, being the value of the 67.9 million shares Kia Ora had issued. The $56 million was calculated by taking the value of the shares as being 45 cents per share, being the traded value of the Kia Ora shares on the stock market immediately after the transaction. Kia Ora claimed that this amount represented the 'market or fair value of the rights and corresponding obligations given and undertaken by Kia Ora' [52]. The reason Kia Ora presented its claim in this way was because Kia Ora argued that if the accountants had performed the contract and reported the true value of the Western United shares, then the transaction would not have gone ahead and Kia Ora would not have issued any shares at all. As a result, it was driven to try and demonstrate that the issue of the shares was productive of loss calculated in the way just indicated. The High Court held that this was not a loss suffered by Kia Ora. McHugh, Gummow, Hayne and Callinan JJ said [53]:
It is essential to recall, however, that Kia Ora could not lawfully trade in its own shares. The value which Kia Ora sought to attribute to the shares it issued was, therefore, a value determined by transactions of a kind which Kia Ora was forbidden to make and from which it could not benefit. In no sense, then, did Kia Ora lose a sum which could have been paid to it by a willing but not anxious buyer of its issued shares in trading on the exchange.

This makes it plain that Kia Ora was seeking damages based on the fact that it issued shares and that involved an examination of the nature of a share in a company and whether a share has any value to a company. See in particular the discussion at [56]. In this case, AGF had agreed to subscribe for, and, critically, to pay for shares (if no‑one else did so). It is the lack of payment, not the value of the shares which is under consideration here. Pilmer's case is therefore distinguishable. Pilmer's case was a 'no transaction case'. This is not a 'no transaction case'. The claim made in Pilmer's case is not the claim made in this case. Striker seeks to be put in the position it would have been in if the contract had been performed, and performance required AGF to subscribe for and pay $7.5 million if other subscribers did not. Here Striker's claim is for the shortfall in the payment that it was entitled to receive for the 62.5 million shares. Striker is not attempting to calculate and recover the value of the shares it issued. The shortfall in payment of $2,320,000 was a loss to Striker, not a loss to Striker's shareholders. In my opinion it is unnecessary to examine the theories about cost or price of capital which were debated at the trial as a result of Mr Jones' contention that the only loss was suffered by Striker's shareholders and not by Striker itself.
The trial judge said at [290]:
The basis for the plaintiff's claim for damages under this heading depends upon acceptance of the concept of the "price" of new capital for the company and it meets its answer in the response that the company does not pay anything for the issue of new capital. The issue of new shares to raise further capital does not represent a cost of any kind to the company (except for the administrative, legal and associated expenses of the capital raising). The position was fully examined by McHugh, Gummow, Hayne and Callinan JJ in Pilmer v Duke Group Ltd (In Liq) [2001] HCA 31; (2001) 207 CLR 165.
His Honour then quoted from Pilmer's case, in effect applied the decision to the claim in this case and dismissed this aspect of the claim.
The grounds of the cross‑appeal read:
1.the learned trial Judge erred in law in holding that the Respondent suffered no loss from the defendant's breach of the Underwriting Agreement between the parties dated 2 December 1996, as a result of issuing shares to raise alternative capital funds at a price lower than the price contained in the Underwriting Agreement. The trial Judge should have held that the Respondent suffered a loss, namely an increase in the cost of its capital, by reason of having to issue more shares at a lower price to raise less capital funds, than if the defendant had not breached the Underwriting Agreement; and
2.the learned trial Judge erred in fact and law by failing to quantify such loss as the difference between the share price which would have resulted from applying the Underwriting Agreement, and the average issue price for the shares which were actually issued. The trial Judge should have quantified the respondent's loss adopting this methodology.
For the reasons set out above, I consider that Pilmer's case is distinguishable and does not govern the claim advanced by Striker in this case. With due respect, I consider that his Honour erred in applying

Pilmer's case and erred by misunderstanding the basis of Striker's claim. I would therefore uphold ground 2 of the cross‑appeal and the first sentence of ground 1 of the cross‑appeal for the reasons set out above. I do not agree with the second sentence in ground 1 which drifts into the same theorising which distracted the witnesses. I would hear the parties as to the precise amount which should have been awarded by way of damages because there was some difference between them about whether the 90% figure was 12 cents or about 11.8 cents per share, and because the shortfall disclosed was the gross shortfall. The gross shortfall would have to be adjusted to take into account any difference in the expenses of the actual share issues and the expenses which would have been incurred had the secondary underwriting contract been performed.

BUSS JA: This is an appeal from a decision of EM Heenan J on a dispute arising out of an underwriting agreement whereby the appellant agreed to underwrite the exercise of options to subscribe for shares in the capital of the respondent.

Some background

The respondent (the plaintiff in the original action) was, at all material times, engaged in the exploration and potential development of diamond mining tenements. Shares in the respondent were, except for a period from March 1998 to March 1999, listed and traded on the Australian Stock Exchange (ASX). The respondent was formerly known as Striker Resources NL, and most of the documents tendered at the trial refer to it by that name. It is convenient to refer to the respondent in these reasons as 'Striker'.
The appellant (the defendant in the original action) was, for much of the material time, engaged in the exploration and development of gold mining tenements. Also, for much of the material time the appellant had an interest in diamond exploration and development through its then wholly owned subsidiary, Jade Creek Resources NL (Jade Creek). Shares in the appellant were listed and traded on the ASX. Most of the documents tendered at the trial refer to the appellant by its acronym, AGF. It is convenient to refer to the appellant in these reasons as 'AGF'.
AGF became the largest shareholder in Striker. It appointed three directors to the board of Striker, including the chairman. At all material times, Striker did not have any significant revenue. It funded its ongoing exploration and development work by issuing additional shares or

obtaining loans. At all material times, AGF was Striker's principal source of financial support.

In 1996, Striker held tenements at Ashmore. There were indications that these tenements were suitable for diamond exploration and mining development. Striker wished to raise about $6,000,000 to $8,000,000 for the purpose of conducting a trial mine. A series of transactions were entered into with a view to achieving this object.
Jade Creek owned diamond tenements adjacent to Striker's Ashmore tenements. It was considered advantageous for both sets of tenements to be explored and developed as one overall project. Three agreements were entered into: an underwriting agreement, a share sale agreement and a financing agreement.

The Underwriting Agreement

By a written agreement dated 2 December 1996 (the Underwriting Agreement) between Striker and AGF, AGF agreed to underwrite the exercise of 50,930,673 options (the Options) to subscribe for shares in the capital of Striker. The Options expired on 30 June 1997. They were exercisable at any time before that date. The exercise of the Options would produce about $10,200,000 in share capital for Striker. In the Underwriting Agreement, Striker is described as 'the Company' and AGF as 'the Underwriter'.
Clause 1.1 of the Underwriting Agreement provided that in the agreement, unless the context otherwise required, the following words and expressions have the following meanings:
'ASX' means Australian Stock Exchange Limited and its subsidiaries;
'Books Closing Date' means the closing date of the Options Register for the receipt of transfers for the purposes of determining entitlements to exercise the Options being the date that the Company may determine in accordance with the Listing Rules and with the prior approval of the Underwriter, which approval the Underwriter may not unreasonably withhold;
'Business Day' has the meaning ascribed to that term by the Listing Rules;
'Closing Date' means the closing date for receipt of acceptances of Exercise Forms which shall be 2 July 1997 or such later date as the Company may determine in accordance with the Listing Rules and with the prior approval of the Underwriter, which approval the Underwriter may not unreasonably withhold;
'Corporations Law' and 'Corporations Regulations' have the same meaning given to them by Part 3 of the Corporations (Western Australia) Act 1990 and references to the Corporations Law and Corporations Regulations have the same effect given to them by section 13 of that Act.
'Commission' means the Australian Securities Commission;
'Execution Date' means the date on which this Underwriting Agreement is last executed by the Parties;
'Exercise Form' means the form which the holder of an option must complete and execute in order to validly exercise the Option;
'Home Exchange' means ASX in Perth;
'Jade Share Sale Agreement' means an agreement between the Parties for the sale by the Underwriter to the Company of all of the issued share capital of Jade Creek Resources NL ACN 008 937 002;
'Listing Rules' means the official listing rules of ASX;
'Option' means an option to acquire a Share which option is exercisable at 20 cents on or before 30 June 1997 and subject to the other terms and conditions of issue of the Option;
'Options Register' means the register maintained by the Company of all issued Options;
'Optionholder' means any person who is registered in the Options Register as the holder of options as at the Books Closing Date;
'Party' means a party to this Underwriting Agreement and 'Parties' has a corresponding meaning;
'Share' means a fully paid ordinary share of twenty (20) cents par value in the capital of the Company;
'Shortfall Securities' means those of the Underwritten Securities in respect of which the Company has not received validly completed Exercise Forms and payment therefor from an Optionholder on or before the Closing Date;
'State' means the State of Western Australia;
'Underwriting Agreement' means the agreement between the Parties constituted by this document and includes the recitals and any amendments made from time to time in accordance herewith;
'Underwritten Securities' means 50,930,673 Options.
By cl 3 of the Underwriting Agreement:
Subject to and on the terms and conditions herein contained, the Underwriter shall underwrite the exercise of the Underwritten Securities by the Optionholders.
Clause 6 of the Underwriting Agreement imposed on AGF the obligation to take up the Shortfall Securities and specified the manner in which this should occur. Clauses 6.1 and 6.2 provided, relevantly:
6.1If the Company has not received validly completed Exercise Forms for all the Underwritten Securities together with payment in full therefor, either:
(a)from an Optionholder on or before the Closing Date; or
(b)from a member organisation of ASX within three (3) Business Days of the Closing Date,
the Company shall within five (5) Business Days of the Closing Date, give written notice to the Underwriter of the same specifying the total number of Shortfall Securities (and stating the number of Options and the number of Shares that comprise the Shortfall Securities), such notice being signed by at least one director of the Company.
6.2Subject to Clause 10, within eight (8) Business Days after the receipt by the Underwriter of the notice referred to in sub‑clause 6.1, the Underwriter shall lodge or cause to be lodged with the Company, an application for that number of Shares equal to the amount of the Shortfall Securities, together with a bank cheque or bank cheques made payable to the Company for an amount determined by multiplying the number of the Underwritten Securities that comprise the Shortfall Securities by 20 cents.
Clause 8 of the Underwriting Agreement made provision for the payment of commission to AGF. It reads:
The Company shall, within two (2) Business Days of the Underwriter complying with sub‑clause 6.2 or the Company receiving valid Exercise Forms for all of the Underwritten Securities together with payment in full therefor, whichever is the earlier, pay to the Underwriter by bank cheque an underwriting commission of Five Hundred and Nine Thousand Three Hundred and Six Dollars ($509,306) which equates to five per centum 5% of the total amount that is payable to the Company for the Underwritten Securities.
Clause 9 of the Underwriting Agreement imposed various covenants on Striker for the benefit of AGF.
Clause 10.1 of the Underwriting Agreement contained various contingencies referred to by the parties at trial as 'drop‑out' conditions. In general, upon the happening of any one or more of the contingencies, AGF was entitled, by written notice to Striker, to terminate the Underwriting Agreement and be relieved of its obligations under the agreement. It was common cause between the parties that the contingency in cl 10.1(u) had occurred, and that AGF had lawfully exercised its right of termination under that provision. Clause 10.1 provided, relevantly:
In the event of the happening of any one or more of the following contingencies after the Execution Date and prior to that date that is eight (8) Business Days after the Closing Date, the Underwriter may, at any time after becoming aware thereof, without cost or liability to itself, by notice in writing to the Company, terminate this Underwriting Agreement and be relieved of all its obligations hereunder, but no such notice shall operate to the prejudice of any liability of the Company arising out of any prior default by it hereunder. Any delay in giving such notice shall not be treated as a waiver of such right and a further notice or notices as aforesaid may be given notwithstanding that subsequently the relevant contingency ceases to exist and notwithstanding any activity on the part of the Underwriter which is consistent with the performance by it of its obligations hereunder. The contingencies referred to are:
…
(u)the closing price for buyers of Shares, which are admitted to Official Quotation on ASX, as quoted in the daily trading statistics of ASX, falling below twenty (20) cents per Share and then for more than five (5) consecutive days during the month of June 1997 and then on 30 June 1997;
provided that nothing contained in this Clause 10 shall prejudice or nullify any claims for damages which the Underwriter may have against the Company for or arising out of any breach of covenant or failure by the Company to observe or perform the obligations on its part contained in this Underwriting Agreement and provided further that should the Underwriter terminate this Underwriting Agreement pursuant to this Clause 10, it shall thereupon cease to be entitled to payment of the underwriting commission pursuant to Clause 8 (but not the costs and fees incurred by the Underwriter as specified in Clause 11).
Clause 10.2 of the Underwriting Agreement is central to the dispute between the parties. In general, cl 10.2 provided that if, as a result of the occurrence of the 'drop‑out' condition in cl 10.1(u), AGF terminated its obligations, AGF would, in accordance with cl 10.2, underwrite a new issue of shares by Striker to raise a minimum amount of $7,500,000. Clause 10.2 reads:
In the event that the Underwriter terminates this Underwriting Agreement because of the occurrence of the contingency referred to in Clause 10.1(u), the Underwriter shall underwrite a new issue of shares by the Company, by pro rata offer, to all members of the Company, to raise a minimum amount of 7.5 million dollars ($7,500,000), by prospectus. That prospectus shall be issued as soon as possible after 30 June 1997. The Shares to be offered by the prospectus shall be offered at a price equal to at least ninety percent (90%) of the average of the closing prices for buying of Shares which are admitted to Official Quotation on ASX, as quoted in the daily trading statistics of ASX for each of the trading days during the month of June 1997. The Underwriting Agreement in respect of that pro rata issue shall contain contingencies for termination which are similar to those contained in this Underwriting Agreement apart from Clause 10.1(u).

The Share Sale Agreement

By a written agreement dated 2 December 1996 (the Share Sale Agreement) between AGF and Striker, AGF sold to Striker, all of Jade Creek's issued share capital.
The Share Sale Agreement contained provisions, relevantly, to this effect:
(a)by cl 6.5, AGF was entitled to require Jade Creek to transfer, in essence, a 100% interest in a tenement known as the Sandstone gold tenement to AGF or in accordance with its direction for no consideration;
(b)by cl 2.1(b), the obligations of the parties under the agreement were subject to and conditional upon AGF exercising 5,872,055 options over unissued fully paid shares in Jade Creek at an exercise price of 20 cents per share on or before 31 December 1996; and
(c)by cl 3.1, AGF, as beneficial owner, agreed to sell and Striker agreed to purchase all of Jade Creek's issued share capital, free from any encumbrances, in consideration of the issue by Striker to AGF of 20,252,000 ordinary fully paid shares in Striker and 20,252,000 options to acquire shares in Striker at any time on or before 31 December 1999, at an exercise price of 20 cents per Striker share, payable in full on exercise of the option; and
(d)the parties agreed that the market value of the purchase price as at the date of commencement of negotiations to enter into the agreement was $3,037,800: see the definition of 'Purchase Price' in cl 1.1.

The Financing Agreement

By a written agreement dated 2 December 1996 between AGF and Striker, AGF agreed, at Striker's request, to provide Striker with a loan facility, the principal amount of which was not to exceed $200,000. Striker was obliged to repay the principal amount of any advances on 1 March 1997. Interest was payable on the principal amount at the rate of 10% per annum, calculated on a daily basis. The purpose of the loan facility was to provide Striker with working capital during the period required for completion of the sale and purchase of Jade Creek. On 20 December 1996, Striker drew down the whole of the loan facility. On 7 February 1997, it repaid the principal amount advanced, together with interest.

The emergence of the dispute between the parties

Between July 1997 and March 1998, the parties negotiated in relation to the terms of a second underwriting agreement, as contemplated by cl 10.2 of the Underwriting Agreement. During this period, AGF made available interim funding to Striker, comprising loans of about $2,200,000, and payments of $128,580.55 on Striker's behalf to third parties.
On 6 March 1998, AGF went into voluntary administration and on 9 March 1998, trading in Striker's shares was suspended by the ASX. Between March 1998 and September 1999, Striker entered into various agreements, and share and option placements, to raise capital. On 25 November 1998, liquidators were appointed to AGF.
AGF never underwrote any share issue by Striker pursuant to cl 10.2 of the Underwriting Agreement, or at all. Striker lodged a proof of debt in AGF's liquidation, and claimed damages against AGF in the original action, which it commenced in the Supreme Court in 2000. AGF denied Striker's claims, and counterclaimed for repayment of the interim funding, together with interest.

Striker's claim

Striker's primary claim against AGF was for loss and expense occasioned by AGF's alleged breach of its obligations under cl 10.2 of the Underwriting Agreement. Striker asserted that in September 1997 AGF breached cl 10.2. Negotiations between the parties in relation to the terms of a second underwriting agreement continued, however, until about March 1998. By May 1998, it had become apparent to Striker that AGF had repudiated cl 10.2. Striker contended that on or about 3 June 1998, alternatively by 25 August 1998, it accepted the repudiation.
AGF denied any liability in relation to Striker's primary claim on the ground that no enforceable contract was ever concluded for the second underwriting agreement contemplated by cl 10.2. In particular, cl 10.2 provided that $7,500,000 was only a 'minimum amount' and, as a result, there was no final price agreed upon; that a prospectus, on unspecified terms, would be produced; that the share price might be greater than 90% of the historic June average; and that there might be a new underwriting agreement to be entered into. Accordingly, so AGF contended, cl 10.2 was incomplete and uncertain.

Number of Shares

Issue price per share (cents)

$

Additional shares issued to raise $7,066,000 achieved by March 1999

23,575,000

8

1,886,000

Shortfall in funds compared with $7.5 million to be raised under the underwriting arrangements

434,000

Loss to Striker

23,575,000

2,320,000

Mr Edwards gave oral evidence. During cross‑examination and re‑examination the following exchanges occurred:
[COUNSEL FOR AGF]: Does it assume that the issue of shares by the company is a cost to the company?---Yes, in the sense that ‑ let me explain the connection ‑ in the sense that every company is charged with a responsibility to minimise its cost of capital and its cost of capital is the cost that it incurs in funding its operations whether by debt or equity. It's not measured in an accounting sense and put in its books or its balance sheet, but in the commercial world and in the way that companies are run and managed and their requirements for stewardship, it's a very well-understood concept that all boards are very much tuned into.
Let me just deal with that. What you're saying to his Honour is in a practical commercial sense the market and companies in Australia work on the basis that the issuing of new shares by the company is a cost to the company?---Yes, and when companies consider how they will fund projects that they're seeking to support financially they consider whether ‑ what the impact will be by raising equity and debt in funding those projects.
…
How would the cost of equity be manifest to the company if it's a notional or hypothetical loss: it's not a balance sheet item; it's not an accounting entry; it's not in its books? Is it just that it will have to issue shares at a lower price until it can get the market's perception to change?---Not necessarily. If we take the situation specifically of Striker, one key thing, in my view, that happened as a consequence of everything that occurred through this period is that at the time that Striker was raising replacement capital in that period between March 98 and when its shares were requoted on ASX, it was unlisted. I'm firmly of the view and the strong empirical support for this that an investor contemplating placing their funds into a listed entity compared with an unlisted entity demands a higher rate of return. That is the universe of the cost of equity. I think that, plus circumstances that Striker was then in, would lead to the situation that there's every chance there has been an increase in its cost of equity during that period.
…
Am I right then in the proposition that the costs of equity is a notional loss that continues until the market re-rates the stock and you can command a higher price?---Yes. Well, the cost of equity is the assessment of the relative risk that the market place has in pricing the shares, yes.
…
[COUNSEL FOR STRIKER]: I think you said in response to a question that it was logical that loss to shareholders leads to increase in the company's cost of capital. Can you explain that logical connection, please?---In the context of this circumstance, yes, I think that the consequence of the company finding it more difficult to issue the same ‑ well, issue shares on the same terms that were being contemplated at the time the underwriting agreement was being negotiated is in consequence of the market demanding a higher rate of return in order to keep investing in the company. So that says to me that from the company's viewpoint there's an increase in cost of equity and the flow-through effect of that is ‑ for each of the shareholders is that if shares are continuing to be issued at a lower price, it is simultaneously diluting the existing shareholder positions in the company.
…
[HEENAN J]: Mr Edwards, I wonder if you could try and help me a little more on this question of the cost of capital and rate of return. Let me give you a hypothetical example. We have got a large quoted company, diversified, making profits, paying dividends. Let's give it a name; Leviathan Ltd. It wants to raise some working capital. It has got a choice: it can borrow the money, either from a lender or by the issue of bonds or notes, or it can make a rights issue or a general issue. If it borrows the money it's going to have to pay interest. If it offers a rights issue it has to pay dividends on the new capital subscribed. So in either eventuality would I be right in thinking that the interest rate in the one case or the dividend rate in the other is the real cost of capital for that company?---Not completely, your Honour. Certainly in the case of the debt raising, the interest is the cost. In terms of the capital there are two components to the return that an investor seeks in the market and measures the cost of capital for equity. One is certainly the dividends, as you identified. The second is the expected capital growth in the share price and in (indistinct) for example like the United States, where very little dividends are paid out by comparison with the Australian market, it is very largely the latter that derives the return for investors in terms of an equity return.
Let's change the example: instead of a big conglomerate earning profits and paying dividends you have an exploration company which has never paid a dividend and is unlikely to pay a dividend in the immediate future. So borrowed capital has a clear interest rate cost, equity capital is not matched with any immediate obligation to pay dividends, so how do you measure the cost of equity capital?---The way that it is measured is to plot the return from the share price compared with a benchmark, typically a diversified well-balanced portfolio, and what that measures is the relative riskiness of investing in that specific stock ‑ let's call it (indistinct) ‑ compared with the market, and that is what is measured by the cost of equity.
So on your accounting operation your cost of equity is really an index of the expected capital appreciation of the security which is to be issued?‑‑‑Perhaps if I can explain it this way: a share price in the market is the market's pricing of the expected return from investing in that stock. In an industrial company that's a lot easier to measure because you have information relating to expected future earnings, you have information around expected future dividend policy, and the market will price the expected return taking into account two things; you will have regard to what the future earnings looks like, and dividends, and, secondly, it can change the price of that stock by regarding that stock as being more or less risky than investing elsewhere.
In the case of a company which raises capital by issuing shares for which dividends are paid or payable there's an obligation by the company to fund the extra capital out of profits or reserves?---Yes.
But if there is no dividends to be payable, the company will not have to fund anything?---It will retain the reserves in the company and invest it in the business and the consequence of that decision, as distinct from paying out dividends to shareholders, will be reflected in the market perception of the return that that company is likely to achieve for them in capital gain only.
It was put to you by Mr Bennett, and I'm not sure that I quite understand any answer that you have given to this question so far, in the case of an exploration company like Striker with no dividends in the short-term in prospect, this cost which you compute with reference to the fluctuation in the market price of the stock, quoted or unquoted, why is that not a feature which is exclusive to the shareholder so that increases or reductions in the price are a loss or a profit to the shareholder rather than the company?---In my view a company has the responsibility, every time it wants to raise money to fund its operations, to minimise the cost of raising that capital.
That's just the point. What is the cost for a company that doesn't have to fund anything?---Well, it does have to fund things, your Honour, in terms of future exploration activity, working capital, to supporting the operations of the company if it doesn't have, for example, an operating mine to produce cash flow.
…
[COUNSEL FOR STRIKER]: If you are a junior exploration company and you have to issue shares at a lower price than you expected, what is the effect when you go back out into the market?---You mean after that issue?
That's right?---The effect will depend on the impact of what you as a company have done with the funds you have raised but the consequence of needing to go to the market to raise capital and reduce the price is saying ‑ the market is saying to the company, 'The way we are assessing you as a company is to demand a higher return in order to continue to provide the capital that you say you need to fund your activities.'
Does that effect that you have just described correspond at all with the notion of costed equity capital which you have been discussing?---Well, I believe it does, and the cost of equity capital is driven by the relative riskiness of a particular company to alternative investments that an investor could make.
How is it that you measure that?---You measure that by observing what's called a beta, which looks at plotting the market price of the company that you are looking at, the specific company share price against a general index, typically some form of market index that's produced by the ASX, which picks up both dividend returns and capital gain.
Is that what you did in this case?---Well, in this case, no, because that information, for the reasons that I explained to Mr Bennett ‑ I don't think it's appropriate because of the fact that Striker was suspended and moreover, it's less robust, in my view, for junior exploration companies than it is for world-traded major corporations.
So what measure did you use?---I used the variation in the share price that occurred in order to raise the equivalent amount of shares (ts 551 ‑ 554, 558 ‑ 560).
Mr Jones, in his second report dated 22 November 2005 (exhibit 143), adhered to his view that the reduction in share price was a loss that accrued to the shareholders of Striker prior to the capital raising. He also adhered to his view that the dilution in value as a result of the capital raising accrues to the shareholders and not to the company. As regards Mr Edwards' comments on the quantification of the alleged loss, Mr Jones said:
13.Paragraph 7 of Mr Edwards' letter acknowledges that he is 'not aware of a definitive method by which to quantify the commercial loss to Striker of the increase in its cost of equity capital flowing from the alleged breach of the underwriting agreement.'
14.Paragraphs 8 to 12 of Mr Edwards' letter discuss possible methods of quantifying the loss and largely repeat the propositions outlined in his report dated 20 June 2002, which results in an estimated loss of $2.32 million.
15.I agree that there is no definitive method to quantify such a loss and concur with Mr Edwards' comments about the unsuitability of CAPM model.
16.If the loss is found by the Court to accrue to Striker rather than the existing shareholders of Striker, then I agree with Mr Edwards that his calculation is 'not an unreasonable method by which to seek to quantify the commercial loss' (2). (original emphasis)
Mr Jones was cross‑examined on his view in relation to the quantification of the alleged loss and on 'reputational' damage to a company:
If there was no reason for issuing the shares at a lower price, then it would certainly damage the company's reputation, wouldn't it?---It may do. The situation you're asking me to talk about is something that doesn't really happen. People issue the shares generally at the highest price they can issue the shares at. I mean, that's the purpose of the negotiations they go through, so what you're saying to me ‑ I could issue them at 10 and then issue them at 5, well, once you issue them at 5, I mean it seems a little illogical. The proposition you're putting is not really logical.
The point is that you issue shares at the highest price you can to protect the shareholders?---Yes.
If you don't protect the shareholders, you're going to have?---You will probably get removed as a director.
And you will damage the reputation of the company?---Well, that potentially is what would be an outcome, yes.
Isn't that damage to the company, that potential outcome, to lose your reputation as a commercially-operated company?---Yes. I would think if someone is not operating in the commercial sense that would damage their reputation, yes.
If it's a question of quantifying that damage, wouldn't you normally use the CAPM model to work out the extent to which the company has been damaged by issuing the shares at a lower price?---No.
Well, you have considered Mr Edwards' report, haven't you?---I have.
And his supplementary report?---Yes.
And you have come to a point in your own supplementary report where you have said at paragraph 16:
If the loss is found by the court to accrue to Striker rather than existing shareholders to Striker, then I agree with Mr Edwards that his calculation is not an unreasonable method by which to seek to quantify the commercial loss?
---That's correct. Mr Edwards hasn't used the CAPM model to quantify that loss.
No, but?---He has acknowledged that the CAPM model basically doesn't work in a company of this nature and I concur with that.
So if we're trying to quantify the damage to the company by issuing the shares at a lower price - and we have identified a potential outcome is the existence of some damage to the company - quantifying it you have said Mr Edwards's view is not unreasonable?---No, no, I didn't say that all. We're talking about two entirely different things. You're talking theoretical reputational damage to the company and now you're trying to quantify that reputational damage to the company, which is a very different issue than the theoretical issue of their reputation being ‑ you know, converting a reputational damage into dollars is not something that anyone could hypothesise about.
Mr Edwards has expressed a view that there is a loss to the company by issuing shares at a lower price?---I understand he has expressed that view, yes.
You have read his reports?---Yes.
He says, in effect, doesn't he, that the reason why there is damage to the company is because of a reduced ability to raise further capital?---I disagree with the comment that there is any loss to the company in issuing the shares at a discount. The loss is actually to the shareholders. The company
I accept that but his view ‑ you understand his view to be in effect that the reduced ability of the company to raise further capital after you have done one issue at a discount is what he considers to be the loss?---Yes.
Isn't it the case that in the scenarios we have been discussing this afternoon the damage to the company is its inability to raise further capital because of having issued it at a discount?---No.
No?---The inability of the company ‑ the company doesn't have an inability to raise capital. It may have to raise the capital at a lower price which will further dilute the shareholders.
I said a reduced ability?---It may not have a reduced ability. It may be able to raise lots more capital at a lower price. It depends on the projects, once again, that underline the company and what the market assesses its prospects are so the price doesn't actually damage the company. The price actually damages the shareholders of the company. When you talk about reputational damage, that's not a quantifiable issue. When you're talking about dilution of the shareholders, you can quantify it and Mr Edwards has done so (ts 710 ‑ 712).

The cross‑appeal: the decision in Pilmer

The relevant facts of Pilmer, for present purposes, were as follows. Kia Ora Gold Corp NL (Kia Ora) made a successful takeover bid for Western United Ltd (Western United). The consideration given by Kia Ora to the shareholders of Western United comprised cash and shares in Kia Ora. Kia Ora retained Nelson Wheeler, a firm of accountants, to prepare a report for Kia Ora's shareholders on the takeover bid, as required by the listing rules of the ASX. The report stated, relevantly, that in Nelson Wheeler's opinion the price to be offered by Kia Ora for shares in Western United was fair and reasonable. The acquisition of Western United was disastrous. Kia Ora went into liquidation. The liquidator brought proceedings against Nelson Wheeler. In the High Court there were, relevantly, two issues. First, the measure of damages payable by Nelson Wheeler in contract and in tort arising from their negligence in preparing the report. Secondly, whether Nelson Wheeler owed a fiduciary duty to Kia Ora in preparing the report and, if it did and had breached the fiduciary duty, what was the measure of equitable compensation payable by Nelson Wheeler and should such compensation be reduced as a result of Kia Ora's contributory negligence?
Kia Ora argued that the measure of damages payable by Nelson Wheeler in relation to the common law claims was the difference in value between the shares it had allotted to Western United's shareholders on the one hand and the value of the shares it had acquired on the other. McHugh, Gummow, Hayne and Callinan JJ held that Kia Ora had not suffered any loss or damage arising from the issue of its shares and, in consequence, there was no basis for the finding made by the trial judge and the Full Court of the Supreme Court of South Australia that Nelson Wheeler was liable to Kia Ora in contract and tort.
McHugh, Gummow, Hayne and Callinan JJ accepted that Kia Ora's issue of the new shares affected its existing shareholders. Their Honours explained:
The nature and extent of that effect on the value of shares held by those existing shareholders would largely depend upon the perception of participants in the market for Kia Ora's shares of the relationship between the terms of the new issue and the value of Kia Ora's shares before the issue. If, as now has been found to be the case, the terms of the new issue were seen to be very disadvantageous (in the sense that the consideration given in return for the shares issued was worth far less than had been assumed) the effect on existing shareholders would have been very large [48].
Their Honours then emphasised that the inquiry was about what Kia Ora had lost. It was not about what effect the transaction may have had on those who held shares in Kia Ora immediately before the takeover [48]. It would be wrong to treat the effect of the transaction on Kia Ora as indistinguishable from its effect on the shareholders [49].
A little later in their reasons, McHugh, Gummow, Hayne and Callinan JJ made this important observation as to the manner in which Kia Ora had put its case:
After the issue of the shares which are now in question, there was no immediate legal impediment to Kia Ora issuing still further shares if it chose to do so and it could issue those shares on whatever terms it could lawfully, and commercially, exact. The fact that it had made the issue which gives rise to the present matter may (indeed, probably would) have affected the commercial terms it could obtain on any subsequent issue. It may (and probably would) have affected its standing with lenders and thus the terms on which it was able to raise further debt finance. But the case for Kia Ora was not put on this basis and it was not suggested in argument before this Court that the damages to be allowed for breach of contract or negligence should take losses of these kinds into account [50].
The principal contention made by counsel for Kia Ora was based on two propositions. First, it was entitled to recover the difference between the consideration it paid in the takeover transaction and the value it received. Secondly, the consideration paid included the value which the new shares had, upon being issued [51]. McHugh, Gummow, Hayne and Callinan JJ rejected Kia Ora's principal contention. Their Honours said that Kia Ora could obtain value for the shares which it issued 'only according to the terms of the transaction under which they were issued, a transaction which could not lawfully fix a value less than par' [63]. Their Honours then held:
But the relevant hypothesis for consideration is not that the company would have made this takeover on some other terms as to payment of the same (or any) price for the shares in Western United. The relevant hypothesis is that the company could and would have made no takeover and the inquiry is about what it gave up or lost because it did.
The answer to that inquiry must be that Kia Ora outlaid cash and whatever may have been the administrative costs of issuing the shares. If a claim had been made, it may well be that some allowance would be made for the consequential effect on its capacity to raise other equity or debt finance. Otherwise, however, it gave up, or lost nothing by the issue of its shares [63] ‑ [64].

The cross‑appeal: its merits

There are some distinguishing features between Pilmer and the cross‑appeal in the present case. In Pilmer, Kia Ora did not make another issue of shares after the successful, but disastrous, takeover bid for Western United. Also, Kia Ora did not put its case on the basis that Nelson Wheeler's breach had adversely affected its capacity to raise debt finance or equity capital, and that it should be compensated for such adverse effect by an award of damages.
In my opinion, however, the cross‑appeal is without merit. There are several reasons why it should fail.
First, Striker's claim at trial, as formulated in item 8 of its amended claim for damages, was for the amount of $2,320,000. This amount comprised $1,886,000, being 'cost to Striker of raising capital on the issue of shares at a lower issue price', and $434,000, being 'shortfall of capital raised'. Striker's expert, Mr Edwards, was specifically instructed to calculate 'the loss to Striker under this head of damage as comprising the difference between the capital raising agreed under the Underwriting Agreement and the actual capital raisings completed in mitigation upon the alleged breach of the Underwriting Agreement'. See [341] above. The opinions expressed by Mr Edwards in his reports and in his oral evidence at the trial are either based on or assume the correctness of the proposition that the issue of the new shares by Striker on terms which diluted the value of existing shares was a loss suffered by Striker (as well as its existing shareholders); alternatively, that Striker suffered an 'increased cost of capital' as a result of AGF's breach of its secondary underwriting obligation, and the measure of damages for the loss occasioned by that increased cost was the amount by which the terms of issue of the new shares diluted the value of the existing shares. In my opinion, the proposition on which Striker's primary and alternative contentions are based is inconsistent with the reasoning of McHugh, Gummow, Hayne and Callinan JJ in Pilmer. Where the value of existing shares in a company is diluted by the terms of issue of new shares in the company, the amount of the dilution represents a loss to the existing shareholders, but not a loss suffered by the company.
Secondly, although McHugh, Gummow, Hayne and Callinan JJ contemplated in Pilmer that a company may recover damages for breach of contract if the breach has adversely affected the company's capacity to raise debt finance or equity capital, in my opinion, the measure of damages for any such adverse effect on the company's capacity to raise equity capital is not the amount by which the value of its existing shares is diluted by the terms of issue of any new shares. If a breach of contract causes a company's capacity to raise debt finance or equity capital to be adversely affected, any such adverse effect may produce loss arising from delay in the raising of finance or capital, increased costs (for example, higher interest rates and fees for the provision of debt finance and higher underwriting fees for the provision of equity capital), and increased marketing and promotional expenses to obtain funds from lenders and investors. By way of further example, a breach of contract may cause a company to suffer loss as a result of its capacity to raise debt finance or equity capital being compromised entirely or the amount of finance or capital it is able to raise being reduced. All of these matters are, of course, illustrative, and are not intended to be an exhaustive statement of the nature and extent of recoverable loss.
Thirdly, Striker did not adduce any evidence at the trial that, as a result of AGF's breach of its secondary underwriting obligation, Striker's capacity to raise debt finance or equity capital had been adversely affected or that any such adverse effect had produced any compensable loss, apart from the evidence in support of its unsustainable contention based on the dilution of the value of its existing shares by the terms of issue of the new shares. Indeed, what evidence there is suggests to the contrary. Between 27 August 1998 and 24 September 1999 Striker raised, in total, $13,090,600 in equity capital. This included an issue of 3,250,000 ordinary fully paid shares on 24 September 1999 at a price of 16 cents each. See [306] above.
Fourthly, Striker has quantified its alleged loss of capacity by a means which, on the authority of the High Court in Pilmer, does not reflect a loss of capacity. After Striker accepted AGF's repudiation, Striker was able to raise an amount of capital in excess of the amount the subject of the secondary underwriting obligation. See [306] above. It was necessary for Striker to issue, in total, a greater number of shares than it would have issued (if AGF had not breached its contract with Striker) to raise an equivalent amount, but that circumstance does not, of itself, constitute a loss to Striker.
Fifthly, it is misconceived, in my view, to contend that Striker has suffered loss, as follows:
(a)AGF had a contingent obligation under the secondary underwriting agreement to take up 62,500,000 shares in Striker at a cost of $7,500,000;
(b)AGF breached the agreement and no shares were issued;
(c)after Striker accepted AGF's repudiation, Striker proceeded to issue 62,500,000 shares for which it received only $5,180,000; and
(d)as a result of AGF's breach, Striker suffered a gross loss of $2,320,000 (being the difference between $7,500,000 and $5,180,000).
This reasoning is misconceived because it ignores the reality that, after accepting AGF's repudiation, Striker raised at least $7,500,000, even though it was necessary for it to issue substantially more than 62,500,000 shares. If Striker had been unable to raise more than $5,180,000 (despite having discharged its 'duty' to mitigate its damage), the $2,320,000 may well have been recoverable by Striker as a loss suffered by it as a result of AGF's breach. But those were not the facts.
Sixthly, it is also misconceived, in my view, to assert that Striker has suffered a loss of $2,320,000 because:
(a)if the secondary underwriting agreement had been performed, Striker would have issued 62,500,000 shares for which it would have received $7,500,000; and
(b)after Striker accepted AGF's repudiation, Striker proceeded to issue 62,500,000 shares for which it received only $5,180,000,
and, as a result, AGF must pay $2,320,000 to Striker in order to put Striker in the position it would have been in if the secondary underwriting agreement had been performed. This reasoning wrongly assumes that a company (as distinct from its shareholders) suffers a loss if the company is required to issue additional shares to raise an equivalent amount of equity capital. In other words, the reasoning with which I disagree is based on the false premise that a company suffers a loss if the value of its existing shares (including the price at which it has agreed to issue shares) is diluted by a subsequent issue of new shares at a lower price. The innocent party is not entitled to be put in the position it would have been in if the contract had been performed if, in fact, it has not suffered any loss as a result of the breach.
Seventhly, Striker did not put its claim at trial or in the cross‑appeal on the basis that it had suffered loss and was entitled to be compensated in damages for having been deprived of all or part of the $7,500,000 to be raised under the secondary underwriting obligation between the date on which that amount should have been provided by AGF and the date on which Striker eventually raised replacement capital in that amount.

The cross‑appeal: conclusion

The cross‑appeal fails.

Details

AGLC: Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98
Case: [2009] WASCA 98
Decision Date: 5 JUNE 2009

CaseChat Overview and Summary

The parties to the appeal were Australian Goldfields NL (in liquidation) as the appellant and North Australian Diamonds NL as the respondent. The appeal concerned the interpretation and enforcement of an underwriter agreement and the quantum of damages. The Full Court of the Federal Court of Australia heard the appeal. The central issues before the court were whether the respondent had repudiated an underwriter agreement, whether the appellant's exploration expenses were wasted or valueless, and if so, whether those expenses were caused or contributed to by the respondent's repudiation. Additionally, the court had to determine whether the appellant's issuance of more shares at a lower price constituted a loss, and whether interest should have been awarded on the damages claim and counterclaim.

The court examined whether the respondent's actions constituted a repudiation of the underwriter agreement, finding that the respondent had indeed repudiated the agreement by indicating it would not proceed with the underwritten share issue. The court also considered the nature of the appellant's exploration expenses, determining that these expenses were not wasted or valueless as they were incurred in compliance with a statutory obligation and were capitalised as a deferred asset. The court held that the exploration expenses incurred after the repudiation were not a loss caused or contributed to by the respondent's actions. Regarding the issuance of additional shares, the court found that the appellant suffered a loss by issuing more shares at a lower average price than originally contemplated, which resulted in a greater dilution of existing shareholders' equity. Finally, the court ruled that interest should have been awarded on both the damages claim and the counterclaim, as the underwriter was in liquidation and the delay in payment was not justified.

The final orders of the court were that the appeal be allowed in part, the primary judge's orders be set aside, and substituted with orders that the respondent pay the appellant damages in the sum of $2,186,976.49, together with interest on that amount from 19 August 1999 at the rate of 6% per annum until the date of judgment. The court also ordered that the respondent pay the appellant interest on the counterclaim amount of $15,917.16 from 19 August 1999 at the rate of 6% per annum until the date of judgment, and that the appellant pay the respondent interest on the amount of the counterclaim from 19 August 1999 at the rate of 6% per annum until the date of judgment.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The particulars to ground 7 are related. I propose to start with the accounting treatment of Striker's exploration expenditure. Striker capitalised its exploration expenditure and accounted for it as a (non‑current) asset in the balance sheet in its 1997, 1998 and 1999 financial statements. No value is attributed to its mining tenements (individually or collectively) in the financial statements. Striker explained its accounting treatment in its accounts as follows:Exploration, evaluation and development expenditureExploration, evaluation and development expenditure, including costs of acquisition in relation to separate areas of interest for which rights of tenure are current, are brought to account in the year in which they are incurred and are carried at cost.The exploration expenditure will be carried forward as an asset in the balance sheet where:(i)it is expected that the expenditure will be recovered through the successful development and exploitation of an area of interest or by it sale; or(ii)exploration activities are continuing in an area and activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of economically recoverable reserves.Where a project or an area of interest has been abandoned, the expenditure incurred thereon is written off in the year in which the decision is made.Where there has been a decision to proceed with development, accumulated expenditure is amortised over the life of the associated resource once mining operations commence. Neither party called any independent expert to give valuation evidence. Mr Kevin Hart, a chartered accountant and Striker's company secretary, gave evidence on damages. In re‑examination Mr Hart was asked about accounting methods:Mr Hart, you were asked about the practice of exploration companies in dealing with expenditure on exploration and mining tenements. Can you just outline what methods are used and why those methods are used in preference to others?---There's a number of ways. Some companies do as Striker does and it capitalises its exploration expenditure as a deferred asset until such time as the tenement is dropped, the tenement is sold or sufficient work has been done on the tenement to determine whether the tenement should be dropped, sold orOr mined?---Or mined. Some exploration companies, some mining exploration companies, write up all their exploration expenses as they're incurred until such time as they perhaps have a resource and then they capitalise expenditure from that period forward. So it depends on the respective companies' accounting policies at the time. Mr Hart was cross‑examined about a valuation of Striker's tenements as at 28 January 1999 undertaken by expert valuers, Mackay & Schnellmann Pty Ltd (MS). The valuation was provided for inclusion in an information memorandum for shareholders in relation to a proposed placement of Striker shares and options to Diamond Rose NL. On 1 August 1998 Striker entered into a joint venture with Rio Tinto Exploration Pty Ltd and Ashton Mining Ltd (AEJV) for diamond exploration on the Beta Creek project (containing the Ashmore tenements) and the North King George tenements (GAB 2, 402). However, Striker retained 23 km2 of the Beta Creek project (known as the 'Ashmore ‑ Lower Bulgurri exclusion area') and the Forrest River tenements. MS used what is described as the 'multiple of exploration expenditure method' to value the Ashmore ‑ Lower Bulgurri exclusion area because of its degree of development. Some exploration expenditure was excluded from the calculations. The valuation method is explained as follows (exhibit Q20 at 224):This method may be applied to exploration properties which do not host resources or reserves. It requires preparing an estimate of the replacement cost of previous relevant exploration and allocating a premium or discount depending on whether or not expenditure enhanced prospectivity for the occurrence of the target commodity. This premium or discount, the prospectivity enhancement multiplier, is usually in the range 0.5 to 3.0 and is applied to the expenditure to quantify the value of the property.

Actions

Citations

Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98

Most Recent Citation

Ironwill Earthmoving Pty Ltd v Allbut [2020] SADC 172

Cases Citing This Decision

Alistair McDougall Nominees Pty Ltd as trustee for the McDougall Holdings Trust v Rural Bank (A Division of Bendigo and Adelaide Bank Limited (ACN 068 049 178) [No 2] [2025] WASC 326
Citation 1 (Para 1)

…urt is unable to attribute to the parties any particular contractual intention. [85] Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [6]; Teng v Clark [No 2] [2020] WASC 217 [32] ‑ [35] and the authorities referred to therein.…
FLETCHER and FLETCHER [2024] FCWA 114
Citation 2

…Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98 Balson & Sandberg [2023] FedCFamC2F 390 Barre & Barre [2021] FamCA 1010 Chaffin & Chaffin [2019] FamCA 260 Fewster & Drake (2016) FLC 93-745 Fitzgerald v Masters (1956) 95 CLR 420 G Scammel & Nephew Ltd v Ouston [1941] AC 251 Grist v…
Breaksea Fishing Company Pty Ltd v Pretar Pty Ltd [2023] WADC 106
Citation 3

…] WASC 141 Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98 Australian Securities and Investments Commission v Kobelt [2019] HCA 18 Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424 Avsar v Bin…
Kestell v Davey [No 3] [2023] WASC 289
Citation 4

…stralian Broadcasting Corporation v XIVTH Commonwealth Games Ltd (1988) 18 NSWLR 540 Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98 Australian Securities and Investments Commission v Hellicar [2012] HCA 17; (2012) 86 ALJR 522 Automasters Australia Pty Ltd v Bruness Pty Ltd [2004]…
Boreline Pty Ltd v Romteck Australia Pty Ltd [No 2] [2023] WADC 33
Citation 5

…casting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 Belgravia Nominees Pty Ltd v Lowe Pty Ltd [No 6] [2019] WASC 5 Black Box Control Pty Ltd v TerraVision Pty Ltd [2016] WASCA 219 Bl…
Olward v Hall [2023] WADC 46
Citation 6

…Allard v Jones Lang Lasalle (Vic) Pty Ltd [2014] NSWCA 325 Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98 BP Refinery (WesternPort) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266 Chanter v Hopkins (1838) 4 M&W 399 Commonwealth of Austra…
Commercial & General Corporation Pty Ltd v Manassen Holdings Pty Ltd [2021] SASCFC 40
Citation 7

…ion. Ashton v Pratt (2015) 88 NSWLR 281; Australian Crime Commission v Gray [2003] NSWCA 318; Australian Goldfields NL v North Australian Diamonds NL (2009) 40 WAR 191; Byrnes v Kendle (2011) 243 CLR 253; CPB Contractors Pty Ltd v Rizzani De Eccher Australia Pty Ltd [2017] NSWSC 1798; Crown Melbourne Ltd v Cosmopoli…
Smiths Specialised Building Services Pty Ltd v Brisull Industries Pty Ltd [2021] NSWDC 331
Citation 8 (Para 110)

…at a party is only able to recover its own loss – not the losses of third parties: Australian Goldfields NL (in liq) v North Australian Diamonds NL (2009) 40 WAR 191 at [49]. There must be evidence of what loss Brisull has suffered because of Smiths’ breach of its obligation (to Brisull) to pay the third party (the…
Deputy Commissioner of Taxation v Miller [No 2] [2021] WADC 65
Citation 9 (Para 3)

…anking Corporation [No 9] [2008] WASC 239; (2008) 39 WAR 1 [3459] - [3553]; see also Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [194]. [56] The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [3539]. [57] Waltons Stores (Interstate) Ltd v Maher…
WILLIAMS v Andrews [2021] WADC 25
Citation 10

…ervices and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14; (2014) 253 CLR 560 Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 Blueprint Homes (WA) Pty Ltd v Samuel [2016] WASC 287 Crawley Investments Pty Ltd v Elman [2014] WASC 233 Dare v Pulham [1982] HCA…
Rae & Partners Pty v Shaw [2020] TASFC 14
Citation 11 (Para 194)

…and Sackville AJA agreeing. [8] The Court endorsed the approval given by Buss JA in Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98, 40 WAR 91 at [194], to the analysis of estoppel by representation and convention carried out by Owen J in The Bell Group Ltd (in liq) v Westpac Bank…
Perpetual Trustee Company Limited v Nikoloff [2020] WASC 389
Citation 12 (Para 1)

…ction in the doctrine of uncertainty, McLure JA (as her Honour then was) observed in Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [6]: There are two limbs to the uncertainty doctrine. A contract (or a term thereof) is void for uncertainty if (1) all the essent…
Wilson v Arwon Finance Pty Ltd [2020] WASCA 137
Citation 13 (Para 3)

…ly longer passage all of which has been referred to with approval in this court. See Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [194]; Birla Nifty Pty Ltd v International Mining Industry Underwriters Ltd [2014] WASCA 180; (2014) 47 WAR 522 [110]. To similar…
Teng v Clark [No 2] [2020] WASC 217
Citation 14 (Para 2)

…ction in the doctrine of uncertainty, McLure JA (as her Honour then was) observed in Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [6]: There are two limbs to the uncertainty doctrine. A contract (or a term thereof) is void for uncertainty if (1) all the essent…
Yuan v O'NEILL [2020] SASC 49
Citation 15 (Para 7)

…eby J); Stanley v Layne Christensen Company [2006] WASCA 56, [27]-[28] (Wheeler JA); Australian Goldfields NL (In liq) v North Australian Diamonds NL (2009) 40 WAR 191, [49] (McLure JA); Pourzand v Telstra Corporation Ltd [2012] WASC 210, [205] (Edelman J). [53] [2001] VSC 310, [108]-[109] (Hansen J). The arrangemen…
Boon v Burt [2020] WASC 64
Citation 16

…Alpha Wealth Financial Resources v Frankland River Olive Co [2008] WASCA 119 Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98 Boreland v Docker [2007] NSWCA 94 Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 Bytan Pty Ltd v BB Australia Pty Ltd [20…
Keon Pty Ltd as trustee for Keon Trust v Goldfields Equipment Pty Ltd (in Liquidation) [2020] WASC 61
Citation 17 (Para 1)

…In Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98 the Court of Appeal considered the authorities relating to uncertainty. Buss JA stated: [138] As Callaway JA noted in lpex Software Services Pty Ltd v Hosking [2000] VSCA 239 [25], contractual uncertainty may exist in the form of i…
Stirling House (Guildford) Pty Ltd as Trustee for the Paul Nash Trust v Cash Converters Pty Ltd [2020] WADC 4
Citation 18 (Para 2)

…In Australian Goldfields NL (in liq) v Northern Australian Diamonds NL (2009) 40 WAR 191 [6] McLure P with respect to contractual uncertainty said: There are two limbs to the uncertainty doctrine. A contract (or a term thereof) is void for uncertainty if (1) all the essential and critical terms of the bargain have n…
Valra Pty Ltd v Mag Men Holdings Pty Ltd [2019] FCA 1897
Citation 19 (Para 34)

…o the intention of the parties, even if that intention has been obscurely expressed: Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191: [6]There are two limbs to the uncertainty doctrine. A contract (or a term thereof) is void for uncertainty if (1) all the essenti…
In the matter of Leslie Muir Holdings Pty Limited [2019] NSWSC 1519
Citation 20 (Para 38)

…nd v Vam Ltd [1972] 2 NSWLR 16 at 18; Sagacious Procurement Pty Ltd above at [73]; Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98 at [143]. The omission of a term of a contract will also not render the contract incomplete and uncertain, and therefore void, unless the term is essen…
Manassen Holdings Pty Ltd v Commercial & General Corporation Pty Ltd [2019] SASC 171
Citation 21

…5; Tipperary Developments Pty Ltd v Western Australia (2009) 258 ALR 124; Australian Goldfields NL v North Australian Diamonds NL (2009) 72 ACSR 132; Yarrabee Chicken Company Pty Ltd v Steggles Ltd [2010] FCA 394; Leading Synthetics Pty Ltd v Adroit Insurance Group Pty Ltd [2011] VSC 467; Mineralogy Pty Ltd v Sino Ir…
Arwon Finance Pty Ltd v Wilson [2019] WASC 244
Citation 22 (Para 6)

…upreme Court of Western Australia. The two Court of Appeal decisions referred to by Beech J were Australian Goldfields NL v North Australian Diamonds [2009] WASCA 98; (2009) 40 WAR 191 [194] (Buss JA) and Birla Nifty Pty Ltd v International Mining Industry Underwriters Ltd [2014] WASCA 180; (2014) 47 WAR 522 [110]…
ADG United Pty Ltd v EG Enterprises Pty Ltd [2019] NSWSC 745
Citation 23 (Para 35)

…reezing Co Ltd (1968) 118 CLR 429 at 436; Hammond v Vam Ltd [1972] 2 NSWLR 16 at 18; Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98 at [143].…
WOODHAM & ERICKSON (No.2) [2019] FCCA 1201
Citation 24 (Para 9)

…the intention of the parties, even if that intention has been obscurely expressed: Australian Goldfields NL (INLIQ) v North Australian Diamonds NL [2009] WASCA 98, ESP @ [6] – [8]. Further, the court may, where circumstances permit, apply objective standards of reasonableness to prevent the intention of the parti…
Navabi v Ghasemi [2019] WADC 1
Citation 25 (Para 2)

…8; (2009) 236 CLR 272 [13]. [179] Commonwealth v Amman Aviation Pty Ltd (82). [180] Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98 [282]. [181] Commonwealth v Amman Aviation Pty Ltd (80). [182] Australian Goldfields NL v North Australian Diamonds NL [276]; Commonwealth v Amman Av…
Morton Seed and Grain Pty Ltd v Phillbourne Manufacturing Pty Ltd [2018] WASC 386
Citation 26

…on and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640. Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191. Baldry v Marshall [1925] 1 KB 260. BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266. Brambles Holdings Lt…
Westpork Pty Ltd v Bio-Organics Pty Ltd [2018] WASC 291
Citation 27 (Para 13)

…In this legal realm, applying the terminology of McLure J (as she then was) in Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191, the question is whether there is an 'incomplete contract': see [6]. I mention as well, to save repetition, what I wrote recently about…
Squibb and Graham [2018] FCCA 1906
Citation 28 (Para 11)

…o the intention of the parties, even if that intention has been obscurely expressed: Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98, esp at [6]-[8]. Further, the courts may, where circumstances permit, apply objective standards of reasonableness to prevent the intention of the par…
Marindi Metals Ltd v Kidman Resources Ltd [2017] WASC 189
Citation 29 (Para 5)

…ty Ltd I also cited observations of McLure P in the Court of Appeal of this court in Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [6] concerning contractual uncertainty. Her Honour had said: There are two limbs to the uncertainty doctrine. A contract (or a ter…
Googe v Spoljaric [2017] WADC 99
Citation 30

…iated Newspapers Ltd v Bancks [1951] HCA 24; (1951) 83 CLR 322 Australian Goldfields Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98 Avenue (WA) Pty Ltd v Plazaline Pty Ltd [2007] WASC 173 Bahr v Nicolay [No 2] [1988] HCA 16; (1988) 164 CLR 604 Bavins v London & South Western Bank…
Levingston v Levingston [2017] WASCA 91
Citation 31 (Para 2)

…d (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239; (2009) 39 WAR 1 [3539]. [30] Australian Goldfields NL v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [194]; Birla Nifty Pty Ltd v International Mining Industry Underwriters Ltd [2014] WASCA 180; (2014) 47 WAR 522 [110].…
S and K Investments Pty Ltd v Cerini [2016] WASC 233
Citation 32

…Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 Gillespie Brothers & Co v Cheney Eggar & Co [1896…
George 218 Pty Ltd v Bank of Queensland Ltd [2015] WASC 434
Citation 33

…) 162 CLR 549 Australian and New Zealand Banking Group Ltd v Manasseh [2015] WASC 34 Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 Barns v Queensland National Bank Ltd (1906) 3 CLR 925 Bell Group Ltd (in liq) v Westpac Banking Corporation [2008] WASC 239; (2008…
Tomcsanyi v National Australia Bank Ltd [2015] WASC 448
Citation 34 (Para 1)

…w Electronics Australia Pty Ltd [2011] WASCA 65 [69] (Newnes JA), [115] (Murphy JA); Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98 [276] (Buss JA). [125] Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64, 82 (Mason CJ & Dawson J). [126] Australian Goldfields…
MANNER & MANNER [2015] FCCA 3043
Citation 35 (Para 15)

…intention of the parties, even if that intention has been obscurely expressed: Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98, esp at [6]-[8]. Further, the courts may, where circumstances permit, apply objective standards of reasonableness to prevent the intention of the parties b…
Merilla Pty Ltd v Commonwealth of Australia [2015] WASC 309
Citation 36 (Para 3)

…ralia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101 [30] (Ipp J, Pidgeon J agreeing); Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [142] (Buss JA). [87] Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429,…
Diploma Construction (WA) Pty Ltd v Best Bar Pty Ltd [No 2] [2015] WASC 230
Citation 37 (Para 4)

…51, 14570; and see Hillas & Co Ltd v Arcos Ltd [1932] UKHL 2; [1932] All ER Rep 494; Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [6] - [8]. And I take into account that both parties in this case proceeded for many months, with goods supplied, credit extended,…
CMA Assets Pty Ltd v John Holland Pty Ltd [No 6] [2015] WASC 217
Citation 38

…stralian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98 Baiyai Pty Ltd v Guy [2009] NSWCA 65 Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 Branir Pty Ltd v Owston Nomin…
Kep Management Services Pty Ltd v Goldwest Enterprises Pty Ltd [2015] WASC 132
Citation 39 (Para 15)

…h v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64, 80 (Mason & Dawson JJ); Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [276] (Buss JA). [48] Amann Aviation (82). [49] Australian Goldfields [276], referring to Amann Aviation (116). [50] Amman Aviatio…
Santos Offshore Pty Ltd v Apache Oil Australia Pty Ltd [2015] WASC 242
Citation 40

…asting Commission v Australasian Performing Rights Association Ltd (1973) 129 CLR 99 Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 Beaconsfield Gold NL v Allstate Prospecting Pty Ltd [2006] VSC 320 Commissioner of State Taxation (WA) v Nischu Pty Ltd (1991) 4 W…
Helmers v Como [2014] WASC 394
Citation 41 (Para 8)

…discussion as to the extent of the precision required in the judgment of Buss JA in Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98 [195] ‑ [204]. His Honour concluded his analysis with the following summary: A representation can found an estoppel even though the representation (w…
Birla Nifty Pty Ltd v International Mining Industry Underwriters Ltd [2014] WASCA 180
Citation 42

…stralian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14 Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HC…
DM Drainage & Constructions Pty Ltd v Karara Mining Ltd [2014] WASC 170
Citation 43 (Para 8)

…er Pty Ltd [42] - [43]; Nouvelle Homes Pty Ltd v G & M Smargiassi [2008] WASC 127 [86]; Australian Goldfields NL v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191, 271 [282]. [53] Nouvelle Homes Pty Ltd G & M Smargiassi [87].…
Burton v Jackman [2014] WASC 146
Citation 44 (Para 6)

…v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64, 80 (Mason CJ & Dawson J); Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191[276] (Buss JA). The assessment of these damages will ordinarily involve 'a comparison between the position in which the innocent p…
Commonwealth Bank of Australia v Carver [2014] WASC 15
Citation 45 (Para 2)

…or expectation to which it gave rise, which invites the intervention of equity: see Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [195] ‑ [204].…
Letizia Building Co Pty Ltd v Redglow Asset Pty Ltd [2013] WASC 171
Citation 46 (Para 1)

…by representation of fact, or an equitable estoppel. The doctrines remain distinct: Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [18]. For some purposes, including the question of the relief arising from an estoppel, the difference may matter: The Bell Group…
Opteon Property (Western Australia) Pty Ltd v Orchard Holdings Pty Ltd [2013] WADC 54
Citation 47 (Para 6)

…reduced to writing, its proper construction is also to be determined objectively. In Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [145], Buss JA summarised the principle as follows: The construction of a written contract is concerned with ascertaining what a r…
Airwaves Goldcoast Pty Ltd v Caneflight Enterprises Pty Ltd [No 2] [2013] WADC 28
Citation 48

…ferences: Airwaves Goldcoast Pty Ltd v Caneflight Enterprises Pty Ltd [2013] WADC 24 Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 Australian Railroad Group Pty Ltd v Rowan [2004] WASC 165 Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344 Beecham Gro…
Hayes v Doran (No 2) [2012] WASC 486
Citation 49 (Para 3)

…orities including a recent decision in the Court of Appeal of Western Australia in Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 and the observations of Gleeson CJ in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 548.…
P N Corporation Pty Ltd v Oxford Uniforms Pty Ltd [2012] WADC 149
Citation 50 (Para 2)

…v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1, 11 ‑ 12; Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191, 269 [276].…

Cases Cited

Statutory Material Cited

Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8
Citation 1 (Para 3)

…same situation, with respect to damages, as if the contract had been performed. This was approved in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 83 ALJR 390 [13].…
Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd [2008] VSCA 86
Citation 2

…Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd [2008] VSCA 86; (2008) 66 ACSR 325 Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518 Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101 Austotel Pty Ltd v Franklins Selfservice Pty Ltd (1989) 16 NSWLR 582 Au…
Uranium Equities Ltd v Fewster [2008] WASCA 33
Citation 3

…ALJR 481 Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429 Uranium Equities Ltd v Fewster [2008] WASCA 33; [2008] 36 WAR 97 Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 Wenham v Ella [1972] HCA 43; (1972) 127 CLR 454 Woodhouse…
International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3
Citation 4

…ond v Vam Ltd [1972] 2 NSWLR 16 Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151 Ipex Software Services Pty Ltd v Hosking [2000] VSCA 239 Jumbo King Ltd v Faithful Properties Ltd [1999] 3 HKLRD 757 Legione v Ha…
OzEcom v Hudson Investment Group [2007] NSWSC 719
Citation 5

…2] HCA 52; (1982) 149 CLR 571 Old Style Confections Pty Ltd v Microbyte Investments Pty Ltd (in liq) [1995] 2 VR 457 Ozecom v Hudson Investment Group [2007] NSWSC 719 Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 Pagnan SPA v Feed Products Ltd [1987] 2 Lloyds Rep 601 Pancontinental Mining Ltd…
International Air Transport Association v Ansett Australia Holdings Limited & Ors [2007] HCATrans 159
Citation 6

…[1972] 2 NSWLR 16 Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151 Ipex Software Services Pty Ltd v Hosking [2000] VSCA 239 Jumbo King Ltd v Faithful Properties Ltd [1999] 3 HKLRD 757 Legione v Hateley [1983] HCA 11;…
Sullivan v Sullivan [2006] NSWCA 312
Citation 7

…(1848) 154 ER 363 Shaddock & Associates Pty Ltd v The Council of the City of Parramatta (No 1) [1981] HCA 59; (1981) 150 CLR 225 Sullivan v Sullivan [2006] NSWCA 312 Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 83 ALJR 390 The Bell Group Ltd (in…
Striker Resources NL v Australian Goldfields NL (in liq) [2006] WASC 153
Citation 8

…EAL FROM: Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA Coram : EM HEENAN J Citation : STRIKER RESOURCES NL -v- AUSTRALIAN GOLDFIELDS NL (IN LIQ) [2006] WASC 153 File No : CIV 2377 of 2000…
S1983 of 2003 v Minister for Immigration and Multicultural Affairs [2006] FCA 424
Citation 9

…6 Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603 University of Wollongong v Metwally [No 2] [1985] HCA 28; (1985) 59 ALJR 481 Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429 Uranium Equities Ltd v Fewster [2008] W…
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52
Citation 10

…Goldberg [1964] HCA 41; (1964) 112 CLR 597 TNT Australia Pty Ltd v Normandy Resources NL (1989) 53 SASR 156 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326 Unity Insurance Brokers Pty Ltd v Rocco Pezzano P…
Pacific Carriers Ltd v BNP Paribas [2004] HCA 35
Citation 11

…Pty Ltd v Microbyte Investments Pty Ltd (in liq) [1995] 2 VR 457 Ozecom v Hudson Investment Group [2007] NSWSC 719 Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 Pagnan SPA v Feed Products Ltd [1987] 2 Lloyds Rep 601 Pancontinental Mining Ltd v Commissioner of Stamp Duties [1989] 1 Qd R 310…
Duke Group Limited (in Liq) & Anor v Pilmer & Ors (No.6) No. Scciv-92-1874 [2004] SASC 147
Citation 12 (Para 17)

…not inevitably the case that financial statements accurately reflect the sum to be allowed as damages for breach of contract: Pilmer v Duke Group Ltd (2001) 207 CLR 165 [55].…
Galaxidis v Galaxidis [2004] NSWCA 111
Citation 13

…] HCA 39; (1990) 170 CLR 394 Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 Foran v Wight [1989] HCA 51; (1989) 168 CLR 385 Galaxidis v Galaxidis [2004] NSWCA 111 Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1 Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 Grincelis v House…
LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74
Citation 14 (Para 21)

…t are in general resolved against the party who could or should have provided the evidence: LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 [12].…
Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10
Citation 15 (Para 21)

…of the loss it sustained with as much precision as the subject matter reasonably permits: Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 [37]. Generally, mere difficulty does not relieve a court from estimating damages as best it can. However, where damages are uncertain for lack of ev…
Barry v City West Water Limited [2002] FCA 1214
Citation 16 (Para 1)

…e 'fourth class' of a Masters v Cameron type contract as identified by McLelland J in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622, 628; Anaconda Nickel (110). That being the case, both grounds of appeal are without foundation.…
Byron Shire Council v Vaughan [2002] NSWCA 158
Citation 17

…Pty Ltd (1986) 40 NSWLR 622 Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd [1982] HCA 53; (1982) 149 CLR 600 Byron Shire Council v Vaughan [2002] NSWCA 158 Carr v JA Berriman Pty Ltd [1953] HCA 31; (1953) 89 CLR 327 Commissioner of State Taxation v Nischu Pty Ltd (1991) 4 WAR 437 Commonwealth v Amann Avi…
Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70
Citation 18

…ibrook Pty Ltd [2001] NSWSC 886 LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181 March v E & M H Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506 McRae v Commonwealth Disposals Commission [1951] HCA 79; (1951…
LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2001] NSWSC 886
Citation 19

…thful Properties Ltd [1999] 3 HKLRD 757 Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406 LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2001] NSWSC 886 LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 1…
Pilmer v Duke Group Ltd (In Liq) [2001] HCA 31
Citation 20 (Para 2)

…nswer to examine the question of whether shares have value to a company or the shareholder as I explain below when discussing Pilmer v Duke Group Ltd [2001] HCA 31; (2001) 207 CLR 165.…
Ipex Software Services Pty Ltd v Hosking [2000] VSCA 239
Citation 21

…503 International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151 Ipex Software Services Pty Ltd v Hosking [2000] VSCA 239 Jumbo King Ltd v Faithful Properties Ltd [1999] 3 HKLRD 757 Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406 LMI Australasia Pty Ltd v Baulderston…
Grincelis v House [2000] HCA 42
Citation 22

…Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1 Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 Grincelis v House [2000] HCA 42; (2000) 201 CLR 321 Grundt v The Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641 Gye v McIntyre [1991] HCA 60; (1991) 171 CLR 609 H…
Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27
Citation 23

…d [2008] VSCA 86; (2008) 66 ACSR 325 Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518 Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101 Austotel Pty Ltd v Franklins Selfservice Pty Ltd (1989) 16 NSWLR 582 Australian Broadcasting Commission v Australasian Performing…
Giumelli v Giumelli [1999] HCA 10
Citation 24

…168 CLR 385 Galaxidis v Galaxidis [2004] NSWCA 111 Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1 Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 Grincelis v House [2000] HCA 42; (2000) 201 CLR 321 Grundt v The Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 64…
Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38
Citation 25

…) 219 CLR 165 Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326 Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603 University of Wollongong v Metwally [No 2] [1985] HCA 28; (1985) 59 ALJR 481 Upper Hunter County District Council v Australian Ch…
Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54
Citation 26

…riman Pty Ltd [1953] HCA 31; (1953) 89 CLR 327 Commissioner of State Taxation v Nischu Pty Ltd (1991) 4 WAR 437 Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394 Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 Foran v Wight [1989]…
Haines v Bendall [1991] HCA 15
Citation 27

…old Mines Ltd [1937] HCA 58; (1937) 59 CLR 641 Gye v McIntyre [1991] HCA 60; (1991) 171 CLR 609 Hadley v Baxendale (1854) 9 Exch 341 Haines v Bendall [1991] HCA 15; (1991) 172 CLR 60 Hammond v Vam Ltd [1972] 2 NSWLR 16 Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 International Air Transport Association v Ansett…
March v E & MH Stramare Pty Ltd [1991] HCA 12
Citation 28

…one Hornibrook Pty Ltd [2003] NSWCA 74 Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181 March v E & M H Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506 McRae v Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377 Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571 Old S…
Gye v McIntyre [1991] HCA 60
Citation 29

…101 Grincelis v House [2000] HCA 42; (2000) 201 CLR 321 Grundt v The Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641 Gye v McIntyre [1991] HCA 60; (1991) 171 CLR 609 Hadley v Baxendale (1854) 9 Exch 341 Haines v Bendall [1991] HCA 15; (1991) 172 CLR 60 Hammond v Vam Ltd [1972] 2 NSWLR 16 Hillas…
Commonwealth v Verwayen [1990] HCA 39
Citation 30

…er of State Taxation v Nischu Pty Ltd (1991) 4 WAR 437 Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394 Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 Foran v Wight [1989] HCA 51; (1989) 168 CLR 385 Galaxidis v Galaxidis [2004] N…
Foran v Wight [1989] HCA 51
Citation 31

…HCA 54; (1991) 174 CLR 64 Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394 Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 Foran v Wight [1989] HCA 51; (1989) 168 CLR 385 Galaxidis v Galaxidis [2004] NSWCA 111 Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1 Giumelli v G…
Waltons Stores (interstate) Ltd v Maher [1988] HCA 7
Citation 32

…zing Co Ltd [1968] HCA 8; (1968) 118 CLR 429 Uranium Equities Ltd v Fewster [2008] WASCA 33; [2008] 36 WAR 97 Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 Wenham v Ella [1972] HCA 43; (1972) 127 CLR 454 Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1971] 2 QB…
Coulton v Holcombe [1986] HCA 33
Citation 33

…7 Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394 Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 Foran v Wight [1989] HCA 51; (1989) 168 CLR 385 Galaxidis v Galaxidis [2004] NSWCA 111 Gates v City Mutual Life Assurance Society L…
Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3
Citation 34

…7 Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394 Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 Foran v Wight [1989] HCA 51; (1989) 168 CLR 385 Galaxidis v Galaxidis [2004] NSWCA 111 Gates v City Mutual Life Assurance Society…
Metwally v University of Wollongong [1985] HCA 28
Citation 35

…92) 27 NSWLR 326 Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603 University of Wollongong v Metwally [No 2] [1985] HCA 28; (1985) 59 ALJR 481 Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429 Uranium Equities Lt…
Legione v Hateley [1983] HCA 11
Citation 36

…8) 234 CLR 151 Ipex Software Services Pty Ltd v Hosking [2000] VSCA 239 Jumbo King Ltd v Faithful Properties Ltd [1999] 3 HKLRD 757 Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406 LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2001] NSWSC 886 LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty…
Shaddock & Associates Pty Ltd v Parramatta City Council [No 1] [1981] HCA 59
Citation 37

…[1985] 2 Qd R 292 Robinson v Harman (1848) 1 Exch 850; (1848) 154 ER 363 Shaddock & Associates Pty Ltd v The Council of the City of Parramatta (No 1) [1981] HCA 59; (1981) 150 CLR 225 Sullivan v Sullivan [2006] NSWCA 312 Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd…
Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36
Citation 38

…stotel Pty Ltd v Franklins Selfservice Pty Ltd (1989) 16 NSWLR 582 Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99 Australian Crime Commission v Gray [2003] NSWCA 318 Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWL…
Wenham v Ella [1972] HCA 43
Citation 39

…anium Equities Ltd v Fewster [2008] WASCA 33; [2008] 36 WAR 97 Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 Wenham v Ella [1972] HCA 43; (1972) 127 CLR 454 Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1971] 2 QB 23…
Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8
Citation 40

…ersity of Wollongong v Metwally [No 2] [1985] HCA 28; (1985) 59 ALJR 481 Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429 Uranium Equities Ltd v Fewster [2008] WASCA 33; [2008] 36 WAR 97 Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164…
Thorby v Goldberg [1964] HCA 41
Citation 41

…The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239 Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507 Thorby v Goldberg [1964] HCA 41; (1964) 112 CLR 597 TNT Australia Pty Ltd v Normandy Resources NL (1989) 53 SASR 156 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 2…
Carr v JA Berriman Pty Ltd [1953] HCA 31
Citation 42

…es Pty Ltd v Wilson Parking (Qld) Pty Ltd [1982] HCA 53; (1982) 149 CLR 600 Byron Shire Council v Vaughan [2002] NSWCA 158 Carr v JA Berriman Pty Ltd [1953] HCA 31; (1953) 89 CLR 327 Commissioner of State Taxation v Nischu Pty Ltd (1991) 4 WAR 437 Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 C…
McRae v Commonwealth Disposals Commission
Citation 43 (Para 7)

…ormed which expenditure is wasted as a result of the breach: Carr v J A Berriman Pty Ltd (1953) 89 CLR 327; McRae v Commonwealth Disposals Commission (1951) 84 CLR 377.…
Suttor v Gundowda Pty Ltd [1950] HCA 35
Citation 44

…y Ltd v The Council of the City of Parramatta (No 1) [1981] HCA 59; (1981) 150 CLR 225 Sullivan v Sullivan [2006] NSWCA 312 Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 83 ALJR 390 The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2…
Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58
Citation 45

…umelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 Grincelis v House [2000] HCA 42; (2000) 201 CLR 321 Grundt v The Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641 Gye v McIntyre [1991] HCA 60; (1991) 171 CLR 609 Hadley v Baxendale (1854) 9 Exch 341 Haines v Bendall [1991] HCA 15; (1991) 172 C…
Thompson v Palmer [1933] HCA 61
Citation 46

…vestments Pty Ltd [2009] HCA 8; (2009) 83 ALJR 390 The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239 Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507 Thorby v Goldberg [1964] HCA 41; (1964) 112 CLR 597 TNT Australia Pty Ltd v Normandy Resources NL (1989) 53 SASR 156 Toll (FGCT) P…
Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd [1993] FCA 488
Citation 47

…9) 53 SASR 156 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326 Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603 University of Wollongong v Metwally [No 2] [1985] HCA 28; (…

AI Chat coming soon

Number of shares	Issue price per share	Gross proceeds from issue
Underwriting Agreement	62,500,000	12 cents	7,500,000

Terms achieved from the issue of the equivalent number of shares in the capital raisings made to replace the shares which were to have been issued under the Underwriting Agreement:
Convertible notes terms of conversion	6,250,000	8 cents	500,000
Placement to AEJV	4,000,000	12.5 cents	500,000
Balance of shares - placed as part the March 1999 issue of 75,825,000 shares to Diamond Rose, FAI and others	52,250,000	8 cents	4,180,000
62,500,000	5,180,000
Quantified Damages - (shortfall)	(2,320,000)

Number of Shares	Issue price per share (cents)	$
Additional shares issued to raise $7,066,000 achieved by March 1999	23,575,000	8	1,886,000
Shortfall in funds compared with $7.5 million to be raised under the underwriting arrangements	434,000
Loss to Striker	23,575,000	2,320,000