Callide Power Management Pty Ltd v Callide Coalfields (Sales) Pty Ltd (No 5) - [2016] QSC 199

SUPREME COURT OF QUEENSLAND

CITATION:

Callide Power Management Pty Ltd & Ors v Callide Coalfields (Sales) Pty Ltd & Ors; CS Energy Ltd v Callide Coalfields (Sales) Pty Ltd & Ors (No 5) [2016] QSC 199

PARTIES:

CALLIDE POWER MANAGEMENT PTY LTD
ACN 082 468 700
(first applicant)
CALLIDE ENERGY PTY LIMITED
ACN 082 468 746
(second applicant)
IG POWER CALLIDE LTD (FORMERLY SHELL COAL POWER CALLIDE LTD)
ACN 082 413 885

(third applicant)

v
CALLIDE COALFIELDS (SALES) PTY LTD
ACN 082 543 986
(first respondent)
ANGLO COAL (CALLIDE) PTY LTD
ACN 081 022 228
(second respondent)
ANGLO COAL (CALLIDE) NO. 2 PTY LTD
ACN 004 784 454

(third respondent)

CS ENERGY LIMITED
ABN 54 078 848 745

(applicant)

v
CALLIDE COALFIELDS (SALES) PTY LTD
ACN 082 543 986
(first respondent)
ANGLO COAL (CALLIDE) PTY LTD
ACN 081 022 228
(second respondent)
ANGLO COAL (CALLIDE) NO. 2 PTY LTD
ACN 004 784 454
(third respondent)

FILE NO/S:

SC No 12122 of 2013

SC No 12138 of 2013

DIVISION:

Trial Division

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

31 August 2016

DELIVERED AT:

Brisbane

HEARING DATE:

18 – 20 July 2016

JUDGE:

Flanagan J

ORDERS:

The separate questions in SC No 12138 of 2013 are answered in the terms of Annexure A to these Reasons.

The separate questions in SC No 12122 of 2013 are answered in the terms of Annexure B to these Reasons.

I will hear the parties as to costs.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – where the respondents and the applicants are parties to Coal Supply Agreements – where the Coal Supply Agreements include a mechanism for review where a Change Event is notified – where a Change Event is a change in circumstances which has, or will have, a material effect on the competitiveness of either party in relation to the industry in which it operates – where the respondents issued notice of a Change Event to the applicants on 12 November 2013 – where the applicants dispute the validity of the 12 November 2013 notice issued by the respondents – where the parties agreed a list of separate questions for determination – whether the 12 November 2013 notice issued by the respondents to the applicants was valid under the terms of the Coal Supply Agreements – whether the alleged facts pleaded by the respondents are true – whether the alleged facts pleaded by the respondents give rise to the objective commercial purpose pleaded by the respondents – whether the 12 November 2013 notice issued by the respondents to the applicants was valid on its face – whether a mere increase in costs is capable of being a Change Event for the purposes of the Coal Supply Agreements – whether a change in a party’s expectation of benefitting under the Coal Supply Agreement is capable of being a Change Event for the purposes of the Coal Supply Agreements – whether the time requirements in clauses 12.3(b)(i) and 12.3(b)(ii) of the Coal Supply Agreements are essential – whether the 12 November 2013 notice issued by the respondents to the applicants describes a Change Event under the terms of the Coal Supply Agreement – whether the 12 November 2013 notice issued by the respondents to the applicants describes the impacts, options and alternatives for a Change Event

AGL Sales (Qld) Pty Ltd v Dawson Sales Pty Ltd & Ors [2009] QSC 8, considered

AGL Sales (Qld) P/L v Dawson Sales P/L & Ors [2009] QCA 262, considered

AIB Group (UK) Limited v Martin [2002] 1 WLR 94, cited

Alliance Petroleum Australia NL & Ors v Australian Gas Light Company (1985) 39 SASR 84, cited

Amann Aviation Pty Ltd v Commonwealth of Australia (1990) 22 FCR 527, cited

Bremer v Handelsgesellschaft mbH v Vanden Avenne-Izegem PVBA [1978] 2 Lloyd’s Rep 109, cited

British and Commonwealth Holdings PLC v Quadrex Holdings Inc [1989] 1 QB 842, cited

Callide Coalfields (Sales) P/L v CS Energy Ltd & Anor [2008] QCA 408, applied

Callide Power Management Pty Ltd & Ors v Callide Coalfields (Sales) Pty Ltd & Ors; CS Energy Ltd v Callide Coalfields (Sales) Pty Ltd & Ors (No 3) [2015] QSC 295, cited

Dilworth v Commissioner of Stamps [1899] AC 99, cited

Esso Exploration & Production UK Ltd v Electricity Supply Board [2004] EWHC 723 (Comm), cited

Great Elephant Corporation v Trafigura Beheer BV [2012] 2 Lloyd’s Rep 503, considered

Jennings Construction Ltd v QH & M Birt Pty Ltd (1986) 8 NSWLR 18, considered

Mamidoil-Jetoil Greek Petroleum Company SA v Okta Crude Oil Refinery AD (No 3) [2003] 1 Lloyd’s Rep 1, cited

Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, considered

McLellan & Anor v Australian Stock Exchange Ltd (2005) 144 FCR 327, cited

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37, cited

Opat Decorating Service (Aust) Pty Ltd v Hansen Yuncken (SA) Pty Ltd (1994) 11 BCL 360, considered

Patel v Earlspring Properties Ltd [1991] 2 EGLR 131 (CA), cited

R v Gray & Ors; Ex parte Marsh & Anor (1985) 157 CLR 351; [1985] HCA 67, considered

State of New South Wales v Austeel Pty Ltd [2003] NSWCA 392, considered

Superior Overseas Development Corporation and Phillips Petroleum (UK) Co Limited v British Gas Corporation [1982] 1 Lloyd’s Rep 262, considered

Tradax Export SA v Andre and Cie SA [1976] 1 Lloyd’s Rep 416, considered

United Scientific v Burnley Council [1978] AC 904, considered

Wormald Engineering Pty Ltd v Resources Conservations Co International (1988) 8 BCL 158, cited

YZ Finance Company Pty Ltd v Cummings (1964) 109 CLR 395; [1964] HCA 12, considered

COUNSEL:

P L O’Shea QC, with D O’Brien QC, for the applicants in SC No 12122 of 2013

A Pomerenke QC, and J O’Regan, for the applicant in SC No 12138 of 2013

S D Doyle QC, with D G Clothier QC, and S J Webster, for the respondents in SC No 12122 of 2013 and SC No 12138 of 2013

SOLICITORS:

Johnson Winter Slattery for the applicants in SC No 12122 of 2013

Corrs Chambers Westgarth for the applicant in SC No 12138 of 2013

Gilbert + Tobin Lawyers for the respondents in SC No 12122 of 2013 and SC No 12138 of 2013

Introduction

The relevant terms of the Coal Supply Agreements

6 November 2013 Notice

12 November 2013 – The Change Event Notice

The separate questions

Background facts and the objective commercial purpose of the Coal Supply Agreement (Questions 1, 3 and 4)

Question 1

Question 3

Question 4

What is a Change Event?

Question 5

Question 5(a)
Question 5(b)
Question 5(c)

Question 6

Question 7

Question 8

Question 9

Question 10

Increases in Cost

Question 11

Time Requirements

Question 13

Questions 14 and 15

Does the 12 November notice describe a Change Event?

Question 16

Question 16(a)
Questions 16(b), (c) and (d)

Question 17

Questions 18 and 19

Questions 20 and 21

Questions 22 and 23

Question 25

Question 26

Question 27

Question 28

Questions 29 and 30

Does the 12 November notice describe the impacts, options and alternatives for a “Change Event” and if it does not is it invalid?

Question 31

Question 32

Question 33

Question 34

Question 35

Question 36

Introduction

On 28 October 2015 I determined that the present proceedings constituted appropriate cases for the hearing and determination of separate questions.[1] The separate questions in SC No 12138 of 2013 and my answers to those questions is “Annexure A” to these Reasons. The separate questions in SC No 12122 of 2013 and my answers to those questions is “Annexure B”.
[1] Callide Power Management Pty Ltd & Ors v Callide Coalfields (Sales) Pty Ltd & Ors; CS Energy Ltd v Callide Coalfields (Sales) Pty Ltd & Ors (No 3) [2015] QSC 295.
Some of the applicants are owners of power stations located in central Queensland. The power station in SC No 12138 of 2013 is referred to as the Callide B Power Station and the power station in SC No 12122 of 2013 is referred to as the Callide C Power Station. Some of the respondents supply coal for the operation of these power stations pursuant to Coal Supply Agreements entered into on or about 11 May 1998. The Coal Supply Agreements are substantially identical. So too are the separate questions. For the purposes of answering the separate questions in each proceeding I will refer to the Coal Supply Agreement and relevant notices in respect of SC 12138 of 2013. CS Energy is the named applicant in those proceedings.
The separate questions raised for consideration the proper construction of the Coal Supply Agreements, in particular clause 12.3 which deals with “Change Events” and whether notices submitted to the applicants by the respondents, purportedly pursuant to clause 12.3(b)(ii) of each Coal Supply Agreement, constitute Change Event Notices under the agreements.

The relevant terms of the Coal Supply Agreements[2]

[2] The Coal Supply Agreement referred to is that of CS Energy, which is Exhibit “AV-1” to the affidavit of Mr Vari CD2.

The respondents are referred to in the Coal Supply Agreement as the “Seller” or the “Coal Mine Owner”. CS Energy, as owner of the Callide B Power Station, is referred to as the “Buyer”.
The Coal Supply Agreement is for an initial term of 10 years. Under clause 3 the Buyer, has four successive options to extend the term of the Coal Supply Agreement, each option being for a period of five years. The potential period of the operation of the Coal Supply Agreement is therefore 30 years. To exercise the option under clause 3 the Buyer is required to issue a notice indicating that it wishes to exercise the option.[3] This notice triggers an obligation on the parties to “meet and negotiate all terms and conditions including price, subject to the price review procedures set out in clause 12”.[4] If the parties fail to agree on all the terms and conditions including price by certain dates, the Buyer has a sole and absolute discretion to exercise the option to extend the Coal Supply Agreement “on the same terms and conditions including the price, applying at the conclusion of the previous Initial Term or Option Term as the case may be”.[5] If the parties do agree the terms and conditions for the Option Term, the Buyer may exercise the option on those agreed terms and conditions.[6]
[3]     Clause 3.2(a)(i).
[4]     Clause 3.2(a)(ii).
[5]     Clause 3.2(a)(vi).
[6]     Clause 3.2(a)(v).
In 2009 CS Energy exercised the first option.
In one relevant respect it is necessary to refer to a difference in the Coal Supply Agreements. Both Coal Supply Agreements contain conditions precedent. Clause 2.1 of the CS Energy Agreement for Callide B provides:
“This Agreement is subject to and conditional on the CS 93 Collapse Agreement and the Callide Power Project Coal Supply Agreement being executed contemporaneously with this Agreement, failing which the Seller may terminate this Agreement by giving seven days notice to the Buyer. The parties agree this Clause 2.1 is for the benefit of the Seller and may be waived, in respect of all or any such Agreements, by the Seller.”
Clause 2 of the Coal Supply Agreement for Callide C states:
“This Agreement is subject to and conditional on: (a) all Project Approvals required for the construction and operation of the Power Station being obtained by the Station Owners by 31 December 1998 failing which the Buyer may terminate this Agreement by giving seven days notice to the Seller. The parties agree this Clause 2(a) is for the benefit of the Buyer and may be waived, in respect of all or any of the approvals forming the Project Approvals, by the Buyer; and (b) all the Related Agreements being executed contemporaneously with this Agreement, failing which the Seller may terminate this Agreement by giving seven days notice to the Buyer. The parties agree this Clause 2(b) is for the benefit of the Seller and may be waived, in respect of all or any of the Agreements forming the Related Agreements, by the Seller.”
These conditions precedent reflect that the Coal Mine Owners were supplying the Callide B Power Station from the Callide Mine prior to the construction of the Callide C Power Station. The Callide Mine is adjacent to the Callide B Power Station. The Callide C Power Station was to be constructed next to the Callide Mine. Initially the coal provided to the Callide B Power Station was pursuant to an agreement called CS 93. The Callide C Power Station was to be constructed pursuant to a joint venture. Both power stations were to be supplied with coal from the Callide Mine by means of delivery to relevantly either the Callide B Coal Conveyor System or the Callide C Coal Conveyor System. The CS 93 Collapse Agreement was an agreement to amend CS 93 to no longer apply to Callide B.
Clause 4 of the Coal Supply Agreement provides for the sale and purchase of coal. Clause 5 provides for quantities and rates of delivery.
By clause 7 the Coal Mine Owners warrant that at the start of the Coal Supply Agreement and every five years throughout the Coal Supply Agreement’s 30 years potential life, they have enough coal to supply all the coal required to operate the Callide B Power Station. Clause 7.2 provides:
“7.2   Ongoing Representations, Warranties and Undertakings
The Seller hereby represents, warrants and undertakes to the Buyer that the Seller will, at the following times during the Term, ensure the Coal Mine Owners set aside from the Coal Reserves for the Buyer’s benefit the following amounts of Coal:
(a)at the commencement of the first eight and one half years of the Initial Term an amount of 99 million Tonnes Equivalent of Coal;
(b)at the commencement of the balance of the Initial Term an amount of Coal calculated in accordance with the following formula:
amount of Coal =       99 million Tonnes Equivalent x 25
33.5
(c)at the commencement of the first Option Term, if exercised by the Buyer, an amount of Coal calculated in accordance with the following formula:
amount of Coal =       99 million Tonnes Equivalent x 20
33.5
(d)at the commencement of the second Option Term, if exercised by the Buyer, an amount of Coal calculated in accordance with the following formula:
amount of Coal =       99 million Tonnes Equivalent x 15
33.5
(e)at the commencement of the third Option Term, if exercised by the Buyer, an amount of Coal calculated in accordance with the following formula:
amount of Coal =       99 million Tonnes Equivalent x 10
33.5
(f)at the commencement of the fourth Option Term, if exercised by the Buyer, an amount of Coal calculated in accordance with the following formula:
amount of Coal =       99 million Tonnes Equivalent x 5
33.5”
Clause 10 deals with the calculation of the Contract Price. Clause 10.1 provides for the escalation of the Base Price on a quarterly basis. The escalation is 90 per cent of increases in the CPI Index for Brisbane. Clause 10.2 contemplates the replacement of the CPI Index’s escalator in favour of an EMI escalation. “EMI” is defined in Schedule 1 to the Coal Supply Agreement to mean the electricity market based index that reasonably reflects the underlying long term trend in electricity prices and which is to be determined in accordance with clause 10.2. By clause 10.2(a) the method of calculating the Contract Price in clause 10 (including the method of calculating escalation) is subject to the review provisions set out in clause 12. By clause 10.2(c)(i) the parties agree that an EMI may be a more appropriate index for the escalation of the Contract Price than the CPI Index. By clause 10.2(e) the parties acknowledge and agree that a possible EMI must:
(i) reflect underlying long term trends in electricity prices;
(ii) exclude taxes; and
(iii)incorporate on a basis acceptable to the parties any market movements or aberrations which occur and which cannot be taken as indicative over the Review Period of underlying long term trends in electricity.
The critical provision is clause 12 which provides:
“12. REVIEW OF AGREEMENT
12.1 Principles
(a) Each Party acknowledges and agrees:
(i)subject to Clause 12.1(a)(ii), the Coal Mine Owners and the Buyer have an expectation of benefiting under this Agreement;
(ii)subject to Clause 12.1(a)(iii), each Party supports the process of review set out in this Clause 12 to ensure both the Coal Mine Owners and the Buyer remain competitive in relation to their respective industries; and
(iii)during the Initial Term, the competitive position of the Power Station relative to other power stations operating in the Power Station's industry in Queensland as at the Effective Date should be restored, having regard to the viability of the Coal Mine Owners' mine in its industry.
(b)Each Party agrees that circumstances may change during the Term of this Agreement which may require the terms of this Agreement to be reviewed to ensure those terms remain consistent with the principles set out in Clause 12.1(a).
12.2 Five Yearly Review Meeting
During this Agreement, the Parties must:
(a)convene a meeting of the Parties within 30 days of the fifth anniversary of the Commercial Load Date for Unit 1;
(b)at that meeting, review the consistency of the operation of this Agreement against the principles set out in Clause 12.1 (a);
(c)within 14 days of that meeting, exchange all data which the Parties hold which is relevant to reviewing the consistency of the operation of this Agreement against the principles set out in Clause 12.1(a); and
(d)use their best endeavours to review the consistency of the operation of this Agreement against the principles set out in Clause 12.1(a) within 90 days of that meeting.
12.3 Change Events
(a)A 'Change Event' is a change in circumstances which has, or will have, a material effect on the competitiveness of either the Coal Mine Owners or the Buyer (in the reasonable opinion of a Party) in relation to the industry in which it operates, and includes, without limitation:
(i)the Commercial Load Date of Unit 2 occurring more than 18 months after the Effective Date;
(ii)if the Buyer reasonably demonstrates, by the elimination of other relevant factors, that there is a change in coal prices being paid by other power stations. The Parties acknowledge that the Buyer must reasonably demonstrate, by the elimination of other relevant factors, that there is a material adverse change in the competitive position of the Power Station which is due to changes in coal prices being paid by other power stations, before the Parties will be obliged to review this Agreement against the principle set out in Clause 12.1(a)(iii).
(iii)major changes to working conditions within the coal mining industry, including, without limitation, advances in technology which were not foreseen at the date of this Agreement;
(iv)a demonstrated (by the Seller) increase in the long term (being at least five years) trend in electricity price occurring during the whole or any part of any period when an EMI is not operative; and
(v)a change in governmental policy, or a change in a law or regulation, relating to environmental standards and compliance with those standards.
(b)If at any time after the date of execution of this Agreement there occurs, or either Party considers there may occur, a Change Event, then:
(i)a Party (the 'Notifying Party') may notify the other (the 'Receiving Party') in writing promptly when that Change Event becomes known to the Notifying Party that it is the Notifying Party's intention to initiate a review of this Agreement which may lead to an Adjustment;
(ii)if it wishes to proceed with a review of this Agreement, the Notifying Party must, as soon as practicable in all the circumstances, submit a formal notice of a Change Event (the 'Change Event Notice') to the Receiving Party, which will include:
(A)all data which the Notifying Party holds which is relevant both to the Change Event including detailed information regarding the nature, extent and quantum of the cost and revenue impacts of the Change Event and to calculating those costs and revenue impacts as they relate to all of the options and alternatives identified by the Notifying Party available to accommodate or mitigate the Change Event; and
(B)options and alternatives identified by the Notifying Party and the Notifying Party's recommended option,
and a Change Event will be deemed to have occurred;
(iii)As soon as possible after a Notifying Party becomes aware that an estimate of the financial effect is likely to be incorrect, the Notifying Party must amend that estimate and give copies of the amended estimate and the estimate it amends to the Receiving Party.
(iv)The onus is upon the Notifying Party to establish the impact of the Change Event.
(v)The Parties must use their best endeavours to review and to attempt to agree an Adjustment generally in accordance with the principles set out in Clause 12.1.
12.4 Receiving Party's Notice Not Accepting Options
(a)If a Receiving Party notifies the Notifying Party that it does not accept any of the options proposed or financial effects estimated in the Change Event Notice, then it may propose alternative options for the Notifying Party's consideration.
(b)The Notifying Party must respond within 10 Business Days of its receipt of any response from the Receiving Party pursuant to Clause 12.4(a).
12.5 Convene Meeting of Parties
The Change Event Notice issued pursuant to Clause 12.3(b)(ii) must specify a time (being at least 30 days but less than 45 days after the date of receipt of the Change Event Notice) and a place in Brisbane at which a meeting will be held and attended by a senior officer of the Notifying Party (who must be named in the Change of Event Notice) and a senior officer of the Receiving Party.
12.6 Receiving Party's Senior Officer
Within 7 days of receipt of the Change Event Notice, the Receiving Party must give the Notifying Party written notice of the name of a representative of the Receiving Party who must be its senior officer for the purpose of attending the proposed meeting specified under Clause 12.5.
12.7 Review of Options
(a)The senior officers must attend the meeting specified under Clause 12.5 and must review the options set out in the Change Event Notice and the detailed information included in the Change Event Notice.
(b)The senior officers must, as soon as practicable, attempt to:
(i)agree an option or determine an appropriate course of action; and
(ii)agree on the nature and quantum of the financial effect of the Change Event.
12.8 Mitigation
The Parties must have regard to the desirability to preclude the occurrence of, or to mitigate any adverse consequences flowing from or contributing to, any Change Event.”

The “Adjustment” contemplated by clause 12.3 is an adjustment to the Coal Supply Agreement.[7]
[7] Coal Supply Agreement Schedule 1, Definitions.
Other relevant clauses which will be referred to in the course of these Reasons are clause 13 which deals with dispute resolution and clause 14 which is the force majeure clause.

6 November 2013 Notice

On 6 November 2013, the relevant respondents delivered to the applicant a document described as a “Notice of Change Event” pursuant to clause 12.3(b)(i) of the Coal Supply Agreement (“the First Notice”). By the First Notice, the respondents purported to notify the applicant that a Change Event had occurred and that it was the respondents’ intention to initiate a review under clause 12 which may lead to an adjustment. The First Notice continues:
“Briefly, and without prejudice to the Change Event Notice, since the time of entry into the CSA [Coal Supply Agreement], there have been a number of changes in circumstances which, in the Seller’s reasonable opinion, have had, and continue to have, a material effect on its competitiveness in the coal mining industry such that a Change Event within the meaning of clause 12.3(a) has occurred. The effect of these changes is that the cost of production at the Callide Mine has substantially increased in circumstances where the Contract Price has remained relatively stable.
The Seller will, pursuant to clause 12.3(b)(ii), submit a formal Change Event Notice as soon as practicable in all the circumstances.
As required under clause 12.3(b)(v), the Seller will use its ‘best endeavours’ to review and attempt to agree an Adjustment generally in accordance with the principles set out in clause 12.1. We expect that the Buyer will do the same.
The terms used in the CSA bear the same meaning in this letter.”

12 November 2013 – The Change Event Notice

On 12 November 2013, the relevant respondents delivered to the applicant a second notice described as a “Change Event Notice” (“the 12 November notice”) purportedly pursuant to clause 12.3(b)(ii). The 12 November notice:
(a)     provides, by [4.2] – [4.6] that:
“4.2   Since the time of entry into the CSA, there have been a number of changes in circumstances (identified below in this Notice) which, in the Seller’s reasonable opinion, have had, and continue to have, a material effect on the Coal Mine Owners’ competitiveness in the coal mining industry.
4.3    The effect of these changes in circumstances is a substantial increase in the cost of producing coal from the southern areas of Callide Coalfields (referred to as the Callide Mine), in circumstances where a significant proportion of the coal from the Callide Mine is sold to the Buyer under a contract which fixes the coal price paid by the Buyer at a rate far lower than market value. These changes in circumstances together and cumulatively constitute a Change Event, being a Change Event within the meaning of clause 12.3(1) [sic].
4.4    The Seller identifies the following changes in circumstances, the nature and extent of each of which is described in sections 5 to 16 of this Notice:
(a)Changes to market and economic circumstances;
(b)Changes to the mine planning conditions;
(c)Extensive and ongoing rainfall initially constituting Force Majeure Events under the CSA, together with the frequency of such rainfall Force Majeure Events and their immediate, cumulative and ongoing effects;
(d)Significant reduction in operating flexibility due to changes in government regulation resulting in changes to the mine’s water discharge and storage requirements;
(e)Significant increases to the overall costs of production of coal at the mine;
(f)Increases in labour and contractor costs at the mine;
(g)Increases in the cost of diesel incurred by the mine;
(h)Increases in the cost of explosives incurred by the mine;
(i)Increases in maintenance costs incurred by the mine;
(j)Increases in the cost of electricity incurred by the mine;
(k)The Coal Mine Owners ceasing to benefit under the CSA; and
(l)Significant change in the coal prices paid by other power stations.[8]
[8]     These purported “changes in circumstances” are further explained in [20] below.
4.5    Pursuant to clause 12.3(2)(2) [sic] upon the issuing of this Notice, a Change Event will be deemed to have occurred.
4.6    If any part of this Change Event Notice is determined to be ineffective or invalid for any reason whatsoever, such ineffectiveness or invalidity will not affect the validity or operation of the remainder of this Change Event Notice and such ineffective or invalid part will be deemed to be deleted from this Change Event Notice.”
(b)sets out the nature and extent of each change in circumstances set out in paragraph 4.4 and is addressed in detail in sections 5 – 16;
(c)provides by section 17 the quantum of the cost and/or review impacts of the changes in circumstances. Section 17 of the 12 November notice relevantly provides:
“17    Quantum of the Cost and/or Revenue Impacts of the Change in Circumstances
17.1 The overall cost and revenue impact of the changes in circumstances described in this Change Event Notice is set out in Annexures B and E to this Notice. Annexure B sets out the Life of Mine (LOM) forecast as at July 2013 if all 3option terms are exercised by the Buyer; that is, to 2031. It shows that the Seller currently stands to achieve a Cash Margin (Deficit) over the life of the CSAs going forward from 1 January 2014 of negative $3.253 billion. By comparison, the original Life of Mine plan forecast a Cash Margin to be derived under the CSAs from 1 January 2014 to 2018 of positive $70 million. To 2031, this is a difference of approximately $3.323 billion. Annexure E sets out a historical summary of Callide Mine’s financial performance between 1998 and 2013.
17.2 This cash loss is largely the result of the increase in the overall costs of production caused by the cumulative effect of the changes in circumstances described in this Notice, in circumstances where the Contract Price is essentially fixed at a rate far below market price for the life of the CSA. The overall impact of the Change Event on the costs of production to date is described in Section 9 above, and the costs impacts of each of the various changes in circumstances contributing to the Change Event are described in Sections 5 to 16 above.”[9]
[9]     CPM’s Written Submissions, [37].
The respondents assert that the estimated extent of these financial consequences up to the time of the 12 November notice, is captured visually in diagram 9.3 of the 12 November notice. The respondents were, at the outset of the Coal Supply Agreement, supplying coal at a contract price which exceeded their costs and allowed for a reasonable return on investment. That position began to deteriorate in about 2004. Between 2012 and 2013 there was a significant change with the result that the costs of production far exceeded the price received under the Coal Supply Agreement.[10]
[10] Respondents’ Written Submissions, [9].

(d)provides, by paragraph 18.1:
“18 Options and Alternatives Identified by the Seller
18.1 The Seller has identified five possible options or alternatives to take account of the changed circumstances described in this Notice. Four of the possible alternatives proposed by the Seller contain a number of adjustments to the CSA relating to:
●Options terms;
●Tonnage requirements and notice;
●Coal quality; and

● Contract and Invoice Price.”
(e)sets out, in paragraphs 18.2 – 18.6, four of the five alternatives referred to in paragraph 18.1 (identified as Alternatives 1 and 2 and 1A and 2A) and proposed in paragraph 18.7, as Alternative 3, the early and orderly termination of the Coal Supply Agreement;
(f)identifies, in paragraph 19.1, the quantum of the costs and/or review impacts of the options and alternatives; and
(g)provides, by section 20, that the Seller’s recommendation was Alternative 2 as described in Annexure 2 to the 12 November notice.

The narrative part of the 12 November notice runs approximately 80 pages. As identified above it refers to 12 matters which are alleged to constitute a “Change Event” within the meaning of the Coal Supply Agreement. The 12 November notice includes approximately 60 annexures which, when printed single-sided, occupy more than seven lever arch volumes.
The 12 November notice also annexes detailed cost models, which were served in electronic Excel spreadsheet form. These models set out:
(a)historical physical and financial data, including costs and revenue data, for the Callide Mine for the period 1998 until 2013;
(b)forecast physical and financial data, including costs and revenue data, for the Callide Mine for the period from 2014 until 2031; and
(c)separate forecast physical and financial data, including costs and revenue data, for the Callide Mine for the period from 2014 until 2031, assuming that the options and alternatives proposed in the notice were implemented.
It may be accepted, as submitted by the applicants, that the Coal Mine Owners rely upon there having been one Change Event. That Change Event is a conglomeration of twelve changes in circumstances. The disparate nature of the changes in circumstances said to give rise to the one Change Event is apparent from even the briefest review of the 12 November notice. The changes include:
(a)a change in the market and economic conditions since 1998 by virtue of the increase in demand for Australian resources as a result of the “mining boom” between 2003 and 2011 (section 5);
(b)the mining strip ratio[11] for the Callide Mine being substantially greater than had been forecast by the Coal Mine Owners (section 6);
[11] The strip ratio typically measures the prime overburden to coal ratio.
(c)two extended periods of severe rain fall, in 2010/2011 and then in 2013, and their physical effects on mining the coal mine (section 7);
(d)a change in 2010 to the Callide Mine’s Environmental Authority conditions in relation to water discharge (section 8);
(e)an instruction from the Department of Environment and Heritage Protection in 2013 to cease discharging water in 2013 (section 8);
(f)increases in the costs of production for every year between 1998 and 2013 at an average of 15% per year (section 9);
(g)increases in labour costs for every year between 1999 and 2013 at an average of 5% year on year growth (section 10);
(h)increases in cost of diesel used for the mine for every year between 1999 and 2013, a total increase over that period of 1160% (section 11);
(i)increases in the cost of explosives for every year between 1999 and 2012, a total increase over that period of 250% (section 12);
(j)increases in the cost of maintenance material costs for every year between 1999 and 2012, a total increase over that period of 193% (section 13);
(k)increases in the cost of electricity for every year between 1999 to 2012, a total increase over that period of 159% (section 14);
(l)the Coal Mine Owners ceasing to benefit under the Coal Supply Agreement (section 15); and
(m)increases in the prices paid for coal by other power stations for every year between 1999 to 2012, a total increase during that period of over 300% (section 16).[12]
[12] CPM’s Written Submissions, [35].
The cost and revenue impacts identified in the 12 November notice are for the cumulative effect of all twelve changes in circumstances.[13] Cost and revenue impacts are not provided for each change in circumstances or any subset of the changes in circumstances.[14]
[13] Section 17 of the 12 November notice.
[14] See [203]-[209] below.
The possible options and alternatives to take account of the changed circumstances described in the 12 November notice are also for the cumulative effect of all twelve changes in circumstances. Options and alternatives are not provided for each change in circumstances nor for any subset of changes in circumstances.[15]
[15] Section 18 of the 12 November notice. See [219]-[220] below.
The applicants submit that, in broad terms, the 12 November notice appears to be an attempt to:
(a)identify all of the disparate factors that may have contributed to the Coal Supply Agreement being less profitable than may have been expected at the outset;
(b)lump those factors together as a single “Change Event”;
(c)claim as the impact of that “Change Event” the difference between what the respondents hoped the Coal Supply Agreement would yield over the life of mine, and what is actually being achieved.[16]
[16] CS Energy’s Written Submissions, [9].
According to the applicants, at the heart of the present dispute are the following issues:
(a)whether such a wide notice complies with the Coal Supply Agreement;
(b)whether certain factors identified in the 12 November notice fall within the definition of “Change Event” in clause 12.3(a) of the Coal Supply Agreement;
(c)whether the global life of mine assessment of impacts complies with the Coal Supply Agreement;
(d)whether a Change Event Notice must be given within the timeframes stipulated in cl. 12.3(b)(i) and (ii) of the Coal Supply Agreement;
(e)the consequences of failure to comply with the content and timing requirements of the notice provisions in the Coal Supply Agreement.[17]
[17] CS Energy’s Written Submissions, [10].

The separate questions

On the first and second days of trial leave was granted to both the applicants and the respondents to amend their pleadings. As a result of those amendments questions 1(a), (b) and (c) in respect of alleged fact 1(e), questions 2, 12 and 24 in SC No 12138 of 2013 and questions 1(a), (b) and (c) in respect of alleged fact 1(e) and questions 2, 12, 22 and 23 in SC No 12122 of 2013 are no longer required to be answered.
The separate questions can be divided into two broad categories. The first category of questions relates to the construction of the Coal Supply Agreement. The second category relates to the construction of the 12 November notice.
The separate questions may be further divided into the following subcategories:
In respect of the construction of the Coal Supply Agreement:
(a)background facts and the objective commercial purpose of the Coal Supply Agreement (Questions 1, 3 & 4);
(b)what is a "Change Event" and what is required to appear on the face of a valid Change Event Notice? (Questions 5 to 10);
(c)are increases in costs and a failure to benefit capable of being a “Change Event”? (Questions 11 and 22); and
(d)what are the time requirements for Change Event notices and do they affect the validity of such a notice? (Questions 13 to 15).
In respect of the construction of the 12 November notice:
(e)does the 12 November notice describe a “Change Event” and if it does not is it invalid? (Questions 16 to 30); and
(f)does the 12 November notice describe the impacts, options and alternatives for a “Change Event” and if it does not is it invalid? (Questions 31 to 36).

Background facts and the objective commercial purpose of the Coal Supply Agreement (Questions 1, 3 and 4)

Question 1

“1. At the time Callide Coalfields (Sales) Pty Ltd (Callide Sales) (acting on behalf of Anglo Coal (Callide Pty Ltd (Anglo Coal Callide) and AMP Life Limited (AMP Life)) and CS Energy Limited (CS Energy) entered into an agreement pursuant to which Callide Sales agreed to supply coal to CS Energy on 11 May 1998 (Coal Supply Agreement),
(a)were the alleged facts set out in subparagraphs (d) to (h) true?
(b)were the alleged facts in subparagraphs (d) to (h) known by each of CS Energy, Callide Sales, Anglo Coal Callide (then Shell Coal (Callide) Pty Ltd) and AMP Life?
(c)alternatively to (b), would the alleged facts in subparagraphs (d) to (h) have been known by reasonable persons in the position of each of those parties?
The alleged facts are:
(d)clauses 9.1.3 and 17.6 of CS93 contain a limited review mechanism in the event of any major change to prescribed working conditions within the coal mining industry (as alleged in paragraph 4A(e)(iii) of the defence);
(f)CS Energy, Callide Energy Pty Ltd and IG Power (Callide) Ltd (then Shell Coal Power (Callide) Ltd) estimated that the Contract Price agreed under the Coal Supply Agreement and the Callide Power Project Coal Supply Agreement for the supply of coal would result in them being competitive and profitable in their operations (as alleged in paragraphs 4A(k) of the defence);
(g)Anglo Coal Callide and AMP Life (the Original Coal Mine Owners) estimated that the Contract Price agreed under the Coal Supply Agreement and the Callide Power Project Coal Supply Agreement for the supply of coal would result in them being competitive and profitable in their operations (as alleged in paragraph 4A(k) of the defence);
(h)a change to the estimates referred to in subparagraphs 4A(k) and (l) of the defence would amount to a change to conditions affecting the competitiveness and profitability of the Callide Mine and the Callide B Power Station and the Callide C Power Station (as alleged in paragraph 4A(n) of the defence).

3. May the facts alleged in paragraph 4A of the defence be taken into account in interpreting the Coal Supply Agreement?
4. Do the facts alleged in paragraph 4A of the defence give rise to the inference of the objective commercial purpose of the Coal Supply Agreement alleged in paragraph 4B of the defence?”

In construing the Coal Supply Agreement and in particular clause 12, the respondents seek to rely on certain background facts and other extrinsic evidence. Nearly all of these background facts are admitted. Each of those facts were known by the parties to the Coal Supply Agreement. [18] These facts and evidence are relied on for a number of purposes. First, by reference to the background facts, the respondents seek to identify the objective commercial purpose of the Coal Supply Agreement. The relevant background facts are pleaded in paragraph 4A of the Sixth Further Amended Defence. [19] By that paragraph, the Respondents allege that at the time of the execution of the Coal Supply Agreement:
[18]   CPM’s Written Submissions, [55].
[19] Ninth Further Amended Defence of the Respondents, [4A] (SC No 12122 of 2013).
(a)CS Energy owned and operated a coal fired electricity generation facility (Callide B Power Station);
(b)Anglo Callide Coal Pty Ltd (then Shell Coal (Callide) Pty Ltd) and AMP Life (Original Coal Mine Owners) owned and operated the Callide Coal Mine;
(c)the Callide B Power Station was adjacent to the Callide Coal Mine and connected to it by a conveyor system;
(d)the Original Coal Mine Owners supplied coal from the Callide Coal Mine to CS Energy for the Callide B Power Station and the Gladstone Power Station pursuant to an agreement dated 23 February 1994 (CS93);
(e)CS93:
(a)     was for a term of 12 years commencing on 1 January 1994;
(b)     contained an escalation mechanism based upon general changes in the costs of labour and materials in the Australian economy, changes in specified statutory charges applicable to the coal industry in Queensland and increases in cost due to changes in the price of electricity sold to the Callide Coal Mine;
(c)     contained a limited review mechanism in the event of any major change to prescribed working conditions within the coal mining industry;
(f)CS Energy and Shell Coal Pty Ltd (then a related company of Anglo Callide Coal (then Shell Coal (Callide) Pty Ltd)) had entered into a written agreement dated 4 December 1997 (Interim Joint Venture Agreement) pursuant to which they formed an interim joint venture:
(a)     to call for tenders to engineer, procure and construct a coal fired electricity generating facility adjacent to the Callide B Power Station and the Callide Coal Mine (Callide C Power Station);
(b)     to complete negotiations and execute documents for:
(A)a joint venture between them or related entities for the construction and operation of the Callide C Power Station and the sale of electricity generated by it (Callide Power Project);
(B)an agreement for the supply of coal from the Callide Mine (as defined in paragraph 7(d)(ii) of the Respondents’ counterclaim) to the Callide C Power Station;
(C)an agreement for the supply of coal from the Callide Mine to the Callide B Power Station;
(D)a variation to CS93 in consequence of the agreement referred to in paragraph (C) above;
(g)as contemplated by the Interim Joint Venture Agreement, between about December 1997 and about May 1998, the following written agreements (amongst others) were negotiated:
(a)     an agreement between:
(A)Callide Energy as a participant;
(B)IG Power (Callide) Ltd (then Shell Coal Power), a related company of Shell Coal and Anglo Callide Coal Pty Ltd (then Shell Coal (Callide) Pty Ltd), as a participant;
(C)CPM as manager, for the establishment and operation of the Callide Power Project (Joint Venture Agreement);
(b)     an agreement between Callide Sales (on behalf of Anglo Callide Coal (then Shell Coal (Callide) Pty Ltd) and AMP Life) and CS Energy for the supply of coal from the Callide Mine to the Callide B Power Station on substantially the same terms as the Coal Supply Agreement (Callide B Coal Supply Agreement);
(c)     an agreement to vary CS93 to no longer apply to the supply of coal from the Callide Mine to the Callide B Power Station (CS93 Collapse Agreement);
(d)     the Coal Supply Agreement;
(h)the Joint Venture Agreement, the Callide B Coal Supply Agreement, the CS93 Collapse Agreement and the Coal Supply Agreement were executed contemporaneously;
(i)the Callide Mine was (and was likely to remain) the sole source of supply of coal to the Callide B Power Station and was likely to be the sole source of supply of coal to the Callide C Power Station;
(j)the Callide B Power Station and the Callide C Power Station were likely to be the predominant customers of coal from the Callide Mine;
(k)the Contract Price for coal to be supplied under the Callide B Coal Supply Agreement and the Coal Supply Agreement had been agreed in an amount that was estimated to result in CS Energy, Callide Energy and IG Power (then Shell Coal Power) on the one hand and the Original Coal Mine Owners on the other hand being competitive and profitable in their respective operations;
(l)the coal resources and coal reserves of the Callide Mine referred to in cl 3.2(c) and Schedule 3 of the Callide B Coal Supply Agreement and cl 3.2(c) and Schedule 3 of the Coal Supply Agreement and their geological characteristics:
(a)     were estimated based upon exploration activities which were typical of exploration activities carried out for open cut coal mines at that time;
(b)     could not and would not be known with certainty until the coal had been exposed in the actual mining process;
(m)by the Callide B Coal Supply Agreement and the Coal Supply Agreement, the Original Coal Mine Owners were committing to:
(a)     supply a large proportion of the coal resources and coal reserves of the Callide Mine to the Callide B Power Station and the Callide C Power Station;
(b)     doing that for a term of at least 10 years and, potentially, approximately 30 years;
(n)during the actual or potential term of the Callide B Coal Supply Agreement and the Coal Supply Agreement:
(a)     there might be changes to conditions affecting the competitiveness and profitability of the Callide Mine and the Callide B Power Station and the Callide C Power Station;
(b)     the type, nature and extent of such changes could not accurately be predicted but might include changes to market and economic conditions, changes to working conditions, changes to input costs and prices and changes to the estimates referred to in subparagraphs (k) and (l) above;
(iii)such changes might affect the competitiveness and profitability of the Callide Mine and the Callide B Power Station and the Callide C Power Station:
(A)suddenly or over a period of time (including weeks, months or years);
(B)with short, medium or long term consequences and effects which may not be capable of being promptly ascertained;
(C)distinctly and independently of other changes, or concurrently with other changes or because of the cumulative and interdependent consequences and effects of several changes over a period of time;
(iv)there might be changes to the mining process at Callide Mine that would have a cumulative and interdependent effect on each other;
(v)whether and the extent to which such changes might occur could not accurately be predicted; and
(o)Callide Energy, IG Power (then Shell Coal Power), Callide Sales, Anglo Callide Coal and AMP Life knew each of the matters referred to in paragraphs (a) to (n) above, or alternatively reasonable persons in the position of each of those parties would have known the matters.

These background facts are relied upon by the respondents to support what they assert is the overall objective commercial purpose of the Coal Supply Agreement pleaded in paragraph 4B of the Sixth Further Amended Defence:
“4B. It is to be inferred from the matters referred to in paragraph 4A above and the terms of the Coal Supply Agreement referred to in paragraph 7 of the statement of claim and paragraph 7 below, that the objective commercial purpose:
(a)of the Coal Supply Agreement was for the sale by the Coal Mine Owners and the purchase by CPM of coal from the Callide Mine on terms that were competitive and economic over the term or potential term of the Coal Supply Agreement:
(b)of clause 12 of the Coal Supply Agreement was to provide a mechanism for reviewing and, as required, changing the terms of the Coal Supply Agreement so as to ensure that those terms fulfilled the purpose referred to in subparagraph (a) above.”[20]
[20] CPM’s Written Submissions, [53]-[54].
The Court of Appeal in Callide Coalfields (Sales) P/L v CS Energy Ltd & Anor[21] did not have recourse to these background facts for the purposes of identifying the objective commercial purpose of the same Coal Supply Agreement. In that appeal the Court considered whether a failure to agree on the outcome of the five yearly review provided for in clause 12.2 of the Coal Supply Agreement fell within the general provision for dispute resolution in clause 13. That question was answered in the negative. Fraser JA (with whom Keane JA and Chesterman J (as their Honours then were) agreed) identified that the commercial objective of the Coal Supply Agreement was:
“… to provide for appropriate adjustments of contractual terms to cater for significant changes during the course of this long term contract.”[22]
[21] [2008] QCA 408.
[22] [2008] QCA 408, [49] (Fraser JA).
Fraser JA considered the “commercial aim of the transaction” as follows:
“[37] In this contract the parties have chosen to express the object of cl 12 by stating the relevant guiding principles in cl 12.1(a) and their agreement in cl 12.1(b) concerning the effect to be given to those principles. The appellant emphasises the unequivocal expression in cl 12.1(b) of the parties’ agreement that changes in circumstances during the term of the contract may “require the terms of this Agreement to be reviewed to ensure those terms remain consistent with the principles. . .” Whilst I would affirm the Chief Justice’s conclusion that the word “review” is used elsewhere in the contract as connoting only a “survey”, the context compels the conclusion that in cl 12.1(b) “review” comprehends adjustments of the contractual terms. That is the most obvious way, if not the only way, in which terms which have become inconsistent with the relevant principles may be made to be consistent with them.
[38] The respondents argue that cl 12.1 does not itself explicitly oblige the parties to adjust the contractual terms even where that is necessary to give effect to the cl 12.1(a) principles. So much may be accepted, but cl 12.1(b), read in the context in which it appears (including the statement in cl 12.1(a)(ii) of the parties’ support for the ‘process of review set out in this cl 12 to ensure both the Coal Mine Owners and the Buyer remain competitive in relation to their respective industries...’), nevertheless conveys the parties’ aim of establishing a process under which the parties may become bound by contractual adjustments where that is necessary to give effect to the cl 12.1(a) principles. It is a most unlikely construction of this long term contract, made at a time of significant uncertainty about the future direction of the electricity industry, that although the parties agreed in cl 12.1 that changes in circumstances might “require” the terms to be reviewed to ‘ensure’ consistency with their agreed underlying principles, they stopped short of binding themselves to the contractual adjustments necessary to achieve that desired result.
[39] …I have concluded that cll 12.3–12.8 (and, in the event of a dispute under that ‘change event’ process, cl 13) exclusively fulfil this aspect of the contractual object expressed in cl 12.1.”[23]
[23] [2008] QCA 408, [37]-[39] (Fraser JA) cited in CPM’s Written Submissions, [26].
Putting aside any questions of the admissibility of the background facts and other extrinsic evidence, the commercial objective identified by the respondents in paragraph 4B of the Sixth Further Amended Defence adds nothing to that identified by the Court of Appeal. Nor does the objective commercial purpose suggested by the respondents add anything to the principles expressly identified in clause 12.1. As conceded by the respondents, there is little disparity between the respondents’ pleaded commercial purpose and that articulated by the Court of Appeal.[24] To the extent of any disparity, the background facts do not permit the identification of the objective commercial purpose as submitted by the respondents.
[24] T2-37, lines 40-44.
I accept the applicants’ submission that the clause 12.1 principles do not speak of the purpose of the Coal Supply Agreement as being the purchase of coal on terms that are “competitive and economic over the term or potential term” of the Coal Supply Agreement. The language used in clause 12.1 is very different.[25] By clause 12.1(a)(i) the parties acknowledge and agree that the Coal Mine Owners and the Buyer would have an expectation of benefiting under the Coal Supply Agreement. In the context of a long term coal supply agreement it should be accepted that the word “benefiting” includes, at least, each party benefiting financially under the Coal Supply Agreement. This expectation of financial benefit however, is not unlimited. As submitted by the applicants there is no unconditional expectation of either party benefiting under the Coal Supply Agreement.[26] The expectation of benefiting is made subject to each party supporting the process of review under clause 12 to ensure both the Coal Mine Owners and the Buyer remain competitive in relation to their respective industries. No part of the language of clauses 12.1(a)(i) or (ii) uses the word “economic”. In my view, the word “economic” adds nothing to the concepts in clause 12.1 and does not assist with the construction of the Coal Supply Agreement. As correctly submitted by the applicants, the clause 12.1 principles reflect a different commercial purpose to that which the respondents posit. The true purpose of clause 12 is to provide a mechanism to adjust the terms of the Coal Supply Agreement in the event of a change of circumstances occurring that has or will have a material effect on competitiveness.[27]
[25] CPM’s Written Submissions, [87].
[26] CPM’s Written Submissions, [89].
[27] CPM’s Written Submissions, [101].
Secondly, the background facts are relied on by the respondents for the purpose of demonstrating the interdependence of the parties. The parties accept that the coalfields and the power stations are physically adjacent; delivery of coal is from a coal loader operated under a conveyor; the sole source of coal for the power stations is from the Coal Mine Owners’ fields and the Power Station Owners constitute the main customers of the Coal Mine Owners.[28] The terms of the Coal Supply Agreement make this interdependence obvious. Clause 6.1 for example, provides that the Coal Mine Owners must deliver coal on to the Callide B Coal Conveyor System. By clause 7.1 the Coal Mine Owners warrant that the Mining Titles contain “the Coal Reserves”. This is a defined term in Schedule 1 and refers to the coal resources set out in Schedule 3. The warranties in clause 7.2[29] reinforce the importance of the security of the long term supply of coal to the Station Owners.[30] The interdependence of the parties is also demonstrated by reference to the principles identified in clause 12.1. These clauses reflect the fact that the Station Owners rely on the Coal Mine Owners to supply the coal to power the stations and the Coal Mine Owners rely on the Station Owners to purchase their coal in the context of a long term contract. The Court does not need to have regard to any extrinsic material in order to discern the interdependence of the parties under the Coal Supply Agreement.
[28] T2-38, lines 17-23.
[29] Clause 7.2 is set out in [11] above.
[30] CPM’s Written Submissions, [15].
Thirdly, the respondents rely on the background facts to identify the nature of the industries in which the parties operate. Within these industries a party’s competitiveness and profitability may be affected by changes:
(a)suddenly or over a period of time (including weeks, months or years);
(b)with short, medium or long term consequences and effects which may not be capable of being promptly ascertained; and
(c)distinctly and independently of other changes, or concurrently with other changes or because of the cumulative and interdependence consequences and effects of several changes over a period of time.[31]
The respondents submit that these factors are relevant to making a constructional choice between various competing constructions of clause 12.3 of the Coal Supply Agreement.[32]
[31] T2-29, lines 45-50 to T 2-30, lines 1-2 and see Respondents’ Written Submissions, [127(g)].
[32] Respondents’ Written Submissions, [121(c)].
The respondents rely on the expert report of Stephen Gye who has been involved in the coal industry for more than 40 years in various roles including geologist, project manager, marketer, consultant and industry adviser. Mr Gye in his report (to which the applicants object in full) refers to various changes that may occur in relation to the operations of a coal mine and which may affect that mine’s current and future operating costs and therefore its competitiveness and profitability. According to Mr Gye these changes may be subtle and only detectable over a period of time. Further, because of the interdependent and cumulative effect of some of these factors, the effectiveness of steps taken to attempt to mitigate any detrimental impacts may not be fully understood for some time. These matters are, in my view, readily apparent from the nature and terms of the Coal Supply Agreement itself. That circumstances may change in the ways outlined in paragraph 35(a), (b) and (c) above was contemplated by the parties and is reflected in the review process for the Contract Price in clause 10.2 By clause 10.2(c)(i) the parties agree that an EMI may be a more appropriate index for the escalation of the Contract Price than the CPI Index. That circumstances may change is also expressly contemplated in the general language of clause 12.1(b) and clause 12.3. In any event, the applicants do not challenge that changes may occur suddenly or over a period of time.[33] The applicants also accept the proposition in paragraph 35(b) above.[34] As to paragraph 35(c) the applicants submit that a “change in circumstances” within the meaning of the Coal Supply Agreement must be an occurrence, comprised of either a single change in circumstances or alternatively multiple changes in circumstances, each of which is of the same nature.[35] For the reasons given in my answers to questions 7(a)(i) and (ii)(B), I have rejected this limitation as to what constitutes a “change of circumstances” for the purposes of clause 12.3(a). In rejecting this limitation I have not been assisted by reference to the background facts or other extrinsic evidence.
[33] T3-28, lines 30-37
[34] T1-81, lines 30-50 and T1-82, lines 1-6.
[35] See separate questions 7(a)(i) and (ii)(B) and [89]-[111] below.
Fourthly, the respondents rely on the fact that at the time of entering into the Coal Supply Agreement the coal resources and the coal reserves of the Callide Mine and their geological characteristics were estimated based upon exploration activities which were typical of exploration activities carried out for an open cut coal mine at the time. The geological characteristics could not and would not be known with certainty until the coal had been exposed in the actual mining process. The respondents rely on the affidavit of Trevor James Hulme who was formerly employed by the Shell Coal Group as the Manager of Business Planning at the Callide Coal Mine.[36] He was involved in the negotiations leading to the Coal Supply Agreement. He refers to the Coal Mine Owners sharing certain geological data with the predecessor to CS Energy. The respondents also tendered, subject to objection, certain disclosed documents (Exhibit 3). CS Energy obtained a report in relation to the geology, mining and reserves of the Callide Mine over a minimum period of 20 years.[37] The respondents also rely, over objection, on the evidence of Mr Gye and another expert, Mr Nethercote. Their evidence is to the effect that it was well known in the Coal Mine Owners’ industry that estimates of a mine’s coal resources and reserves and the geological characteristics typically change when geological phenomena not previously encountered during the mining process are uncovered. Material changes to estimates of the coal resources and reserves at an open cut coal mine and the geological characteristics will affect the mine’s competitiveness and profitability. Mr Nethercote’s evidence is to the effect that it would have been known by an experienced participant in the coal fired power generation industry entering into the Coal Supply Agreement that there may be changes to the modelled estimates of the resources and reserves and the geological characteristics over the term of the Coal Supply Agreement. Given the nature and sophistication of the contracting parties reference to extrinsic evidence is not necessary. The relevant separate question is 18. In answering this question in the respondents’ favour I have not been assisted by reference to the background facts and extrinsic evidence.
[36] The applicants also object in full to Mr Hulme’s affidavit.
[37] Disclosed document C.01.02.017; Exhibit 3, tab 8.
Fifthly, the respondents rely on the fact that each party conducted financial modelling prior to entering into the Coal Supply Agreement which resulted in the contract price for coal being agreed in an amount that was estimated to result in the parties being competitive and profitable in their respective operations. The parties separately undertook this financial modelling to determine that the contract price for coal would satisfy certain internal rates of return. This was a fact known to each party.[38] This evidence adds nothing to the detailed and express principles acknowledged and agreed to by the parties in clause 12.1 of the Coal Supply Agreement.
[38] Ex 3, tabs 1, 4 and 5.
Sixthly, the respondents rely on the wider review mechanism provided in clause 12 which was a departure from the review mechanism under the existing contract for the supply of coal to Callide B, CS93. CS93 commenced in 1994 and had only run for three years of its initial 12 year term when the Coal Supply Agreement was negotiated. I deal with this evidence in paragraphs [41] to [42] below.
Having identified the six aspects in which the pleaded background facts and other evidence is said to be relevant, I turn then to a specific consideration of questions 1, 3 and 4.
Subparagraph 1(d)
The relevant background fact is that clauses 9.1.3 and 17.6 of CS93 contain a limited review mechanism in the event of any major change to prescribed working conditions within the coal mining industry (as alleged in paragraph 4A(e)(iii) of the Sixth Further Amended Defence). The question posed by 1(a) is simply whether the fact is true. Clause 9.1.3 of CS93 provided:
“9.1.3The parties confirm that the proposed changes in Contract Price are not intended to reflect changes in either productivity in the coal mining industry or costs specific to coal mining and that the parties agree that the price should remain linked to generalised indices of the Australian economy as a whole. In the event of any major change to prescribed working conditions within the coal mining industry, the Agreement shall be reviewed in accordance with Clause 17.6. Arbitration relating to the Contract Price will be limited to the consideration of the suitability of the indexes selected to reflect the real purchasing power of the Australian dollar within the Australian economy.”[39]
Clause 17.6 of CS93 provided:
“17.6 Mutual Collaboration
The Commission and the Sellers recognize that circumstances may arise which could not have been reasonably foreseen at the time the Agreement was entered into. The parties agree that they will use their best efforts to resolve any problems due to any such unforeseeable circumstances including continuation of any force majeure condition in the spirit of mutual understanding and collaboration.”[40]
[39] Ex “TJH-1”, Affidavit of Hulme, 24-25.
[40] Ex “TJH-1”, Affidavit of Hulme, 42.
The question in terms does not call for a comparison of the review mechanism in clause 12.3 of the Coal Supply Agreement with that in CS93. Under CS93 the review is only triggered by any major change to prescribed working conditions within the coal mining industry. Further, the review under clause 17.6 dealing with arbitration, is limited to the consideration of the suitability of certain indexes. A review under clause 17.6 is in relation to circumstances which could not have been reasonably foreseen at the time CS93 was entered into. It may therefore be accepted that the review mechanism under CS93 was more limited than the review mechanism under clause 12.3 of the Coal Supply Agreement. The applicants submit that whilst the arbitration referred to in clause 9.1.3 was limited, the review was not. The review was at large.[41] Whilst the review of the terms of CS93 was at large any arbitration relating to the Contract Price was constrained to a consideration of the suitability of certain indexes selected to reflect the real purchasing power of the Australian dollar within the Australian economy. Therefore, even without comparing the review mechanisms under CS93 with clause 12.3 of the Coal Supply Agreement, the review mechanism under CS93 was limited in the ways I have identified. The alleged fact set out in paragraph 1(d) is true and the question should be answered “yes”. It was also a fact known to the parties. Question 1(b) in respect of fact 1(d) should also be answered “yes”. It is unnecessary to answer question 1(c).
[41] CS Energy’s Written Submissions, [8] and CPM’s Written Submissions, [59].
Whether this background fact is true or not is, in my view, irrelevant and of no assistance in construing the Coal Supply Agreement. I accept the applicants’ submission that this background fact relates to a different question of construction of a different term of a different agreement, and does not establish any objective background fact that bears on any particular question of construction before the Court.[42]
[42] CS Energy’s Outline of Submissions, Questions 1 to 4 and Admissibility of Evidence, [9].
Subparagraphs 1(f) and (g)
The relevant facts are that:
(f)CS Energy, Callide Energy Pty Ltd and IG Power (Callide) Ltd (then Shell Coal Power (Callide) Ltd) estimated that the Contract Price agreed under the Coal Supply Agreement and the Callide Power Project Coal Supply Agreement for the supply of coal would result in them being competitive and profitable in their operations (as alleged in paragraphs 4A(k) of the Sixth Further Amended Defence);
(g)Anglo Coal Callide and AMP Life (the Original Coal Mine Owners) estimated that the Contract Price agreed under the Coal Supply Agreement and the Callide Power Project Coal Supply Agreement for the supply of coal would result in them being competitive and profitable in their operations (as alleged in paragraph 4A(k) of the Sixth Further Amended Defence).

There is no dispute that the parties entered into the Coal Supply Agreement in circumstances where each had obtained estimates of the likely financial return that it would obtain under the Coal Supply Agreement. Each party knew that the other party had also obtained such estimates. The applicants, however, query the imprecise terminology of “competitive and profitable”.[43] Apart from this imprecision in terminology, the background fact is true and the answers to questions 1(a) and 1(b) in respect of the facts in 1(f) and (g) should be “yes”. Question 1(c) is unnecessary to answer.
[43] CS Energy’s Written Submissions, [20] and CPM’s Written Submissions, [64]-[65].
I do not consider however, that these background facts are of any assistance in construing the Coal Supply Agreement. The respondents submit that these two background facts assist in identifying what the parties contemplated by the use of the word “benefiting” in clause 12.1(a)(i) of the Coal Supply Agreement. The respondents further submit that the objective background facts assist in identifying the financial sense in which the term was used.[44] Neither of these background facts assist in construing the word “benefiting” in clause 12.1(a)(i) of the Coal Supply Agreement. In the context of the Coal Supply Agreement, the word “benefiting” at least includes an expectation that all parties would financially benefit under the Coal Supply Agreement. Any such expectation however, was not unlimited and was specifically made subject to the principle identified in clause 12.1(a)(ii) which itself was made subject to the principle in clause 12.1(a)(iii).
[44] Respondents’ Written Submissions, [246].
Subparagraph 1(h)
The background fact is that a change to the estimates referred to in subparagraphs 4A(k) and 4A(l) of the Sixth Further Amended Defence would amount to changes to conditions affecting the competitiveness and profitability of the Callide Mine, the Callide B Power Station and the Callide C Power Station (as alleged in paragraph 4A(n) of the Sixth Further Amended Defence).
The estimates referred to in paragraphs 4A(k) and 4A(l) are the financial estimates and the estimates of coal resources, coal reserves and their geological characteristics. There is no dispute that the parties conducted such estimates. Nor is there any apparent dispute that the geological characteristics of the coal could not and would not be known with certainty until the coal had been exposed in the mining process.[45] The real dispute is whether the change in estimates constitutes a “change of conditions”. The difficulty with this background fact is that it requires the drawing of a conclusion, namely whether the change in estimates constitutes a “change in conditions”. Even if this extrinsic evidence was admissible the background fact itself is of no assistance in construing the Coal Supply Agreement. In any event, by reference to the terms of the Coal Supply Agreement I have concluded that a change in the respondents’ knowledge of the geology of the Callide Mine may constitute a “change of circumstances” within the meaning of clause 12.3(a).[46] Although the background fact in 1(h) is irrelevant to the proper construction of the Coal Supply Agreement, questions 1(a) and (b) in respect of 1(h) should be answered “yes”. Question 1(c) is unnecessary to answer.
[45] Sixth Further Amended Defence, [4A(L)(ii)] which is admitted and see generally Mr Gye’s report, paras. 3.1 to 3.5, 5.4 to 5.5.
[46] See [114]-[119] below.

Question 3

“3. May the facts alleged in paragraph 4A of the defence be taken into account in interpreting the Coal Supply Agreement?

I have answered the separate questions by reference to the terms of the Coal Supply Agreement alone. I do not consider the background facts and other evidence sought to be tendered as being of any assistance in construing the Coal Supply Agreement. It is therefore unnecessary to determine the admissibility of the extrinsic evidence.

Question 4

“4. Do the facts alleged in paragraph 4A of the defence give rise to the inference of the objective commercial purpose of the Coal Supply Agreement alleged in paragraph 4B of the defence?”

For the reasons stated in [32]-[33] above the answer to question 4 is “no”.
What is a Change Event? (Questions 5 to 10)

Question 5

“5. In order for a notice to be a notice within the terms of, and given in accordance with, clause 12.3(b)(ii) of the Coal Supply Agreement is it the case that:
(a)the matters set out in the notice must, on the face of the notice, fall within the definition of “Change Event”?[47]
(b)the notice must, inter alia, include detailed information regarding the nature, extent and quantum of the cost and revenue impacts of the “Change Event”?[48]
(c)the notice must, inter alia, state options and alternatives identified by the Notifying Party as being available to accommodate or mitigate the Change Event?”[49]
[47] Further Amended Statement of Claim, [9(c)(ii)] and Sixth Further Amended Defence, [9(c)(i), 9(c)(ii)(A)].
[48] Further Amended Statement of Claim, [9(c)(iii)] and Sixth Further Amended Defence, [9(c)(ii)(B)].
[49] Further Amended Statement of Claim, [9(c)(iv)] and Sixth Further Amended Defence, [9(c)(ii)(C)].

Question 5(a)

For a notice to be a notice within the meaning of and given in accordance with clause 12.3(b)(ii) of the Coal Supply Agreement, the notice must be of a Change Event. The respondents have admitted this in their relevant defences.[50] The respondents accept that if a Change Event Notice does not contain notification of a Change Event as defined under the Coal Supply Agreement, such a notice would be invalid. That is, if the notice does not contain a notification of a Change Event then it cannot be a Change Event Notice.[51]
[50] Sixth Further Amended Defence, [9(c)] (SC No 12138 of 2013) and Ninth Further Amended Defence, [10] (SC No 12122 of 2013).
[51] T2-33, lines 1-6.
This concession accords with the observation of Fraser JA in Callide Coalfields (Sales) P/L:[52]
“… Before an obligation to “review this Agreement” arises under clause 12.3, there must be a “change event”, meaning a change in circumstances which has or will have a material effect on the competitiveness of either the Coal Mine Owners or the buyer in relation to the industry in which it operates. Furthermore, clause 12.3(a) specifies another objective criterion: the opinion of the relevant party that the change of circumstances has or will have the specified effect must be a “reasonable opinion”.”
[52] [2008] QCA 408, [44] (Fraser JA).
The real dispute between the parties in answering 5(a) arises from the applicants’ use of the words “on the face of the notice”. The applicants submit that it is clear from the terms of clause 12.3(b)(ii) and a consideration of the Change Event review procedure detailed in clauses 12.3 to 12.8, that a Change Event notice must, on its face, set out matters which fall within the definition of a “Change Event”.[53] The applicants further submit that clause 12.3(b)(ii), in its opening paragraph, provides that the notice to be provided is a “formal notice of a Change Event” (emphasis added).[54] The applicants therefore submit that it is difficult to see how a notice could be said to be a formal notice of a Change Event unless the notice on its face sets out matters that fall within the definition of “Change Event”. The applicants also rely on the mandatory language used in clause 12.3(b)(ii)(A) which provides that the notice “will include … all data which the Notifying Party holds which is relevant … to the Change Event”.[55] The applicants also rely on the procedure outlined in clauses 12.3 to 12.8 to support a conclusion that the notice must on its face describe matters which fall within the definition of a Change Event:
“The effect of the delivery of a valid Change Event Notice is that it triggers a procedure whereby the party receiving the notice must respond to it (including whether they accept the proposed adjustment or wish to propose an alternative option), the parties have to negotiate in an attempt to agree an Adjustment to the Coal Supply Agreement generally in accordance with the 12.1 principles (12.3(b)(v)) and which has as its purpose an attempt to “preclude the occurrence of, or to mitigate any adverse consequences flowing from or contributing to” the Change Event (cl 12.8), failing which the question of an adjustment will be determined by the cl 13 dispute resolution procedure. Without a clear delineation on the face of the Change Event Notice of what the Change Event is, it is difficult to see how the party receiving the Change Event Notice will be able to assess: (a) whether the Change Event occurred; (b) what the impacts of the Change Event were; (c) whether the proposed adjustment precludes the occurrence of, or mitigates the adverse consequences flowing from or contributing to, the Change Event; (d) whether to accept the proposed adjustment; and (e) whether alternative options should be proposed to preclude the occurrence of, or mitigate the adverse consequences flowing from or contributing to, the Change Event. It is also difficult to see how the negotiation (and determination under cl 13 absent agreement) of whether there should be an Adjustment could be practically undertaken without a clear delineation on the face of the Change Event Notice of what the Change Event is. As Fraser JA observed in Callide, the dispute under the Change Event procedure is “not at large” (at [52]). The Change Event Notice, with its requirement of a formal notice including a raft of information about the Change Event and proposed adjustment, “and the provision for the party receiving the notice (the “Receiving Party”) to propose alternative options (cl 12.4), are aptly designed to assist in the definition of any dispute, including as to any adjustment of the contractual terms sought by the parties” (at [45]).”[56]
[53] CPM’s Written Submissions, [105].
[54] CPM’s Written Submissions, [106].
[55] CPM’s Written Submissions, [106].
[56] CPM’s Written Submissions, [108].
The applicants refer to the deeming provision in clause 12.3(b)(ii) which states “and a Change Event will be deemed to have occurred.” The applicants submit:
“That it is an essential requirement that the Change Event Notice state on its face matters that fall within the definition of a Change Event is confirmed by the deeming provision at the end of cl 12.3(b)(ii). The deeming provision provides that if a Change Event Notice is given (that is a Change Event Notice which complies with the requirements in cl 12.3(b)(ii)), a “Change Event will be deemed to have occurred”. As is explained further below, the deeming provision has the effect that, for the purposes of triggering the obligation to negotiate an Adjustment in relation to the Change Event described in the Change Event Notice, a Change Event is taken to have occurred on the delivery of the notice. It should be noted that cl 12.3(b)(iv) makes it clear that the deeming provision does not alter the fact that the onus is upon the notifying Party to establish the impact of the Change Event and, ultimately, that the adjustment sought should be made.
The deeming provision has the effect that, on the delivery of a notice that complies with cl 12.3(b)(ii), the receiving party must comply with the tight timeframes for a response and for meetings of the parties. For that process to be able to work practically, the receiving party must be able to ascertain from a review of the notice itself whether what is described as having occurred is in fact a Change Event so that the notice is a valid Change Event Notice. Any alternative construction of cl 12.3 would be uncommercial and impractical.”[57]
[57] CPM’s Written Submissions, [109]-[110].
The flaw in these submissions, as identified by the respondents, is that there is no express requirement to describe the Change Event itself “on the face of the notice”. Clause 12.3(b)(ii) refers to “all data” which the Notifying Party holds which is relevant to the Change Event. Clause 12.3(b)(ii) also refers to calculating cost and revenue impacts as they relate to all options and alternatives identified by the Notifying Party as available to accommodate or mitigate the Change Event. The respondents therefore submit that there is an overriding qualification, namely that the data is confined to that which the Notifying Party holds. There is therefore, as submitted by the respondents, no textual, legal or commercial justification to impose “universal requirements, essential to validity, about what must appear “on the face” of a Change Event Notice in every case.”[58]
[58] Respondents’ Written Submissions, [210].
The respondents refer to the decision in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd[59] where the House of Lords found a notice to be effective, notwithstanding that, on its face, it contained an incorrect date. Lord Steyn stated:
“The construction of the notices must be approached objectively. The issue is how a reasonable recipient would have understood the notices. And in considering this question the notices must be construed taking into account the relevant objective contextual scene.”
[59] [1997] AC 749, 767 (Steyn LJ).
The respondents rely on the fact that clause 12.3(b)(i) does not contemplate any information about a Change Event being included in the initial notice. Clause 12.3(b)(ii) only contemplates that data relating to the Change Event will be provided but does not in terms require the Change Event Notice to contain some narrative or other description of the Change Event itself. The respondents further submit that even if there is to be found in the text of clause 12.3 some implicit general requirement that certain things always appear on the face of a Change Event Notice, there is no justification for concluding that strict compliance with these requirements is an essential pre-condition to validity.[60]
[60] Respondents’ Written Submissions, [211]-[212].
The parties’ submissions turn upon the proper construction of clause 12.3(b)(ii). This clause was considered by Fraser JA in Callide Coalfields (Sales) P/L:[61]
“Then cl 12.3(b)(i) obliges any party who wishes subsequently to give a “change event notice” under cl 12.3(b)(ii) first to notify the other party in writing promptly when the relevant “change event” becomes known to the notifying party of that party’s intention to initiate the proposed review. If the “Notifying Party” wishes to proceed cl 12.3(b)(ii) obliges it “as soon as practicable in all the circumstances” to submit a formal “change event notice”. Importantly, the notice must include all data held by the notifying party that is relevant to the suggested “change event” and the change event notice must identify the “options and alternatives . . . available to accommodate or mitigate the “change event””. This, and the provision for the party receiving the notice (the “Receiving Party”) to propose alternative options (cl 12.4), are aptly designed to assist in the definition of any dispute, including as to any adjustment of the contractual terms sought by the parties.”
[61] [2008] QCA 408, [45] (Fraser JA).
The reference in clause 12.3(b)(ii) to “a formal notice of a Change Event” does not, in my view, require such a notice on its face to set out the matters which fall within the definition of “Change Event”. The use of the word “formal” denotes at least two matters. First, the word “formal” distinguishes a notice given under clause 12.3(b)(ii) from the first notice given under clause 12.3(b)(i). As to the first notice, the Notifying Party has a discretion whether to issue such a notice. This is denoted by the word “may” in clause 12.3(b)(i). Such a notice is given “promptly” when the Change Event becomes known to the Notifying Party. The only role of the first notice is to notify the Receiving Party of the Notifying Party’s intention to initiate a review of the Coal Supply Agreement which may lead to an adjustment. As already noted, the word “adjustment” means an adjustment to the Coal Supply Agreement.[62] A notice under clause 12.3(b)(i) does not require the Receiving Party to do anything. Nor does it oblige either the Notifying Party or the Receiving Party to proceed with a review. The review mechanisms under clauses 12.4 to 12.8 and ultimately the dispute resolution procedures under clause 13 of the Coal Supply Agreement are only engaged upon the submitting of a “formal” notice pursuant to clause 12.3(b)(ii). This is the second aspect which denotes the use of the word “formal”. The notice in clause 12.3(ii) is referred to as “formal” because it is the notice that actually initiates the review mechanism. Beyond these two aspects it cannot be implied that the word “formal” carries with it the requirements submitted by the applicants, including stating “on the face of the notice” those matters which fall within the definition of “Change Event”.
[62] Schedule 1 to the Coal Supply Agreement.
Clause 12.3(b)(ii) does however state what the formal notice must include. Clause 12.3(b)(ii)(A) commences by identifying what a notice must include by reference to “all data which the Notifying Party holds”. The word “data” is not defined in the Coal Supply Agreement. The Macquarie Concise Dictionary defines “data” to mean “figures, statistics, etc, known or available; information collected for analysis or reference.”[63] It may be expected that the Notifying Party would be in possession of such information because it is the party that initiates the process. Before sending a “formal notice” under clause 12.3(b)(ii) the Notifying Party must hold the reasonable opinion that there has been a change in circumstances which has or will have a material effect on its competitiveness in relation to the industry in which it operates. Further, the Notifying Party must have given a notice under clause 12.3(b)(i) stating its intention to initiate a review of the Coal Supply Agreement which may lead to an adjustment. To hold such a reasonable opinion and to send the first notice the parties contemplated that the Notifying Party would be in possession of data which would enable it to identify the relevant Change Event.
[63] Macquarie Concise Dictionary, 5^th ed (2009), 315.
The formal notice must include all data held by the Notifying Party relevant to two matters. That the data must be relevant to two matters is apparent from the use of the word “both” in clause 12.3(b)(ii)(A). The notice must include all data which the Notifying Party holds which is relevant to the Change Event including detailed information regarding the nature, extent and quantum of the cost and revenue impacts of the Change Event. Secondly, the notice must include all data which the Notifying Party holds which is relevant to calculating those cost and revenue impacts as they relate to all of the options and alternatives identified by the Notifying Party available to accommodate or mitigate the Change Event. Clause 12.3(b)(ii)(A) contemplates that the Notifying Party will hold such data relevant to both matters. It is by reference to that data included in the notice that the Receiving Party is informed of the following:
(i)the nature of the Change Event;
(ii)the extent of the Change Event;
(iii)the quantum of the cost and revenue impacts of the Change Event; and
(iv)the calculation of those cost and revenue impacts as they relate to all of the options and alternatives identified by the Notifying Party available to accommodation or mitigate the Change Event.
Clause 12.3(b)(ii)(A) does not expressly require this information to appear on the face of the notice. Rather, what is required of the Notifying Party is to include in the notice all data which it holds which is relevant both to the Change Event and to calculating the cost and revenue impacts as they relate to all of the options and alternatives identified by the Notifying Party. What the clause requires is for this data to be provided to the Receiving Party by inclusion in the notice. The data which the Notifying Party holds which is relevant to both of the matters identified in clause 12.3(b)(ii)(A) must, at least objectively, notify a Change Event. To the extent, however, that question 5(a) requires these matters to appear “on the face of the notice”, no such requirement arises from a consideration of clause 12.3(b)(ii). Question 5(a) as worded should therefore be answered “no”.

(f)CS Energy, Callide Energy Pty Ltd and IG Power (Callide) Ltd (then Shell Coal Power (Callide) Ltd) estimated that the Contract Price agreed under the Coal Supply Agreement and the Callide Power Project Coal Supply Agreement for the supply of coal would result in them being competitive and profitable in their operations (as alleged in paragraphs 4A(k) of the defence);
(g)Anglo Coal Callide and AMP Life (the Original Coal Mine Owners) estimated that the Contract Price agreed under the Coal Supply Agreement and the Callide Power Project Coal Supply Agreement for the supply of coal would result in them being competitive and profitable in their operations (as alleged in paragraph 4A(k) of the defence);
(h)a change to the estimates referred to in subparagraphs 4A(k) and (l) of the defence would amount to a change to conditions affecting the competitiveness and profitability of the Callide Mine and the Callide B Power Station and the Callide C Power Station (as alleged in paragraph 4A(n) of the defence).

Question 3:May the facts alleged in paragraph 4A of the defence be taken into account in interpreting the Coal Supply Agreement?

Answer: UNNECESSARY TO ANSWER

Question 4:Do the facts alleged in paragraph 4A of the defence give rise to the inference of the objective commercial purpose of the Coal Supply Agreement alleged in paragraph 4B of the defence:
Answer:NO
Question 5:In order for a notice to be a notice within the terms of, and given in accordance with, clause 12.3(b)(ii) of the Coal Supply Agreement is it the case that:
(a)the matters set out in the notice must, on the face of the notice, fall within the definition of “Change Event”?
Answer:     NO
(b)the notice must, inter alia, include detailed information regarding the nature, extent and quantum of the cost and revenue impacts of the “Change Event”?
Answer:     NO
(c)the notice must, inter alia, state options and alternatives identified by the Notifying Party as being available to accommodate or mitigate the Change Event?
Answer:     YES

Question 6:Is strict compliance with the requirements referred to in 5(a) to (c) (if those requirements are found to exist) necessary for a notice under clause 12.3(b)(ii) to be valid or may a notice be valid if it substantially complies with the requirements of clause 12.3(b)(ii)?
Answer:UNNECESSARY TO ANSWER
Question 7:Must the “change in circumstances” comprising a “Change Event” within the meaning of the Coal Supply Agreement:
(a)     be an occurrence, comprised of either:
(i)     a single change in circumstances? or
Answer:     NO
(ii)alternatively, one or more changes in circumstances which:
(A)    do not constitute more than one Change Event;
Answer:    YES

(B) further or alternatively, are the same nature?
Answer: NO

(b)subject to any express exception, be supervening or external in nature, such that a mere failure to meet one party’s own expectations or forecasts would not fall within the definition?
Answer: YES

Question 8:Can a party rely on a change or changes in circumstances for the purposes of clause 12.3 of the Coal Supply Agreement, in circumstances where the party has previously:
(a)notified the other party (pursuant to clause 12.3(b)(i)) of; or
(b)submitted a Change Event Notice (pursuant to clause 12.3(b)(ii)) in relation to,

an alleged Change Event that is comprised in whole or in part of the change or changes in circumstances sought to be subsequently relied upon?

Answer:NO
Question 9:Can a party rely on a change or changes in circumstances for the purposes of clause 12.3 of the Coal Supply Agreement in circumstances where the party forms a reasonable opinion that the change or changes in circumstances have, or will have, a material effect on the competitiveness of the Coal Mine Owners or the Buyer in relation to the industry in which it operates and:[245]
[245] [9)(e)] SOC, [9(e)] D.
(a)does not notify the other party in writing promptly on the formation of the opinion that it is the party’s intention to initiate a review of the Coal Supply Agreement under clause 12.3 which may lead to an Adjustment; or
(b)does not, as soon as practicable in all the circumstances, submit a Change Event Notice within the meaning of that term as used in clause 12.3(b)(ii) in relation to an alleged Change Event that is comprised in whole or in part of the change or changes in circumstances?

Answer: NO

Question 10:               Was a Change Event deemed to have occurred upon the delivery of the document entitled ‘Change Event Notice Callide B Coal Supply Agreement (Clause 12)’ (with Annexures) delivered by Callide Sales to CS Energy on 12 November 2013 (the 12 November Notice)?
Answer:NO
Question 11:      Are increases in costs governed exclusively by clause 10 of the Coal Supply Agreement (such that they cannot engage clause 12 of the Coal Supply Agreement) or may increases in costs give rise to, or form part of, a change or changes in circumstances that constitute a Change Event?
Answer:Mere increases in costs are not in and of themselves a Change Event. Unless they are the consequence or effect of a Change Event, they are governed exclusively by clause 10 of the Coal Supply Agreement.
Question 13:      Must a notice given in accordance with clause 12.3(b)(i) of the Coal Supply Agreement be given promptly when the Change Event becomes known to the Notifying Party or may a notice given in accordance with clause 12.3(b)(i) of the Coal Supply Agreement be given promptly after the party giving the notice forms the intention to initiate a review?
Answer:A notice given in accordance with clause 12.3(b)(i) of the Coal Supply Agreement must be given promptly when the Change Event becomes known to the Notifying Party.
Question 14:      Is compliance with the time specified in clause 12.3(b)(i) of the Coal Supply Agreement a condition precedent to the valid issue of a notice under the clause?
Answer:NO

Question 15: Is compliance with the time specified in clause 12.3(b)(ii) of the Coal Supply Agreement a condition precedent to the valid issue of a Change Event Notice under the clause?
Answer:NO

Question 16:      Does the 12 November Notice, on the face of the notice, assert that there was:
(a)an occurrence comprised of a single change in circumstances”
Answer:     NO
(b)one or more changes in circumstances which both (i) do not constitute more than one Change Event and (ii) are of the same nature?
Answer:     NO
(c)one or more changes in circumstances which do not constitute more than one Change Event?
Answer:     NO
(d)one or more changes in circumstances which are of the same nature?
Answer:     NO

Question 17: Does the answer to 16 mean that, on the face of the notice, the matters set out in the 12 November notice do not fall within the definition of “Change Event”?
Answer:The matters set out in the 12 November notice do not fall within the definition of “Change Event” because they are changes in circumstances which comprise more than one Change Event.
Question 18: Are the matters in section 6 of the 12 November notice, on the face of the notice:
(a)based on an alleged initial failure to appreciate features of the geology, not based on any alleged change in actual geology, not entailing an occurrence or a matter of a supervening or external nature, entailing a mere failure to meet expectations; and/or
Answer:No, except they are not based on any alleged change in actual geology.

(b)based on increased costs arising from adverse physical conditions encountered at the Callide Mine?
Answer:YES

Question 19:      Does the answer to 18 mean that, on the face of the notice, the matters set out in the 12 November notice do not fall within the definition of ‘Change Event’?
Answer:NO
Question 20:      Are matters in paragraphs 9 to 14 of the 12 November notice, on the face of the notice, matters which do not entail an occurrence but entail a mere consequence or effect without identification of an underlying occurrence?
Answer:YES
Question 21:      Does the answer to 20 mean that, on the face of the notice, the matters set out in the 12 November notice do not fall within the definition of “Change Event”?
Answer:YES

Question 22: Are matters in paragraph 15 of the 12 November notice, on the face of the notice, matters which do not entail an occurrence or a matter of a supervening or external nature but entail a mere failure to meet expectations?

Answer:YES
Question 23:      Does the answer to 22 mean that, on the face of the notice, the matters set out in the 12 November notice do not fall within the definition of “Change Event”?
Answer:YES
Question 25:      Having regard to the answer to question 11 above do the matters referred to in the 12 November notice at paragraphs 9 to 14 engage clause 12 of the Coal Supply Agreement?
Answer:NO
Question 26:      Do the matters set out in the 12 November notice fall, in substance, within the definition of a “Change Event”?
Answer:NO
Question 27:      Are the matters referred to in question 16 above discernible by a reasonable reader of the 12 November notice in the position of the applicant?
Answer:NO
Question 28:      If some of the matters set out in the 12 November notice do not, on the face of the notice, fall within the definition of Change Event, is the 12 December notice nevertheless valid?
Answer:NO
Question 29:      As a result of the answers to questions 16 to 23 and 26 to 28 above, is the 12 November notice a notice “of a Change Event”?
Answer:NO
Question 30:      As a result of the answers to questions 16 to 29 above, is the 12 December notice invalid?
Answer:YES
Question 31:      Does the 12 November notice identify or include detailed information regarding the quantum of the cost and revenue impacts of the alleged Change Event?
Answer:NO
Question 32:      Does the answer to question 31 mean that the 12 November notice is invalid?
Answer:YES
Question 33:      If the 12 November notice is to be read as encompassing some only of the changes in circumstances it describes, does the 12 November notice set out, or include, detailed information regarding the quantum of the cost and revenue impacts of those changes in circumstances?
Answer:NO
Question 34:      If the 12 November notice is to be read as encompassing some only of the changes in circumstances it describes and does not set out or include detailed information regarding the quantum of the cost and revenue impacts of those changes in circumstances, is the 12 November notice invalid?
Answer:YES
Question 35:      If the 12 November notice is to be read as encompassing some only of the changes in circumstances it describes, does it state any options and alternatives as being available to accommodate or mitigate those changes in circumstances?
Answer:NO
Question 36:      If the 12 November notice is to be read as encompassing some only of the changes in circumstances it describes and it does not state any options and alternatives as being available to accommodate or mitigate those changes in circumstances, is the 12 November notice invalid?
Answer:YES

ANNEXURE “B” – SC No 12122 of 2013

Separate Questions and Answers

Question 1:At the time Callide Coalfields (Sales) Pty Ltd (Callide Sales) (acting on behalf of Anglo Coal (Callide Pty Ltd (Anglo Coal Callide) and AMP Life Limited (AMP Life)) and Callide Power Management Pty Ltd (CPM) (acting on behalf of IG Power (Callide) Ltd (IG Power) and Callide Energy Pty Limited (Callide Energy)) entered into an agreement dated 11 May 1998 pursuant to which Callide Sales agreed to supply coal to CPM (Coal Supply Agreement),
(a)were the alleged facts set out in subparagraphs (d) to (h) true?
Answer:     YES
(b)were the alleged facts in subparagraphs (d) to (h) known by each of Callide Sales, Anglo Coal Callide (then Shell Coal (Callide) Pty Ltd), AMP Life Callide Energy and IG Power (then Shell Coal Power (Callide) Ltd (Shell Coal Power)?
Answer:     YES
(c)alternatively to (b), would the alleged facts in subparagraphs (d) to (h) have been known by reasonable persons in the position of each of those parties?
Answer:     UNNECESSARY TO ANSWER
The alleged facts are:
(d)clauses 9.1.3 and 17.6 of CS93 contained a limited review mechanism in the event of any major change to prescribed working conditions within the coal mining industry (as alleged in paragraph 4A(e)(iii) of the defence);
(f)CS Energy Limited (CS Energy), Callide Energy Pty Ltd and IG Power (then Shell Coal Power (Callide) Ltd) estimated that the Contract Price agreed under the Callide B Coal Supply Agreement and the Coal Supply Agreement for the supply of coal would result in them being competitive and profitable in their operations (as alleged in paragraphs 4A(k) of the defence);
(g)Anglo Coal Callide and AMP Life (the Original Coal Mine Owners) estimated that the Contract Price agreed under the Callide B Coal Supply Agreement and the Coal Supply Agreement for the supply of coal would result in them being competitive and profitable in their operations (as alleged in paragraph 4A(k) of the defence);
(h)a change to the estimates referred to in subparagraphs 4A(k) and (l) of the defence would amount to a changes to conditions affecting the competitiveness and profitability of the Callide Mine and the Callide B Power Station and the Callide C Power Station (as alleged in paragraph 4A(n) of the defence).

Question 3:May the facts alleged in paragraph 4A of the defence be taken into account in interpreting the Coal Supply Agreement?

Answer: UNNECESSARY TO ANSWER

Question 4:Do the facts alleged in paragraph 4A of the defence give rise to the inference of the objective commercial purpose of the Coal Supply Agreement alleged in paragraph 4B of the defence?
Answer:NO
Question 5:In order for a notice to be a notice within the terms of, and given in accordance with clause 12.3(b)(ii) of the Coal Supply Agreement is it the case that:
(a)the matters set out in the notice must, on the face of the notice, fall within the definition of “Change Event”?
Answer:NO

(b)the notice must include detailed information regarding:
(i)the nature, extent of the “Change Event”?
(ii)the quantum of the cost and revenue impacts of the “Change Event”?
(iii)the quantum of the cost and revenue impacts of each option and alternative identified?
Answer:NO

(c)the notice must specify options and alternatives identified by the Notifying Party as being available to accommodate or mitigate the Change Event?
Answer:YES

Question 6:Must the “change in circumstances” comprising a “Change Event” within the meaning of the Coal Supply Agreement:
(a)     be an occurrence, comprised of either:
(i)     a single change in circumstances? Or
Answer:    NO

(ii)in the alternative to (i):
(A) a single change in circumstances; or
(B) multiple changes in circumstances where:
(1)each of the changes in circumstances is of the same nature;
Answer:NO
(2)further, and in the alternative, they do not constitute more than one Change Event?
Answer:YES

(b)subject to any express exception, be supervening or external in nature and not comprise merely a change from the conditions or state of affairs which a party expected, at the time of the Coal Supply Agreement, to encounter in the future?
Answer: NO. This question is worded differently to question 7(b) in the Separate Questions in SC No 12138 of 2013 because it refers to “a change from the conditions or state of affairs which a party expected” as opposed to “a mere failure to meet one party’s own expectations or forecasts”. To the extent the question is framed so as to exclude the change in circumstances identified in section 6 of the 12 November notice it should be answered “no”.

Question 7:As to the requirements referred to in question 5(a) to 5(c) and 6 above:
(a)must each requirement be met on the face of the Change Event Notice?
Answer:NO

(b)must each requirement be strictly complied with, or may a notice be valid if it substantially complies with the requirements of clause 12.3(b)(ii)?
Answer: UNNECESSARY TO ANSWER

Question 8:Can a party rely on a change or changes in circumstances for the purposes of clause 12.3(b)(i) or a Change Event Notice under clause 12.3(b)(ii) of the Coal Supply Agreement, if party has previously:
(a)notified the other party (pursuant to clause 12.3(b)(i)) of; or
(b)submitted a Change Event Notice (pursuant to clause 12.3(b)(ii)) in relation to,

that change or those changes in circumstances?

Answer:NO
Question 9:Can a party rely on a change or changes in circumstances for the purposes of a notice under clause 12.3(b)(i) or a Change Event Notice under clause 12.3(b)(ii) of the Coal Supply Agreement if the party forms a reasonable opinion that the change or changes in circumstances has, or will have, a material effect on the competitiveness of the Coal Mine Owners or the Station Owners in relation to the industry in which it operates and:
(a)does not notify the other party in writing promptly on the formation of the opinion that it is the party’s intention to initiate a review of the Coal Supply Agreement under clause 12.3 which may lead to an Adjustment; or
(b)does not, as soon as practicable in all the circumstances, submit a Change Event Notice within the meaning of that term as used in clause 12.3(b)(ii)?

Answer: NO

Question 10:      Was a Change Event deemed to have occurred consequent upon the delivery of the document entitled “Change Event Notice Callide C Coal Supply Agreement (Clause 12)” (with Annexures) by Callide Sales to CPM on 12 November 2013 (the 12 November Notice)?
Answer:NO
Question 11:      Are increases in costs governed exclusively by clause 10 of the Coal Supply Agreement (such that they cannot engage clause 12 of the Coal Supply Agreement) or may increases in costs give rise to, or form part of, a change or changes in circumstances that constitute a Change Event?
Answer:Mere increases in costs are not in and of themselves a Change Event. Unless they are the consequence or effect of a Change Event they are governed exclusively by clause 10 of the Coal Supply Agreement.
Question 13:      Can the mere fact of the Coal Mine Owners ceasing to benefit under the Coal Supply Agreement of itself be a change in circumstances capable of comprising a Change Event within the meaning of clause 12.3 of the Coal Supply Agreement?
Answer:NO
Question 14:      Must a notice given in accordance with clause 12.3(b)(i) of the Coal Supply Agreement be given promptly when the Change Event becomes known to the Notifying Party or may a notice given in accordance with clause 12.3(b)(i) of the Coal Supply Agreement be given promptly after the party giving the notice had formed the intention to initiate a review?
Answer:A notice given in accordance with clause 12.3(b)(i) of the Coal Supply Agreement must be given promptly when the Change Event becomes known to the Notifying Party.

Question 15: Must a Change Event Notice given in accordance with clause 12.3(b)(ii) of the Coal Supply Agreement be given as soon as practicable:
(a)after the Notice of Intention is given; or
Answer:YES

(b)after the Change Event the subject of the Change Event Notice becomes known to the party giving the Change Event Notice; or
Answer:NO

(c)after the party giving the Change Event Notice forms the opinion that it wishes to proceed with a review under clause 12 of the Coal Supply Agreement?
Answer: NO

Question 16: Is compliance with the time specified in clause 12.3(b)(i) of the Coal Supply Agreement a condition precedent to the valid issue of a notice under the clause?

Answer:NO
Question 17: Is compliance with the time specified in clause 12.3(b)(ii) of the Coal Supply Agreement a condition precedent to the valid issue of a notice under the clause?
Answer:NO
Question 18: Does the 12 November notice describe, on its face:
(a)a single change in circumstances?
Answer:NO

(b)multiple changes in circumstances which both (i) are the same nature and (ii) do not constitute more than one Change Event?
Answer:NO

(c)multiple changes in circumstances which are of the same nature?
Answer:NO

(d)changes in circumstance which comprise more than one Change Event?
Answer: YES

Question 19: Do the answers to question 18 mean that, on the face of the 12 November notice, it does not identify a Change Event under clause 12.3(a) of the Coal Supply Agreement?
Answer:YES
Question 20: Does section 6 of the 12 November notice, on the face of the notice:
(a)describe the change in circumstances as Callide Sales becoming aware of geological features of the Coal deposit at the Callide Mine which were not known by Callide Sales at the time of execution of the Coal Supply Agreement, which increased the costs of mining and reduced profitability under the Coal Supply Agreement (or is this an inaccurate summary)?
Answer:NO

(b)describe a change to the conditions or state of affairs existing at the time of entry into the Coal Supply Agreement for the purposes of clause 12.3(a) of the Coal Supply Agreement?
Answer:YES

(c)describe merely a change from the conditions or state of affairs which the Coal Mine Owners believed, at the time of entry into the Coal Supply Agreement, that they would encounter in the future?
Answer:NO

(d)describe matters based on increased costs arising from adverse physical conditions encountered at the Callide Mine?
Answer:YES

Question 21: Do the answers to question 20 mean that:
(a)the matters described on the face of section 6 of the 12 November notice are not a change in circumstances capable of comprising a Change Event within the meaning of clause 12.3(a) of the Coal Supply Agreement?
Answer:NO

(b)the 12 November notice does not, on its face, identify a Change Event under clause 12.3(a)?
Answer: NO

Question 24: Are sections 9 to 14 of the 12 November notice accurately stated in paragraphs [25] to [30] of the Statement of Claim?
Answer:YES
Question 25: Do sections 9 to 14 of the 12 November notice, on the face of the notice, describe:
(a)a change or changes in circumstances comprising a mere increase in costs?
Answer:YES

(b)the occurrence of a single change in circumstances or multiple changes in circumstances where each of the changes in circumstances is of the same nature?
Answer:NO

(c)merely the effect on competitiveness contemplated by clause 12.3(a)?
Answer:YES

Question 26: Do the answers to questions 11 and 24 – 25 above meant that:
(a)the matters described on the face of sections 9 to 14 of the 12 November notice are not a change in circumstances capable of comprising a Change Event within the meaning of clause 12.3(a) of the Coal Supply Agreement?
Answer:YES

(b)the 12 November notice does not on its face, identify a Change Event under clause 12.3(a)?
Answer:YES

Question 27: Does section 15 of the 12 November notice, on the face of the notice, describe a change or changes in circumstances comprising the mere fact of the Coal Mine Owners having ceased to benefit under the Coal Supply Agreement?
Answer:YES
Question 28: Do the answers to questions 13 and 27 above meant that:
(a)the matters described on the face of section 15 of the 12 November notice are not a change in circumstances capable of comprising a Change Event within the meaning of clause 12.3(a) of the Coal Supply Agreement?
Answer:YES

(b)the 12 November notice does not, on its face, identify a Change Event under clause 12.3(a)?
Answer:YES

Question 29:      Do the matters set out in the 12 November notice fall, in substance, within the definition of a “Change Event”?
Answer:NO
Question 30:      Are the matters referred to in question 18 above discernible by a reasonable reader of the 12 November notice in the position of the Applicants?
Answer:NO
Question 31:      If some of the matters set out in the 12 November notice do not on the face of the notice, fall within the definition of Change Event, does the 12 November notice nevertheless identify a Change Event as defined in clause 12.3(a)?
Answer:NO
Question 32:      As a result of the answers to questions 18 to 31 above, is the 12 November notice a Change Event Notice under clause 12.3(b)(ii)?
Answer:NO
Question 33:      Does the 12 November notice describe the cost and revenue impacts of the changes in circumstances cumulatively only?
Answer:YES
Question 34:      Does the 12 November notice:
(a)contain detailed information regarding the quantum of the cost and revenue impacts of a Change Event?
Answer:NO

(b)specify options and alternatives to accommodate or mitigate a Change Event?
Answer:NO

(c)contain detailed information regarding the quantum of the costs and revenue impacts of such options and alternative?
Answer:NO

(d)state Callide Sales’ recommended option to accommodate or mitigate a Change Event?
Answer:NO

Question 35: As a result of the answers to question 34 above, is the 12 November notice a notice under clause 12.3(b) of the Coal Supply Agreement?
Answer:NO
Question 36: If the 12 November notice is to be read as encompassing some only of the changes in circumstances it describes, does it:
(a)contain detailed information regarding the quantum of the cost and revenue impacts of the changes in circumstances identified in the 12 November notice?
Answer:NO

(b)state options and alternatives to accommodate or mitigate those changes in circumstances?
Answer:NO

(c)state detailed information regarding the quantum of the cost and revenue impacts of options and alternatives to accommodate or mitigate those changes in circumstances?
Answer:NO

(d)state Callide Sales’ recommended option to accommodate or mitigate those changes in circumstances?
Answer:NO

Question 37: As a result of the answers to question 36 above, is the 12 November notice a notice under clause 12.3(b) of the Coal Supply Agreement?
Answer:NO

CITATION:	Callide Power Management Pty Ltd & Ors v Callide Coalfields (Sales) Pty Ltd & Ors; CS Energy Ltd v Callide Coalfields (Sales) Pty Ltd & Ors (No 5) [2016] QSC 199
PARTIES:	CALLIDE POWER MANAGEMENT PTY LTD ACN 082 468 700 (first applicant) CALLIDE ENERGY PTY LIMITED ACN 082 468 746 (second applicant) IG POWER CALLIDE LTD (FORMERLY SHELL COAL POWER CALLIDE LTD) ACN 082 413 885 (third applicant) v CALLIDE COALFIELDS (SALES) PTY LTD ACN 082 543 986 (first respondent) ANGLO COAL (CALLIDE) PTY LTD ACN 081 022 228 (second respondent) ANGLO COAL (CALLIDE) NO. 2 PTY LTD ACN 004 784 454 (third respondent) CS ENERGY LIMITED ABN 54 078 848 745 (applicant) v CALLIDE COALFIELDS (SALES) PTY LTD ACN 082 543 986 (first respondent) ANGLO COAL (CALLIDE) PTY LTD ACN 081 022 228 (second respondent) ANGLO COAL (CALLIDE) NO. 2 PTY LTD ACN 004 784 454 (third respondent)
FILE NO/S:	SC No 12122 of 2013 SC No 12138 of 2013
DIVISION:	Trial Division
PROCEEDING:	Trial
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	31 August 2016
DELIVERED AT:	Brisbane
HEARING DATE:	18 – 20 July 2016
JUDGE:	Flanagan J
ORDERS:	The separate questions in SC No 12138 of 2013 are answered in the terms of Annexure A to these Reasons. The separate questions in SC No 12122 of 2013 are answered in the terms of Annexure B to these Reasons. I will hear the parties as to costs.
CATCHWORDS:	CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – where the respondents and the applicants are parties to Coal Supply Agreements – where the Coal Supply Agreements include a mechanism for review where a Change Event is notified – where a Change Event is a change in circumstances which has, or will have, a material effect on the competitiveness of either party in relation to the industry in which it operates – where the respondents issued notice of a Change Event to the applicants on 12 November 2013 – where the applicants dispute the validity of the 12 November 2013 notice issued by the respondents – where the parties agreed a list of separate questions for determination – whether the 12 November 2013 notice issued by the respondents to the applicants was valid under the terms of the Coal Supply Agreements – whether the alleged facts pleaded by the respondents are true – whether the alleged facts pleaded by the respondents give rise to the objective commercial purpose pleaded by the respondents – whether the 12 November 2013 notice issued by the respondents to the applicants was valid on its face – whether a mere increase in costs is capable of being a Change Event for the purposes of the Coal Supply Agreements – whether a change in a party’s expectation of benefitting under the Coal Supply Agreement is capable of being a Change Event for the purposes of the Coal Supply Agreements – whether the time requirements in clauses 12.3(b)(i) and 12.3(b)(ii) of the Coal Supply Agreements are essential – whether the 12 November 2013 notice issued by the respondents to the applicants describes a Change Event under the terms of the Coal Supply Agreement – whether the 12 November 2013 notice issued by the respondents to the applicants describes the impacts, options and alternatives for a Change Event AGL Sales (Qld) Pty Ltd v Dawson Sales Pty Ltd & Ors [2009] QSC 8, considered AGL Sales (Qld) P/L v Dawson Sales P/L & Ors [2009] QCA 262, considered AIB Group (UK) Limited v Martin [2002] 1 WLR 94, cited Alliance Petroleum Australia NL & Ors v Australian Gas Light Company (1985) 39 SASR 84, cited Amann Aviation Pty Ltd v Commonwealth of Australia (1990) 22 FCR 527, cited Bremer v Handelsgesellschaft mbH v Vanden Avenne-Izegem PVBA [1978] 2 Lloyd’s Rep 109, cited British and Commonwealth Holdings PLC v Quadrex Holdings Inc [1989] 1 QB 842, cited Callide Coalfields (Sales) P/L v CS Energy Ltd & Anor [2008] QCA 408, applied Callide Power Management Pty Ltd & Ors v Callide Coalfields (Sales) Pty Ltd & Ors; CS Energy Ltd v Callide Coalfields (Sales) Pty Ltd & Ors (No 3) [2015] QSC 295, cited Dilworth v Commissioner of Stamps [1899] AC 99, cited Esso Exploration & Production UK Ltd v Electricity Supply Board [2004] EWHC 723 (Comm), cited Great Elephant Corporation v Trafigura Beheer BV [2012] 2 Lloyd’s Rep 503, considered Jennings Construction Ltd v QH & M Birt Pty Ltd (1986) 8 NSWLR 18, considered Mamidoil-Jetoil Greek Petroleum Company SA v Okta Crude Oil Refinery AD (No 3) [2003] 1 Lloyd’s Rep 1, cited Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, considered McLellan & Anor v Australian Stock Exchange Ltd (2005) 144 FCR 327, cited Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37, cited Opat Decorating Service (Aust) Pty Ltd v Hansen Yuncken (SA) Pty Ltd (1994) 11 BCL 360, considered Patel v Earlspring Properties Ltd [1991] 2 EGLR 131 (CA), cited R v Gray & Ors; Ex parte Marsh & Anor (1985) 157 CLR 351; [1985] HCA 67, considered State of New South Wales v Austeel Pty Ltd [2003] NSWCA 392, considered Superior Overseas Development Corporation and Phillips Petroleum (UK) Co Limited v British Gas Corporation [1982] 1 Lloyd’s Rep 262, considered Tradax Export SA v Andre and Cie SA [1976] 1 Lloyd’s Rep 416, considered United Scientific v Burnley Council [1978] AC 904, considered Wormald Engineering Pty Ltd v Resources Conservations Co International (1988) 8 BCL 158, cited YZ Finance Company Pty Ltd v Cummings (1964) 109 CLR 395; [1964] HCA 12, considered
COUNSEL:	P L O’Shea QC, with D O’Brien QC, for the applicants in SC No 12122 of 2013 A Pomerenke QC, and J O’Regan, for the applicant in SC No 12138 of 2013 S D Doyle QC, with D G Clothier QC, and S J Webster, for the respondents in SC No 12122 of 2013 and SC No 12138 of 2013
SOLICITORS:	Johnson Winter Slattery for the applicants in SC No 12122 of 2013 Corrs Chambers Westgarth for the applicant in SC No 12138 of 2013 Gilbert + Tobin Lawyers for the respondents in SC No 12122 of 2013 and SC No 12138 of 2013