Chevron (TAPL) Pty Ltd v Pilbara Iron Company (Services) Pty Ltd - [2021] WASCA 193

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT :   THE COURT OF APPEAL (WA)
CITATION:   CHEVRON (TAPL) PTY LTD -v- PILBARA IRON COMPANY (SERVICES) PTY LTD [2021] WASCA 193
CORAM:   QUINLAN CJ
MURPHY JA
BEECH JA

HEARD:   11 & 12 OCTOBER 2021
DELIVERED          :   17 NOVEMBER 2021
FILE NO/S:   CACV 96 of 2020
BETWEEN:   CHEVRON (TAPL) PTY LTD
First Appellant
CHEVRON AUSTRALIA PTY LTD
Second Appellant
MOBIL AUSTRALIA RESOURCES COMPANY PTY LIMITED
Third Appellant
SHELL AUSTRALIA PTY LTD
Fourth Appellant
OSAKA GAS GORGON PTY LTD
Fifth Appellant
TOKYO GAS GORGON PTY LTD
Sixth Appellant
JERA GORGON PTY LTD
Seventh Appellant
AND
PILBARA IRON COMPANY (SERVICES) PTY LTD
First Respondent
HAMERSLEY IRON PTY. LIMITED
Second Respondent
ROBE RIVER MINING CO. PTY. LTD.
Third Respondent

ON APPEAL FROM:
Jurisdiction              :   SUPREME COURT OF WESTERN AUSTRALIA
Coram:   ARCHER J
Citation: PILBARA IRON COMPANY (SERVICES) PTY LTD -v- CHEVRON (TAPL) PTY LTD [2020] WASC 296
File Number            :   CIV 1626 of 2020

Catchwords:

Contract - Construction of contracts - Long-term gas supply agreement - Whether time stipulation in the clause empowering the parties to initiate a Price Review is of the essence - Whether notice initiating a Price Review given outside the stipulated time period is effectual - Whether presumption should be made that time is not of the essence

Legislation:

Nil

Result:

Appeal allowed
Declarations made

Category: A

Representation:

Counsel:

First Appellant	:	N C Hutley SC & N Oreb
Second Appellant	:	N C Hutley SC & N Oreb
Third Appellant	:	N C Hutley SC & N Oreb
Fourth Appellant	:	N C Hutley SC & N Oreb
Fifth Appellant	:	N C Hutley SC & N Oreb
Sixth Appellant	:	N C Hutley SC & N Oreb
Seventh Appellant	:	N C Hutley SC & N Oreb
First Respondent	:	S K Dharmananda SC & C V Wren
Second Respondent	:	S K Dharmananda SC & C V Wren
Third Respondent	:	S K Dharmananda SC & C V Wren

Solicitors:

First Appellant	:	Norton Rose Fulbright Australia
Second Appellant	:	Norton Rose Fulbright Australia
Third Appellant	:	Norton Rose Fulbright Australia
Fourth Appellant	:	Norton Rose Fulbright Australia
Fifth Appellant	:	Norton Rose Fulbright Australia
Sixth Appellant	:	Norton Rose Fulbright Australia
Seventh Appellant	:	Norton Rose Fulbright Australia
First Respondent	:	Johnson Winter & Slattery - Perth
Second Respondent	:	Johnson Winter & Slattery - Perth
Third Respondent	:	Johnson Winter & Slattery - Perth

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

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27
Alliance Petroleum Australia NL v Australian Gas Light Co (1985) 39 SASR 84
Black Box Control Pty Ltd v TerraVision Pty Ltd [2016] WASCA 219
Bondi Diggers Club Ltd v Vitarni Pty Ltd (1996) 7 BPR 15,061
Callaghan v Merivale CBD Pty Ltd [2005] NSWSC 985; [2006] NSW ConvR 56-155
Callide Power Management Pty Ltd v Callide Coalfields (Sales) Pty Ltd (No 5) [2016] QSC 199
Canning v Temby (1905) 3 CLR 419
Carr v JA Berriman Pty Ltd (1953) 89 CLR 327
Douglas v Cicirello [2006] WASCA 226
Earnshaw v Gorman & Sons Pty Ltd [2001] WASCA 50
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95
George 218 Pty Ltd v Bank of Queensland Limited [No 2] [2016] WASCA 182; (2016) 313 FLR 287
Gollin & Co Ltd v Karenlee Nominees Pty Ltd (1983) 153 CLR 455
GR Mailman & Associates Pty Ltd v Wormald (Aust) Pty Ltd (1991) 24 NSWLR 80
Hewitt v Debus [2004] NSWCA 54; (2004) 59 NSWLR 617
Holland v Wiltshire (1954) 90 CLR 409
JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [2020] WASCA 112
Kawasaki Heavy Industries Ltd v Laing O'Rourke Australia Construction Pty Ltd [2017] NSWCA 291; (2017) 96 NSWLR 329
Larking v Great Western (Nepean) Gravel Ltd (in liq) (1940) 64 CLR 221
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1988) 166 CLR 623
Louinder v Leis (1982) 149 CLR 509
Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2013] QCA 271
Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
Petrie v Dwyer (1954) 91 CLR 99
Pilbara Iron Company (Services) Pty Ltd v Chevron (TAPL) Pty Ltd [2020] WASC 296
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355
R v A2 [2019] HCA 35; (2019) 93 ALJR 1106
Reid v Moreland Timber Co Pty Ltd (1946) 73 CLR 1
Rolleston Coal Holdings Pty Ltd v ICRA Rolleston Pty Ltd [2020] QSC 352; (2020) 14 ARLR 213
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80; (2019) 55 WAR 89
Solomons v Halloran (1906) 7 SR (NSW) 32
Stickney v Keeble [1915] AC 386
Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315
The Peonia [1991] 1 Lloyd's Rep 100
Tokio Marine & Nichido Fire Insurance Co Ltd v Hans Bo Kristian Holgersson t/as Holgerssons Complete Home Service [2019] WASCA 114
Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632
Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689
Trustees of Henry Smith Charity v AWADA Trading and Promotion Services Ltd (1983) 47 P & CR 607
United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904

JUDGMENT OF THE COURT:

Introduction

This appeal concerns a single question of construction of a price review clause in a long-term gas supply contract: does failure, in giving notice to initiate a price review, to comply with a time stipulation mean that the attempt to invoke the price review clause is ineffectual?
The appellants are joint venture participants in the Gorgon Gas Project. The respondents are entities in the Rio Tinto Iron Ore Group and operate iron ore mines in the north west of Western Australia. Under a contract between the parties, the appellants (Sellers) agreed to supply the first respondent (Buyer) gas over a period of [number redacted][1] years. The second and third respondents guaranteed the Buyer's obligations.[2]
[1] Parts of these reasons have been suppressed from publication in order to give effect to the parties' obligations of and correlative interests in confidentiality, reflected in the order of Mitchell JA made on 9 October 2020.
[2] Only the first respondent is a party to, and therefore the 'Buyer', under the contract. However, as all respondents adopted a single position in the appeal, in the interests of consistency of terminology, in these reasons the respondents are also referred to, collectively, as the Buyer in the outline of their contentions.
The gas supply contract between the parties provides that, every [number redacted] years, either party may initiate a review of the price of the gas by issuing a notice within a stipulated time frame. Clause 14, which contains 19 subclauses, creates an elaborate regime for a Price Review, defined by cl 14.1 as a price review in respect of the Base Reference Gas Price (BRGP). By cl 14.3, either party may initiate a Price Review by issuing the other side 'a notice which complies with Clause 14.4 ('Price Review Notice') not more than 120 days nor less than 90 days prior to a Price Review Date'.
In [month redacted] 2020, the Buyer issued a notice some three weeks late, outside that time frame. In the primary proceedings, the Buyer claimed that the notice was effective to initiate a Price Review, notwithstanding that it was issued outside the time frame. It sought a declaration to that effect. The Sellers counterclaimed and sought a declaration to the contrary.
The primary judge found in favour of the Buyer and made declarations accordingly.[3] The critical issue, as her Honour framed it, was whether the parties objectively intended the time stipulation in cl 14.3 to be essential.[4]
[3] Pilbara Iron Company (Services) Pty Ltd v Chevron (TAPL) Pty Ltd [2020] WASC 296 (primary reasons).
[4] Primary reasons [13], [317].
The judge discussed numerous factors relied on by the parties for and against the competing constructions. The primary judge concluded that the time stipulation was not essential and that a Price Review Notice could be issued until the Price Review Date (defined in cl 14.2, set out in [28] below) but not after that date. Her Honour considered the factors of particular significance to be:[5]
(1)the way in which 'Price Review Notice' is defined, so as to exclude the time stipulation, when that term is read into cl 14.5;
(2)the purpose of cl 14;
(3)the limited termination rights in the context of a take or pay contract;
(4)the absence of a deeming provision setting out the consequences of non-compliance with the time stipulation; and
(5)the uncommerciality of a construction of cl 14 under which the right to a Price Review in respect of a Price Review Date may be lost simply by a failure to issue the notice within the timeframe stipulated in cl 14.3.
[5] Primary reasons [318].
The Sellers appeal against the primary decision on two grounds. In substance, the grounds contend that the Sellers' construction is to be preferred and the words 'not more than 120 days nor less than 90 days prior' in cl 14.3 of the contract should be construed as being essential, so that a notice given outside the notice window would be ineffective to initiate a Price Review under cl 14.
For the reasons that follow, we prefer the Sellers' construction and so would uphold the appeal. In our view, time is of the essence of the time stipulation in cl 14.3. In other words, the power under cl 14.3 to initiate a Price Review can be invoked only by giving notice within the period stipulated in it. In short, consideration of the text of cl 14.3, in the context of cl 14 as a whole, seems to us to demand that conclusion. The competing constructions give no work to the time stipulation in cl 14.3 and create intractable disharmony with other provisions of cl 14.

Background facts

On or about [date redacted], the parties entered into an agreement entitled Agreement for Sale and Purchase of Gas (GSA). The GSA is a long‑term contract for the sale of gas by the Sellers to the Buyer from the Start Date to the End Date.
The Start Date (Start Date) under the GSA was [date redacted], but, following amendment of the GSA by five deeds of amendment, the Start Date was varied to be [date redacted]. The End Date is [number redacted] years from the Start Date.
Under cl 14, at [number redacted]‑year intervals after the Start Date, either the Buyer or the Sellers may initiate a Price Review. When that occurs, a revised price is to be determined by negotiation or, failing agreement, by arbitration.
The first Price Review Date was [date redacted] 2020. Consequently, the notice window for that Price Review expired on [date redacted] 2020. The Buyer issued a notice on [date redacted] 2020, after the notice window had expired. The notice otherwise complied with the terms of cl 14.
As already noted, the parties advanced competing contentions as to whether the notice was effective to initiate a Price Review.

Material terms of the GSA

The terms of the GSA reveal, among other things, the following contextual matters:
(1)The GSA was entered into before construction of the facilities for the Gorgon Project, hence the [number redacted] years between the Execution Date and the Start Date (prior to its amendment).
(2)The Sellers had, or intended to have in place, other agreements for the supply of Gas to other buyers within Western Australia.
(3)The Buyer buys Gas to generate power for iron ore operations that are owned and operated by companies within the Rio Tinto Group and their joint venturers in Western Australia.
The Sellers are members of a joint venture. The GSA is a separate agreement between the Buyer and each Seller for the sale and purchase of that Seller's proportionate share of the quantity of Gas[6] to be sold to the Buyer: cl 3.3(a).
[6] Defined in cl 1.1 of the GSA to mean any 'hydrocarbons or mixture of hydrocarbons and other gases, consisting primarily of methane, which at a temperature of 15˚C and an absolute pressure of 101.325 kPa is predominantly in the gaseous state'.
On and from the Start Date and until the end of the Term, each Seller agrees to sell and make Gas available to the Buyer at the Delivery Point, and the Buyer agrees to purchase and pay for, or to pay for if not taken, Gas in the quantities, at the price and in accordance with the terms specified under the GSA: cl 5. The Term runs for [number redacted] years from the Start Date.
The Sellers make the Gas available to the Buyer at the Delivery Point, which is the point where the Sellers' facilities meet the Dampier to Bunbury Natural Gas Pipeline (DBNGP): cl 5, cl 7.1. The Buyer takes title to the Gas at the Delivery Point and is responsible for arranging its transportation from the Delivery Point: cl 7.5, cl 8. For this purpose, the Buyer is required to procure and maintain a right to transport Gas on the DBNGP: cl 18.4.
The GSA is a take or pay contract: cl 5, cl 11, cl 12.7.
There is no clause purporting to limit the freedom of the Buyer to onsell any gas supplied to it under the GSA. The prospect of such onselling is explicitly contemplated by cl 8(g) and cl 8(h) which provide:
(g)The Buyer will use reasonable endeavours to include in all Gas supply agreements entered into after the Execution Date with any Business Customer a requirement for the Business Customer to take reasonable precautions to minimise the risk of, and to insure against, Loss to any equipment, premises or business of the Business Customer which may result from variations in quality or interruptions to Gas supply.
(h)To the extent permitted by law, the Buyer agrees to use reasonable endeavours to obtain an acknowledgment from its customers that:
(i)the quality and continuity of supply of Gas is subject to a variety of factors outside of the Buyer's control, for example, accidents, weather and the acts of third parties; and
(ii)the Buyer does not guarantee the quality or continuity of supply of Gas to the customer and does not vary or exclude any immunity, limitation of liability or indemnity which may be provided under Government regulations.
Clause 11 requires the Buyer to give the Sellers information as to the amount of Gas to be taken by the Buyer in good faith, in the form of a staggered series of notifications providing advanced notice to the Sellers of the Buyer's intentions and requirements.
The judge adopted the Sellers' summary of the effect of cl 11 in the following terms:[7]
… the amount of gas to be supplied for any day is between [number redacted]% and [number redacted]% of [number redacted] [terajoules], subject to the Annual Contract Quantity and the supply of Make-Up Gas, and:
(a)the Buyer is required to provide in good faith its best estimates on a yearly basis, then updated quarterly;
(b)the Buyer is required to nominate its precise supply requirements in good faith at 2 pm each Friday for each day of the following week;
(c)that nomination can be altered for a particular day by 2 pm the previous day; and
(d)in the absence of any nomination, the supply amount for a day may be set by the [GSA] at the Sellers' discretion.
The effect of clause 11 is that the [GSA] provides for a graduated process pursuant to which the Buyer's prospective estimates evolve into the Buyer's advance nomination of its requirement for the precise quantity of gas for each particular day. That figure is then referred to in clause 12 as the 'Buyer's Nominated Quantity'.
[7] Primary reasons [80].
Clause 12 deals with the quantities of Gas which the Sellers are obliged to supply. There are detailed provisions governing shortfalls in supply entitling the Buyer to claim additional costs incurred in securing alternative supplies in respect of any Shortfall Gas Quantity. There are also provisions dealing with interruption to supply due to maintenance of the Sellers' facilities.
Clause 13 deals with price. The following summary of the effect of cl 13 was common ground at trial:[8]
The amount to be paid for the Gas supplied in each Month, called the 'Gas Quantity Payment' is calculated by reference to the 'Reference Gas Price' applicable to that Month: clause 13.1(a); clause 13.2. Any Take‑or‑Pay Payment payable in a Contract Year under clause 12.7 is calculated by reference to 'the mean of all Reference Gas Prices applicable during that Contract Year': clause 12.7(a); Item 6 of the Key Commercial Terms.
Item 3 of Key Commercial Terms sets out how the Reference Gas Price is to be calculated. In effect, it is calculated by reference to the Base Reference Gas Price applicable in that Month adjusted according to a formula for changes in CPI. The formula is expressed as follows:
[formula redacted]
Clause 13.1(b) provides 'Unless and until revised amounts have first been agreed, established or determined under Clause 14, the amount of the Base Reference Gas Price shall be BRGP₀ as set out in Item 2 of the Key Commercial Terms'.
The Base Reference Gas Price that applies for the period from the Execution Date until Price Review number 1, is the confidential $/GJ figure set out in Item 2 of the Key Commercial Terms.
[8] Primary reasons [83].
Thus, by cl 13.1(b), unless and until the BRGP that applies as at the execution date, namely BRGP₀, is altered following a Price Review, it will remain the same.
'Market Price' is defined to mean a representative wholesale market price of Gas under Long Term Contracts that have been entered into, amended on price or have had a price review in the last [number redacted] years for supply to the Relevant Gas Market (whether arising from price reviews, new supplies or otherwise) adjusted (by either adding or subtracting transportation costs) as though delivered to the Delivery Point.
'Long Term Contracts' is defined to mean contracts for the wholesale supply of gas for a term of [number redacted] years or greater and an average quantity of [number redacted] TJ or more per Day, but excluding the GSA.
'Relevant Gas Market' is defined to be the wholesale market for gas under contracts for supply for resale to gas customers in Western Australia and as direct sales by gas producers to end users in Western Australia for whose business gas retailers and/or other gas producers would normally be expected to compete.
Clause 14 of the GSA, the construction of which is the issue in the appeal, is in the following terms:
14PRICE REVIEW
14.1Purpose
(a)The purpose of this Clause 14 is to enable the Buyer or the Sellers to request a price review in respect of the BRGP ('Price Review') if the Buyer or the Sellers believe the Market Price has moved compared with the Market Price prevailing:
(i)at the Execution Date; or
(ii)when a revised BRGP was most recently agreed or determined in a previous Price Review.
(b)The Base Reference Gas Price applicable in a Month is:
(i)unless Clause 14.1(b)(ii) applies, BRGP₀; or
(ii)the most recent BRGP to apply pursuant to Clause 14.17.
(c)The BRGP established at Price Review number 'r' (expressed in dollars/GJ[9]) shall be referred to as 'BRGP_r'. For example, the BRGP established at Price Review number 2, is referred to as BRGP₂.
[9] Defined as gigajoules in cl 1.1 of the GSA.
14.2Price Review Date
The 'Price Review Date' shall be:
(a)[redacted]
(b)[redacted].
Any revised BRGP arising from a Price Review will apply in accordance with Clause 14.17.
14.3Initiation of Price Review
The Buyer or the Sellers may initiate a Price Review by issuing, in the case of the Buyer, to the Sellers and the Sellers' Representative and in the case of the Sellers, to the Buyer, a notice which complies with Clause 14.4 ('Price Review Notice') not more than 120 days nor less than 90 days prior to a Price Review Date.
14.4Price Review Notice
A Price Review Notice shall be issued in accordance with Clause 28[10] and shall state:
[10] Clause 28 requires notices to be in writing, signed and served. It also sets out address details, and provides for when notices are taken to have been received. It does not address the consequences of a failure to issue a notice within a time stipulation.
(a)the BRGP at the Price Review Date;
(b)the proposed new BRGP (in the dollars/GJ of the Contract Year of the Price Review Date);
(c)reasons for the proposed new BRGP; and
(d)any other matters the Party or Parties issuing the Price Review Notice consider relevant in determining the proposed new BRGP.
14.5Negotiation period
Upon receipt of the Price Review Notice by the Buyer or the Sellers, the Buyer and the Sellers ('Reviewing Parties') shall meet and, in good faith, discuss the proposed new BRGP and seek to agree on a new BRGP prior to the Price Review Date.
14.6Base Reference Gas Price Pricing Principles
In establishing the revised BRGP, the Reviewing Parties will consider only the factors outlined in this Clause 14.6.
(a)The Parties agree that:
(i)at the Execution Date, BRGP₀ is deemed to be equal to the Market Price; and
(ii)they intend the BRGP will remain a price equal to the Market Price through Price Reviews conducted under this Clause 14.
(b)For the purposes of determining the Market Price regard shall be had to the terms for the supply of Gas under Long Term Contracts[11] that are in existence and unconditional as at the Price Review Date and the corresponding prices that would apply if such Gas was made available under the terms of this Agreement ('Standard Terms'). These terms will include:
[11] Defined in cl 1.1 of the GSA to mean contracts for the wholesale supply of Gas for a term of [number redacted] years or greater and an average quantity of [number redacted] TJ or more per Day, but excluding the GSA.
(i)[redacted];
(ii)[redacted];
(iii)[redacted];
(iv)[redacted];
(v)[redacted];
(vi)[redacted];
(vii)[redacted];
(viii)[redacted];
(ix)[redacted];
(x)[redacted];
(xi)[redacted];
(xii)[redacted];
(xiii)[redacted]; and
(xiv)the capability and/or reliability of seller's facilities.
(c)For the avoidance of doubt, no account shall be taken of:
(i)[redacted];
(ii)[redacted];
(iii)[redacted];
(iv)[redacted];
(v)[redacted];
(vi)[redacted]; and
(vii)[redacted].
For the purposes of the matters specified above, 'contract' means a Long Term Contract.
(d)In determining the Market Price the weighting given to different Long Term Contracts (converted to Standard Terms) will be determined by:
(i)how recently they were entered into, amended on price or experienced a price review; and
(ii)their significance in establishing the wholesale price of Gas in the Relevant Gas Market[12].
[12] Defined in cl 1.1 of the GSA to mean the wholesale market for Gas under contracts for supply for resale to Gas customers in Western Australia and as direct sales by Gas producers to end users in Western Australia for whose business Gas retailers and/or other Gas producers would normally be expected to compete.
(e)The adjustments for pipeline tariffs used to determine (by either adding or subtracting transportation costs) the Market Price shall be taken to be the lower of:
(i)[redacted]; and
(ii)[redacted].
14.7Final Price Submission
If the Reviewing Parties have not agreed a revised BRGP by the Price Review Date then, within 3 days of the Price Review Date, each Reviewing Party must submit to the other Reviewing Party in writing a proposed final value for the revised BRGP ('Final Price'). The Final Price must be expressed as a number in $/GJ and not require calculation from variables.
14.8Arbitration
If the Reviewing Parties are unable to agree on a revised BRGP within 7 days of each Reviewing Party submitting its Final Price, then either Reviewing Party may refer the matter to arbitration by giving Notice to the other Reviewing Party ('Arbitrating Parties').
14.9Appointment of Arbitrators
The arbitration shall be heard and determined by three arbitrators. Each Arbitrating Party shall appoint an arbitrator of its choice within 20 days of receipt of a Notice by either Reviewing Party requiring arbitration. The Party‑appointed arbitrators shall in turn appoint a presiding arbitrator within 10 days of the appointment of the last of the Party‑appointed arbitrators. If the Party‑appointed arbitrators fail to agree on a presiding arbitrator or an Arbitrating Party fails to appoint its own arbitrator within the prescribed periods, then either Arbitrating Party may request the President of the Bar Council of the Western Australian Bar Association (Inc) to appoint an independent arbitrator as the presiding arbitrator or for that Arbitrating Party as applicable.
14.10Arbitrators to be independent and impartial
The arbitrators shall be and remain at all times wholly independent and impartial.
14.11Price Review Submission
(a)Each Arbitrating Party shall make a written submission ('Price Review Submission') to the arbitrators within 10 Business Days of the appointment of the presiding arbitrator. The Price Review Submission shall contain:
(i)the Arbitrating Party's proposed Final Price together with:
(A)reasonably substantiated reasoning for its Final Price;
(B)an explanation of all methodologies used to calculate its Final Price;
(C)all relevant data and information to support its Final Price; and
(D)indications of confidentiality issues associated with any of the information and data provided in the Price Review Submission; and
(ii)in relation to the Arbitrating Party who initiated the Price Review, reference to the Price Review Notice.
(b)Within 5 Business Days of an Arbitrating Party sending a Price Review Submission to the arbitrators, the arbitrators shall provide a copy of that Arbitrating Party's Price Review Submission, excluding any confidential information and data, to the other Arbitrating Party. Within 10 Business Days following the receipt of the other Arbitrating Party's Price Review Submission, the receiving Arbitrating Party may submit to the arbitrators a written response ('Price Review Response') to that Price Review Submission and may also submit a revised Final Price. Within 5 Business Days of an Arbitrating Party sending a Price Review Response to the arbitrators, the arbitrators shall provide a copy of that Party's Price Review Response to the other Arbitrating Party excluding any confidential information and data.
(c)Once each Arbitrating Party has received a copy of the other Arbitrating Party's Price Review Submission, or, if a Price Review Response has been submitted by both Arbitrating Parties, a copy of that Price Review Response, the arbitrators will hear oral argument and evidence led from each Arbitrating Party in support of its Price Review Submission and, if any, Price Review Response and in reply to any Price Review Response submitted by the other Arbitrating Party.
14.12Arbitrators to determine revised Base Reference Gas Price only
The arbitrators must determine a revised BRGP in accordance with this Clause 14 and shall only have regard to:
(a)Clause 14.1 and the pricing principles described in Clause 14.6; and
(b)facts, data and information included in the Price Review Submissions, Price Review Responses or oral arguments and evidence led at the hearing (including documents obtained by way of discovery or by the issue of subpoenas) that support, and are consistent with, the matters specified in Clause 14.12(a) above.
The arbitrators are obliged to check the validity of the data supplied in the Price Review Submissions and Price Review Responses to the extent that the confidential nature of the data means either that it is not fully included or described in the Price Review Submissions or Price Review Response or the other Arbitrating Party is not able to critique the data.
14.13Decision period
The arbitrators shall issue their decision as soon as possible, and must take all available steps to issue their decision within nine months of the Price Review Date.
14.14Final and binding decision
The decision of the arbitrators shall be final and binding and each Arbitrating Party irrevocably waives its right to any form of appeal, review or recourse.
14.15Additional requirements
Except as expressly modified by this Clause 14, arbitrations conducted pursuant to this Clause 14 shall be conducted in accordance with the provisions of Clause 24 and Exhibit E. In the event of any conflict between the provisions of this Clause 14 and the provisions of Clause 24 and Exhibit E, this Clause 14 will prevail to the extent of the inconsistency. To avoid doubt, Items E.8, E.9 and E.10 of Exhibit E are not inconsistent with the provisions of this Clause 14.
14.16Costs of Arbitration
(a)Each Party will bear all of its own costs incurred prior to the commencement of arbitration.
(b)Subject to Clause 14.16(c), the allocation of the Arbitration Costs between the Arbitrating Parties shall be determined by the arbitrators and stated in the arbitral decision. In reaching their decision on the allocation of Arbitration Costs the arbitrators will have regard to the relative magnitude of the difference between each Arbitrating Party's Final Price and the value of BRGP determined by the arbitrators.
(c)The Sellers will be treated as one party for the purpose of allocation of costs.
14.17Application of revised BRGP
(a)Following agreement between the Reviewing Parties or issuance of an arbitral decision, the revised Base Reference Gas Price shall be used in the calculation of the Reference Gas Price under Item 3 of the Key Commercial Terms from time to time for each Month commencing on and from the Price Review Date for that Price Review.
(b)Within 30 days of an arbitral decision or the agreement of the Parties, each Seller shall issue a statement to the Buyer showing any sum which becomes owing pursuant to the calculation in Clause 14.17(a); provided that if the Sellers have been recovering costs from the Buyer for new or varied Taxes pursuant to Clause 15.l, then such recovered costs shall be taken into account in determining any sum owing. Such sum shall be paid by the Buyer or the Seller (or Sellers) (as the case may be) in accordance with Clause 17.7 not later than 30 days after issue of the statement to the Buyer. Interest on that sum will be calculated daily at an annual rate equivalent to the Interest Rate plus [number redacted]% and will be compounded at 30 day intervals starting from the Price Review Date and ending on the date of payment.
14.18Price During Price Review
If, and for as long as, no agreement has been reached between the Reviewing Parties in respect of a Price Review and no arbitral decision has been issued or taken effect, the rights and obligations of the Parties and the prevailing BRGP under the Agreement shall continue in full force and effect.
14.19Base Reference Gas Price fully inclusive of Taxes
The BRGP agreed by the Reviewing Parties or determined as a result of a Price Review is and will be fully inclusive of all Taxes prevailing at the time of its establishment.

There is a force majeure clause: cl 27. Under that clause, either party may terminate where there is prolonged force majeure: cl 27.9. However, by cl 27.3, the following events do not constitute force majeure events:
(1)financial hardship;
(2)loss of customers, loss of market share, reduction in demand for gas or electricity;
(3)failure or inability to perform attributable to the Reference Gas Price, or currency devaluation.
Each of the Buyer and the Sellers may terminate the GSA if the other party does not cure certain defaults within stipulated periods: cls 31.1 ‑ 31.6. There is no termination for convenience clause. Clause 31.10 provides that the only rights of the parties to terminate the GSA are those expressly provided in cl 31, namely uncured defaults and - in cl 27.9 - prolonged force majeure.
Clause 30 establishes an elaborate regime limiting the liability of the parties, and the Sellers in particular, as to any shortfall in supply. Clause 30.4 establishes an exclusive remedial regime for any provision that creates a payment obligation in respect of a breach.
Clause 32.1 of the GSA provides:
…
(c)No failure to exercise or delay in exercising any right or remedy arising from this Agreement shall operate or be construed as a waiver of a right or remedy.
(d)If a Party does not exercise a right or remedy fully or at a given time, the Party may still exercise it later.
(e)A Party may exercise a right or remedy or give or refuse its consent in any way it considers appropriate (including by imposing conditions), unless this Agreement expressly states otherwise.
(f)A Party is not liable for loss caused by [among other things] delay in exercising a right or remedy under this Agreement.

The primary reasons

Summary

Her Honour began analysis of the issue by considering the text of cl 14.3, then cl 14 generally, including its purpose. Next, the judge considered the GSA as a whole, identifying other clauses within the GSA capable of bearing on the construction of cl 14. Finally, the judge considered issues of certainty, and the consequences and commerciality of the competing constructions.
The primary judge concluded that the time stipulation was not essential and that a Price Review Notice could be issued until the Price Review Date but not after that date, and not before the start of the window provided in cl 14.3. Her Honour considered the factors of particular significance to be:[13]
(1)the way in which 'Price Review Notice' is defined, so as to exclude the time stipulation, when that term is read into cl 14.5;
(2)the purpose of cl 14;
(3)the limited termination rights in the context of a take or pay contract;
(4)the absence of a deeming provision setting out the consequences of non-compliance with the time stipulation; and
(5)the uncommerciality of a construction of cl 14 under which the right to a Price Review in respect of a Price Review Date may be lost simply by a failure to issue the notice within the timeframe stipulated in cl 14.3.
[13] Primary reasons [318].
We will outline the more material aspects of the primary judge's reasons.

Textual considerations in cl 14.3

The definition of 'Price Review Notice' in cl 14.3

The judge considered that the definition of 'Price Review Notice' in cl 14.3, read with cl 14.5, is a particularly significant indicator that the time stipulation is not essential. In essence, her Honour accepted the Buyer's submissions to the following effect.
The term 'Price Review Notice' in cl 14.3 is defined as a notice which complies with cl 14.4 - the definition being before reference to the time stipulation - and, therefore, the time stipulation is not part of the definition of this term. Clause 14.5 effectively says that the parties must engage in good faith negotiations about price upon receipt of a Price Review Notice. Therefore, when the definition of Price Review Notice is inserted into cl 14.5 - as is required by the principles set out in Black Box Control Pty Ltd v TerraVision Pty Ltd[14] -that clause provides that the parties must engage in good faith negotiations about price upon receipt of a notice that complies with cl 14.4. Clause 14.4 itself only contains requirements about the content of a notice and makes no reference to timing.
[14] Black Box Control Pty Ltd v TerraVision Pty Ltd [2016] WASCA 219 [42].
Accordingly, on its plain terms, the obligation in cl 14.5 to engage in Price Review negotiations is conditioned upon the issue of a Price Review Notice regardless of when the notice is issued; it is not conditioned upon the issue of a Price Review Notice within the time stipulation in cl 14.3.[15]

Is cl 14.3 a non‑promissory condition precedent?

[15] Primary reasons [107] ‑ [112], [318].

The Sellers submitted that cl 14.3 is a non‑promissory condition precedent. The judge said that whether cl 14.3 is a non‑promissory condition precedent asks the same question as the key issue in this case ‑ namely, 'whether the parties intended that the obligation to engage in the price review process would be conditional upon a notice being issued within' the time stipulated in cl 14.3.[16]
[16] Primary reasons [113] ‑ [115].
The judge foreshadowed that her conclusion to this question is 'no' and said it follows that cl 14.3 is not a non‑promissory condition precedent.[17] Her Honour added the following:[18]
(1)Clause 14.3 does not use words such as 'on the condition that' or 'subject to'.
(2)There is no provision which sets out what is to happen if the notice is not issued within the time stipulated.
(3)It is the issuing of a Price Review Notice that triggers the review process in cl 14.5. The obligation to seek to agree arises on receipt of a notice that complies with cl 14.4. It is not conditional on the Price Review Notice being issued within the stipulated period.

United Scientific Holdings Ltd v Burnley Borough Council

[17] Primary reasons [116] ‑ [117].

[18] Primary reasons [118] ‑ [120].

The judge considered that the principles enunciated in United ScientificHoldings Ltd v Burnley Borough Council[19] could be applied in this case because the circumstances of this case were sufficiently analogous to the rent review context. The judge reasoned that, first, like rent reviews, the Price Review process in cl 14 can benefit either party (Market Price could rise or fall).
[19] United ScientificHoldings Ltd v Burnley Borough Council [1978] AC 904, outlined at [219] ‑ [232] below.
Secondly, like a rent review, a Price Review does not create a new contract and the obligation to pay the revised price, as determined by the rent review process, is an obligation to which the parties agreed when they entered the GSA.
Finally, the judge accepted that the party receiving the Price Review Notice could be prejudiced by it being issued outside the time stipulated. But, she said, '[n]evertheless, the nature of that prejudice is not of the quality of the prejudice that could be suffered by a failure to comply with a clause that stipulated the time for delivery in a contract for the sale of a wasting asset or of a perishable commodity or something likely to change rapidly in value'.[20]
[20] Primary reasons [134].
Her Honour added that, though she found that the principles from United Scientific v Burnley could apply to this case, that would not be determinative of the construction of cl 14.[21]

Does the time stipulation have work to do?

[21] Primary reasons [135].

The Sellers submitted that, if the time stipulation in cl 14.3 were not essential, it would have no work to do.[22] The judge disagreed and found that if not essential, cl 14.3 would still have work to do in two senses.
[22] Primary reasons [137].
First, her Honour said, if the time stipulation were not essential, a notice issued outside of the time stipulation would be effective to initiate a Price Review but would 'still be a breach of cl 14.3'.[23]
[23] Primary reasons [138].
Secondly, the judge said that, if non‑essential, the time stipulation would have work to do in that it fixes the date after which a party could issue what the judge referred to as a 'deadline notice'. A deadline notice is a notice given after the elapsing of a non‑essential time period that sets out a reasonable time within which the relevant right must be performed or exercised. The effect of a deadline notice is, the judge explained, to make time of the essence.[24] The judge considered and rejected each of the Sellers' submissions to the contrary.

Textual considerations outside of cl 14.3 but within cl 14

[24] Primary reasons [142], [161].

Next, the judge turned to textual considerations arising from the other subclauses of cl 14.

Clause 14.5 and cl 14.6 - negotiations

The judge noted that, given the time stipulation in cl 14.3, the GSA contemplates that the parties would have three to four months to perform their obligation under cl 14.5, that is, to meet and, in good faith, discussed the proposed new BRGP and seek to reach agreement prior to the Price Review Date. The judge observed that if, as the Buyer contended, the time stipulation were not essential, the time available for negotiations pursuant to cl 14.5 could be significantly curtailed (by one party issuing a Price Review Notice late). Accordingly, the judge said, a factor that bears on whether the time stipulation is essential is whether the parties would have entered the GSA had they not been assured of strict or substantial compliance with it.[25]
[25] Primary reasons [167].
The judge concluded as follows:[26]
[26] Primary reasons [194].
(1)cl 14 as a whole demonstrates the parties objectively placed a value on the opportunity to reach an agreement through good faith negotiation, in the hopes of avoiding an arbitration;
(2)during the negotiations pursuant to cl 14.5, the parties are expressly required to act in good faith;
(3)the negotiations during that period are not intended to be merely commercial bargaining as to price;
(4)the parties are required to undertake as much of the task required by cl 14.6 as the information that they have permits;
(5)the GSA does not presume that the parties will be unable to meaningfully undertake that task;
(6)the parties are not, however, required to:
(a)share confidential comparator contracts;
(b)obtain expert assistance;
(c)undertake the task together, or to meet, discuss or negotiate for any period of time or in any particular manner; and
(7)the parties objectively intended to give themselves sufficient time to undertake the task required by cl 14.6 and to seek to reach an agreement prior to the Price Review Date or at least before the date on which either party would have the power to refer the matter to arbitration by providing notice to the other party (see cl 14.8).
The judge accepted that the GSA appears to contemplate that the parties would have sufficient time to reach an agreement by negotiating in good faith prior to the review date and that, on the Buyer's construction, the opportunity for the parties to do that could be significantly curtailed.[27] The judge also accepted that the GSA evidently contemplates that the parties would have sufficient time to seek to reach agreement by negotiation in good faith prior to the Price Review Date. These matters supported the Sellers' construction, the judge found. However, that support was limited by the fact that the parties would continue to negotiate after the Price Review Date and that there is no fixed start date for any arbitration ‑ the GSA, by cl 14.8, merely sets a date from which either party can refer the matter to arbitration.[28] The judge also found that the reduction in time available for negotiation was not outside the control of the parties as a party concerned about delay could issue a Deadline Notice.[29]

The purpose of cl 14 as a whole

[27] Primary reasons [226] - [229].

[28] Primary reasons [229] - [230].

[29] Primary reasons [213] - [214].

The judge rejected the Sellers' submission that the purpose of cl 14 was to enable a party to request a Price Review if they believe the Market Price has changed. The judge found, in effect, that the purpose of the Price Review in cl 14 was to enable the parties to ensure that, if the Market Price changes, the price will be adjusted at regular intervals so that the BRGP remains a price equal to the Market Price.[30] The judge concluded that this strongly supported the Buyer's construction.[31]
[30] Primary reasons [248].
[31] Primary reasons [249].
The judge observed that although, at a high level the purpose of cl 14 is to enable a request for a Price Review, the purpose of enabling a request is to enable the parties to have the price adjusted to reflect Market Price at regular intervals if either party believes the Market Price has changed. The judge pointed out some of the factors to which she had regard in considering the purpose of cl 14:[32]
[32] Primary reasons [247].
(1)the length of time between reviews;
(2)that a party needs, at most, a belief that the Market Price has changed;
(3)that the right to initiate a review is the right of both parties;
(4)the express statement in cl 14.6(a)(ii) that the parties intend the BRGP will remain a price equal to the Market Price through Price Reviews conducted under cl 14; and
(5)the [GSA] as a whole, including the take-or-pay obligation on the Buyer, the limited termination rights, and the nature of the commercial relationship established under the [GSA].

Textual considerations outside of cl 14

Clause 31.10 (limited termination) and cl 5 (take or pay)

The judge said that the fact there are limited rights to terminate the contract weigh against an objective intention that (as the Sellers contended) the right to engage a Price Review would be lost ‑ and a party would have to continue paying a price it did not believe reflected the Market Price ‑ if the Price Review Notice were sent outside the time stipulation. According to the judge, the fact the contract is a take or pay contract weighs further against the Sellers' construction.[33]

Clause 31.1 and cl 31.3 - delay in performance generally

[33] Primary reasons [250] ‑ [252].

Clause 31.1 and cl 31.3 give the Buyer and the Sellers (respectively) the right to provide the other side a notice if the other side does not perform on time and as required by the agreement, other than an obligation to make available or take gas, where the non‑performance is material in the context of the GSA as a whole.
The judge said this contemplates that not all failures to perform on time will be material. This supported the Buyer's construction but, her Honour said, it is of relatively little weight.

Clause 32.1 - general provision permitting later exercise of rights

The Buyer submitted that cl 32.1(c), (d) and (e) show that delay in the exercise of a right is not fatal.
Ultimately, the judge said it was unnecessary to decide whether cl 32.1(d) applies to cl 14.3 because her ultimate conclusion was that the time stipulation in cl 14.3 is not of the essence.

No deeming provision

The judge observed there was no deeming provision that sets out what is to follow if a notice is not issued within the time stipulation, but that the GSA provided deeming clauses in other contexts. This weighed in favour of the Buyer's construction. Her Honour rejected the Sellers' submission that cl 13.1(b) is a type of deeming provision for cl 14.3.[34]

Other considerations

Certainty

[34] Primary reasons [266] ‑ [278].

The judge did not accept the Sellers' submission that the Buyer's construction gave rise to uncertainty for a party concerning whether there would be a Price Review and that the value evidently placed by the parties on certainty, reflected most clearly in cl 11, favoured the Sellers' construction.[35]

Commerciality/harsh result

[35] Primary reasons [279] - [295].

The judge found that to construe cl 14 so that the time stipulation in cl 14.3 is essential gives rise to uncommercial or harsh results that are unlikely to have been intended by the parties. The judge considered it highly unlikely that, reading cl 14 and the GSA as a whole, the parties objectively intended that the opportunity to initiate a Price Review could be lost by failing to issue a notice within the stipulated period.[36] The judge considered this a significant factor in support of the Buyer's construction.[37]

Conclusion

[36] Primary reasons [310].

[37] Primary reasons [316].

The judge concluded that on a proper construction of the GSA, the time stipulation in cl 14.3 is not essential.

Grounds of appeal

The Sellers appeal the judge's decision on two grounds:
1.The primary judge erred in law by declaring that the notice dated [date redacted] 2020 issued by the first respondent to the first to seventh appellants, and received on [date redacted] 2020, pursuant to clause 14 of the [GSA] (Notice) was effective to initiate a Price Review for the purposes of clause 14 of the GSA: Order 1 of the orders of the [primary judge] made on 21 August 2020.
Particulars
(a)The trial judge erred in law by finding that the words 'nor less than 90 days prior' in cl 14.3 of the GSA were not of the essence: J[317] - [320].
(b)The trial judge erred in law by finding that:
(i)cl 14.3 of the GSA contained an obligation capable of breach: J[12]; and
(ii)rejecting the appellants' submission that cl 14.3 of the GSA was a non-promissory condition precedent: J[113] ‑ [120].
(c)The trial judge erred in law by finding that United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904 (United Scientific) was analogous and thus applied to the present case: J[134].
(d)The trial judge erred in law by failing to find that the presumption in United Scientific was not rebutted by the text of the GSA: J[278] and [318(4)].
(e)The trial judge erred in law by finding that the concept of a 'Deadline Notice' supported a construction that time was not of the essence in respect of cl 14.3 of the GSA: J[161] ‑ [162].
(f)The trial judge erred in law by finding that the time stipulation in cl 14.3 of the GSA has effect because a breach results in damages: J[136] and [138].
(g)The trial judge erred in law by failing to find that if time was not of the essence in cl 14.3 of the GSA then a notice could be issued at any time: J[16] - [17]; J[293].
(h)The trial judge erred in law by failing to find that the negotiation period provided for in cl 14 of the GSA supported a construction requiring compliance with the time stipulation in cl 14.3 of the GSA: J[194] - [196], J[210] - [214], J[226].
(i)The trial judge erred in law by finding that the limited rights of termination in the GSA supported a finding that the time stipulation was not of the essence: J[250] - [252] and [318(3)].
(j)The trial judge erred in finding that a construction which rendered a late notice under cl 14.3 of the GSA of no effect was uncommercial and/or that the consequences of [sic] were so harsh that the parties could not have intended such a notice to have effect: J[310], [314], [316] and [318(5)].
2.The primary judge erred in law by failing to declare that the Notice was ineffective to initiate a Price Review for the purposes of clause 14 of the GSA: Order 2 of the orders of the [primary judge] made on 21 August 2020.
Particulars
(a)The appellants repeat the particulars to Ground 1 above.
In substance, grounds 1 and 2 amount to a single proposition - the judge erred on the question of whether time was of the essence of the time stipulation in cl 14.3.

The parties' submissions

The Sellers' submissions

The Sellers submit that, on a proper construction of the GSA, the temporal limit in cl 14.3 - in its words 'not more than 120 days nor less than 90 days prior to a Price Review Date' - is of the essence, so that notice given outside the stipulated period is ineffective.

Textual considerations

The Sellers point to five textual indicators favouring their construction.
First, the language of the time stipulation is clear. Nothing in the surrounding circumstances or commercial purposes or objects of the GSA indicates that anything other than the meaning of the plain language of cl 14.3 was intended.[38]
[38] Appellants' submissions [12].
Secondly, the Sellers submit that, properly construed, cl 14.3 is a non‑promissory condition precedent to the duty to perform an obligation. The language used is not that of a promise ‑ cl 14.3 says that either party 'may' issue a Price Review Notice, not that either party 'must' or 'will' do so.[39]
[39] Appellants' submissions [14] ‑ [15].
With reference to Perri v Coolangatta Investments Pty Ltd,[40] Tricontinental Corporation Ltd v HDFI Ltd[41] and GR Mailman & Associates Pty Ltd v Wormald (Aust) Pty Ltd,[42] the Sellers submit that the consequence of cl 14.3 being a non‑promissory condition precedent is that this endows it with the character of essentiality. They say this is implicit in Mason J's judgment in Perri v Coolangatta.[43]
[40] Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537.
[41] Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689.
[42] GR Mailman & Associates Pty Ltd v Wormald (Aust) Pty Ltd (1991) 24 NSWLR 80.
[43] Appellants' submissions [16] referring particularly to Perri v Coolangatta (554) and (555).
The Sellers reiterate that the time stipulation in cl 14.3 is not concerned with performance of an obligation. Rather, cl 14.3 confers a 'true Hohfeldian power on the parties' (original emphasis) - the power to issue a notice within the time stipulation which, if exercised, triggers cl 14.5, thereby altering the parties' rights and obligations. The time stipulation 'defines the extent of the power'.[44]
[44] Appellants' submissions [17].
Thirdly, the Sellers submit that the parties objectively intended to prescribe when a Price Review can be initiated, thereby preventing the possibility that a costly, time‑consuming Price Review could be initiated at any time of one party's choosing.
Further, they submit, limiting the opportunity to initiate a Price Review to the time period in cl 14.3 provides the parties certainty as to the significance of other third‑party gas supply contracts on the price of gas under the GSA. Under cl 14.6 of the GSA, in establishing the revised BRGP it is mandatory to consider other Long Term Contracts that are in existence and are unconditional as at the Price Review Date. The more recently those other contracts are entered into, the more significant they are likely to be in a Price Review. Accordingly, the parties objectively desired certainty as to when a party could initiate a Price Review and when the opportunity to do so has ended.[45]
[45] Appellants' submissions [19] - [20].
Further, the GSA clearly contemplates that the Buyer may onsell gas it acquires; see cl 8(g). The Buyer thus has an evident interest in certainty as to whether there will be a Price Review, which interest would be defeated if it is open to a party to initiate a Price Review outside the stipulated period.[46]
[46] Appeal ts 18 ‑ 20.
Fourthly, the Sellers submit that, by the time stipulation in cl 14.3, the parties agreed they would have three to four months for negotiations. If time were not of the essence, that negotiation period would fall away. They point to features of the requirements of cl 14 from which, they submit, the rationale for the prescribed negotiation period is apparent.[47]
[47] Appellants' submissions [21].
Fifthly, cl 14.1 states that cl 14 enables a party to 'request' a review. The GSA does not make Price Reviews automatic and, unless a review is engaged, the existing price continues. The Sellers reiterate their submission that maintaining the price at Market Price is not an overriding objective of the GSA or the purpose of cl 14.[48]

The judge's alleged errors

[48] Appellants' submissions [22].

The Sellers' particulars of ground 1 and their submissions assert nine errors by the primary judge in reaching her construction.
First, they say the judge erred in finding that cl 14.3 was capable of breach and erred in rejecting their submission that cl 14.3 is a non‑promissory condition precedent.
In so submitting, the Sellers respond to a point of evident significance in the primary judgment ‑ namely, the placement of the definition of 'Price Review Notice' before the time stipulation. They advance the following reasons why weight should not be placed on that definition to conclude in favour of the Buyer's construction. First, the time stipulation is contained in the clause which sets out the power to issue a Price Review Notice. Unless and until the temporal element is complied with, one need not consider the contents of the notice (cl 14.4) or the negotiation obligation (cl 14.5). Secondly, they submit, to rely on the placement of the definition of Price Review Notice to say that a notice can be issued any time before the Price Review Date would leave the time stipulation no work to do.
The Sellers assert that the judge's failure to accept cl 14.3 as a non‑promissory condition precedent led her Honour to erroneously apply the test from Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd[49] to determine whether the time stipulation is 'essential'. They submit that this was in error because there is no promise in cl 14.3 that can be substantially or strictly performed ‑ there is only a power to be exercised. The test in Tramways v Luna Park, they submit, by its very language applies only to promissory terms. Its purpose is to determine whether non‑performance justifies termination. No question of a right to terminate arises in relation to a clause that is merely a condition precedent. Quoting Samuels JA in Tricontinental,[50] the Sellers say that 'it is meaningless to speak of the substantial performance of a condition precedent'.[51]
[49] Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632.
[50] Tricontinental (705).
[51] Appellants' submissions [25] ‑ [31].
Secondly, the judge erred in finding that this case was sufficiently analogous to the rent review context such that the principles from United Scientific v Burnley applied here. The Sellers say that the rent review context is different from the present one for various reasons.[52]
[52] Appellants' submissions [35].
In the only case in which the United Scientific v Burnley principles have been applied to a gas supply contract, Alliance Petroleum Australia NL v Australian Gas Light Co,[53] the relevant time stipulation was for the time within which an arbitrator must be appointed after the process had been effectively initiated. There were no negotiation obligations following the appointment of an arbitrator and so no negotiation period would be eroded if the appointment was done late. On this basis, the Sellers submit, Alliance Petroleum, like United Scientific v Burnley itself, is distinguishable from this case.[54]
[53] Alliance Petroleum Australia NL v Australian Gas Light Co (1985) 39 SASR 84.
[54] Appellants' submissions [37].
Thirdly, the Sellers say that, even if United Scientific v Burnley is sufficiently analogous so that its principles apply, the court should find that the presumption that time is not of the essence is rebutted by the text of the GSA.[55]
[55] Appellants' submissions [39].
Fourthly, the Sellers submit that the judge erred in finding that, if time were not of the essence, the time stipulation would still have work to do because it would fix the date after which a party could issue a deadline notice. They say this was an error because deadline notices apply only in relation to the non-performance of contractual obligations. Quoting Gibbs CJ in Perri v Coolangatta, they say that it is 'inappropriate that one party to a contract should be able to give a notice requiring the other to complete a sale, when that other party has not promised to do so … and when it is not necessarily within his power to do so'.[56]
[56] Perri v Coolangatta (545). The Sellers also refer to Perri v Coolangatta per Gibbs CJ (546), Brennan J (569) (Stephen J agreeing at (547)).
The Sellers recognise that in GR Mailman, the New South Wales Court of Appeal accepted in obiter that deadline notices could be applied to non‑promissory conditions precedent. However, the Sellers say that the court had misgivings about this, including that which the judge quoted in her Honour's reasons.[57] The Sellers say Gleeson CJ[58] felt bound to apply United Scientific v Burnley because it had been cited with approval in Gollin & Co Ltd v Karenlee Nominees Pty Ltd,[59] decided one year after Perri v Coolangatta. They submit, however, that Gollin v Karenlee did not say anything express about deadline notices, nor whether they could or should apply to non‑promissory conditions precedent.[60]
[57] Primary reasons [143], and see also primary reasons [151]. The Sellers say that Samuels JA (95) and Meagher JA (99 ‑ 100) in GR Mailman also had misgivings.
[58] GR Mailman (94 ‑ 95). In fact, the passage to which they refer is from the judgment of Samuels JA.
[59] Gollin & Co Ltd v Karenlee Nominees Pty Ltd (1983) 153 CLR 455.
[60] Appellants' submissions [46].
The Sellers say that Mango Boulevard Pty Ltd v Mio Art Pty Ltd[61] is the only appellate authority in Australia which expressly held that a deadline notice could be issued in respect of a failure to exercise a power. They submit, however, that this court need not pay Farah deference to Mango Boulevard v Mio Art because that case does not itself develop the common law - the Queensland Court of Appeal was merely applying what it perceived to be the state of the common law after Gollin v Karenlee. Further, and in any event, Mango Boulevard v Mio Art is distinguishable as it did not concern a time stipulation.[62]
[61] Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2013] QCA 271.
[62] Appellants' submissions [47].
Accordingly, the Sellers conclude, deadline notices are of no application here because cl 14.3 does not contain an obligation. In turn, the time stipulation in that clause would have no work to do if it were found not to be essential.[63]
[63] Appellants' submissions [48].
Fifthly, the judge erred when she found that a non‑essential time stipulation still has work to do because, if breached, the defaulting party may be liable in damages. In the case of cl 14.3, the judge said that a late notice would still be effective to initiate a Price Review, but would be a breach of cl 14.3. The Sellers submit that there is no possibility of damages if a Price Review Notice is issued late because there was no promise or obligation to issue a notice.[64]
[64] Appellants' submissions [49].
Sixthly, the Sellers contend that the judge erred in failing to recognise that a consequence of her Honour's construction is that a notice can be issued at any time. They submit that the start and end of the window provided in cl 14.3 must be treated alike - that is, if the words 'nor less than 90 days prior' are not of the essence (such that a Price Review Notice could be issued late), then, as a matter of logic, the words 'not more than 120 days' must also be not essential (such that a Price Review Notice could be issued early).
The Sellers say that the judge appears not to have appreciated that the start and end of the window provided in cl 14.3 must be treated alike. Her Honour said that 'a notice could be issued until the Price Review Date but not after that'[65] and that 'a Price Review Notice cannot be issued until the start of the 30‑day Notice Window'.[66] The Sellers say it is not apparent why a construction which reads into cl 14 another time stipulation (namely, a notice may be issued at any time after the start of the window in cl 14.3 but before the relevant Price Review Date) should be preferred over that which was expressly agreed and included in cl 14.3.[67]
[65] Primary reasons [16] ‑ [17].
[66] Primary reasons [293].
[67] Appellants' submissions [50].
The Sellers add that there is a sensible reason why a Price Review Notice cannot be issued too early, namely, so that the parties could undertake a genuine assessment of Market Price at a future date.[68]
[68] Appellants' submissions [52] referring to Callaghan v Merivale CBD Pty Ltd [2005] NSWSC 985; [2006] NSW ConvR 56-155 [17].
Seventhly, the Sellers submit that the judge erred in failing to find that the negotiation period provided for in cl 14 supported a construction requiring compliance with the time stipulation in cl 14.3.
Eighthly, the judge erred in finding that the limited rights of termination in the GSA supported, or significantly supported, the conclusion the time was not of the essence in cl 14.3.
Ninthly, the judge erred in finding that not giving effect to a late notice would be so harsh that the parties could not have intended this.

The Buyer's submissions

The Buyer's construction

In written submissions, the Buyer supported and adopted the judge's construction - that a Price Review Notice could be given not before 120 days prior to the Price Review Date and until the Price Review Date, but not after the Price Review Date. However, in oral submissions they advanced a different construction, founded on and said to give full effect to the principles in United Scientific v Burnley - that a Price Review Notice could be issued at any time before, during or after the time stipulated in cl 14.3. That is, a Price Review Notice could validly be given both more than 120 days prior to the Price Review Date, as well as at any time after 90 days prior to the Price Review Date, including at any time after the Price Review Date.[69] On this construction, a Price Review Notice could be given at any time during the whole period of the contract or at least at any time within each [number redacted]‑yearly interval between Price Review Dates, including at any time after one Price Review Date and into the period designated for the next Price Review Date.

Background matters

[69] Appeal ts 56 - 59.

The Buyer begins by pointing to the context of the GSA. It is a long‑term agreement with limited termination rights. The parties contracted to buy and sell gas for [number redacted] years, regardless of financial hardship or changes to market demand (these matters are expressly excluded from the force majeure provisions). The parties entered the contract [number redacted] years ahead of the Start Date. They must be taken to have known that there could be rises or falls in Market Price in the [number redacted] years leading up to the Start Date, and during the [number redacted]‑year term of the contract.
Next, it submits that the features that underpinned the presumption in United Scientific v Burnley apply here. Like in the rent review context, the Price Review process is an agreed contract pricing mechanism that forms a vital part of the contractually agreed consideration in a long‑term gas supply contract. Also like in the rent review context, the Price Review clauses are to the benefit of both parties as the Market Price could rise or fall.

Presumption that time is not of the essence

The Buyer submits that the line of cases starting with United Scientific v Burnley and encompassing Alliance Petroleum, GR Mailman and Mango Boulevard v Mio Art establish a general principle that time stipulations, whether promissory or non‑promissory, in machinery‑type provisions for determining price adjustments under a contract are not construed as essential unless there is express provision or necessary implication to that effect.[70]

Textual considerations

[70] Appeal ts 98.

The Buyer points to the following seven matters in submitting that the text of cl 14 does not state or imply that time is of the essence.
First, it submits that the purpose of cl 14 is contained in cl 14.1 ‑ to enable the parties to request a Price Review. The trigger for the request is the mere belief that Market Price has changed. Clause 14.3, and those that follow, then provide the machinery by which a Price Review is to be initiated.[71] In support of this, it points to the express statement in cl 14.6(a)(ii), in clear and unqualified terms, that the parties intend the BRGP will remain a price equal to the Market Price through Price Reviews conducted under cl 14.[72]
[71] Respondents' submissions [20]; appeal ts 42, 66.
[72] Appeal ts 44.
The Buyer says that the fact cl 14 does not mandate automatic Price Reviews is simply to avoid the cost and burden of a Price Review if neither party believes the Market Price has changed. Relying on cl 14.1, cl 14.6(1)(a)(ii) and the structure of cl 14, the Buyer submits that the purpose of cl 14 is as the judge found: to enable the parties, through the ability to request a Price Review, to ensure that if the Market Price changes, the price will be adjusted to remain equal to the Market Price.[73]
[73] Respondents' submissions [51] ‑ [52].
Secondly, it submits, there are no words in cl 14.3 that make the valid initiation of a Price Review conditional upon compliance with the time stipulation. The clause does not use language such as 'on condition that', 'subject to', 'provided that', or 'if' (or any equivalent phrase) the notice is issued in the stipulated period.[74]
[74] Respondents' submissions [21]; appeal ts 45, 61.
Thirdly, the Buyer emphasises that the definition of 'Price Review Notice' does not encompass the time stipulation.[75]
[75] Respondents' submissions [23]; appeal ts 46.
Fourthly, the obligation in cl 14.5 is not contingent upon a Price Review Notice being issued within the time period ‑ that obligation is enlivened upon (or, 'on') receipt of a notice that complies with clause 14.4.[76]
[76] Respondents' submissions [24] ‑ [25]; appeal ts 46.
Fifthly, reading cl 14.3 with cl 32.1(d) indicates that if a party did not initiate a Price Review within the time stipulated, they may still initiate it later. This point is the subject of the Buyer's notice of contention.
Sixthly, there is no deeming provision providing that the ability to initiate a Price Review is lost if the Price Review Notice is not served within the period mentioned. In that respect, the Buyer points to other clauses having the character of a deeming provision such as cl 11.3(b), cl 19.4(b) and cl 25.6.[77]
[77] Respondents' submissions [27]; appeal ts 61 - 62.
Seventhly and finally, given the context of the GSA (outlined above) and the importance of Price Reviews in that context, if such a consequence was intended, this should have been specified. That a trifling delay would result in a party losing the right to initiate a Price Review would be an uncommercial construction.[78]

Response to the Sellers' textual arguments

[78] Respondents' submissions [28].

The Buyer provides detailed submissions in response to each of the textual matters on which the Sellers rely.
The Buyer says that the clarity of the language used is not to the point. The meaning of the time stipulation is clear, but that is not the issue; the issue is the consequences of failing to comply with it. In construing the GSA to resolve that issue, regard must be had to all its clauses, and harmony must be achieved between them.[79]
[79] Respondents' submissions [29] ‑ [30].
The Buyer makes a number of points in response to the Sellers' contention that the time stipulation is essential 'because it is a non‑promissory condition precedent to the duty to perform an obligation or a "contingent" condition'. In addition to the textual considerations summarised in [99] - [106] above, those points include the following.
The Buyer submits that the real issue is whether the obligations imposed by cl 14.5 are contingent upon an event, and the content of any such contingency. It contends that the performance of the obligation to negotiate in cl 14.5 is contingent upon, and only upon, the receipt of the Price Review Notice. In that manner and to that extent, the event (the receipt of the Price Review Notice) can be described as a 'condition precedent' to the performance of the contractual obligation (here, the obligation to negotiate in cl 14.5). It reiterates that the obligation in cl 14.5 is not expressed to be subject to compliance with the time stipulation in cl 14.3. Clause 14.3 cannot be characterised as a condition precedent merely because it is the clause that defines the term 'Price Review Notice' and that term is used in the description of the event upon which the obligation in cl 14.5 is contingent.

The Buyer submits that cl 14.3 contains both non‑promissory and promissory aspects. It is non‑promissory in that the parties 'may' initiate a Price Review but are not required to do so. However, it is promissory in the sense that, if a party chooses to initiate a Price Review, they 'promise to issue any Price Review Notice … within the time period'.[80]
[80] Respondents' submissions [40] referring to Mango Boulevard v Mio Art [84]; appeal ts 51 - 53.
As to the Sellers' argument that cl 14.3 confers a Hohfeldian power on the parties to issue a notice within the time stipulated which, once exercised, triggers cl 14.5, the Buyer submits that, whatever the characterisation of cl 14.3 under a Hohfeldian analysis, ordinary businesspeople would regard the ability to initiate a Price Review as a right. This is how, it submits, the ability was referred to in GR Mailman.[81]
[81] Respondents' submissions [43] referring to GR Mailman (88) and (95). See also appeal ts 111.
The Buyer responds to the Sellers' third reason for why strict compliance with the time stipulation is required. It says that, contrary to the Sellers' contentions, as to frequency, only one Price Review can occur in relation to any Price Review Date. A delay in initiating a Price Review will not affect the time and cost involved or alter the fact that price will change on and from the Price Review Date. As to certainty, the Buyer says that uncertainty is inevitable, even if the Price Review is initiated within the window in cl 14.3.[82]
[82] Respondents' submissions [44] - [45]; appeal ts 111 - 112.
As to the Sellers' submission outlined in [72] above, the Buyer submits that this is a new argument that should not be allowed on appeal. In any event, it says, this argument assumes that the parties objectively contemplated that a purpose of the Price Review process would be to 'game' the system and influence Market Price, by delaying negotiations of other third party contracts. It notes that there is no evidence about the parties' influence over Market Price. For example, it queries whether a party would have such control over contracts with third parties that they could delay execution of the third party contract until after the Price Review Date. If so, consideration of that contract would be excluded from the standardisation and weighting process by cl 14.6(b) of the GSA.[83]
[83] Respondents' submissions [46].
The Buyer submits that limited weight should be put on the fact that a late notice could curtail the period contemplated in cl 14.5 for good faith negotiations. The Buyer points to the following features of cl 14. Clause 14.5 does not oblige the parties to engage in good faith discussion for the full period allowed nor does it oblige them to together have regard to the factors in cl 14.6. Further, the parties may continue negotiating after the Price Review Date, as there is no fixed date for a referral to arbitration. The parties are not 'locked in' to the Final Price submitted, under cl 14.7, three days after the Price Review Date. By cl 14.11(b) they may later provide a revised Final Price with their Price Review Response.[84]

Response to the errors asserted by the Sellers

[84] Respondents' submissions [47] ‑ [50]; appeal ts 100 - 105.

In summary, the Buyer submits that the judge did not make the asserted errors or any error was not material.
The Buyer says the judge did not err in placing weight on the placement of the definition of Price Review Notice in determining whether time was of the essence. The Buyer identifies two related questions of construction that inform whether time was of the essence. The first is whether the time stipulation is a precondition to the obligation in cl 14.5. The second is whether the time stipulation is a precondition to the ability to initiate a Price Review. The placement of the definition, the Buyer says, is a powerful textual indicator on the first and an important textual indicator on the second.
The Buyer submits that the judge did not err in applying the essentiality test from Tramways v Luna Park, and that United Scientific v Burnley and GR Mailman show that it is applicable by analogy.
The Buyer says the judge was correct to find the rent review context sufficiently analogous for the principles from United Scientific v Burnley to apply. It says the complexity of a Price Review process, and the requirement to negotiate, do not affect the rationale underpinning United Scientific v Burnley.
Further, the Buyer submits that the judge did not err in applying the concept of notices to perform, or, as the primary judge called them, deadline notices, in the present context. It submits that United Scientific v Burnley found that deadline notices could be provided in the context of contracts such as this and that the courts in GR Mailman and Mango Boulevard v Mio Art accepted this.
The Buyer submits that the time stipulation would still have work to do if it were not essential. Clause 14.3 is partly promissory, so a breach of it would sound in damages. It also provides the temporal framework for giving a deadline notice. Further, apart from these effects, the time stipulation sets out a timetable in a directory sense that records the expectations of the parties and, in appropriate circumstances, could give rise to an estoppel.[85]
[85] Respondents' submissions [65]; appeal ts 51, 53.
The Buyer says that an early notice raises different considerations (particularly given it could be later reissued within the time period, such that an early notice would not result in the loss of the ability to initiate a Price Review). In any event, the Buyer submits, there is no reason why a Price Review Notice issued early would be invalid. It notes that, an early Price Review Notice would enliven earlier the obligation to engage in good faith discussions in cl 14.5. However, the obligation is merely for the parties to seek to agree a new price prior to the Price Review Date. All the other steps follow after the Price Review Date. So, the concern that an early notice would cause a review to occur too early, and therefore at a time too far removed from the Price Review Date, would not apply.[86]
[86] Respondents' submissions [66] ‑ [67].
The Buyer further submits that the judge did not make the other errors asserted by the Sellers.
We turn now to determine the critical question of construction of cl 14.

Legal principles and summary of our conclusions

As all parties recognise, the question - whether the time stipulation in cl 14.3 is essential - is one of construction.
As already noted, the Sellers' particulars and submissions assert a number of errors in the primary judge's reasoning to the conclusion on the critical question of construction. However, demonstration of error in the reasoning process is neither necessary nor sufficient for success on the part of the Sellers. Because a question of construction is one of law, there is only one true construction, and the task of this court in an appeal on a question of construction is to determine for itself the proper construction of the instrument.[87] Thus, it is not necessary to determine the merits of each criticism of the judge's reasoning, although some differences between our analysis and that of her Honour will emerge in the course of explaining our preferred construction.
[87] Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80; (2019) 55 WAR 89 [172] and cases there referred to.
The principles applicable to the construction of written contracts established by decisions of the High Court are well known. They were outlined in Black Box Control v TerraVision[88] and in Sino Iron Pty Ltd v Mineralogy Pty Ltd.[89] By way of summary:
(1)The construction of a contract involves a determination of the meaning of the words of the contract by reference to its text, context and purpose. The starting point for the proper construction of a clause is the language used in the clause. In particular, one starts by identifying the possible meanings that the words chosen by the parties can bear.
(2)Ascertaining the meaning of terms in an instrument requires a determination of what a reasonable person would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract, and the commercial purpose or objects to be secured by the contract.
(3)The instrument must be read as a whole. A construction that makes the various parts of an instrument harmonious is preferable. If possible, each part of an instrument should be construed to have some operation.
(4)The general principle applicable to the construction of commercial contracts is that they should be given a businesslike interpretation. Absent a contrary intention, the court approaches such contracts on the basis that the parties intended to produce a result which makes commercial sense. This requires that the construction placed on the term or terms in question is consistent with the commercial object of the agreement. However, it must also be borne in mind that business commonsense may be a topic on which minds may differ.
[88] Black Box Control v TerraVision [42].
[89] Sino Iron v Mineralogy [295] - [298].
It may be seen that these principles make no reference to presumptions as to the parties' intentions. Later in these reasons we will explain why we do not accept the Buyer's submission that, in determining the question of construction in this case, the court should start with the presumption that the parties did not intend time to be of the essence in cl 14.3.
The conclusions we have reached may be summarised as follows:
(1)Applying the principles of construction summarised in [127] above, on a proper construction of cl 14 of the GSA, it is only by issuing a Price Review Notice within the notice period stipulated in cl 14.3 that a party may effectively initiate a Price Review. Consideration of the text of cl 14.3, in the context of cl 14 as a whole, seems to us to demand that conclusion. The competing constructions create intractable disharmony with other provisions of cl 14 such as cl 14.5 and cl 14.7.
(2)The Buyer's reliance on the general principle asserted in [97] above - that time stipulations in machinery provisions for determining price adjustments under a contract are presumed not to be essential - does not assist them for two reasons:
(a)We do not accept that there is any such general principle applicable to all contracts containing provisions for the adjustment of price, irrespective of the nature, terms and subject matter of the contract and the market within which the contract operates.
(b)Even if such a general principle existed, in its terms it applies only to machinery provisions. In our opinion, cl 14.3 is not properly characterised as merely a machinery provision within the context of the GSA read as a whole.
(3)Even if, somehow, it is appropriate to begin the construction exercise with a presumption that the time stipulation in cl 14.3 is not essential, the matters set out under the heading, 'The proper construction of cl 14', would, in our view, comfortably sustain the conclusion that the presumption was rebutted.

The proper construction of cl 14

Outline of cl 14

We begin with an outline of the various provisions contained in cl 14.
Clause 14.1 states that the purpose of cl 14 is to enable either party to request a Price Review if the party believes the Market Price has moved, compared with the Market Price at the date of execution of the GSA or prevailing since the most recent Price Review.
Clause 14.3 provides for the initiation of a Price Review. 'Price Review' means 'a price review in respect of the BRGP', which is thus a reference to the review process contained in cl 14.[90] Either party may initiate a Price Review by issuing 'a notice which complies with cl 14.4 ('Price Review Notice') not more than 120 days nor less than 90 days prior to a Price Review Date'. 'Price Review Date' is defined in cl 14.2.
[90] See the definition of BRGP in cl 1.1 of the GSA.
It can be seen from the terms of cl 14.3 that the definition of Price Review Notice is 'a notice which complies with cl 14.4'. As the Buyer emphasises, the brackets so defining Price Review Notice are located before the time stipulation in cl 14.3.
Clause 14.5 imposes obligations on the parties to meet and in good faith discuss the proposed new BRGP and to seek to agree on a new BRGP prior to the Price Review Date. Those obligations arise '[u]pon receipt of the Price Review Notice'.
Clause 14.6(a)(ii) records that the parties agree that they intend the BRGP will remain at a price equal to the Market Price through Price Reviews conducted under cl 14.
Clause 14.6(b) stipulates, in considerable detail, the matters to which regard is to be had in determining the Market Price.
By cl 14.7, if agreement is not reached by the Price Review Date, then within three days of the Price Review Date each party must submit to the other a proposed new price, referred to as the Final Price.
By cl 14.8, if the parties are unable to agree on a revised BRGP within seven days of the parties having submitted their respective Final Prices, then either reviewing party may refer the matter to arbitration by giving notice to the other party. No time period is stipulated for the giving of that notice.
Clause 14.9 provides for the appointment of three arbitrators. Each party shall appoint an arbitrator of its choice within 20 days of receipt by either party of the notice requiring arbitration. The party‑appointed arbitrators then appoint a presiding arbitrator within 10 days of the appointment of the last of them. If an arbitrating party fails to appoint its own arbitrator within the prescribed period, or if the party‑appointed arbitrators fail to agree on a presiding arbitrator, then either party may request the President of the Bar Council of the Western Australian Bar Association to appoint an independent arbitrator as the presiding arbitrator or as arbitrator for that party as applicable.
Clause 14.11 provides a timetable for the parties to make submissions as to their proposed Final Price and for Price Review Responses in response to the other party's submissions.
Clause 14.13 provides for the arbitrators to issue their decision as soon as possible and to take all available steps to issue their decision within nine months of the Price Review Date.
Clause 14.17 provides for the application of the revised BRGP, following agreement or issuance of an arbitral decision, for each month on and from the Price Review Date for that Price Review.

The three competing constructions

There are, in substance, three competing constructions. The Sellers' construction is that time is of the essence of the time stipulation in cl 14.3. In other words, the power under cl 14.3 to initiate a Price Review can be invoked only by giving notice within the period stipulated in it.
The Buyer's construction is that time is not of the essence of the power to initiate a Price Review, and that the power may effectually be exercised at any time, including before the stipulated period and including after the Price Review Date.
The judge's construction is that the power to initiate a Price Review may be exercised during the stipulated period, and after the stipulated period up to the Price Review Date, but not thereafter and not before the beginning of the stipulated period.
For the reasons that follow, in our opinion, the preferable and correct construction is the construction advanced by the Sellers.

The proper construction of cl 14 - why the Sellers' construction is to be preferred

The following matters, in combination, seem to us to compel acceptance of the Sellers' construction. In summary:
(1)the language and structure of cl 14.3 supports the Sellers' construction;
(2)by contrast, nothing in the language and structure of cl 14.3 supports the Buyer's construction or the judge's construction;
(3)the Buyer's construction and the judge's construction are inconsistent with the text of cl 14.3, as they give the temporal element in cl 14.3 no work to do;
(4)the Sellers' construction is harmonious with other provisions of cl 14;
(5)by contrast, the Buyer's construction and the judge's construction produce incoherence with both cl 14.5 and cl 14.7; and
(6)contrary to the Buyer's submission and to the judge's conclusion, cl 14.3, which confers the power to initiate a Price Review, cannot properly be characterized as a mere machinery provision.

The text of cl 14.3 - language and structure

First, in our view, the language and structure of cl 14.3 firmly supports the Sellers' construction. Clause 14.3 is the sole source of the parties' power to initiate a Price Review. No other provision in cl 14 (or elsewhere in the GSA) so empowers the parties. Clause 14.3 confers on the parties the power to do something which they otherwise could not do, namely, initiate a Price Review, and thereby create obligations upon all parties, by issuing a notice. The clause empowers the parties - they 'may initiate a Price Review' - and specifies the means of exercising that power - 'by issuing …'. The word 'by' in the clause connotes that what follows it is the means of initiating the Price Review. Thus, the conferral of the power to initiate a Price Review is coupled with the specification of the means by which the power is to be invoked. Issuing the notice within the stipulated period is the sole means provided by the GSA for a party to initiate a Price Review. It follows that if a party does not issue a notice within the stipulated period, the party will not have done what cl 14.3 provides for them to do to initiate a Price Review, with the result that one will not have been initiated.
The Buyer emphasises that cl 14.3 does not use the classical language of conditionality, such as 'if' or 'on condition that'. While that may be accepted, the conferral of a power to do X by doing Y naturally conveys, as a matter of the ordinary meaning of the language, that a party wishing to exercise the power thereby conferred, namely to do X, can do so by, and only by, doing Y. Nothing in the ordinary meaning of such language conveys that X may be done in any other manner.
Clause 14.3 confers a power on the parties but does not impose any obligations upon them. The language of cl 14.3 is permissive - 'may', it contains or involves no promises. The primary judge's conclusion and the Buyer's submissions to the contrary cannot be accepted.
The judge did not explain the basis for her conclusion that a party giving notice outside the period stipulated in cl 14.3 would thereby be in breach of cl 14.3. With respect, we can find no basis for so construing cl 14.3.
The Buyer was invited to identify the basis for finding, as it submits, a promissory element in cl 14.3. The response was that this conclusion:[91]
arises as a matter of construction of that clause because it contains within it a reference to the definition of Price Review Notice, but does not include the time element, but it does direct that if you are to initiate, you do so within that window.
…the only other matter that might illuminate that particular argument is the duty of good faith because there's no express promise to initiate. The time period is an aspect that is directory within the clause. And if one is to initiate, then one must do so within the period identified in clause 14.3.
[91] Appeal ts 51 - 52.
Those matters are said to sustain the conclusion that, on a proper construction, not as an implied term,[92] the parties promise that, if they choose to give a notice, they will not give a notice outside the stipulated period. Nothing more was said to explain how a promissory element is contained in cl 14.3. It is, with respect, difficult to make sense of this submission. It falls a long way short of persuading us of the alleged express term. We can see no foothold for the alleged term in the text of cl 14.3. Read in its natural and ordinary meaning, the effect of cl 14.3 is that the parties have agreed that a Price Review for the purposes of cl 14 may be initiated by the issue of a notice in compliance with cl 14.4 within the time stipulated in cl 14.3. To read cl 14.3 as providing that the parties have agreed that issuing a notice that complies with cl 14.4 - which is something neither party is obliged to do - will initiate a Price Review, coupled with an independent promise that the initiating notice will not be given outside of the stipulated period, is at best highly artificial and at worst is to rewrite the clause.
[92] Appeal ts 52.

Conclusions from the authorities

[174] Bondi Diggers Club Ltd v Vitarni Pty Ltd (1996) 7 BPR 15,061.

[175] Callide Power Management Pty Ltd v Callide Coalfields (Sales) Pty Ltd (No 5) [2016] QSC 199 [138] ‑ [151].

[176] Rolleston Coal Holdings Pty Ltd v ICRA Rolleston Pty Ltd [2020] QSC 352; (2020) 14 ARLR 213.

As foreshadowed, in our view, the authorities on which the Buyer relies fall well short of sustaining the general principle it asserts. As is apparent from the detailed outline above, none of the authorities expresses a broad principle along the lines of the general principle asserted by the Buyer.
The foundational decision in United Scientific v Burnley was a decision about time stipulations in a rent review clauses in leases. The long‑standing inflationary conditions then affecting the rental market were emphasised in their Lordships' speeches.[177] Lord Diplock observed that it has been usual to include rent review clauses in long‑term leases 'in the last two decades since inflation' and Lord Fraser of Tullybelton said the main purpose of such clauses is to protect the revenues of landlords from the effects of inflation. As Gleeson CJ observed in GR Mailman,[178] the decision in United Scientific v Burnley was, and was expressed to be, a judicial response to a practical commercial problem relating to the fixing of a rental for leases, and especially long leases, in times of inflation. Given this context, United Scientific v Burnley provides an insecure foundation for the imposition of the presumption other than in rent review cases, let alone to all cases falling within the broad principle asserted by the Buyer.
[177] United Scientific v Burnley (922, 948, 958).
[178] GR Mailman (86).
Both Gollin v Karenlee and GR Mailman were cases concerned with rent review clauses. Nothing in the reasoning in those decisions supports a principle of broader application than to rent review clauses in leases.
Further, as already explained, United Scientific v Burnley involved two cases, one of which involved a promissory provision and the other a non‑promissory provision. In Gollin v Karenlee, in making the observation in which the court referred with approval to United Scientific v Burnley the court assumed the existence of a provision creating an obligation. In those circumstances, it is not clear that the court should be taken to have approved that part of the reasoning in United Scientific v Burnley that related to the lease with the non‑promissory provision. In our view, that is all the more so in circumstances where a year earlier, in Perri v Coolangatta a majority of the High Court had held that the ability of a party to give a notice requiring the other party to take a step within a reasonable time, failing which the contract could be terminated, had no application to the non‑fulfilment of a contingent non‑promissory condition.[179] In so observing, we do not overlook the tentatively expressed suggestion by Peter Lyons J in Mango Boulevard v Mio Art as to how Perri v Coolangatta and Gollin v Karenlee might be reconciled. Such a reconciliation would not accommodate the breadth of the statements of principle in Perri v Coolangatta, as to which see [243] above.
[179] Perri v Coolangatta (546, 547, 569).
The Sellers submit that, insofar as Mango Boulevard v Mio Art and Alliance Petroleum applied the presumption to contracts outside the context of rent review clauses, and in the case of Mango Boulevard v Mio Art in extending the presumption to a power as distinct from an obligation, the decisions are wrong.[180] However, for the following reasons, it is not necessary to decide whether that is so.
[180] Appeal ts 7.
As to Alliance Petroleum, three features of the case make it significantly different from the present case. First, either party could 'require' an adjustment to price and absent agreement there was a mandatory reference to arbitration. Secondly, as Cox J emphasised more than once,[181] the case concerned delay only in relation to the appointment by a party of an arbitrator in circumstances where the other steps envisaged by cl 24 had occurred, including the mandatory reference of the matter to arbitration. Given the contractual scheme outlined in [250] above, the characterisation of the provision as a machinery clause was, with respect, readily understandable. Thirdly, the case concerned the failure of a party to comply with its obligations in respect of the relevant time stipulation; it was not concerned with a non‑promissory time stipulation.
[181] Alliance Petroleum (92, 106).
That leaves the decision in Mango Boulevard v Mio Art. Their Honours' acceptance of the application of the presumption in United Scientific v Burnley and the application in that case of a notice to make time of the essence were by no means necessary parts of the court's reasoning. First, the court found that the alternative valuation was obtained within a reasonable time. Secondly, the court considered that, without regard to any presumption, as a matter of construction the proper conclusion was that time was not intended to be essential in relation to the alternative valuation.[182] Further and in any event, the court's application of the presumption to the clause in that case does not support the broad contention advanced by the Buyer as to the scope of the presumption.
[182] Mango Boulevard v Mio Art [34], [83].
For these reasons, the authorities on which the Buyer relies do not sustain the application of a presumption that time is not of the essence in the broad category of cases it contends.
Further, in our opinion, the application of such a presumption to the general class of cases proposed by the Buyer is unjustifiable as a matter of principle. It does not fit with the modern approach to construction, which has as its focus the text, context - including subject matter and market - and purpose of the particular instrument to be construed.
There are many judicial statements in Australia observing that presumptions have fallen into disfavour in the context of construction and other related contexts. This court has recently so observed in Sino Iron v Mineralogy,[183] with reference to Ermogenous v Greek Orthodox Community of SA Inc.[184] In JKC Australian LNG Pty Ltd v CH2M Hill Companies Ltd,[185] this court expressed agreement with the conclusion of the primary judge in that case that application of a presumption arising from the nature of a performance bond in the process of construing an instrument of that character was inconsistent with the general approach of Australian courts to questions of construction. In like vein, in Kawasaki Heavy Industries Ltd v Laing O'Rourke Construction Pty Ltd,[186] the New South Wales Court of Appeal rejected the notion of a presumption in favour of an unfettered right to call on a bond. Rather, the matter is to be approached by an orthodox process of construction of the relevant language.[187]
[183] Sino Iron v Mineralogy [289].
[184] Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 [26].
[185] JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [2020] WASCA 112 [91].
[186] Kawasaki Heavy Industries Ltd v Laing O'Rourke Australia Construction Pty Ltd [2017] NSWCA 291; (2017) 96 NSWLR 329.
[187] Kawasaki v Laing O'Rourke [60] - [67].
Some authors suggest that presumptions as to intention are better reframed as a construction preference which may assist in choosing between competing constructions.[188] The Buyer did not frame its submissions in this manner, but we have considered its submissions in this alternative framework nonetheless. The italicised observations of Gleeson CJ in Mailman in [259] above support that view, as do the observations of Saville J in The Peonia:[189]
Over the course of the years the English Courts have dealt in this way with many disputes over the meaning and effect of commercial bargains. As a result there exists a large body of case law which not only authoritatively reaffirms and from time to time refines the applicable principles, … but also provides authoritative guidance on the meaning and effect of common types of commercial bargain, both generally and with regard to the words and phrases commonly used in such bargains. It follows that if in one case a Court concludes that a particular type of commercial bargain gives rise, or indeed does not give rise, to particular express or implied rights or obligations, another Court or tribunal is likely (or, if required by the laws of precedent, bound) to take the same view of another like bargain, unless there are significant differences in the words or phrases used, or in the context in which they are used. The approach, however, always remains the same. The starting point must be to examine in context the words and phrases used in the case under consideration. If this is not done, then there exists the risk that the law will start dictating to the parties what their bargain should be, the antithesis of the philosophy and principles of English common law on this subject.
[188] See, for example, Carter JW, The Construction of Commercial Contracts (2013) [16-05].
[189] The Peonia [1991] 1 Lloyd's Rep 100, 103.
On the Buyer's submission, a presumption that time is not of the essence is to be made in all cases involving a time stipulation in machinery‑type provisions for determining price adjustments. Thus, whether such a presumption is to be made or preference is to be given is evidently not sensitive to matters such as the subject matter of the contract, the market conditions in the market relevant to that contract, the length of the term of the contract and the relationship between the parties. To state the obvious, those matters are readily capable of bearing significantly on the discernment of the parties' objective intentions revealed by a contract. In our view, it is not a sufficient answer to say that these matters might be considered in determining whether the presumption was rebutted. To impose the presumption of intention, or construction preference, without regard to such matters seems to us to demonstrate that it is an unjustifiably blunt and over‑inclusive tool for the ascertainment of the parties' intentions and runs the risk identified by Saville J in the passage from The Peonia quoted above.
The point seems to us to be illustrated by consideration of the present case. The task of construction is to discern the intention revealed by the lengthy and elaborate terms of the GSA. In the circumstances, we are unable to see any principled basis on which the court should approach the task of objective ascertainment of these sophisticated commercial parties' intentions by reference to a presumption, or with any predilection one way or another as to the parties' intentions.
For these reasons, we reject the Buyer's submission that the authorities establish a presumption or a construction preference that time is of the essence of general application to all time stipulations, whether promissory or non‑promissory, in machinery‑type provisions for determining price adjustments under a contract.
We would also observe that we have some conceptual difficulty with applying the presumption to the class of cases propounded by the Buyer. As already noted, that class of cases is said to apply to all machinery‑type provisions for determining price adjustments. Whether a term is properly seen as machinery may itself be seen as a question of characterisation rather than one of construction. Nevertheless, whether that characterisation is apt necessarily requires consideration of the terms of the contract. That in turn will involve, at least to some extent and in some respects, construing those terms. Once the presumption is applied to the contract, the contract must then be construed to determine whether the presumption is rebutted. We have difficulty seeing (i) at what point before the process of construction is completed, that process is to be interrupted and the presumption interposed, before the process of construction then resumes for the purpose of deciding whether the presumption is rebutted, and (ii) why it should be so interposed.
In any event, even if the presumption, or constructional preference, that time is not of the essence were applicable to the general class of case propounded by the Buyer, in our view, it would not apply to the present case. That is because, for the reasons given in [198] above, cl 14.3 cannot properly be characterised as a machinery provision.
Nor, in our respectful opinion, can the presumption be applied to the present case on the basis, adopted by the primary judge, that this case is 'sufficiently analogous' or 'sufficiently similar' to United Scientific v Burnley.[190] For the reasons already given, United Scientific v Burnley is inapt to provide a launching-pad for such reasoning. In addition to the points we have already made, to so reason seems to us unacceptably vague. The basis for reasoning from a rent review clause in a lease to a price review clause in a gas supply agreement is not apparent. No satisfactory criteria for evaluating the sufficiency of any analogy (or discerning the sufficiency of similarity) were identified by the Buyer or by the judge. Apart from proposing the category of cases to which we have referred, and supporting the judge's approach, the Buyer did not identify criteria.[191] The judge's reasons for finding a sufficient analogy are outlined at [41] - [43] above. In substance, the first two amount to no more than that cl 14 provides for a price review in a long‑term contract. For the reasons already given, that is an inadequate foundation for commencing the construction task with a presumption or preference. The same is true of the third reason. The extent of the apparent prejudice arising from failure to give notice within the stipulated period is a matter to be considered in the construction exercise, together with all the other relevant considerations. It is not a basis for a presumption or preference.
[190] Appeal ts 69.
[191] Respondents' submissions [19], [57].
The Buyer submitted at the hearing that, in the alternative to applying the presumption from United Scientific v Burnley in the form of a presumption, it is possible to treat the 'features in United Scientific' as 'markers' or factors relevant to construing this contract 'without elevating it to a presumption'. It submits that this is what the primary judge did in the part of her Honour's reasons outlined at [41] - [43] above.[192] However, it appears that the judge did treat the United Scientific v Burnley as establishing a presumption that could be applied as such to this case. As explained above, the approach her Honour took was to consider whether the circumstances of this case were 'sufficiently analogous to apply the principles in United Scientific'.[193] The word 'principles' must mean, or at least include, the presumption that time stipulations in rent review clauses are not of the essence. In any event, if, by the submission that the features in United Scientific v Burnley can be applied as factors relevant to construing this contract, the Buyer meant the approach taken by the judge as outlined at [41] ‑ [43] above, then that approach should not be adopted for the reasons at [288] above.
[192] Appeal ts 69 ‑ 71, 98 ‑ 100.
[193] Primary reasons [134].
Further, as we have said, even if the presumption or constructional preference were somehow applicable to the construction of cl 14 of the GSA, for the reasons given under the heading, 'The proper construction of cl 14', in our view, the presumption is comfortably rebutted in the present case.

Notice of contention

By its notice of contention, the Buyer contends that the judge's conclusion can be sustained on two further bases, although, as we will explain, the second basis adds nothing of substance.

Clause 32(1)(d)

First, the Buyer contends that the judge's conclusion - that a Price Review Notice issued outside the period stipulated in cl 14.3 is effectual - is sustained by the operation of cl 32(1)(d).
Clause 32.1(d) provides that if a party does not exercise a right or remedy fully or at a given time, the party may still exercise it later.
The Buyer submits that cl 32(1)(d) is a 'powerful indicator supporting the conclusion that time is not of the essence' in cl 14.3.[194] It contends that: (1) the ability to initiate a rent review, as referred to in cl 14.3, would be understood by business people as a 'right', and (2)applied in the context of cl 14.3, the fact that a party did not exercise its right under cl 14.3 at the times given in that clause does not prevent it from exercising it later.[195]
[194] Respondents' Notice of Contention [79].
[195] Respondents' Notice of Contention [79]; appeal ts 119 - 121, 123 - 124.
The relationship between this contention and the Buyer's construction of cl 14 was made not entirely clear. The contention might be taken as supporting the Buyer's construction of cl 14 that time is not of the essence in cl 14.3. Or, it may be taken to proceed on the assumption that its construction of cl 14 was not accepted. Either way, the contention fails. As to the first, cl 32.1(d) does not inform the construction of cl 14.3 or of cl 14 more generally. Consequently, we proceed on the basis of our preferred construction of cl 14 in considering the notice of contention.
It is not necessary to determine the metes and bounds of the scope of operation of cl 32.1(d). In our opinion, on its proper construction it is incapable of affecting the operation of cl 14.3 and its time stipulation. In our view, cl 32.1(d) is directed to a right or remedy the existence of which is not itself conditioned by any temporal element. In such a case, the clause operates to make clear that the fact that the right or remedy was not exercised immediately does not preclude the subsequent exercise of it. In our view, the clause is not directed to, and has no operation in relation to, a right where the conferral of the right is conditioned by compliance with a requirement as to time. In such a case, when the stipulated time has elapsed, there is no right to which cl 32.1(d) could attach. In other words, in the case of a right such as one under cl 14.3 - where the right is a right to do something only within a stipulated period - there is no room for the operation of cl 32.1(d). Once the period stipulated in cl 14.3 had elapsed, there was no right in relation to which cl 32.1(d) could operate.
That reading of cl 32.1(d) is consistent with and supported by its reference to not exercising a right or remedy 'at a given time' and being able to exercise it 'later'. The phrase 'at a given time' more naturally refers to a time in the abstract, rather than to a stipulated time. The lack of temporal specificity in the operative effect of the clause - enabling the party to do it 'later' - sits comfortably with this sense of cl 32.1(d): enabling a party to do something 'later' is as much as can be done in relation to a failure to do something at a time in the abstract. By contrast, provision enabling a party to do something 'late' would have been apt to apply to a clause stipulating a specific time by which (or specific time period within which) something has to be done. Thus, the provision in cl 32.1(d) that the right may be exercised 'later' rather than 'late' also favours the construction set out in [296] above in preference to reading the clause as enabling a party, where a clause provides the right is to be exercised at a stipulated time (or within a stipulated period), to exercise the right after the stipulated time (or after the stipulated period) has elapsed.
The Buyer's construction strains the language of cl 32.1(d). At best it involves a very awkward attribution of meaning to that language. Accepting that words denoting the singular include the plural,[196] a party who does not exercise the power in cl 14.3 to initiate a Price Review within the time there stipulated cannot be said, as the Buyer would have it, to have not exercised that right at the times given in cl 14.3. That is so for two reasons. First, for the reasons in [297] the phrase 'at a given time' more naturally refers to a time in the abstract, rather than to a stipulated time. Secondly, and in any event, cl 14.3 does not give times, it stipulates a period. That stipulation of a period does not create a (infinite) set of 'given times'.
[196] GSA cl 1.2(b).

As the Buyer ultimately accepted, to construe cl 32.1(d) in the manner it contends for results in giving no effect to the time stipulation in cl 14.3.[197] Clause 32.1(d) should not be construed to have such an effect.

Section 21 of the Property Law Act 1969 (WA)

[197] Appeal ts 125.

The Buyer's notice of contention asserts that the judge's conclusion can be sustained by virtue of s 21 of the Property Law Act, as addressed in United Scientific v Burnley. However, the Buyer's submissions in support of the contention explain the limited basis of the Buyer's reliance on s 21. Its written submissions say only that the Buyer relies on the equitable presumption under s 21 of the Property Law Act insofar as it informed the approach adopted in United Scientific v Burnley. Although it initially appeared that the Buyer went further in its oral submissions,[198] in the end, it relied on s 21 in aid of the application of the reasoning in United Scientific v Burnley.[199]
[198] Appeal ts 117 - 118.
[199] Appeal ts 127 - 128.
We have already had regard to s 21 of the Property Law Act in the course of considering United Scientific v Burnley and other authorities. Consequently, this contention adds nothing to the analysis.

Conclusion

For the above reasons, we would determine the critical question of construction favourably to the Sellers. In our view, time is of the essence of the time stipulation in cl 14.3. In other words, the power under cl 14.3 to initiate a Price Review can be invoked only by giving notice within the period stipulated in it. Consequently, we would uphold the appeal. Declarations should be made accordingly. We would hear from the parties as to the terms of the declarations and as to costs.
We would also hear from the parties as to the identification of those parts of these reasons that should be suppressed from publication in order to give effect to the parties' obligations of and correlative interests in confidentiality, reflected in the order of Mitchell JA made on 9 October 2020.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RC
Associate to the Honourable Justice Beech
17 NOVEMBER 2021