Cumnock No. 1 Colliery P/L v Pacific Power

CITATION:	Cumnock No. 1 Colliery P/L v Pacific Power & Anor [2002] NSWCA 278
FILE NUMBER(S):	CA 40018 of 2002
HEARING DATE(S):	31/07/02, 01/08/02
JUDGMENT DATE:	4 September 2002
PARTIES :	Cumnock No. 1 Colliery Pty Ltd v Pacific Power & Elcom collieries Pty Ltd
JUDGMENT OF:	Meagher JA at 1; Handley JA at 23; Foster AJA at 24

LOWER COURT JURISDICTION :	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S) :	ED 50008 of 2000
LOWER COURT JUDICIAL OFFICER :	Bergin J

COUNSEL:	Appellant: R J Weber SC/Ms A Mountfort Respondents: J L Trew QC/G R Waugh
SOLICITORS:	Appellant: Mallesons Stephen Jaques Respondents: Boyd House and Partners
CATCHWORDS:	Contract Law - whether the parties were content to be bound immediately and exclusively by the terms agreed upon - whether it was expected that a further contract would be made in substitution of the first - appeal dismissed with costs.
CASES CITED:	Masters v Cameron (1954) 91 CLR 353 Sinclair, Scott & Company Limited (1929) 43 CLR 310
DECISION:	Appeal dismissed with costs.

CA 40018 of 2002
ED 50008 of 2000

MEAGHER JA
HANDLEY JA
FOSTER AJA

Wednesday, 2 September 2002

CUMNOCK NO. 1 COLLIERY PTY LTD

v

PACIFIC POWER & ELCOM COLLIERIES PTY LTD

Facts

In 1991, the appellant, Cumnock No 1 Colliery Pty Limited (“Cumnock”) purchased the Liddell State Coal Mine from the respondents. Various contracts were executed between the parties in relation to the purchase, namely, a Deed called the Royalty Deed, and an agreement called either the Supply Contract or Contract No 4180. The Coal Supply Contract was for a term of three years, expiring on 5 November 1994, and required the appellant to supply to the first respondent (“Pacific Power”), certain tonnages of coal at certain rates. The combined effect of the Royalty Deed and the Supply Contract was that, the respondents would have an income stream consisting partly of royalty payments and partly by the discount built into the scheduled price of coal obtained by the appellant. Clause 11 of the Royalty Deed provided that any variation of the Deed must also be by Deed.

On 23 May 1993, the second respondent, Elcom Collieries Pty Ltd, sold to the first respondent all its rights, title and interest under both contracts in consideration of a payment of $18.3 million. The respondents’ documents indicated that they calculated the value of the income stream to be $9.6 million. While the parties performed the contracts for a period of time, it was not long before they both found that the deal they had consummated was not wholly satisfactory. The Supply Contract was effectively varied by an interchange of letters (“the February letter” and “the May letter”), but the parties were in dispute as to whether the Royalty Deed had also been varied.

On appeal, the appellant submitted (i) that the case was one which fell into the third category of Masters v Cameron (1954) 91 CLR 353; (ii) that clause 11 of the Deed of Royalty…