EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd - [2010] WASCA 78

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: EDWF HOLDINGS 1 PTY LTD -v- EDWF HOLDINGS 2 PTY LTD [2010] WASCA 78

CORAM: OWEN JA
BUSS JA
NEWNES JA

HEARD: 11 DECEMBER 2009

DELIVERED : 30 APRIL 2010

FILE NO/S: CACV 125 of 2008

BETWEEN: EDWF HOLDINGS 1 PTY LTD (ACN 114 267 748)
Appellant
AND
EDWF HOLDINGS 2 PTY LTD (ACN 114 267 793)
First Respondent
EDWF MANAGER PTY LTD (ACN 115 374 386)
Second Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :MARTIN CJ
Citation  :EDWF HOLDINGS 1 PTY LTD -v- EDWF HOLDINGS 2 PTY LTD [2008] WASC 275
File No  :CIV 1298 of 2008

Catchwords:

Contract - Joint venture agreement - Change of control of a participant - Provision for change of control of a participant with the prior written consent of the other participant - Consent not to be unreasonably withheld - Proviso that the new party in control of the affected participant must have 'the financial and technical resources and experience to adequately support the affected participant' - Proper construction of the provision for change of control and the proviso - Whether the first respondent unreasonably withheld its consent to a change in control of the appellant - Whether the trial judge made errors in his findings of fact or took into account irrelevant considerations in construing and applying the provision for change of control and the proviso

Trial process - Function of pleadings - Case litigated at trial - Whether the trial judge relied on reasons or grounds that were not raised on the pleadings or litigated at trial to justify the first respondent's withholding of consent to the change of control of the appellant

Legislation:

Nil

Result:

Appeal allowed

Category: A

Representation:

Counsel:

Appellant:     Mr C L Zelestis QC & Mr J A Thomson
First Respondent           :     Mr M J McCusker QC & Mr G J Carter
Second Respondent      :     No appearance

Solicitors:

Appellant:     Norton Rose Australia
First Respondent           :     Clayton Utz
Second Respondent      :     No appearance

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

Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349
British Gas Trading Ltd v Eastern Electricity Plc [1996] EWCA 1239
Butt v M'Donald (1896) 7 QLJ 68
Cathedral Place Pty Ltd v Hyatt of Australia Ltd [2003] VSC 385
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89
Fitzgerald v F J Leonhardt Pty Ltd [1997] HCA 17; (1997) 189 CLR 215
Gibson Motor Sport Merchandise Pty Ltd v Forbes [2005] FCA 749
International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151
International Drilling Fields Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513
JA McBeath Nominees Pty Ltd v Jenkins Development Corporation Pty Ltd [1992] 2 Qd R 121
Kids Campus Holdings Pty Ltd v Kelly [2007] VSC 282
Mackay v Dick (1881) 6 App Cas 251
Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181
Maitland Main Collieries Pty Ltd v Xstrata Mt Owen Pty Ltd [2006] NSWSC 1235
Mick Skorpos Petrol Discount King Pty Ltd v The Shell Company of Australia Ltd (1997) ATPR 41-556
Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1
Nullagine Investments Pty Ltd v Western Australian Club Inc [1993] HCA 45; (1993) 177 CLR 635
Old Papa's Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11
Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451
Park v Brothers [2005] HCA 73; (2005) 80 ALJR 317
Peters (WA) Ltd v Petersville Ltd [2001] HCA 45; (2001) 205 CLR 126
Ray v Davies [1909] HCA 51; (1909) 9 CLR 160
Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596
Smith v Chadwick (1882) 20 Ch D 27
Tattersall's Hotel Penrith Pty Ltd v Permanent Trustee Co of NSW Ltd [1942] 42 SR (NSW) 104
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
United Dominions Corporation Ltd v Brian Pty Ltd [1985] HCA 49; (1985) 157 CLR 1
Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491
Williams v Australian Telecommunications Commission (1988) 52 SASR 215
Yedway Pty Ltd v Owners Corporation of Strata Plan 62871 [2009] NSWSC 8

Table of Contents

Buss JA's reasons

The relevant provisions of the JVA
The relevant provisions of the Management Agreement
The relevant provisions of the Deed of Cross Charge
The relevant provisions of the Technical Services Agreement
The relevant provisions of the Joint Development Agreement
The relevant provisions of the WP Sale and Purchase Agreement
The Griffin Board Paper
The letter dated 18 March 2008 from the first respondent to the Queensland Treasury
The appellant's pleaded case
The first respondent's pleaded case
The appellant's reply
The trial judge's reasons
The grounds of appeal
The grounds of appeal generally: the proper approach to contractual construction
The grounds of appeal generally: the proper construction of cl 11.7
Ground 1 of the appeal
Ground 2 of the appeal
Ground 3 of the appeal
Ground 4 of the appeal
Ground 5 of the appeal
Ground 6 of the appeal
The appellant's amended orders wanted
The result of the appeal

OWEN JA: I agree with Buss JA.
BUSS JA: The appellant and the first respondent are participants in an unincorporated joint venture known as the Emu Downs Wind Farm Joint Venture (the Joint Venture). The second respondent is the manager of the Joint Venture.
The Joint Venture was established pursuant to an agreement dated 21 July 2005 (the JVA), made between the appellant and the first respondent as participants and the second respondent as manager.
The appellant is a subsidiary of Stanwell Corporation (Stanwell), a body incorporated under the Government Owned Corporations Act 1993 (Qld). At all material times, Stanwell's issued share capital has been held by ministers of the State of Queensland on behalf of the State.
The first respondent is a subsidiary of Griffin Energy Group Pty Ltd (Griffin Energy). In these reasons I will refer to the first respondent, Griffin Energy and their related corporations as the Griffin group.
The appellant and the first respondent jointly own the second respondent.
By cl 11.7 of the JVA, a 'Change in Control' (as defined in cl 1.1) of a participant (the affected participant) requires the prior written consent of the other participant. Clause 11.7 also provides:
(such consent not to be unreasonably withheld or delayed or given subject to unreasonable conditions provided that the new party in Control of the affected Participant must have the financial and technical resources and experience to adequately support the affected Participant)
On 30 November 2007, the appellant sought the first respondent's consent to a proposed change in control of the appellant from Stanwell to Transfield Services Infrastructure Ltd (TSIL). The change in control was intended to occur pursuant to an agreement dated 28 November 2007 and made between Stanwell, TSIL and others. In these reasons I will refer to TSIL and its related corporations as the Transfield group.
By letter dated 18 March 2008, the first respondent withheld its consent to the change in control.
The appellant contended that the consent was wrongly and unreasonably withheld. It commenced a Supreme Court action (as plaintiff) against the first respondent (as first defendant) and the second

respondent (as second defendant). In its prayer for relief, the appellant claimed, relevantly:
(a)a declaration that the first respondent had withheld its consent to the proposed change in control of the appellant unreasonably and in breach of the JVA; and
(b)a declaration that, in the events which had occurred, the appellant shall not be deemed by cl 11.7 of the JVA to have offered to assign the whole of its Joint Venture interest to the first respondent if the proposed change in control of the appellant to TSIL is effected.

The action was tried before Martin CJ. His Honour dismissed the appellant's claim and entered judgment for the respondents. In summary, his reasons were these:
(a)the appellant had failed to establish the factual conditions which, on the proper construction of cl 11.7 of the JVA, are a prerequisite to any claim that the first respondent had unreasonably withheld consent to the proposed change in control;
(b)further and in any event, the appellant had failed to make good the grounds upon which it asserted that the first respondent had unreasonably withheld consent; and
(c)further, even if a broader view of the question of reasonableness of consent was taken, unconstrained by the appellant's pleading, there were a number of reasons why a party in the position of the first respondent was and remained justified in refusing consent to the proposed change in control.
The appellant has appealed to this court.

The relevant provisions of the JVA

The proper construction of cl 11.7 of the JVA is central to the resolution of the issues in the appeal. It is therefore necessary to set out in some detail the relevant provisions of the JVA and other transaction documents.
The commercial context in which the JVA was made is recorded in its recitals. They provide, relevantly:
BStanwell and Griffin Energy … have decided to proceed with the Project on the basis that the Participants will initially be wholly owned subsidiaries of Stanwell and the Participants will form an unincorporated joint venture for the purposes of the Project.
…
DThe Participants are entering into this Agreement to govern the relationship between them as an unincorporated joint venture to implement the Project.
EThe Manager is to be engaged by the Participants to manage the Joint Venture.
In cl 1.1, 'Joint Venture', 'Project', 'Wind Farm', 'Wind Farm Facilities' and 'WTG' are defined, as follows:
Joint Venture means the unincorporated joint venture established under cl 3.1.
…
Project means the Emu Downs Wind Farm Project involving the design, development, construction, commissioning, testing, operation, maintenance and modification by or on behalf of the Participants of the Wind Farm at the Site but excluding the utilisation or sale of JV Output produced by the Wind Farm.
…
Wind Farm means the development of two wind powered electricity generating plants at the Site of 40MW capacity each (or such other capacity as the Participants determine) and comprising the Wind Farm Facilities.
Wind Farm Facilities means all WTGs and other facilities including electricity transformation equipment, the electricity transmission and/or distribution lines used to convey the electricity for injection into an electricity transmission network and all associated plant and structures used for the sale and efficient operation of the WTGs, housing, control, support and production as may be required for the establishment and connection of the Wind Farm to the Western Power transmission network.
…
WTG means a wind turbine constructed for generating electricity that is driven by wind power and includes the structures and plant used to provide the energy derived from the wind.
The duration of the Joint Venture is specified in cl 2.1, which reads:
This Agreement commences operation on the Commencement Date and will continue in full force and effect until the earliest of:
(a)the JV Termination Date;
(b)the date on which one Participant acquires the whole of the JV Interests arising under this Agreement;
(c)the date agreed in writing by each of the Participants.
In cl 1.1, 'Commencement Date' is defined to mean the date of execution of the JVA and 'JV Termination Date' is defined, in essence, to mean the date of termination of the lease agreement by which the participants will gain access to, and have usage rights over, the land on which the Wind Farm is to be constructed.
The lease agreement in question is dated 21 July 2005. By the agreement, the appellant and the first respondent are granted a lease over the relevant land for a term of 22 years commencing on 23 July 2005 and expiring on 22 July 2027, together with an option of renewal for a further 10 years commencing on 23 July 2027.
'JV Output' is defined in cl 1.1 to mean, in essence, all energy production generated by the Joint Venture and any and all rights, benefits, credits or certificates of any kind which derive from the generation of that energy production.
Clause 1.1 defines the terms 'Joint Venture Property' and 'JV Interest'. 'Joint Venture Property' means, in essence, the JV Documents, the rights and entitlements of the participants under the JV Documents, all real and personal property (including plant, equipment, facilities and leases) held, acquired or created at any time for use by or on behalf of the participants or either of them for the JV Purpose. 'JV Interest' means the undivided right, title and interest (expressed as a percentage) of a participant in:
(a)the Joint Venture Property;
(b)rights arising under this Agreement and the JV Documents; and
(c)any benefits arising from the foregoing.
Clause 3.1 establishes the Joint Venture and specifies its purpose (the JV Purpose), as follows:
The Participants agree to associate as joint venturers in an unincorporated joint venture to implement and carry the Project into effect and to pursue the following objects subject to and in accordance with this Agreement:
(a)to:
(i)carry out the Construction Activities;
(ii)operate, maintain and, if required, modify the Wind Farm;
(iii)connect the Wind Farm to Western Power's transmission network; and
(iv)undertake and perform all such other acts, matters and things,
so as to generate the JV Output, to which each Participant will be severally entitled to a share in proportion to its JV Interest; and
(b)to undertake such other purposes as the Management Committee may approve in accordance with this Agreement.
In cl 1.1, 'Construction Activities' is defined to mean the design, construction, commissioning and testing of the Wind Farm.
Construction of the Wind Farm was completed in October 2006. The generation and sale of electricity from the Wind Farm commenced shortly afterwards.
Clause 3.5(a) states that the relationship of the participants is that of joint venturers in an unincorporated joint venture. Other provisions of cl 3.5 state, relevantly, that nothing in or contemplated by the JVA or the JV Documents shall be considered or interpreted as constituting the relationship between the participants as a partnership or quasi‑partnership.
In cl 1.1, 'JV Document' is defined to mean each of the following:
(a)this Agreement;
(b)the Management Agreement;
(c)Shareholders Agreement (Manager);
(d)Lease Agreement;
(e)any Cross Charge, Deed of Priority, confidentiality agreement or Deed of Assumption entered into by the Participants for the purposes of this Agreement;
(f)the EPC Contract;
(g)any contract relating to the connection and access of the Wind Farm Facilities to Western Power's transmission network; and
(h)any other agreement designated by the Participants as a JV Document.
The Management Agreement is the agreement between the participants and the manager relating to the management of the Joint Venture, that was executed contemporaneously with the JVA. The Shareholders Agreement (Manager) is the agreement between the participants and the manager relating to the shareholding of the participants in the manager, that was executed contemporaneously with the JVA. The Cross Charges comprise the charges created in the deed that was executed contemporaneously with the JVA, under which each of the participants, as beneficial owner, created a charge in favour of the other participant and the manager severally. It is unnecessary to refer to the 'Deed of Priority' or the 'Deed of Assumption', as defined in cl 1.1. The EPC Contract is the contract between the participants and Vestas‑Australian Wind Technology Pty Ltd for the construction of the Wind Farm at the agreed site. No other agreement has been designated by the participants as a JV Document.
Clause 3.8 is a typical provision in unincorporated joint ventures of the kind in question. It provides, relevantly, that each participant is entitled and obliged to receive and take in kind, as its own absolute property, its share of all JV Output equal to its JV Interest and separately dispose of its share of the JV Output equal to its JV Interest.
Clause 3.9 limits the joint venture to the JV Purpose (that is, the purpose specified in cl 3.1). It reads:
The Joint Venture is, unless the Participants otherwise agree, strictly limited to the JV Purpose and is not to be construed as extending further by implication or otherwise.
Clause 3.10 deals with the rights of the participants in relation to engaging in activities outside the scope of the JV Purpose, as follows:
Each Participant has an unrestricted right to engage in and receive the full benefit of any activity outside the JV Purpose (whether or not in competition with the JV Purpose or another Participant) without consulting the other Participants or permitting the other Participants to participate, and without any liability or accountability to the other Participants provided such activity does not unreasonably interfere with, impede or compromise the JV Purpose.
Clause 7.1 establishes the Management Committee. Each participant is entitled and obliged under cl 7.4(a) to appoint two representatives to the Management Committee. In general, each participant (other than a defaulting participant in the circumstances specified in cl 9.6) is entitled at meetings of the Management Committee to that number of votes which is equal to the number of percentage points comprised in its JV Interest at the commencement of the meeting. See cl 7.2. The chairperson of the Management Committee does not have a second or casting vote in addition to the vote he or she may have as a Management Committee representative. See cl 7.9(d). The chairperson must be appointed from the Management Committee representatives. See cl 7.9. By cl 7.11(a), subject to the provisions of any JV Document, all matters concerning the Joint Venture and the Joint Venture Property must be determined by the Management Committee. Clause 7.11(b)(v) provides that, without limitation to cl 7.11(a), the powers and responsibilities of the Management Committee include, relevantly, establishing appropriate insurance arrangements for the Joint Venture.
All decisions of the Management Committee, other than those with respect to 'Reserved Matters', require a resolution of the Management Committee approved by a 'Special Majority' of votes. See cl 7.13(a). In cl 1.1, 'Special Majority', with respect to decisions of the Management Committee, is defined to mean an affirmative vote of at least 75% of the votes cast by Management Committee representatives who represent participants entitled to vote at that meeting. The Reserved Matters are those listed in Annexure A to the JVA. By cl 7.12(d), the Management Committee may not make a decision on any Reserved Matter except with the unanimous consent of all Management Committee representatives of participants (other than a 'Disqualified Participant'). The term 'Disqualified Participant' is defined in cl 7.3.
By cl 9.6, relevantly, if an insolvency event occurs in respect of a participant or if a participant fails to remedy a specified default or fails to pay compensation in respect of an irremediable default then, in essence, the non‑defaulting participant and the manager or either of them may exercise all rights under the Cross Charge granted by the defaulting participant.
Clause 11 is concerned with the disposal of JV Interests. Clause 11.4 provides for assignment to third parties. It reads:
A Participant (Assignor) may Dispose of the whole or any part of its JV Interest, (Available JV Interest) to any person (including any other Participant) other than a Related Body Corporate, (Assignee) subject to the following conditions:
(a)the Assignor must obtain the prior written consent of each other Participant (Non‑Disposing Participants) which will not be unreasonably withheld or delayed if:
(i)the Assignee has agreed to be bound by the terms of this Agreement and the JV Documents by a Deed of Assumption in accordance with clause 11.6(a); and
(ii)the Assignor has demonstrated that the Assignee is reputable and of good financial standing and has the capability to fulfil all the obligations of the Assignor under this Agreement and the JV Documents; and
(b)the Assignor must have complied fully with the requirements of clause 11.5.

Clause 11.7 relates to 'Change in Control', as defined in cl 1.1. There will be a 'Change in Control' if, in essence, there is a change in the control of:
(a)the beneficial ownership of a participant or the ultimate holding company of a participant; or
(b)the composition of the board of directors of a participant or the ultimate holding company of a participant; or
(c)more than half of the voting power of the board of directors, or more than half of the voting power of any class of shares, of a participant or of the ultimate holding company of a participant.
It is common cause, in the present case, that there was a proposed change in control of the appellant from Stanwell to TSIL.
Clause 11.7 reads:
Subject to clause 11.8, if there is a Change in Control of a Participant, such Participant shall immediately give notice in writing thereof to the other Participants and, unless the other Participants have given their prior written consent to the Change in Control (such consent not to be unreasonably withheld or delayed or given subject to unreasonable conditions provided that the new party in Control of the affected Participant must have the financial and technical resources and experience to adequately support the affected Participant), the affected Participant shall be deemed, whether or not such notice has been given, to have offered to assign the whole of its JV Interest to the other Participants as required by clause 11.5(a) together with its Associated Interest such that for the purposes of the Disposal Notice:
(a)the consideration for the offer is the value of the Participant's JV Interest and Associated Interest at the date of such Change in Control being the Fair Value as determined in accordance with clause 9.14 less all Valuation Costs;
(b)the settlement date is the date which is 60 days after the other Participants reasonably became aware of the Change in Control,
and the provisions of clause 11.5 shall apply to such offer (modified as necessary).
For present purposes, the exceptions in cl 11.8 are not relevant.
Clause 15 is concerned with confidentiality. It is stipulated in cl 15.1 that each party must, relevantly, keep 'Confidential Information' confidential and not disclose it or allow it to be disclosed to any third party without the prior consent of the other participant. Clause 15.2 contains various exceptions to the prohibition in cl 15.1. The exceptions are, relevantly, these:
Notwithstanding clause 15.1, a party (Disclosing Party) may disclose Confidential Information:
…
(i)to any bona fide potential assignee of all or any part of the Disclosing Party's JV Interest (and to its professional advisers, including legal advisers, and prospective financiers) with whom the Disclosing Party is in good faith negotiations, provided that the potential assignee agrees with the Disclosing Party and for the benefit of the other Participants:
(i)to only use the Confidential Information disclosed by the Disclosing Party for the purposes of satisfying it of the value and commercial viability of the relevant JV Interest; and
(ii)to be bound by confidentiality undertakings substantially the same as those contained in this clause 15;
(j)to any bona fide potential transferee of all or part of a person's shareholding in the Disclosing Party with whom that shareholder of the Disclosing Party is in good faith negotiations, provided that the potential transferee agrees with the Disclosing Party and for the benefit of the other Participants:
(i)to only use the Confidential Information disclosed by the Disclosing Party for the purposes of satisfying it of the value and commercial viability of the relevant JV Interest held by the Disclosing Party; and
(ii)to be bound by confidentiality undertakings substantially the same as those contained in this clause 15.

The relevant provisions of the Management Agreement

On 21 July 2005, the appellant, the first respondent and the second respondent executed the Management Agreement.
Clause 3.1 provides that the first respondent (who is referred to in the agreement as 'the Manager') must manage the Joint Venture on behalf of the participants. The provision reads:
(a)The Manager must manage the Joint Venture, including all activities of the Joint Venture, as agent for the Participants subject to the terms of this Agreement and the Joint Venture Agreement, and to the control and direction of the Management Committee under the Joint Venture Agreement.
(b)While the Manager continues to manage the Joint Venture pursuant to this Agreement, it must not, without the prior written consent of the Management Committee, whether:
(i)on its own account;
(ii)jointly with or on behalf of any other person or corporation as a partner, joint venturer or agent; or
(iii)by means of an agent, independent contractor or any firm or corporation in which it may be interested,
carry on any other activities, undertakings, businesses or enterprises, whether of a similar nature to the JV Purpose or otherwise, except for the Other Functions.
By cl 3.2, subject to any resolution or direction of the Management Committee under the JVA, the first respondent, as manager, shall perform the following functions and duties on behalf of the participants, relevantly:
(a)do all things necessary or desirable for the efficient and economic conduct of the Joint Venture in accordance with Approved Annual Programs and Approved Capital Expenditure Programs;
…
(c)perform and attend to all things required of the Manager under this Agreement or the Joint Venture Agreement or pursuant to a resolution of the Management Committee under the Joint Venture Agreement;
…
(o)carry out or procure the design, construction, commissioning, testing, operation and maintenance of the Wind Farm Facilities;
(p)employ, engage, appoint or contract with competent experts, advisers, superintendents and engineers as employees or independent contractors of the Manager;
(q)procure specialised engineering, design, legal, accounting and other professional or non-professional services;
(r)supervise and control consultants, specialists or independent contractors engaged by the Manager;
(s)ensure the custody, maintenance, operation and protection of Joint Venture Property in the Manager's possession or control;
(t)manage and maintain all interests in land held by the Joint Venture, or the Manager on behalf of the Joint Venture, in accordance with the protocols and guidelines (if any) advised to the Manager from time to time by the Management Committee;
(u)acquire all property and services necessary for the Joint Venture;
…
(dd)without limiting its other functions and duties, carry out or procure to be carried out the activities specified in schedule 2;
…
(ff)any other functions or duties as resolved by the Management Committee in relation to the Joint Venture;
(gg)undertake any other functions stated in any JV Document to be conferred on the Manager in that capacity.
The functions and duties specified in sch 2, which the second respondent as manager is bound to carry out or procure to be carried out, include, subject to any resolution or direction of the Management Committee under the JVA, the following activities, amongst others:

Activity

Obligation

Operate and maintain the Wind Farm

•       Start/stop Wind Farm

•       Visual plant/site inspections

•       Plant fault first up response

•       Plant fault finding

•       Maintain operations and maintenance records

•       High Voltage system operation

•       Scheduled maintenance

•       Breakdown maintenance

•       Outage/overhaul maintenance/refurbishment

•       Procure services, spares and consumables

•       Statutory inspections (fire, lifting, electrical, etc)

•       Cleaning

•       Storage and maintenance of plant manuals and drawings

•       Site storage and management of spares and consumables

…

Supply plant technical support comprising the following obligations

•       Management of plant modification, design, review and approval processes

•       Maintenance of O&M manuals and drawings for all plant

•       Manage plant certification

•       Manage registration of plant

•       Schedule and plan scope of plant maintenance/refurbishment outages

•       Project management

•       Analyse plant trips and events

•       Review plant alarms

•       Facilitate and document plant risk assessment activities as required

•       Develop and manage risk control plans

•       Coordinate and schedule capital works programs

•       Procuring goods and services for capital works programs

•       Liaison with Western Power on transmission interface issues

•       Provide initial Wind Farm operations training

Manage Wind Farm performance and efficiency activities comprising the following obligations

•       Monitor plant performance

•       Recommend, design and implement plant performance improvement

•       Measure plant efficiency

Liaise with, advise and report to the Management Committee on the following obligations

•       Statutory compliance

•       Plant performance

•       Investigations

•       Special projects

•       Due diligence

•       Plant improvement options

•       Risk management

•       Capital requirements

Planning, preparation and management of Wind Farm budgets including the following obligations

•       Develop annual Operation and Maintenance Plan including plant improvement and compliance projects

•       Assist with planning of annual OPEX and Capital budgets, and 5 year forecast

Ensure personnel are appropriately trained for site activities

•       Implementation of training plan for site competencies

•       Evaluate and maintain competencies

•       Manage performance against the plan

•       Identification of initial training requirements

•       Provision of training as required.

•       Ensure Participants' personnel are trained and competent to access site in accordance with O&M Sub-contractors requirements.

•       Evaluate and maintain competencies.

Manage all Wind Farm sub‑contractor's activities

•       Monitor sub contractor performance

Clause 9.1 provides that the second respondent as manager must maintain, relevantly, such insurances as may be directed by the Management Committee from time to time, with an insurer approved by the participants.
By cl 11.2, the second respondent as manager must not, without the prior approval of the participants, assign all or any part of its rights and obligations as manager, or delegate the whole or any part of its duties or obligations.

The relevant provisions of the Deed of Cross Charge

On 21 July 2005, the appellant, the first respondent and the second respondent executed a deed which created the Cross Charges (the Deed of Cross Charge).
By cl 2.1, for the purpose of securing the due and punctual payment of the 'Moneys Secured', each participant, as beneficial owner, charged in favour of the other participant and the manager severally:
(a)all of the Participant's JV Interest;
(b)all of the Participant's entitlement to the JV Output under the Joint Venture Agreement;
(c)the Participant's rights and interest in any Sales Contracts;
(d)the Participant's right to any proceeds, revenues or other amounts payable to the Participant (Sale Receipts) with respect to the sale (including under any Sales Contracts) of its share of the JV Output under the Joint Venture Agreement; and
(e)all of the Participant's shares in the Manager.
In cl 1.1, 'Moneys Secured', in respect of a participant, is defined to mean its share of the cash calls and all other moneys which may become due and payable by that participant to the manager or the other participant pursuant to the JVA or the Deed of Cross Charge. 'Cash calls' are amounts specified by the manager in accordance with the JVA as being required to be contributed by a participant for the expenses of the Joint Venture, being the proportion of those expenses the subject of the cash call at that time as is equal to that participant's JV Interest.
'Sales Contract' is defined in cl 1.1 to mean any present or future contract made by a participant for the sale of its right, title and interest in any JV Output.
The charge created under cl 2.1 was partly fixed and partly floating. Clause 2.2 provides that the charge is:
(a)a fixed charge on all present and future:
(i)JV Interest of each Participant in any freehold or leasehold property or any other interest in real property or fixtures forming part of the Joint Venture Property;
(ii)JV Interest of each Participant in any plant, machinery, equipment or any other interest in plant, machinery or equipment forming part of the Joint Venture Property;
(iii)right, title and interest of each Participant under any JV Document;
(iv)the Participant's shares in the Manager;
(v)securities, instruments, document of title, books of account, invoices, statements, ledger cards, computer software and all other documents and agreements of each Participant relating to the Joint Venture;
(vi)personal property (other than that described above) acquired by each Participant for purposes associated with the Joint Venture other than for disposal in the ordinary course of business; and
(b)a floating charge on all other Charged Property.
By cl 2.3, relevantly, the floating charge crystallises and becomes fixed if the security constituted by the Deed of Cross Charge becomes enforceable in respect of the participant in question, as provided in cl 5.1 of the Deed of Cross Charge.
By cl 2.5, the cross charges operate as first ranking securities.
Clause 5.1 provides, relevantly, that upon any participant becoming a defaulting participant and the rights under the Deed of Cross Charge becoming exercisable pursuant to cl 9.6 of the JVA, the charge created by the defaulting participant becomes enforceable and all powers under the Deed of Cross Charge not previously exercisable become exercisable.

The relevant provisions of the Technical Services Agreement

On 26 August 2005, the second respondent as manager entered into a technical services agreement with Stanwell. By that agreement, Stanwell agreed to provide engineering, operations, maintenance, environmental, health and safety, electricity marketing and trading and drafting services, and such other services as the second respondent may reasonably require in relation to the Wind Farm, for a fee to be determined in accordance with specified hourly rates. On 21 December 2005, this agreement was replaced by another agreement.
The agreement of 21 December 2005 was made between the second respondent as 'principal' and Stanwell and The Griffin Coal Mining Company Pty Ltd (Griffin) as 'service providers' (the Technical Services Agreement). The second respondent in its capacity as manager of the Joint Venture appointed Stanwell and Griffin to perform various services.
The first respondent and Griffin Energy are subsidiaries of Griffin.
Stanwell is obliged to perform the 'Stanwell Services' and Griffin is obliged to perform the 'Griffin Services', in each case, for valuable consideration.
Clause 2.1 provides, relevantly:
(a)Stanwell shall only be responsible to the Principal for the performance of the Stanwell Services and all other obligations under this Agreement associated with and ancillary to the Performance of the Stanwell Services. Stanwell shall not be responsible to the Principal for the performance of the Griffin Services.
(b)Griffin shall only be responsible to the Principal for the performance of the Griffin Services and all other obligations under this Agreement associated with and ancillary to the Performance of the Griffin Services. Griffin shall not be responsible to the Principal for the performance of the Stanwell Services.
The Stanwell Services and the Griffin Services are set out in sch 2, and are identical. The services to be performed are:
Engineering, operations, maintenance, environmental, health and safety, electricity marketing and trading and drafting services and such other services as the Principal may reasonably require (in writing) [Stanwell/Griffin] to perform for the Project from time to time.
Although the Stanwell Services and the Griffin Services, as set out in sch 2, are identical, the evidence at the trial was to the effect that, in fact, Stanwell provided some technical services and Griffin provided some accounting (but not technical) services pursuant to the Technical Services Agreement.
The fees to be paid to each of Stanwell and Griffin for the provision of the services are set out in sch 3. The fees are to be calculated in accordance with the following hourly rates:
(a)principal consultant:      $220 per hour;
(b)senior consultant:          $170 per hour;
(c)consultant:  $120 per hour; and
(d)graduate consultant:      $75 per hour.
The term of the agreement is set out in cl 2.2, which reads:
Subject to clause 6, each of the Service Providers must perform in accordance with this Agreement those Services for which they are responsible commencing on the Start Date for the duration of the Project.
In cl 1.1, 'Start Date' is defined to mean, in essence, the date of the agreement, namely 21 December 2005.
Clause 6.2 provides for termination of the agreement by either Stanwell or Griffin. It states, relevantly:
Either of the Service Providers may terminate this Agreement if:
…
(d)if [sic] a Service Providers [sic] divests itself of its interest in the unincorporated joint venture which proposes to undertake the Project.

The relevant provisions of the Joint Development Agreement

On 26 April 2007, Stanwell and Griffin Windfarm 2 Pty Ltd (a subsidiary of Griffin) entered into an agreement called the 'Wind Farms-Joint Development Agreement' (the JDA). The recitals referred to the history of association between related corporations of the parties in relation to the Wind Farm, and the desire of the parties to investigate the feasibility of developing further wind farms at Emu Downs North (sometimes referred to as Badgingarra), Joanna Plains and such other sites as may be agreed. The JDA, in essence, obliged the parties to share joint responsibility for the preparation of a technical feasibility report, a comprehensive economic model of each prospective wind farm, a set of specifications and designs for each prospective wind farm, and various other reports and feasibility assessments for each project. The JDA provided for these obligations to be achieved by the appointment of a project manager under the control of a committee called the 'Project Control Group'. Each party was entitled to appoint two members to this committee.

The relevant provisions of the WP Sale and Purchase Agreement

On 28 November 2007, the State of Queensland, Stanwell, TSIL and TSI (Wind Farms) Pty Ltd (TSI (WF)) entered into an agreement called the 'WP Sale and Purchase Agreement' (the WP Sale and Purchase Agreement). TSI (WF) is a subsidiary of TSIL. Under the agreement, TSI (WF) agreed to purchase all of the issued shares in the appellant and Wind Portfolio Pty Ltd. The appellant is a subsidiary of Wind Portfolio Pty Ltd, which is a subsidiary of Stanwell. The sale was subject to numerous conditions including that the appellant obtain the first respondent's consent to the change in control, as required by cl 11.7 of the JVA. That condition was required to be satisfied by, at the latest, 19 December 2008. As I have mentioned, by the letter dated 18 March 2008, the first respondent refused to consent.

The Griffin Board Paper

On 30 November 2007, the appellant sought the first respondent's consent to the proposed change of control. During January and February 2008, there was an exchange of correspondence between the appellant and its solicitors on the one hand and the first respondent and its solicitors on the other. This correspondence involved, primarily, the Griffin group seeking information about the Transfield group.

On 17 March 2008, a meeting was held of the board of directors of various companies in the Griffin group, including the first respondent. A paper was presented at the meeting which dealt with the request for consent to the proposed change of control (the Griffin Board Paper). The paper set out background details in relation to Stanwell, the Transfield group and the Griffin group. It raised three areas of concern about the proposed change of control. The concerns related to technical, competition and financial matters.
First, the Griffin Board Paper asserted that the Transfield group did not have wind farm development, operation or maintenance experience and lacked the personnel to provide necessary services to the Joint Venture. Secondly, the paper drew a distinction between Stanwell, which did not compete against Griffin in the Western Australian energy market, and the Transfield group, which did. The paper said that this competitive tension could inhibit the frank discussions between participants which are necessary for the successful operation of the Joint Venture. Thirdly, the paper expressed doubts about the Transfield group's ability to provide financial support for the Joint Venture. It said that the Transfield group had limited available capacity with its existing debt facilities, and would be vulnerable to changes in interest rates.
The Griffin Board Paper referred to Transfield Services (Renewables) Pty Ltd (TS Renewables), which is a subsidiary of Transfield Services Ltd (TSE). The paper noted that the proposed change in control would allow for the rights and assets held by Wind Portfolio Pty Ltd under JDA to be assigned to TS Renewables.
The Griffin Board Paper contained an 'overall summary' in these terms:
13.1Griffin has been provided with insufficient information on its technical, competition and financial concerns, as detailed above. Stanwell's lawyers have stated that Griffin now has all the information necessary to enable it to make a decision on the Change in Control (and on the other consents set out below). There is no further opportunity for Griffin to ask questions of TSIL/TSE.
13.2In relation to the technical concerns, notwithstanding that TSE either has or claims some wind farm development, operation and maintenance expertise, including in the form of Terry Johannesen and Jeff Ware, and non-wind farm specific development, operation and maintenance expertise in the energy sector:
(a)neither TSIL nor TSE have any wind farm systems or significant wind farm deve1opment, construction operations or maintenance experience;
(b)TSIL and TSE are on steep learning curves which cannot easily be scaled, which is likely to prejudice the operation of the EDJV, any expansion of the Emu Downs Wind Farm, and the Badgingarra Development, at least in the short to medium term;
(c)TSIL/TSE does not have sufficient contracted personnel with a sufficient depth of experience in wind farm development, construction, operation and maintenance;
(d)TSIL//TSE does not offer a similar level of in‑house expertise (in terms of personnel and systems) as Stanwell, which will require TSE and/or the EDJV to contract out most of the technical services required to be performed in relation to the EDJV;
(e)TSIL/TSE is unlikely to be able to properly design or manage wind farm related contracts, where it has no relevant expertise to perform the work itself;
(f)TSIL's/TSE's proposed appointees to the Management Committee do not have any relevant wind farm expertise, which expertise the Manager relies on heavily for the daily performance of his functions;
(g)Stanwell is not required under the SPA to support TSIL beyond a period of 30 days after the completion of the SPA.
13.3In relation to the competition concerns:
(a)TSIL/TSE is a competitor to Griffin in the WA energy generation market, and has confirmed that it will continue to compete against Griffin;
(b)TSIL/TSE is not prepared to indicate its future plans in the WA energy generation market;
(c)TSIL/TSE may not wish to support any future expansion of the Emu Downs Wind Farm, in view of TSIL's/TSE's other interests in the WA energy generation market;
(d)TSIL/TSE will, by virtue of their participation in the Emu Downs Joint Venture, be privy to information concerning Griffin's business know‑how, business model and economic and financial parameters, relating to development projects and sales models, methods of financing, debt to equity ratios, financing costs, internal rates of return and the like. Thus giving TSIL/TSE a competitive advantage over Griffin outside the Emu Downs Joint Venture, potentially to Griffin's commercial detriment;
(e)in view of these factors, Griffin is unlikely to establish an open and transparent joint venture relationship with TSIL/TSE as it had with Stanwell. The relationship will necessarily need to be at arm's length in many respects. In short, the relationship will not have the ingredients for the establishment and maintenance of a lasting joint venture relationship;
(f)the EDJV has a 25 year existing asset life (which may be extended), and Griffin cannot afford to enter a 'marriage' with TSIL/TSE when considerable risk and uncertainty surrounds the proposed relationship, particularly as TSIL/TSE may obtain an advantage from the relationship to Griffin's commercial detriment.
13.4In relation to the financial concerns:
(a)there is uncertainty as to how TSIL/TSE propose to fund the Badgingarra development, if a decision is made to proceed with it. Similar uncertainty exists as to how TSIL/TSE may fund any expansion of the Emu Downs Wind Farm and any other development, including Joanna Plains;
(b)there is a possibility that TSIL's financial position may deteriorate such that its participation in the EDJV (and any expansion of the Emu Downs Wind Farm) is adversely affected;
(c)TSIL does not currently have the financial capacity to fund any expansion of the EDJV, or to participate in the Badgingarra development or any other wind farm development including Joanna Plains;
(d)whilst TSE has a significant financial capacity, TSIL has not identified to what extent TSE would fund the Badgingarra development;
(e)upon a Change in Control, TSE would be the relevant parent company of Transfield Services (Renewables) Pty Ltd's interest in the Badgingarra project. However there is no certainty that TSE will provide a parent company guarantee, nor has TSIL been prepared to confirm that TSE will not transfer part or all of its interest in the Badgingarra project back to TSIL for the purposes of developing that project.
13.5In summary, due to its technical, competition and financial concerns, and the lack of adequate information provided by TSIL/TSE, Griffin is exposed to an unacceptable level of risk and uncertainty, in relation to TSIL's/TSE's proposed participation in the EDJV, any expansion of the EDJV, the Badgingarra development and any other development including Joanna Plains.
The Griffin Board Paper concluded that it was not in Griffin's best interests for the proposed change of control to occur and it recommended that consent not be given.
This recommendation was accepted by the board of the first respondent.

The letter dated 18 March 2008 from the first respondent to the Queensland Treasury

In the letter dated 18 March 2008 from the first respondent to the Queensland Treasury on behalf of the appellant, the first respondent informed the Queensland Treasury that on 17 March 2008 its board of directors had met and passed a resolution that it did not consent to the proposed change in control. The letter elaborated upon the refusal of consent, as follows:
As you are aware, [the first respondent] has and continues to have a number of concerns with the Change in Control of [the appellant]. Those concerns relate to Transfield Services Infrastructure Limited's (TSIL's)/Transfield Services Limited's (TSE's):
1.technical expertise and capacity in the operation and maintenance of wind farms;
2.technical expertise and capacity in the development and construction of wind farms;
3.financial capacity and the inter-relationship between those entities;
4.role as a co-venturer in the Emu Downs Joint Venture and the potential commercial detriment to [the first respondent] and related Griffin entities arising from the above and the fact that the Transfield and Griffin entities are and will continue to be competitors.
These issues have been made clear to you in correspondence including our formal questions, and at the meeting on 6 March 2008 in Sydney. Despite [the first respondent's] best efforts to obtain adequate information and assurances from TSIL/TSE, its concerns remain largely unaddressed.
[The first respondent] considers that unacceptable risk and uncertainty surrounds the Change in Control, and that it is not in its best interests to consent to the Change in Control. In light of the above, [the first respondent] considers that the proposed relationship with TSIL/TSE would not work in practice, and would be to the detriment of the Emu Downs Joint Venture and its participants.
[The first respondent] has not consented to the Change in Control on the basis of the concerns expressed in this letter, individually and collectively.

The appellant's pleaded case

In its statement of claim, the appellant pleaded facts about the various parties, the JVA and the development of the Wind Farm. Most of them were not disputed.
The appellant alleged that since about October 2006, the revenue received by the appellant from the sale of its share of JV Output has substantially exceeded its share of the costs of operating the Wind Farm [21]. The appellant also pleaded that as at November 2007, the purposes of the Joint Venture that remained to be pursued were the continuing operation, including the continuing maintenance, of the Wind Farm [22]. It then alleged that as from 30 November 2007, it was reasonable to expect that:
(a)the revenue to be received by the appellant from the sale of its share of JV Output would substantially exceed its share of the costs of operating the Wind Farm; and
(b)the technical resources and experience required to operate the Wind Farm would be able to be procured by the manager, in that:
(i)the manager has ongoing contracts with Griffin Services Pty Ltd to provide necessary business, marketing and trading services for the Wind Farm; and
(ii)the manager will be able to procure any necessary technical services from TSI (WF), as TSI (WF) has available to it the necessary technical resources and experience [23].
The appellant pleaded that at all material times on and from 30 November 2007, the appellant has had and will continue to have the necessary financial and technical resources and experience to operate the Wind Farm [29].
The appellant alleged that TSIL has the financial and technical resources and experience to support, reasonably adequately, the pursuit of the purposes of the Joint Venture which remain to be pursued, in that TSIL has available to it for the purposes of operating and maintaining the Wind Farm:
(a)the technical resources and experience of TSE, to be provided through its wholly owned subsidiary Transfield Services (Australia) Pty Ltd (TSAPL), which include the following:
(i)persons who were previously employed by Stanwell or another Queensland government owned corporation, with specific expertise in wind farms (Jeff Ware, Terry Johannesen);
(ii)experience in constructing, operating and maintaining wind farms in Australia and New Zealand;
(iii)200-300 staff located in Western Australia capable of providing services to support the operation and maintenance of the Wind Farm's plant and equipment;
(iv)experience of operating power stations connected to the South West Interconnected System;
(b)its own financial resources, which presently include a net profit of $16.2 million in the six months to 31 December 2007 and net assets of $518 million [30].
The appellant then alleged that in the letter dated 18 March 2008, the first respondent withheld its consent to the proposed change in control of the appellant to TSI (WF) and TSIL for the stated reasons, in effect, that:
(a)the first respondent held concerns about TSIL's financial and technical resources and experience to reasonably adequately support the appellant; and
(b)there was and might be competition between companies associated with TSI (WF) and TSIL and companies associated with Griffin Energy [31].
Finally, the appellant pleaded that in the circumstances alleged in pars 29, 30 and 31 of the statement of claim, and on the proper construction of the JVA, the first respondent withheld its consent unreasonably and in breach of the JVA, in that:
(a)as to the first respondent's concerns about TSIL's financial and technical resources and experience, TSIL has the financial and technical resources and experience to reasonably adequately support the appellant; and
(b)as to the contention that there was and might be competition between companies associated with TSI (WF) and TSIL and companies associated with Griffin Energy, that reason was inconsistent with cl 3.10 of the JVA, read with cl 11.7 of the JVA, and such a prospect of competition (if any) as may exist was not capable of sustaining a reasonable withholding of consent having regard to the remaining purposes of the Joint Venture.
As I have mentioned, in its prayer for relief the appellant sought, relevantly, declaratory relief.

The first respondent's pleaded case

The first respondent admitted that as at November 2007, the purposes of the Joint Venture were the continuing operation and continuing maintenance of the Wind Farm. However, it said, further, that the objects and purposes of the Joint Venture include modification of the Wind Farm and such other purposes as may be agreed by the Management Committee from time to time [3].
The first respondent denied that:
(a)the appellant has had and will continue to have the necessary financial and technical resources and experience to operate the Wind Farm; and
(b)TSIL has the financial and technical resources and experience to support, reasonably adequately, the pursuit of the purposes of the Joint Venture which remain to be pursued [6].
It said, further, that:
(a)the financial resources which may be required to be contributed to the Joint Venture by the appellant in the future include those financial resources which might reasonably be expected to be required for any significant modification of the Wind Farm, including by way of expansion of the Wind Farm, and any other objects or purposes agreed by the Management Committee from time to time; and
(b)following any change in control, the appellant will not have available to it adequate technical resources and experience necessary to operate or maintain the Wind Farm, or design, develop, construct, commission or test the Wind Farm (as modified or proposed to be modified) [6].
The first respondent pleaded that the decision withholding consent was made having regard to all the relevant circumstances as at 17 March 2008, including the information provided to the first respondent by the appellant or otherwise available to the first respondent, and the inadequate nature of certain information provided to the first respondent by the appellant as at 17 March 2008 [13].
It was alleged that the decision withholding consent was not unreasonable and was made for five reasons. First, the first respondent's concerns about the adequacy of the technical expertise and capacity of TSIL and TSE in the design, development, construction, commissioning, testing, operation, maintenance and modification of wind farms. Secondly, the first respondent's concerns about the adequacy of the financial resources available to and the capacity of TSIL and TSE to adequately finance the design, development, construction, commissioning, testing, operation, maintenance and modification of any future wind farm arising out of or in connection with the JDA, and the operation, maintenance and any significant modification of the Wind Farm. Thirdly, the first respondent's concerns about the commercial detriment likely to be caused to the first respondent and its related bodies corporate (referred to collectively in the defence as 'Griffin') by the first respondent being in a joint venture in the Western Australian energy generation market with a competitor of Griffin in that market, unlike Stanwell (and its related bodies corporate) which were not in competition with Griffin in the Western Australian energy generation market. Fourthly, the failure by Stanwell and its related bodies corporate, including the appellant, to provide sufficient information to the first respondent, despite requests for such information from the first respondent and its related bodies corporate, relevant to the first respondent's decision to grant or withhold consent, or grant its consent subject to reasonable conditions, and sought by the first respondent for the specific purpose of a full and proper evaluation by the first respondent of all matters relevant to the first respondent's decision to grant or withhold its consent, or grant its consent subject to reasonable conditions, to the proposed change in control of the appellant. Fifthly, the consequence of the first respondent consenting to the change in control of the appellant would have been to convey the rights in the JDA to TS Renewables, a subsidiary of TSE, which was a consequence the first respondent did not consider to be in Griffin's best interests by reason of the concerns embodied in the first, second, third and fourth reasons [14].

The appellant's reply

The appellant filed and served a reply to the first respondent's defence. In the reply, the appellant, relevantly, joined issue with the first respondent on its defence, except insofar as the defence contained admissions.

The trial judge's reasons

The trial judge began by summarising the background facts, the agreements between the various parties and the evidence given by the appellant's and the respondents' witnesses.
His Honour then discussed various decided cases relating to evaluating the reasonableness of a refusal to consent to the assignment of an interest under a contract. Most of those cases were concerned with the relationship of lessor and lessee. He identified three areas of tension in the English and Australian authorities [202] ‑ [204].
The first area of tension concerns the extent to which a particular factor or purpose may be considered extraneous and therefore irrelevant to the relationship between the contracting parties, with the result that it provides no basis for refusing consent. His Honour elaborated:
While the principle that a party cannot refuse consent for the purpose of obtaining a collateral benefit not provided by the contract is clear from the authorities (such as the early surrender of the lease in Bates (Bates v Donaldson [1896] 2 QB 241)), the authorities are not entirely consistent in the way in which they deal with allied commercial interests of the party whose consent is sought. So, while in Houlder (Houlder Bros & Co Ltd v Gibbs [1925] 1 Ch 575) it was held that the landlord's interest in maintaining a tenant in adjoining premises was irrelevant, in Premier Confectionery (Premier Confectionery (London) Co Ltd v London Commercial Sale Rooms Ltd [1933] Ch 904), the landlord's interest in adjoining premises being occupied by the same tenant was considered reasonable and relevant, as was the landlord's desire for a desirable tenancy mix in Tamsco (Tamsco Ltd v Franklins Ltd [2001] NSWSC 1205) and the landlord's desire that all tenants insure with the one insurer in Tredegar (Tredegar v Harwood [1929] AC 72) . On the other hand, in Cathedral Place (Cathedral Place Pty Ltd v Hyatt of Australia Ltd [2003] VSC 385) , the hotel manager's interest in a contract which was closely related commercially to the hotel management agreement was held to be irrelevant and extraneous [202].

The second area of tension concerns whether the party whose consent is sought may refuse consent even if the proposed assignee intends to do nothing more than exercise the rights lawfully conferred by the contract. His Honour said:
With one exception, the cases consistently establish that consent may be refused even though the basis for refusal involves the exercise of an express contractual right - such as the right to carry out a particular use of the premises. The exception is the decision in International Drilling Fluids (International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] 1 Ch 513), which appears to have turned upon the form of the covenant as to the use of the leased premises, and the court's view of the commercial detriment that would be suffered by the assignor if consent was refused [203].
The third area of tension concerns the matters investigated by the court when reviewing the reasonableness of a refusal. His Honour explained:
On the one hand, the cases emphasise that the task of the court is to review the subjective decision taken by the relevant party at the time it was taken, by reference to the actual reasons for refusal and the material before that party. On the other hand, the cases also establish that a party refusing consent may rely upon any ground available up to the time of hearing, even though the ground was not relied upon at the time consent was refused [204]
According to his Honour, this tension may be minimised if the court proceeds as follows:
First, the court should identify the reasons why the party refused consent at the time consent was refused. If, having identified those reasons, the court finds that they were objectively reasonable (in the sense that a reasonable person could refuse consent for those reasons), that they were relevant to the relationship between the parties to the agreement, and that it has not been established that the factual premises upon which the refusal was based were erroneous, that will be the end of the inquiry - the other party will have failed to discharge the onus of proving that consent was unreasonably withheld. However, if the court does not conclude that there were relevant reasons which provided a reasonable basis for the decision to refuse consent at the time the decision was made, or that the reasons depended upon a factual premise which was false, it will be open to the party who refused consent to sustain that conclusion by reference to other reasons, supported by objective facts which exist at the time of hearing [204].
Next, the trial judge examined the framework for assessing whether, in the present case, the first respondent had unreasonably withheld its consent. He said in relation to the 'proviso' in cl 11.7 of the JVA:
The parties have expressed a condition which must be satisfied before any obligation to consent to a Change in Control arises. That condition identifies a number of specified characteristics of the party taking control. It also specifies the standard which is to be applied to the assessment of those characteristics - namely, that they be adequate to support the affected Participant ‑ in this case, [the appellant]. In that context, it would, I think, be perverse to attribute to the parties an intention that consent could reasonably be withheld by the application of some other or different standard to the assessment of those characteristics.
However, it is necessary to note the boundaries of this proposition. Because cl 11.7 is concerned with a Change in Control of a Participant, the characteristics which are identified by the proviso are those of the new controller. By contrast, cl 11.4, which is concerned with an assignment of the JV Interest of a Participant in the Joint Venture, focuses upon the characteristics of the assignee, who is to take on the role of Participant if the assignment proceeds. The proviso to cl 11.7 exhaustively defines the criterion or standard of assessment which is to be applied to the specified characteristics of the new controller - that is, its financial resources, technical resources and experience. The proviso requires that those characteristics be assessed by reference to the adequacy of support to be provided to the affected participant - in this case, [the appellant].
The proviso does not provide an exhaustive statement of all issues relating to financial or technical resources or experience. A Change in Control might have an impact upon the financial or technical resources and experience available to [the appellant], or to the Joint Venture generally, through some means other than the support to be provided to the Participant by its controller. That would be an effect which falls outside the terms of the proviso (because it does not relate to the controller's capacity to adequately support the Participant) which could therefore be taken into account by the party whose consent is sought, if it is sufficiently related to the Joint Venture to be properly taken into account. So, for example, the fact that the Change in Control will lead to Stanwell exercising an option to terminate the Service Agreement is a matter which falls outside the terms of the proviso, because it does not relate to the capacity of the new controller to support [the appellant], but rather to the technical services available to the Joint Venture through the Manager. Thus, the proposition that the proviso exhaustively defines the rights and obligations of the parties in respect of the matters it covers does not answer the question of whether or not Stanwell's termination of the Service Agreement in the event of a Change in Control, is a matter properly taken into account by [the first respondent] for the purpose of determining whether or not to give consent to the proposed Change in Control. That is a question which I will address below [212] ‑ [214].
The trial judge then dealt with the question of the onus of proof. In its statement of claim, the appellant had alleged that the first respondent refused its consent for specified reasons. In its defence, the first respondent joined issue with those allegations and pleaded reasons why its consent was refused. In its reply, the appellant relevantly joined issue with the first respondent on its defence. According to his Honour, there was no common ground between the parties as to the reasons why consent was refused. The appellant bore the onus of proving the unreasonableness of the refusal to consent. The trial judge decided that the best evidence of the first respondent's reasons for refusing consent was contained in the Griffin Board Paper [217], [219]. According to his Honour, the framework of the issues to be determined was as follows:
First I must determine whether the evidence establishes, as an objective fact, that TSIL has the financial and technical resources and experience to adequately support [the appellant]. If that condition is not satisfied on the evidence, [the first respondent] is under no obligation to consent, and [the appellant's] claim must be dismissed. However, if the condition is satisfied on the evidence, I must then determine whether [the appellant] has established that [the first respondent] acted unreasonably at the time it withheld its consent for the reasons which I have found, being the reasons enunciated in the Griffin Board Paper presented to the board of [the first respondent]. That question is to be determined by reference to the assertions made in the statement of claim. If the evidence does not make good the assertions made in the statement of claim, by reference to the reasons for the decision made by [the first respondent], the claim must be dismissed. However, if it is concluded that the refusal of consent was unreasonable by reference to the actual reasons for that refusal, it would then be necessary to determine whether any additional reasons asserted in the defence justify the refusal of consent, and whether the facts sustaining those reasons have been established [221].
His Honour determined the considerations that were relevant to the assessment of whether to consent to the proposed change in control, and those that were irrelevant to such assessment. Two considerations, whose relevance was disputed between the parties, were the prospect of competition, and the fact that if the proposed change of control occurred then Stanwell would terminate the Technical Services Agreement.
As to the prospect of competition, the appellant argued that the JVA expressly permitted the co-venturers to compete against each other and against the Joint Venture. It contended that, on the basis of this express right to compete, the prospect of competition between the Transfield group and the Griffin group was not a consideration that could properly be taken into account. A refusal of consent based on this consideration would have the effect of depriving a party of its rights under the JVA. The trial judge rejected the appellant's argument. He said:
[I]t is significant that the principle upon which [the appellant] relies for this submission exists alongside a line of authority which also establishes that the manner in which a right conferred by the agreement might be exercised can be relevantly considered by the party whose consent is sought ... This is not a case like Bates where the party refusing consent has been motivated by a desire to deprive the other party of a right to which they were entitled - in that case the right to remain in occupation for the term of the lease. Nor is it a case in which it is alleged that consent has been refused in order to deprive [the appellant] of the right to assign its interest, or to undergo a Change in Control or deprive entities associated with the new controller of the right to compete with entities associated with [the first respondent]. This is a case which is analogous to those cases in which the change for which consent is sought would have an impact upon the manner in which rights conferred by the agreement are likely to be exercised - in this case, the right to compete. Put another way, there is no suggestion that the right of [the appellant] to compete with [the first respondent] or the Joint Venture itself is to be curtailed. However, the proposed Change in Control would make it much more likely, indeed almost inevitable, that associates of [the appellant] will exercise the right to compete with associates of [the first respondent]. Accordingly, in my opinion, the increased likelihood of competition between entities associated with [the appellant] and entities associated with [the first respondent] in the event of a Change in Control, is a matter properly taken into account in assessing the reasonableness of the refusal of consent by [the first respondent], to the extent that it is relevant to the relationship created by the Joint Venture as regards the Joint Venture [232].
As to the fact that, if the proposed change of control occurred, Stanwell would terminate the Technical Services Agreement, the appellant argued that the termination of this agreement, being a relationship between Stanwell and the second respondent as manager, was extraneous to the relationship between the co‑venturers. The trial judge rejected this argument. He was of the opinion that the termination of the Technical Services Agreement was a relevant consideration:
[I]t is the very Change in Control for which consent is sought which triggers the capacity of Stanwell to terminate the Service Agreement pursuant to its terms. Thus, the termination of the Service Agreement would be the direct consequence of the Change in Control for which consent is sought. Further, the services provided under the Service Agreement, are provided to [the] Manager on behalf of the Participants and for the purposes of the Joint Venture. It follows that the effect of a Change in Control upon the provision of services by Stanwell under the Service Agreement is a matter directly related to the Joint Venture itself, and to the relationship between the Participants in the Joint Venture. The Service Agreement can be distinguished from the JDA which was a separate agreement, between separate entities (albeit related) and dealing with separate projects. Therefore, the termination of the Service Agreement is a matter permissibly taken into account in assessing the reasonableness of the refusal of consent [234].
Next, his Honour considered whether the 'proviso' in cl 11.7 of the JVA had been satisfied in relation to TSIL's financial and technical resources. He was of the opinion that TSIL did have sufficient technical resources to support the appellant, and hence that aspect of the proviso was satisfied [250]. The respondents do not challenge this finding in the appeal. The trial judge held, however, that the appellant had not established that TSIL had the financial resources to provide adequate support to the appellant. He said that there was '[v]ery little' direct evidence adduced as to TSIL's capacity to provide adequate financial support [241]. According to his Honour, the appellant's case was limited to the proposition that the appellant was debt free and cash‑flow positive and, as a result, no financial support would be required from TSIL. His Honour said:
It seems to me that in order to demonstrate that TSIL had sufficient financial resources to adequately support [the appellant], the first matter that was required to be addressed by the evidence was the possible future financial needs of [the appellant] over the period of the Joint Venture, and across a range of potential contingencies, including such things as Cash Calls, to meet the expenses of operating and maintaining the Wind Farm, modifications to the Wind Farm, changes in market conditions including the price at which the products of the Joint Venture could be sold, and the possibility of calamitous loss of the turbines and plant. From this assessment, conclusions could be drawn as to the likely future financial needs of [the appellant], and in particular, whether it was capable of meeting those needs from its own resources. If it was not, the next matter that would require to be addressed is the capacity of TSIL to provide any support needed by [the appellant] in meeting those financial needs.
As I have mentioned, no attempt was made to lead evidence addressing these issues, even though [the first respondent] has denied the express plea of [the appellant] that TSIL has the financial resources to adequately support it. The various gaps in the evidence to which I have referred make it impossible for me to conclude that [the appellant] has established this contested assertion on the balance of probabilities [246] ‑ [247].
The appellant's failure to establish that TSIL had adequate financial resources to support the appellant meant that the 'proviso' in cl 11.7 was not satisfied and, as a result, the appellant's claim failed, irrespective of whether or not the first respondent's refusal to consent was unreasonable [247]. Nevertheless, his Honour set out his findings in relation to the other matters in contest at trial.
The trial judge dealt with the first respondent's concerns about the adequacy of TSIL's financial and technical resources. As to financial resources, he was of the view, as I have mentioned, that it was not unreasonable to refuse consent on the basis of financial resources. As to technical resources, his Honour was of the view, as I have mentioned, that TSIL had the technical resources and experience to adequately support the appellant, and it was not open to the first respondent to apply some other criterion of assessment to TSIL's capacity to support the appellant in this area. However, his Honour was also of the view that this did not mean that the first respondent was precluded from taking account of the effect which a change in control would have upon the technical resources and experience available to the co‑venturers, if that impact occurred through some means sufficiently connected to the relationship between the parties to the JVA, other than the extent of the support provided by the new controller to the appellant. His Honour said:
The evidence establishes that personnel employed or associated with Stanwell have provided significant technical resources and experience to the Manager of the Joint Venture. Those resources and experience have been supplied both formally, pursuant to the [Technical Services] Agreement, and informally, as a result of informal requests made by Mr Roberts, on behalf of the Manager. This is not support provided to [the appellant]. Accordingly, it is not support of a kind covered by the proviso to cl 11.7 of the JVA. The provision of those technical resources and experience is, on the evidence, of substantial benefit to the Joint Venture, and therefore to [the first respondent] as a Participant in the Joint Venture. Although the day to day operation and maintenance of the Wind Farm is carried out by the contractor who constructed the Wind Farm (Vestas), this has been described in evidence, which I accept, as an 'arms and legs' operation. On that analogy, the intellectual input has to be provided from other sources, and in the past, Stanwell has made a significant contribution in this respect. It was reasonable for [the first respondent] to conclude that those benefits would be lost in the event of a Change in Control. [The appellant] does not challenge that conclusion, which is in any event established by the evidence.
The loss of the benefit of the technical resources and experience supplied both formally under contract and informally by personnel related to Stanwell is a matter which directly affects the relationship between the parties which was created by the Joint Venture as regards the Joint Venture. The loss of those benefits could not be said to be a matter extraneous to their relationship as Joint venturers ‑ rather, it bears directly upon that relationship and the Joint Venture itself, and would be the direct consequence of the proposed Change in Control. Although the new controller of [the appellant] will be in a position to direct some personnel who have particular experience in wind farm energy projects to assist the Joint Venture, notably Mr Neil, Mr Johannesen and Mr Ware, the technical resources and experience available from that quarter would be a significant reduction in the technical resources and experience presently available, both informally and formally, through Stanwell and its associates. The evidence also establishes that while it may not be impossible for the Manager to augment the technical resources and experience available to support the maintenance and operation of the wind farm, such expertise is not readily available, and might only be sourced with some difficulty [257] ‑ [258].
His Honour therefore concluded that it was not unreasonable to refuse consent on the basis of concerns about the technical resources available to the Joint Venture. In so concluding, his Honour excluded from consideration any technical resources or experience that might be required by the parties to the JDA [259].
The trial judge then considered the prospect of competition between the Transfield group and the Griffin group. His Honour found that there was a real prospect of competition between them in the Western Australian energy market. Also, his Honour found that the evidence established, consistently with the views expressed in the Griffin Board Paper, that there is a real prospect that issues might arise in the future operation of the Wind Farm which will require negotiations between the parties to the JVA. His Honour gave, as examples, a modification to the Wind Farm to add an additional six turbines, the financing or 'securitisation' of a party's JV Interest, and the joint negotiation of agreements for the sale of the JVA Output [261]. He continued:
The evidence also establishes, and I find, that negotiations on subjects of this kind would be likely to be enhanced if the parties to those negotiations were free to communicate with each other without concern that commercially confidential aspects of their business or plans for the future might give the other party, or associates of the other party, a competitive advantage in relation to other projects. For example, disclosure of a party's attitude in respect of the internal rate of return required to justify capital investment; its expectations as to future demand in the Western Australian energy market; as to future revenue likely to be derived from the sale of energy into the Western Australian market; or as to its perceptions of the risks which attend energy generation and the sale of energy into the Western Australian market might all be matters which would be regarded as commercially sensitive in the context of prospective competition. In such a circumstance, the parties to the Joint Venture would either have to take the risk of commercial damage arising from disclosure to the other party of commercially sensitive information, or restrict the nature and content of their communications in relation to potentially significant issues arising under the Joint Venture. The dilemma faced by each party in that circumstance is an aspect of their relationship under the Joint Venture as regards the Joint Venture, and can therefore be taken into account in assessing whether or not to refuse consent. In my view, it would be reasonable for a party in the position of [the first respondent] to form the view that the prospect of such a dilemma having an adverse impact upon the Joint Venture was sufficiently undesirable to reasonably conclude that consent to the Change in Control should be refused [262].

The question whether increased competition was a consideration which the first respondent was entitled to take into account in deciding to withhold its consent to the proposed change in control depends on the proper construction of the JVA (in particular, the proper construction of cl 3.1, cl 3.9 and cl 3.10 in the context of cl 11.7).
It is apparent from cl 3.10 that, when the JVA was executed, the participants contemplated that each of them may, and would be entitled to, engage in other commercial activities (including owning and operating wind farms and other forms of energy generation) in Western Australia or elsewhere that would create or involve competition between those other commercial activities and the Joint Venture.
Clause 3.10, read with cl 3.9, therefore conferred on the appellant the right to engage in other commercial activities, whether or not those activities would create or involve competition with the first respondent or its related entities, subject to the other commercial activities not unreasonably interfering with, impeding or compromising the JV Purpose.
I note, as regards the JV Purpose, that when the appellant sought the first respondent's consent to the proposed change in control, the Construction Activities had been completed and the Wind Farm had been connected to Western Power's transmission network. The Wind Farm had been generating and selling electricity since in or about October 2006.
I also note, as regards the JV Purpose, that the participants confined the agreed objects of the Joint Venture to, relevantly, the construction, operation, maintenance and, if required, modification of a wind farm with two generating plants of 40 megawatts capacity each. The words 'and, if required, modify the Wind Farm' in cl 3.1(a)(ii) refer to modifications which may be necessary in order for the Wind Farm to operate in the manner provided for in the JVA. The generating capacity of the Wind Farm cannot be increased or expanded without the consent of both participants. Although the JV Purpose includes undertaking such other purposes as the Management Committee may approve, in accordance with the JVA, the adoption of any other purpose would require the unanimous consent of the representatives of the Management Committee; that is, the adoption of any other purpose would, in substance, require the consent of both participants. See the provisions of the JVA which I have summarised at [30] ‑ [31] above. A participant may refuse, for any reason (or, indeed, no reason), to consent to the adoption of another purpose. A participant, in deciding whether to consent to the adoption of another purpose, is not constrained by reasonableness. A new agreement is required without any obligation on either participant to agree.
It is apparent from cl 3.10, read with cl 11.7 (and, also, cl 11.4) that when the JVA was executed the participants contemplated that one or other of them might undergo a change in control or assign its rights and interests under the JVA and that the new controller or the assignee might, and would be entitled to, engage in other commercial activities (including owning and operating wind farms and other forms of energy generation) in Western Australia or elsewhere that would create or involve competition between those other commercial activities and the Joint Venture.
It is likely that any new controller or assignee will be involved in energy generation. The clear implication from cl 3.10, read with cl 11.7 (and, also, cl 11.4) is that a new controller or an assignee might well be engaged in commercial activities, before and after the change in control or the assignment, that have been and will be in competition with the Joint Venture.
Although the 'proviso' to cl 3.10 protects the integrity of the JV Purpose, cl 3.10 otherwise confers, in very broad terms, freedom for each participant to engage in other commercial activities, whether in competition with the Joint Venture or not. So, one participant may establish a wind farm or some other electricity‑generating project in the vicinity of the Joint Venture operations or anywhere else in Western Australia.
The 'proviso' in cl 3.10 applies only to the participants. It has no application to the controller or any related entity of a participant. Accordingly, the controller or a related entity of a participant may engage in commercial activities (including owning and operating wind farms and other forms of energy generation) in Western Australia or elsewhere that create or involve competition with the Joint Venture.
The only contractual restraint on competition by a participant of the kind I have described is that the other commercial activities giving rise to the competition not unreasonably interfere with, impede or compromise the JV Purpose. The word 'unreasonably' is important. It connotes that the competition generated by the other commercial activities must not threaten the pursuit, implementation or carrying on, on a commercial basis, of any of the objects specified in cl 3.1. As at 18 March 2008, when the first respondent refused its consent to the proposed change of control, all agreed construction activities had been completed, and the Wind Farm had been generating and selling electricity into the Western Power transmission network, for about 18 months. In these circumstances, if any such competition were to interfere with, impede or compromise the JV Purpose it would, probably, relate to the price at which each of the participants was able to sell its share of the JV Output. As to this point, the restraint against unreasonably interfering with, impeding or compromising the JV Purpose would require that the competition in question should not, of itself, diminish the ability of each participant to sell its share of the JV Output on terms that would enable the participant to derive a reasonable commercial rate of return on its investment in the Project.
In my opinion, on the proper construction of cl 3.1, cl 3.9 and cl 3.10 of the JVA, in the context of cl 11.7, a participant who is considering whether to consent to a proposed change in control is not entitled to take into account any aspect of competition which extends beyond protecting the integrity of the JV Purpose. Consent can only be refused on the ground of the competitive effect of the proposed change in control if the change in control would, in terms of cl 3.10, unreasonably interfere with, impede or compromise the JV Purpose. This must necessarily involve an assessment of the extent to which the JV Purpose has already been implemented, and the commercial circumstances of the Joint Venture, as at the date on which consent is refused.
I respectfully disagree with the trial judge's decision, in effect, that the first respondent, in deciding whether to consent to the proposed change in control, was entitled to take into account the increased likelihood of competition between entities associated with the appellant and entities associated with the first respondent. On the proper construction of cl 3.1, cl 3.9 and cl 3.10 of the JVA, in the context of cl 11.7, the first respondent was not entitled to consider, and objectively to justify the reasonableness of withholding consent to the proposed change in control by reference to, the increased likelihood of competition between entities associated with the appellant and entities associated with the first respondent if the proposed change in control proceeded. The first respondent was not entitled to take into account the manner in which the appellant, when under the control of TSIL, might exercise its express right of competition under cl 3.10 or the manner in which TSIL or any of its related bodies corporate might compete with the first respondent or any other companies within the Griffin group.
Ground 3 of the appeal has been made out.

Ground 4 of the appeal

Ground 4 asserts, in essence, that the trial judge erred in fact by holding, in essence, that there was a real prospect that if the proposed change in control occurred, entities associated with the first respondent would have to disclose confidential information to entities associated with the appellant. According to the appellant, his Honour should have held that there was no such real prospect.
The trial judge held that the commercial detriment flowing from the competition concern, which could properly be considered in refusing consent, was the commercial detriment that would flow from disclosing confidential information to a competitor in relation to financing the capital cost of adding six turbines, the financing or securitisation of a participant's JV Interest or the collective sale of JV Output [261] ‑ [262]. His Honour found that negotiations on subjects of this kind would be likely to be enhanced if the parties to the negotiations were free to communicate with each other without concern that commercially confidential aspects of their business or plans for the future might give the other party or its associates a competitive advantage in relation to other projects [262].
As to the disclosure of confidential information as regards financing the capital cost of adding six turbines, this issue had not been raised by the first respondent with TSIL, and the cost involved was, in the context of the Project as a whole, modest. Mr Trumble gave this evidence:
So you don't know whether you ever put to Transfield that what was in your mind at least was up to six additional turbines?---I don't believe that's the case.
You don't think you did tell them?---I believe that we discussed expansion of the wind farm but I don't believe we discussed six.
When you discussed expansion did you make clear what you had in mind, that is, adding turbines, not adding generating capacity?---I don't believe the conversation went to that depth.
…
ZELESTIS, MR: Now, to come back to the proposed modification, you have said in your mind it was up to six new turbines and pylons?---Yes.
We have had a discussion about the rough cost of that. There are two participants in the joint venture, aren't there?---Yes.
So each participant would have to contribute the capital cost of three?‑‑‑Yes.
Say, seven and a half, eight million dollars?---Yes.
Can I suggest to you that in the course of considering whether to recommend consent to Griffin, you never paid any attention to TSIL's capacity to fund a limited expenditure of that kind, did you?---No.
Because you didn't doubt that it could?---I would not have a very good understanding of whether they could or couldn't. [It] just didn't get a consideration.
So you didn't pay any attention to that?---No.
And the wind farm is operating financially profitably now, isn't it?---It is (ts 146, 150).
As to the disclosure of confidential information as regards the financing or securitisation of a participant's JV Interest, TSIL had informed Griffin that it was not proposing to offer any Wind Farm asset as security for long‑term financing. TSIL said in its written response dated 15 January 2008 to questions from Griffin:
TSIL's current financial arrangements do not provide for any security over any wind farm assets and thus it is not proposed to offer any wind farm asset as security to [sic] any long term financing. This policy extends to TSIL's interest in the Emu Downs wind farm, which is financed on an unsecured basis. However, TSIL will consider secured project finance as an option if appropriate, as was the case for Stanwell.
As I have mentioned, Mr Mott gave evidence that the answers in TSIL's written response were true, and he was not cross‑examined on the point.
As to the disclosure of confidential information relating to the collective sale of JV Output, it is not apparent why information confidential solely to Griffin would be likely to be disclosed to TSIL.
The JVA does not provide that access to confidential information or intellectual property of the Joint Venture or a participant is a ground for restricting competition between the participants. Clause 15 of the JVA controls and regulates access to and use of 'Confidential Information'. This term is defined in cl 1.1 to mean, in essence, information and data 'of a commercially sensitive nature relating to the Project' which is regarded by one or more of the participants as being confidential to it. By cl 15.1, relevantly, each participant must not disclose Confidential Information or allow it to be disclosed to any third party without the prior consent of the other participant. Clause 15.2 provides, relevantly, that notwithstanding cl 15.1, a participant may disclose Confidential Information to any related body corporate of the disclosing party, provided such related body corporate agrees with the disclosing party to comply with cl 15.
The right of competition under cl 3.10, read with cl 3.9, was very broadly expressed in circumstances where the participants must have known, when it was executed, that confidential information would be likely to be acquired in the course of pursuing, implementing or carrying on the objects of the Joint Venture. Indeed, it is apparent from recital A to the JVA, which records that, before executing the JVA, Stanwell and Griffin Energy 'undertook certain activities in order to determine whether to proceed with the Project' that confidential information was generated in the course of planning for and ascertaining the commercial feasibility of the Project.
Mr Trumble said in cross‑examination that when the feasibility of the Project was under examination by the participants, each of them separately prepared a draft cash flow model on the basis of its own financing, tax and other interests. When each of these draft cash flow models had been prepared, they were given to an independent contractor, Corpac Pty Ltd, who was engaged by the participants to develop a more sophisticated cash flow model for the purposes of raising finance (ts 168 ‑ 170). The settled model developed by Corpac Pty Ltd reflected an 'agreed common view' between the participants (ts 170 ‑ 171). There appears to be no reason why a similar process could not be adopted in relation to the feasibility of any proposed expansion of the Project which the participants might, in future, wish to investigate. Any financial models prepared by an independent contractor engaged by the participants could readily be applied separately by each participant through its own scenarios and rates of return for the purpose of ascertaining whether it would be prepared to agree to the expansion.
In my opinion, it is materially inconsistent with the provisions of the JVA which permit competition between participants, even if they share confidential information, and with the provisions of the JVA which control and regulate access to and use of such information, to hold that the requirement for consent under cl 11.7 enables a participant to withhold consent because competition may occur when confidential information is held.
In any event, I respectfully disagree with the trial judge's decision, in effect, that there was a real prospect that if the proposed change in control occurred, then entities associated with the first respondent would have to disclose confidential information to entities associated with the appellant. My reasons for this conclusion are these:
(a)As I have mentioned, when the first respondent refused its consent to the proposed change in control, all agreed construction activities had been completed, and the Wind Farm had been generating and selling electricity into the Western Power transmission network, for about 18 months.
(b)The potential for the disclosure of confidential information in connection with any financing of the capital cost of adding six turbines, any financing or securitisation of a participant's JV Interest or the collective sale of JV Output was not of any particular significance when evaluated against:
(i)the protection afforded by cl 15.1 of the JVA;
(ii)the degree of importance of a participant's right to assign its valuable proprietary and contractual rights under the JVA;
(iii)the extent to which the JV Purpose had already been implemented;
(iv)the limited scope of the JV Purpose; and
(v)the very broad right of competition conferred by the JVA.
(c)The mechanisms adopted by the original participants to protect their individual interests when preparing draft cash flow models relating to the feasibility of the Project and the absence of any compelling reason why similar mechanisms could not readily be adopted in the future.
Ground 4 of the appeal has been made out.

Ground 5 of the appeal

Ground 5 asserts, in essence, that the trial judge erred in law by holding that the first respondent was entitled to consider, and objectively to justify the reasonableness of withholding consent to the proposed change in control by reference to, the likely consequential termination of the Technical Services Agreement. According to the appellant, his Honour should have held that the first respondent was not so entitled.
The trial judge rejected the appellant's submission that the likely exercise by Stanwell of its right to terminate the Technical Services Agreement in the event of a change in control was extraneous to the relationship between the parties to the JVA and, therefore, not a matter that could properly be taken into account in assessing the reasonableness of the first respondent's refusal of consent. His Honour held that the likely exercise by Stanwell of this right was a relevant consideration:
[I]t is the very Change in Control for which consent is sought which triggers the capacity of Stanwell to terminate the Service Agreement pursuant to its terms. Thus, the termination of the Service Agreement would be the direct consequence of the Change in Control for which consent is sought. Further, the services provided under the Service Agreement, are provided to [the] Manager on behalf of the Participants and for the purposes of the Joint Venture. It follows that the effect of a Change in Control upon the provision of services by Stanwell under the Service Agreement is a matter directly related to the Joint Venture itself, and to the relationship between the Participants in the Joint Venture. The Service Agreement can be distinguished from the JDA which was a separate agreement, between separate entities (albeit related) and dealing with separate projects. Therefore, the termination of the Service Agreement is a matter permissibly taken into account in assessing the reasonableness of the refusal of consent [234].
A feature of the JVA and the Management Agreement is that the design, construction, commissioning, testing, operation and maintenance of the Wind Farm and its facilities are to be implemented or carried on by the second respondent as manager, either by itself or by the engagement of independent contractors. The functions and duties of the second respondent as manager are, of course, to be performed subject to any resolution or direction of the Management Committee under the JVA. But the activities in question are not to be implemented or carried on by the participants working together as joint venturers.
The JVA and the other JV Documents, consistently with this feature, do not make any provision for the participants to provide technical or other services in connection with obtaining or pursuing the objects of the Joint Venture, either directly or through the second respondent as manager. Similarly, no such provision is made in relation to the ultimate holding company or any other related body corporate of each participant. The participants were content to engage the second respondent as manager to provide or arrange for the provision of services. The participants made no promise to each other to provide any services for the advancement of the JV Purpose.
By cl 5.1(a) and (b) of the JVA, the participants engaged the second respondent to manage the Joint Venture, including the Construction Activities, in accordance with the JVA and the Management Agreement. By cl 5.1(d) of the JVA, subject to direction by the Management Committee and the terms of the Management Agreement, the participants agreed that the second respondent as manager had the authority, discretions and powers of an independent contractor in its management, supervision and conduct of the Joint Venture.

Clause 3.2 of the Management Agreement provides that, subject to any resolution or direction of the Management Committee under the JVA, the second respondent as manager shall perform the functions and duties specified in cl 3.2. See [41] ‑ [42] above. These duties and functions include carrying out or procuring the design, construction, commissioning, testing, operation and maintenance of the Wind Farm Facilities and the supervision and control of consultants, specialists or independent contractors engaged by the second respondent as manager.
Pursuant to the powers conferred on it by the Management Agreement, the second respondent as manager executed the Technical Services Agreement with Stanwell and Griffin. As I have mentioned, the Technical Services Agreement superseded a similar agreement entered into by the second respondent as manager with Stanwell on 26 August 2005.
The second component of cl 11.7 requires that the new controller have the financial and technical resources and experience to adequately support the affected participant. As I have mentioned, the term 'adequate' connotes, relevantly, that the proposed new controller will have sufficient or suitable technical resources and experience on which the affected participant may draw to facilitate the discharge of its obligations under the JVA in relation to technical matters until the JV Termination Date. The proposed new controller is not required to promise or undertake to provide technical resources or experience to the affected participant. The requisite resources and experience merely have to be available to the affected participant.
In addition to the technical services provided by Stanwell under the Technical Services Agreement, Stanwell supplied to the second respondent as manager, on an informal basis and without cost, significant technical expertise for the purposes of the Joint Venture. These informal services were provided without any obligation. Stanwell could have ceased to provide the informal services at any time, and for any reason or no reason.
In my opinion, the better construction of cl 11.7 is that the second component deals comprehensively with the capacity of a proposed new controller to provide technical resources and experience to the affected participant upon a change of control. The third component of cl 11.7, construed in the context of the scheme of the JVA and the other JV Documents (in particular, the Management Agreement) with respect to the manner of implementing and carrying on the JV Purpose, does not permit the other participant to withhold its consent to a proposed change of control on the ground that an agreement for the provision of technical services entered into by the second respondent as manager with the ultimate holding company of the affected participant may be terminated upon the change in control occurring.
In my opinion, it would be unreasonable for the other participant to withhold its consent to a proposed change of control on the ground that the ultimate holding company of the affected participant may cease to provide informal technical expertise to the Joint Venture which the ultimate holding company is not obliged to provide and which it may cease providing at any time, for any reason or no reason. My reasons for this conclusion are:
(a)The second component of cl 11.7 deals comprehensively with the capacity of a proposed new controller to provide technical resources and experience.
(b)It would be incongruous if the affected participant's right to assign its valuable proprietary and contractual rights under the JVA were to be prejudiced by the affected participant or a related body corporate having voluntarily, gratuitously and without obligation agreed to provide informal technical expertise for the benefit of the Joint Venture, especially in the context of the scheme of the JVA and the other JV Documents (in particular, the Management Agreement) concerning the method of implementing and carrying on the JV Purpose.
Ground 5 of the appeal has been made out.

Ground 6 of the appeal

Ground 6 asserts, in essence, that the trial judge erred in law and in fact by holding that the first respondent had properly and reasonably withheld its consent to the proposed change in control. According to the appellant, his Honour should have held that the first respondent had improperly and unreasonably withheld such consent.
The trial judge held that if it was necessary to consider the reasons pleaded in the first respondent's defence, its refusal of consent was not shown to have been wrongful or unreasonable having regard to its concerns in respect of:
(a)the financial capacity of TSIL [255];
(b)a diminution in the range and quality of technical resources and experience that would be available to the Joint Venture through the manager [256] ‑ [259]; and
(c)an increased likelihood of competition between related entities of TSIL on the one hand and related entities of the first respondent on the other [261] ‑ [262].
For the reasons I have given in the course of considering the other grounds of appeal, it was not open to the first respondent to withhold its consent on the basis of its concerns in respect of these matters. I respectfully disagree with the trial judge's finding that the first respondent's refusal of consent was not shown to have been wrongful or unreasonable.
Ground 6 of the appeal has been made out.

The appellant's amended orders wanted

The proposed change in control from Stanwell to TSIL was conditional upon the consent of the first respondent being obtained by 19 December 2008. The condition was not fulfilled.
By letter dated 13 January 2009, the appellant's solicitors informed the first respondent's solicitors that the agreement under which the proposed change in control was to be effected, had been terminated.
Initially, the first respondent contended that, in the circumstances, the appeal was moot. This contention was, however, abandoned before the hearing of the appeal. In my opinion, the first respondent properly abandoned the point. The trial judge's decision continues to affect legal rights and may affect future requests for similar consents, having regard to the proper construction of the JVA and the other JV Documents. Also, questions relating to costs in the primary proceedings turn upon the correctness of his Honour's decision.
The amended orders wanted by the appellant include declaratory relief, as follows:
(aa)it be declared that, on a proper construction of the Emu Downs Wind Farm Joint Venture Agreement dated 21 July 2005, as regards a request for consent to a proposed Change in Control, it is not relevant to consider, and it is not open to justify objectively the reasonableness of withholding consent to a proposed Change in Control on the ground of, an increased likelihood of competition between entities associated with the appellant and entities associated with the first respondent in the event of [a] proposed Change in Control;
(ab)it be declared that, on a proper construction of the Emu Downs Wind Farm Joint Venture Agreement, that it is not relevant for the first respondent to consider, and it is not open for the first respondent to justify objectively the reasonableness of withholding consent to a proposed Change in Control on the ground of, the

likely consequential termination of the Technical Services Agreement between EDWF Manager Pty Ltd, Stanwell Corporation Ltd and Griffin Coal Mining Company Pty Ltd;
(a)it be declared that the first respondent withheld its consent to the proposed Change in Control of the appellant unreasonably and in breach of the terms of the Emu Downs Wind Farm Joint Venture Agreement executed on 21 July 2005;
(b)it be declared that, in the events which have occurred, the appellant shall not be deemed to have offered to assign the whole of its joint venture interest in the Emu Downs Wind Farm Joint Venture to the first respondent.

The result of the appeal

I would allow the appeal. Counsel should be heard as to the precise form of the orders.
NEWNES JA: I agree with Buss JA.

Liaise with, advise and report to the Management Committee on the following obligations	• Statutory compliance • Plant performance • Investigations • Special projects • Due diligence • Plant improvement options • Risk management • Capital requirements
Planning, preparation and management of Wind Farm budgets including the following obligations	• Develop annual Operation and Maintenance Plan including plant improvement and compliance projects • Assist with planning of annual OPEX and Capital budgets, and 5 year forecast
Ensure personnel are appropriately trained for site activities	• Implementation of training plan for site competencies • Evaluate and maintain competencies • Manage performance against the plan • Identification of initial training requirements • Provision of training as required. • Ensure Participants' personnel are trained and competent to access site in accordance with O&M Sub-contractors requirements. • Evaluate and maintain competencies.
Manage all Wind Farm sub‑contractor's activities	• Monitor sub contractor performance