Electricity Generation Corporation T/As Verve Energy v Woodside Energy Ltd & Ors; Woodside Energy Ltd & Ors v Electricity Generation Corporation T/As Verve Energy

[2013] HCATrans 300

[2013] HCATrans 300

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth   No P47 of 2013

B e t w e e n -

ELECTRICITY GENERATION CORPORATION (ABN 58 673 830 106) T/AS VERVE ENERGY

Appellant

and

WOODSIDE ENERGY LTD (ABN 63 005 482 986)

First Respondent

BP DEVELOPMENTS AUSTRALIA PTY LTD (ABN 54 081 102 856)

Second Respondent

CHEVRON AUSTRALIA PTY LTD (ABN 29 086 197 757)

Third Respondent

BHP BILLITON PETROLEUM (NORTH WEST SHELF) PTY LTD (ABN 41 004 514 489)

Fourth Respondent

SHELL DEVELOPMENT (AUSTRALIA) PTY LTD (ABN 14 009 663 576)

Fifth Respondent/

Office of the Registry
  Perth  No P48 of 2013

B e t w e e n -

WOODSIDE ENERGY LTD (ABN 63 005 482 986)

First Appellant

BP DEVELOPMENTS AUSTRALIA PTY LTD (ABN 54 081 102 856)

Second Appellant

CHEVRON AUSTRALIA PTY LTD (ABN 29 086 197 757)

Third Appellant

BHP BILLITON PETROLEUM (NORTH WEST SHELF) PTY LTD (ABN 41 004 514 489)

Fourth Appellant

SHELL DEVELOPMENT (AUSTRALIA) PTY LTD (ABN 14 009 663 576)

Fifth Appellant

and

ELECTRICITY GENERATION CORPORATION (ABN 58 673 830 106) T/AS VERVE ENERGY

Respondent

FRENCH CJ
HAYNE J
CRENNAN J
KIEFEL J
GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 4 DECEMBER 2013, AT 2.14 PM

Copyright in the High Court of Australia

____________________

MR D.F. JACKSON, QC:   Your Honours, I appear with my learned friends, MR B. DHARMANANDA, SC, MS J.K. TAYLOR and MR E.M. HEENAN, for the appellants in P48/2013 and the respondents in P47/2013.  (instructed by Lavan Legal)

MR N.C. HUTLEY, SC:   If your Honours please, I appear with my learned friends, MR J.C. GILES and MR D.A. HUGHES, for Verve Energy in each of the appeals.  (instructed by Jackson McDonald Lawyers)

FRENCH CJ:   Yes, Mr Jackson.

MR JACKSON:   Your Honours will have, I think, or are about to have our outline of submissions.  Your Honours, could I say that there are several issues which arise in relation to the parties’ appeals.  May I commence by indicating the way in which they relate to each other.  The starting point, your Honours, is the actual order of the Court of Appeal, which your Honours will see in volume 3 at page 1129. 

Your Honours will see there that in paragraph 1, the order of the Court of Appeal varies the sums which are set out in the primary judge’s judgment at page 1047.  I do not think I need to take your Honours to page 1047, but may I just say this?  The sums in the primary judge’s reasons were based on a matter no longer in issue, namely a finding that there had been a breach by our side, the sellers, in failing to deliver shortfall gas in January 2008.  If I could just give your Honours the references to where your Honours will see the essential parts of that; volume 3, page 1020, paragraph 53 and page 1042, paragraphs 1 to 7.

Your Honours, the increase in the amounts which is reflected in the Court of Appeal’s order at page 1129 to which I referred your Honours earlier, followed from that court’s finding that the primary judge had erred in not finding that there had been a breach by the sellers of clause 3.3 of the gas supply agreement in June to September 2008 in failing to supply what was called SMDQ gas.  Your Honours, the increase in the amount reflects a calculation based on the cap on liability which appears in clause 22.7(c) of the agreement, that is in volume 2 at page 555.  I will be coming back to it in just a moment, your Honours, to the detail of it.

Your Honours, could I pause at this point to mention several features arising in relation to what I have just said?  The first, your Honours, is that clause 3.3, if I could take your Honours to that for a moment, is in volume 2 at page 511.  You will see – your Honours, I will come to the relationship between clause 3.3(a) and clause 3.3(b) in a moment, but your Honours will see that clause 3.3(a) contemplates that Verve may seek what is described as “SMDQ” and SMDQ is a quantity of gas in excess of MDQ and MDQ is the maximum daily quantity referred to in the previous clause, clause 3.2.

Your Honours, as clause 3.2, and particularly clause 3.2(b), makes apparent we were obliged to make MDQ for delivery on any day but as to SMDQ our obligation was to use reasonable endeavours to make SMDQ available.  You will see the change in wording that is in clause 3.3(a).  I have spoken of the gas supply agreement and our obligation in the singular but as clause 26, which is in volume 2 at page 560, makes apparent the obligations of the sellers are several, not joint, and under what are separate contracts.  Your Honours will see that in clause 26 which elaborates upon the point.

Your Honours, they relate to their proportionate shares and “proportionate shares” is a term defined by clause 26.3.  If I could take your Honours to that for a moment at page 560, you will see that the sellers had different proportionate shares, with Woodside Energy having the largest share of it. 

Your Honours, if I could return to the Court of Appeal’s judgment, the increase in the amounts affected by it was, as I submitted earlier, due to the finding that there had been the breach of the obligation under clause 3.3.  The quantum of those amounts reflects the agreed limitation on damages provided for by clause 22.7 which is at page 555.  Your Honours will see that clauses 22.6 and 22.7 provide for limits on the potential liability, each to the other, of the buyer and the seller.  There is a particular provision dealing with failure to use reasonable endeavours to provide SMDQ and that is clause 22.7(c) on page 555.  Your Honours will see that it says that:

The liability of each Seller in respect of a failure to use reasonable endeavours to meet a Buyer nomination above MDQ up to SMDQ is limited to its Proportionate Share –

Your Honours, I will not read the rest of it out, but may I say that it has the effect that limits liability in respect of each seller in two ways.  First of all, the liability conceptually is limited to the actual additional costs of alternative fuel – that is, the amount by which the actual costs incurred by the buyer in obtaining alternative fuel exceed the amount equivalent to the gas price.  Then the second limitation is, in actual money terms, the amount of liability so determined cannot exceed what would have been the price of the SMDQ gas under the agreement. 

Your Honours, if I could just put it this way, it is in the first place, the difference between what they had to pay and what they would have paid but that difference cannot exceed the number of dollars they would have paid under the agreement.

CRENNAN J:   Is there any contractual obligation on the buyer to obtain its SMDQ from these sellers?

MR JACKSON:   No, your Honour, no.  I will elaborate upon that a little later, if I may, but there is not, and I am going to come to that, your Honour.
The reason why I say that with a slight degree of hesitation is that in certain circumstances, the practicality of working it out might have the result that they have to get SMDQ at some point.  That would come about, your Honours, because of a number of features but fundamentally because of the terms of recital C at page 508, which your Honours will see says that they are going to be a long term agreement and then (b) that they intend to:

purchase most of [their] gas requirements from the Sellers (although up to 30% of those requirements above the Minimum Quantity may be purchased from other suppliers) –

That is really the matter that might – but the working out of that, your Honour, is a little more complicated and may I come back to that.  Your Honours, could I go then to – I was dealing with the quantum of the limitation under 22.7(c) and it cannot exceed what the price for SMDQ gas would have been.  That is provided for by clause 6.1(d) at page 521 in book 2 and your Honours will see that it speaks of the gas price and then 6.1(d) provides:

for Gas delivered on a Day which is part of Tranche 3 –

A price is then mentioned.  Tranche 3, your Honours, is defined as gas delivered “in excess of MDQ”.  You will see that in clause 30 at page ‑ ‑ ‑

HAYNE J:   Clause?

MR JACKSON:   I am sorry, your Honour.  It is part of clause 30, which is a series of definitions.  It is at page 570.  It is tranche 3, your Honours, and all the prices that are set out in clause 6.1 are prices which are subject to adjustment in accordance with clause 6.2.  The detail of that, your Honours, does not matter, but I simply mention that.

Your Honours, coming back to the structure of the matter before the Court, in our appeal we challenge the finding of the Court of Appeal that there was a breach of clause 3.3.  If we succeed in that challenge that is the end of the matter because it is accepted that the claim relied on by Verve, that is, the claim based on duress, cannot succeed unless there was breach of clause 3.3 by us.  Your Honours will see that referred to in two passages in their written submissions, paragraph 55 and also perhaps a little more obliquely in paragraph 2.  Could I go to paragraph 55, and you will see there, your Honours, particularly the last sentence of paragraph 55.

Now, so far as the claim based on duress is concerned, that is Verve’s claim, that failed in the Court of Appeal and that failure is a subject of Verve’s appeal.  It failed because, whilst the Court of Appeal was satisfied that we had applied illegitimate pressure leading to Verve’s entry into the two short‑term agreements, it yet held that duress gave rise to a right to rescind those two agreements but that Verve, never having sought to rescind those agreements, indeed, claiming it did not need to do so, was bound by their terms.

In the Verve appeal, Verve challenges the finding as to the need to rescind, the other finding being in its favour.  We seek to support that finding, and by our notice of contention, which your Honours will see in volume 3 at page 1137, we challenge the antecedent finding, namely that there was duress.  That is ground 2 of our notice of contention.  Your Honours, by our notice of contention ground 3, we contend also that even if Verve’s claim in duress were to succeed, the liability in respect of that was a liability to which the cap provided for by clause 22.7(c) in any event applied.

So, your Honours, our contention is that in the end, the case can be disposed of relatively simply in a sense by, in this way, if our appeal were to succeed on the construction of clause 3.3 that would be the end of the matter.  The appeal would succeed, the judgment of the Court of Appeal be set aside and Verve’s appeal would fail.

If our appeal on the construction of clause 3.3 fails, we contend that the case is, in any event, one to which the limitation of liability in clause 22.7 would apply and if that view were correct the issues of duress and need to rescind would be of, in a sense, academic interest because even if Verve succeeded on those issues the cap would apply and the judgment of the Court of Appeal would be unchanged.  Your Honours, that is the structure of the matter.

KIEFEL J:   Mr Jackson, is there any dispute between the parties as to the quantum of the amounts for which you seek variation of orders in the event that you are successful on the construction question?

MR JACKSON:   Your Honour, if we were successful on our appeal the result would simply be that the judgment of the Court of Appeal would be set aside and the judgment of the primary judge remain.

KIEFEL J:   I see, thank you.

CRENNAN J:   Other than orders in respect of what is no longer in issue?  Did not the primary judge make some orders there that – you just mentioned that at the outset – in relation to one or two days of shortfall, or supply, or some ‑ ‑ ‑

MR JACKSON:   Your Honour, there was no challenge to the primary judge’s decision on that issue and his judgment would remain in terms of amounts if we were successful on the clause 3.3 issue.

CRENNAN J:   Yes, I follow.

MR JACKSON:   If we were successful on the other issues, then the Court of Appeal’s judgment would remain, assuming we had failed on the 3.3 issue.  Your Honours, might I turn then to the question of construction of clause 3.3, and I turn to two aspects of it.  One is the construction of the clause and, secondly, the application of that construction to the present case.  The question of construction involves, in the end, the relationship between the two parts of clause 3, namely, 3.3(a) and 3.3(b).

The provisions of clause 3.3 of course do not appear in a vacuum.  Could I mention they are a part of a larger contract.  May I mention briefly some of the other potentially relevant provisions and I will do so as shortly as I can.  Your Honours will see that there is a definition provision which is at clause 30 at page 563.  That defines many of the terms.  You will see also at page 570 there is what is described as an interpretation provision.  May I just go to one aspect of clause 31 and that is at page 571, it is clause 31.3.  Your Honours, consistently with the matter to which I referred your Honours earlier it says:

In this document any reference to “this Agreement” is a reference to the separate [agreements] between each Seller of the one part and the Buyer –

Now, your Honours, moving from that the agreement was a long‑term agreement to last about 20 years.  You will see that from two provisions.  First of all, clause 2.1(a), which is at page 510, and then the definition of “anticipated end date” which is at page 564 and the anticipated end date there referred to is 1 January 2020.  One of the circumstances that might bring the contract to an end was delivery of what was described as “total contract quantity” and that is a figure referred to in clause 3.1 at page 511 and, your Honours, that was the total gas required to be made available throughout the agreement. 

The quantity to be made available each day - and “day” is a term defined at page 565, it means 8.00 am one day to 8.00 am the next – the term, I am sorry, your Honours – the quantity to be made available each day was MDQ and could I take your Honours then back in a little more detail to clause 3.2 at page 511.  Your Honours will see in clause 3.2 the reference in 3.2(a) to the “maximum quantity” that the sellers are required to make available for delivery on any day is the MDQ, in effect, for that day as defined by paragraph (b).  They will not be obliged to make available for delivery gas for any part of the day at a rate greater than the average rate that would result in delivery of that during the day. 

The numbers are provided for by 3.2(b) but, your Honours, the quantum of that was increased from a date which is described as the “Reset Date” of 1 January 2007 and that is something referred to in clause 3.4(a).  The Reset Date provides for there to be some alteration – I do not think the numbers matter at all, your Honour. 

Your Honours, could I go then to say that it is clear from the terms of both 3.2(a) and 3.2(b) that the sellers were obliged to make MDQ available for delivery each day and there was a firm – what was described as a firm obligation to deliver up to that figure provided for by clause 9.2 which is at page 527.  Your Honours will see the opening words of 9.2.  Your Honours, I will come back a little later in a bit more detail to 9.2(a) but your Honours will see its terms.  The buyer, however, might seek to obtain more than MDQ for any day and the entitlement to do that was provided for by clause 3.3.  Your Honours will see that clause 3.3(a) said if:

the Buyer’s nomination for a Day exceeds the MDQ, the Sellers must use reasonable endeavours to make available for delivery –

an additional quantity of gas and the additional quantity of gas is described, to put it shortly, as SMDQ.  Your Honours, the content of the obligation to use reasonable endeavours to make available for delivery up to SMDQ was not left without further definition.  The further definition is provided for by 3.3(b).  Your Honours will see that the opening words of 3.3(b) are – or 3.3(b) commences with the phrase:

In determining whether they are able to supply SMDQ on a Day –

Those words differ in words, as it were, from the words used in 3.3(a) in the sense that one speaks of making available for delivery, the other speaks of being able to supply SMDQ on a day.  But, your Honours, we would submit that the two expressions in determining whether they are to supply SMDQ on a day and using reasonable endeavours to make available for delivery up to SMDQ are provisions which are related to the same matter.  I will elaborate upon that in a moment, if I may, your Honours.

But the expression your Honours will see that is used in 3.3(a) is using “reasonable endeavours to make available for delivery” quantities of gas to Verve and it is not simply a question of pure capacity or ability to supply that quantity.  That that is so, your Honours, is made apparent from the reference in 3.3(b) to the ability of the sellers to take into account all relevant commercial, economic and operational matters.  Relevant, one might ask, relevant to what?  The answer, in our submission, would be relevant to whether to make available to Verve gas above MDQ and up to SMDQ. 

It becomes necessary to consider, your Honours, what are the matters which are “commercial, economic and operational”, to use the language of 3.3(b).  Your Honours, it is easiest, in a sense, to start with operational matters.  They, we would submit, are the ones that relate to the practical ability to make available the gas.

Your Honours, one does need to bear in mind that this is a relatively sophisticated system one is talking about and your Honours will see as the President said in the Court of Appeal at paragraphs 3 and 4, page 1067 in volume 3, the gas was transported from the north‑west of Australia to the south‑west in Western Australia by the Dampier to Bunbury natural gas pipeline and not all the gas were necessarily affirm supplied every time.

The second thing, your Honours, was that an operational matter in fact was the sudden decline in available gas brought about by the Apache explosion.  Could I refer your Honours for a moment to our written submissions in paragraph 40 at page 8 where, we would submit, and I will be coming to the application of these provisions in a few moments, but, your Honours, what we would submit is that the matters to which we there referred are matters which were operational matters germane to resolution of the questions raised by the interrelationship of 3.3(a) and 3.3(b). 

But, your Honours, so far as economic matters are concerned – and one sees that that is an aspect referred to specifically in 3.3(b) – they would include and, in our submission, necessarily include by reason of their nature the economics of making available the SMDQ.  In short, is it economic to make available the additional gas and that inevitably, we would submit, does involve some comparison of the cost of making available with the price payable for the gas.  Now, your Honours, the price payable for the gas is that to which I took your Honours at 6.1(d) earlier at page 521 and tranche 3 gas is all the gas which is above MDQ.  It may be SMDQ, it may be more but it includes SMDQ.  You will see that at page 570. 

Now, your Honours, if it be that the cost of providing the SMDQ significantly exceeds the price payable for SMDQ under the contract and, your Honours, may I interpolate that I accept immediately to use the word “significantly” requires some further elaboration and may I come to that.  That, in our submission, is a factor which clause 3.3(b) allows the sellers to take into account.

GAGELER J:   And by costs, you include opportunity costs?

MR JACKSON:   Well, in a sense, your Honour, yes.  That itself is a term that sometimes requires some definition, but the cost of bringing the gas.  I mean, no doubt is a matter of calculation there would be some complication but maybe not if you are doing it for a long time, but it does involve what does it cost to produce the gas; what are you getting for it. 

HAYNE J:   Why, Mr Jackson, does one take this triplet, all relevant commercial, economic and operational matters and divide it?  Why not take it as a single composite expression?

MR JACKSON:    Well, your Honour, I do not know that I disagree with your Honour, but except that if one is speaking – and, your Honour, we said in our written submission and I am going to say it again in a moment, that there is an overlapping between commercial and economic and there may well be aspects of that intrude into operational, but between commercial and economic on the one hand and operational, it is easier to see that they are perhaps separate matters.  That is all I am saying, your Honour.

HAYNE J:   But the triplet together might be thought, I do not know, to refer to the position of the sellers and, indeed, to refer generally to what might compendiously be described as the business position of the sellers.

MR JACKSON:   Well, your Honour, the ‑ ‑ ‑

HAYNE J:   For a start, it does not seem – on the face of it at least there is no immediate textual hook on which you hang the buyer’s interest, is there?

MR JACKSON:   No, your Honour.  The buyer’s interest, if it comes from anywhere, is from the expression “reasonable endeavours” in 3.3(a).

HAYNE J:   Undoubtedly, but the triplet “all relevant”, relevant to whom? “Commercial, economic, operational” matters, what would fall outside that if you took as a general notion the business interests of the seller?

MR JACKSON:   Your Honour, I accept that with what may or may not be a qualification.  What I mean by that is this.  If one takes for simplicity “operational” as one aspect of it, operational activities as well as commercial and economic do not take place in a complete vacuum, of course.  It may be that so far as the ability to provide the same quantity of gas is unchanged by pure operational reasons by what happened somewhere else.

HAYNE J:   But the obligation to supply SMDQ to use all reasonable endeavours does not mean that you have to reschedule scheduled maintenance.

MR JACKSON:   Quite, your Honour, quite.  Your Honour, all that I was trying to say was one can imagine there may be situations where nothing has happened so far as our own system for delivery has occurred, but there have been other events which can be taken into account, for example, and in the particular case, the lack of import from the Apache system that occurred when 30 to 35 per cent of the available gas went out, to put it shortly.  Your Honour, I am not really disagreeing, I think, with what your Honour is putting to me, but just saying that it is a large area.  If I could just say ‑ ‑ ‑

FRENCH CJ:   Can I just ask before you leave that, in looking at the term “able to supply”, is it oversimplifying your case to say that the term “able” there is being used in a sense in which one would use it if one said “I am not able to help you because having regard to what I can get on the open market, it is not worth my while to supply you under the GSA”?

MR JACKSON:   Your Honour, that puts it, if I may say so, with respect, a little crudely, but probably the answer is yes.  Your Honour, I am going to seek to develop that if I can in just a ‑ ‑ ‑

HAYNE J:   You are going to seek to dress it up, but that is what the argument comes down to, is it not, Mr Jackson, that you are not able to supply in circumstances where, taking account of the seller’s own commercial interests, suppliers provide to other contracting parties.

MR JACKSON:   Yes.  Your Honour, that possibility is referred to, for example, specifically in 3.3(b)(i).

CRENNAN J:   A correlative or balancing aspect of the contract may be that the buyers are not obliged to get this supplementary supply in circumstances where in the marketplace there is a more advantageous price at which they can obtain it.

MR JACKSON:   Yes, well, your Honour would appreciate this is a long term contract and as the evidence would demonstrate the prices that were being paid were those that reflect, in a sense, our ability to have some secure MDQ obligation on their part and it is a long‑term contract but, of course, the evidence would demonstrate that the prices were significantly higher at the time there was the entry into the two short‑term agreements – the market price was – they are agreed facts, your Honour. 

Your Honours, could I just say this?  I mentioned the words “significantly” in relation to, say, economic matters and what I was seeking to say was that an economic matter might well be the – a relevant economic matter might well be if there was a significant increase in cost of delivery of the gas.  Your Honours, a significant exceeding would become relevant, in our submission because, could I put it this way, your Honours, it would be difficult to say that it would be reasonable in terms of 3.3(a) not to make available SMDQ if there had been only a small increase in cost, or if the increase in cost had resulted only in cost being marginally above price.  But if cost, if I could put it a little emphatically, surged above – price, for example, became two, three or four times or more, in other words we would say significantly, that would be, we would submit, an economic matter which the sellers could take into account in determining whether to make available SMDQ.

GAGELER J:   Are you speaking there, Mr Jackson, of costs of delivery or costs of the gas?

MR JACKSON:   Well, cost of the gas including delivery, your Honour.  I do not know the two – it depends how far back along the line you go when you first push the gas into the pipe or when you first extract the gas, but it is delivered gas.

CRENNAN J:   Is the market overlaid by any regulatory scheme of any sort?

MR JACKSON:   Not relevantly, I think, your Honour.  I will check that, but I think the answer is no.  Your Honours, if I could come then to the term “commercial”.  One does start from the proposition that the parties have specifically provided.  Your Honours, could I just say in relation to what your Honour the Chief Justice said, I know there are Commonwealth and State provisions providing for the extraction of the gas and relating to many matters concerning the actual extraction and pipelines, but as to price I think the answer is no. 

Your Honours, if I could go to commercial matters, one does start from the proposition that in clause 3.3(b) the parties have specifically provided that commercial matters may be taken into account in determining whether to make available SMDQ gas to Verve.  Your Honours, at the heart of commercial reasons, we would submit, is the price that is payable for gas as SMDQ, on the one hand, and the price that might otherwise be obtainable for that gas, and if the situation which obtains is that the market price has risen significantly, the disparity between that price and the price payable by Verve is, in our submission, a relevant commercial matter.

In the end, of course, those things feed into, in our submission, the question posed by 3.3(a) and that is whether we have used reasonable endeavours to make available the delivery to Verve the additional amount.  Your Honours will see, I should just say, the expression used in 3.3(a) “make available for delivery” and that is the expression also used in about the fourth line of 3.3(b), “make available for delivery” and it is used, I think, three other times in the remaining parts of 3.3.

Your Honours will have seen the respondent’s submissions and I will come to the judges below in a moment, that they rely on the opening words of 3.3(b) “they are able to supply” and treat it as a practical ability to supply that.  But, your Honours, really the concept is one of making available for delivery - in the context of the contract, that means making available for delivery to Verve the quantity of SMDQ.

FRENCH CJ:   If the only relevant factor was a difference between the SMDQ price under the GSA and market price, how does the requirement to use reasonable endeavours to make available interact with consideration of that factor?

MR JACKSON:   In this way, your Honour, we would submit.  There is a requirement in 3.3(a) for the use of reasonable endeavours.  In determining whether there will be made available for delivery that amount you can take into account what are relevant commercial matters.  Assuming that a relevant commercial matter is the difference between the price under the contract for that gas and the price otherwise available for the gas, then unless there were a significant – I use the word again – disparity between the two it would be unlikely if the view were taken not to supply that reasonable endeavours had been used because one would say look at the price, there is not much difference in the price.  It is not reasonable every time the price goes this way or that to refuse to do it.

HAYNE J:   But is price the only item or element to which we need to have regard?

MR JACKSON:   No, your Honour.

HAYNE J:   I assume that the system for delivery has a finite capacity.  Is that assumption right?

MR JACKSON:   Yes, your Honour.

HAYNE J:   If sellers are supplying to a range of buyers an amount that is at the limit of capacity they are unable to supply more than what is being made available.  If it is assumed that the obligation under 3.3(a) “to make available” is performed there is presumably a finite amount of capacity left in the system.  If there are others wishing to buy the balance of capacity at a price higher than tranche 3 SMDQ price how is it that the sellers are able to supply SMDQ?

MR JACKSON:   Well, your Honour, I think I accept what your Honour is putting to me.  The answer is that the – I mean, the sellers may choose to do so.  The sellers may say, well, we have to use reasonable endeavours to make it available but we are entitled to take into account the matters referred to in (b).  In taking into account those matters, the result is that we cannot make it available. 

HAYNE J:   This is at least not cast in terms of option, right of first refusal or some notion of that kind.

MR JACKSON:   No, it is not, your Honour, no.

HAYNE J:   But the suggestion that you are able to supply at tranche 3 prices, regardless of the fact that you have, let it be assumed, one other purchaser anxious to take the whole of your free capacity at a price, seems to treat 3.3(b) as giving buyer the first right at the fixed price.  That is not what is says, I do not think.  Maybe it does.

MR JACKSON:   Your Honour, could I put it in this way?  Clause 3.3(a) and 3.3(b) do give a buyer a right.  It is a right of some kind, and we accept that.  In terms of 3.3(a), we have to – the nature of the right is that we have to make reasonable endeavours to provide – make available – that gas to them, up to that quantity.  But, in determining whether we do that, and comply with that right, we can take into account the matters that are set out in (b) which, inevitably, involve our own interests.  Your Honours, there is a question in each case whether we have used reasonable endeavours, but the content of reasonable endeavours must be affected by (b).

HAYNE J:   All this in the context of a take or pay obligation in 3.3(a).  Is 3.3(a) take or pay?

MR JACKSON:   No. 

HAYNE J:   No?

MR JACKSON:   No, no.  Your Honour, may I come to that in a moment?

HAYNE J:   Yes, of course.

MR JACKSON:   Because I do want to deal with that.  Your Honour, I will come to the quantities.  Your Honours, could I go to the reasons of the courts below as briefly as I can, if I may, on this issue and in the course of that, I will deal with the question your Honour asked me.  Could I go first to the reasons of the primary judge which your Honours will see commencing in volume 3, page 1021?  They commence at paragraph 54.  You will see, immediately under the heading:

June to September 2008 – SMDQ non‑delivery

Your Honours, the nature of the claim ultimately pursued is in the last four lines of paragraph 54.  Your Honours, it is in relation to contract, of course, but could I just mention one thing?  The third sentence of paragraph 54 down to and including the penultimate sentence of paragraph 54 indicate an argument that, in the end, was not pursued.

Going back then to the primary judge’s reasons, your Honours will see that after setting out the various arguments, he came to his preferred construction at paragraph 66.  He set out then something more of the arguments and then at paragraph 68 your Honours will see he makes the point in paragraph 68 that:

there is no obligation imposed on the Sellers to reserve gas or production capacity for the supply of SMDQ –

There is no obligation on Verve –

to take or pay for –

and, your Honours, “pay for” seems to mean “pay for in the absence of taking” –

SMDQ gas.

If I could just revert to the question that your Honour Justice Hayne asked me a moment ago, the minimum quantity under the agreement is set out in clause 4.3(b)(ii) – that is 112 TJ.  The “take or pay” obligation each year is the sum of the minimum quantity, and 70 per cent of the quantity by which the buyers aggregate gas requirements, which is set out in clause 4.1(a), exceed the minimum quantity for that year, and your Honours, it is in clauses 4.2(b) and 4.2(c).

The primary judge was correct to say that there was no obligation to take or pay for a volume of SMDQ.  That is because the minimum quantity is the 112 to which I referred earlier.  If Verve obtained gas from elsewhere in large quantities in a year then its obligation to take or pay for 70 per cent of the amount taken above 112 might include volumes greater than MDQ of up to 165 per day and, your Honours, could I refer also to clause 4.1(b)(v)?  Could I just say that your Honours will see the precedent noted at paragraph 8 of her reasons in the last sentence – that is at page 1069 – that:

It was no part of Verve’s case that the practical effect of the take or pay obligation was that Verve would have to pay for not taking SMDQ.

Your Honours, I am sorry, it is a long and perhaps confusing answer to that question.  Would it be of any assistance if overnight I give your Honours just a small sheet of paper saying what that is and endeavour to put it in perhaps a few more words?  If one goes back to paragraphs 68 or 69 of the primary judge’s reasons at page 1027, one also sees his Honour refers to the fact that:

The Sellers are under no obligation . . . to refrain from agreeing to sell gas to –

others even if that affects their ability to supply SMDQ.  Your Honours will see that elaborated upon at some length in paragraph 69, with his Honour arriving at the conclusion in paragraph 70, and your Honours will see in the second sentence of paragraph 70 he refers to the meaning and content of the word “able” being informed by what is in paragraph 3.3(b), and he goes on to say:

In the context of cl 3.3(b) commercial matters include the sale of gas to other customers or potential customers and the profitability to such sales compared with the profitability of supplying SMDQ under the GSA.  The Sellers may take such matters into consideration –

Your Honours, we would submit, that was a correct statement of the position.  Could I invite your Honours just to note one thing in passing about paragraph 70?  You will see that in the first line of it, his Honour uses the expression that:

cl 3.3(b) conditions the Sellers’ obligation to use reasonable endeavours –

Your Honours, we would submit, that is correct but the meaning attributed – that expression appears to have been given a slightly different meaning by one of the judges in the Court of Appeal.  I simply invite your Honours to note it for the moment and I will come to it in just a moment.

Could I go then to the views expressed in the Court of Appeal?  Could I go first, your Honours, to the more lengthy reasons of Justice Murphy?  They commence at page 1095 and commencing at paragraph 123 you will see that he sets out a number of matters.  In particular, your Honours, commencing at paragraph 123, we would not, I think, differ from his Honour in what he says in paragraph 123.  They are very broad propositions.  The only aspect I would mention, however, is that you will see that he says in that paragraph, and it is at page 1096, paragraph 11.  I am not certain if some of your Honours have the page numbers.  Line 11 on page 1096, he says:

Clause 3.3(b) is not expressed to be the conditioning event.

That seems to be a reference back to paragraph 70 of the primary judge’s reasons where the condition was meant.  All that was meant, your Honours, by “conditioning event” seems to be one description of the relationship between 3.3(a) and 3.3(b), but what is in Justice Murphy’s first point does not seem to really advance the matter towards a resolution.

His Honour’s second proposition is paragraph 124.  We would say that “reasonable endeavours”, of course, takes its meaning from the context and, prima facie, it refers to an obligation to do all that can reasonably be done but no more.  But, your Honours, again, that does not really take us anywhere for immediate purposes.  The third proposition at paragraph 125 is also true.  You will see that the word “language” of obligation is used.  One sees the word “must” in clause 3.3(a).  One can see if one goes to clause 3.3(c), to which I have not earlier taken your Honours, which is at page 512.  It says that:

The Sellers have no obligation to supply –

in effect, beyond 3.2 and 3.3, but it uses the term “obligation”.  If one goes to clause 9.3, the other provision to which Justice Murphy referred in paragraph 126, clause 9.3 is at page 527.  It speaks of a need to use reasonable endeavours in accordance with clause 3.3.  Now, your Honours, plainly enough it is speaking in terms of an obligation but is not expanding the obligation beyond what it is in clause 3.3 and could I make two points in a sense about what is said as Justice Murphy’s third point in paragraph 125.  The first is of course the provisions use the language of obligation.  We would not be here otherwise, but secondly, the question is one of the content of the obligation, of the obligation so found.

Your Honours, if I could go then to the fourth point his Honour makes in paragraph 126 at page 1096, he refers to a number of provisions of the agreement.  I have already referred to clauses 3.3 and 9.3, but he refers also to clause 9.2(a).  Now, clause 9.2(a) is at page 527.  It is concerned only with MDQ and a daily obligation less than MDQ.  It has nothing to do with SMDQ.  Now, the judge referred also to clause 9.10(a), which you will see at page 529, and if your Honours look at clause 9.10(a) it is simply saying that a seller is prima facie treated as having complied with obligations to make gas available if it is within eight per cent either way of the daily nomination.

Now, your Honours, I say prima facie because your Honours will see that in the opening words of 9.10(a) it recognises that being within the eight per cent band either way does not automatically satisfy a requirement to use reasonable endeavours, but 9.10(a) does not assist the resolution of the content of 3.3 and, your Honours, could I also say this, that your Honours will note, if I may say so in passing, that 9.10(a) specifically recognises in its opening words, indeed emphasises, the presence of the limitations of liability in clause 22.7.

Your Honours, there is also a reference in paragraph 126 to recital C.  Now, it is not correct to say as the judge does, that amounts in excess of the minimum quantity are taken as SMDQ.  The minimum quantity is set out in clause 4.3(b)(ii) at page 517 and that quantity is actually less than in the quantity for MDQ which is set out in 3.4(e)(i) at page 512.

Your Honours, the fifth point and your Honours I know I sound as though I am dealing with President Wilson’s demands of the Treaty of Versailles, but the fifth point made is at paragraph 127.  We would accept, as is apparent from our earlier submissions, that clause 3.3(b) is directed to giving definition to the nature and scope of the obligation in 3.3(a).  Having said that, it is a question of what it does. 

Your Honours, if one goes to the sixth and seventh points in paragraphs 128 and 129, may we just say the following things in relation to them.  It may well be correct to say, as is said at paragraph 128, that the word “able” may prima facie refer to capability or capacity but the central expression used in 3.3, as I said earlier, in five places, is “make available for delivery” and that means, of course, make available for delivery to Verve.  To treat, as the seventh point does, the matters referred to in the first part of clause 3.3(b) as simply going to capacity or capability, we would submit is erroneous.

CRENNAN J:   I was going to suggest that on one reading of paragraph 129, and particularly in the context of some of those previous matters, second, third and so on, with which you do not agree, one idea that seems to come through is that his Honour is concerned that if the construction of 3.3, for which you contend, were to be accepted, his Honour seems to be concerned that clause 3.3 then has no obligatory content.  I think that was the point of him going through the obligatory nature of much of the language of the agreement, to give a context to his conclusion in 129.

MR JACKSON:   Your Honour, could we just say this.  If one accepts, as his Honour says, in paragraph 129 that 3.3(b) does not give the sellers a discretion, does not give them a discretion governed only by bona fides, for example, the reality is, of course, that there is a limitation which is imposed by the concept of reasonable endeavours.  So it is not an absolutely unconstrained power, if I can call it that, given by 3.3(b).  It works into the concept of reasonable endeavours. 

Now, I tried to select earlier circumstances that would not be reasonable, that is, the simple equivalence between cost and price or a simple – very little difference between them and reasonable endeavour seems to – does involve some value judgment, of course.

CRENNAN J:   Well, I suppose that point you make about very little difference does show that there is obligatory content, if I could put it that way.  In other words, it is capable of operating – putting an obligation on the seller in a range of circumstances – sellers, I should say.

MR JACKSON:   Your Honour, one can use various words to describe – one might say it is a weak obligation, perhaps, but it is still an obligation and it exists.  Your Honours, could I ‑ ‑ ‑

KIEFEL J:   Just before you do, Mr Jackson, in what you have just said in answer to Justice Crennan, you appear to equate reasonable endeavours with reasonableness as a criterion of a subjective commercial assessment.  “Reasonable endeavours” would normally be taken to mean to take steps – to put something in action, would it not?  It does not sit comfortably with the notion of a discretion.

MR JACKSON:   Your Honours, if one is looking at the performance of someone where they are required to do something, not in the absolute sense but required to make reasonable endeavours to do things, now, one can construe that depending on the circumstances as meaning they have to be objectively reasonable without reference to subjective considerations.  I am putting it in very broad terms, your Honour.

The second is that it might, to take the other end of the spectrum, be something that can be reasonable but subjective considerations are the only ones to be taken into account but the end result has to be whether a person was, taking into account those matters, acting reasonably.  There is an objective element to that and that is really the class into which the current matter fits, in our submission, that you have to use reasonable endeavours to make it available but in deciding whether that has been satisfied, whether the making – the failure to make available has been justified, one has to bear in mind that the sellers can take into account the classes of matters referred to in 3.3(b).

Your Honours, it may be that too much self‑interest, if I can put it that way, means that the result is unreasonable but it does not mean that every time self‑interest is taken into account that the result will be unreasonable.  If one were looking, for example – to go to another context – whether a professional person had made reasonable endeavours to comply with a professional duty but the nature of the professional duty was something that allowed matters – subject matters – personal to the person to be taken into account, for example, the degree of business and other family matters, these kinds of things, it would still be possible to say, in the light of all those matters which could properly be taken into account was it reasonable for the person, for example, not to have initiated an action within time, not to have recommended that a medical procedure be considered, these kinds of things. 

Your Honours, it is perfectly possible to have a reasonableness criterion that does involve taking into account the personal circumstances of the person or entity upon whom the obligation is cast.  Your Honour, I do not know that I can take it beyond that but that is the submission we would make.

KIEFEL J:   Yes, thank you, Mr Jackson.

MR JACKSON:   Your Honours, could I go then to the eighth point at paragraph 130.  We agree with the first sentence of it.  The sentence, though – and the sentence at about line 36 on page 1097 in paragraph 130, the sentence commencing “A ‘likely’ commitment” may be a little too narrowly expressed, perhaps, but it does not matter for present purposes.  If I could go then to the ninth point on page 1098 at paragraph 131.  Your Honours, we would accept what is said in the second sentence:

The advertence to breach and the express delineation of the scope for liability in the event of breach –

and his Honour is referring to 22.7(c) –

are not conducive to a construction of cl 3.3 to the effect that the sellers are not required to use reasonable endeavours to make available SMDQ gas unless they first determine that it is in their interests to do so.

Your Honours, rather, they have to use reasonable endeavours to make it available but the matters in clause 3.3(b) inform whether they have done so or not.  Could I go on then, your Honours, to paragraph 132 where Justice Murphy dealt with the four matters to which I have earlier referred which were relied on by the primary judge.  Your Honours, as to his first point in the second sentence of paragraph 132 you will see that he refers to SMDQ forming an important part of the agreement and he refers to his reasons earlier.  That seems to refer back we think, your Honours, to what is in paragraph 126 and I have dealt with those paragraphs – those provisions already. 

The second thing, your Honours, is that in same sentence he refers to the fact that the parties had designated a specific price for the supply of the gas.  Your Honours, could we just say that may be, in a sense, misleading perhaps because, first of all, all gas provided under the agreement was priced.  The prices are in 6.1.  All gas is priced.  The second thing is that there was not actually a price specifically for SMDQ - the price that was payable for SMDQ was a price for all gas above MDQ, all gas above MDQ.  You will see that, your Honours, from clause 6.1(d) at page 521 and the definitions of tranche 3 price and tranche 3 at page 570. 

Now, your Honours, the remainder of his Honour’s first point in paragraph 132 which goes down, I think, to about line 42 on page 1098 is really a statement of – an approach to interpretation and a conclusion that clause 3.3 cannot be left without an effective operation.  Your Honours, we would not disagree with that.

HAYNE J:   In particular, do you accept at appeal book 1098, lines 36 to 42, the sentences:

It is true that . . . But it cannot leave it without ‑ ‑ ‑

MR JACKSON:   Yes, your Honour, I think we do, yes.

HAYNE J:   Does it follow that ‑ ‑ ‑

MR JACKSON:   Those two sentences, your Honour, I think I take your Honour to – sorry.

HAYNE J:   Those two sentences are only does it follow that you say this is not a case in which the sellers have not exploited their opportunities to sell elsewhere?

MR JACKSON:   Well, your Honour, we have, we have exploited our opportunities.  “Exploit” of course has its baggage but we have, yes.

HAYNE J:   Yes, we can dance around the term.

MR JACKSON:   Your Honour, if one takes, if I could put it this way, any disaster, it may be that beneficent governments and people give a lot of tarpaulins to the persons who have lost their housing but it does not follow that the price of tarpaulins does not go up because of the shortage of it and the price of tarpaulins to the market.  I mean, that is a short example, your Honours, but these things happen.  It is what happens in relation to things that become suddenly in short supply.  Your Honours, could I just say the second point made by his Honour in paragraph 132 – it is about line 42 on page 1098.  His Honour said:

the word ‘able’ more readily signifies its ordinary meanings of capability or capacity.

Your Honours, that may well be correct, but the true question here was whether taking into account all relevant, et cetera, matters, the sellers had used reasonable endeavours to make available to Verve the SMDQ.

HAYNE J:   Is the proposition also capable of expression as being the obligation can be put interrogatively as “Can you supply it?”  The answer you proffer seems to be “Not if the seller can and has sold it for more dollars elsewhere.”

MR JACKSON:   Yes, your Honour.  I think the answer to that, your Honour, is inevitably yes.  Could I say that is so as a matter of construction?  The facts are a little more benign than that.  I am coming to those shortly, your Honour.

KIEFEL J:   You could read “able” as simply meaning in a position to supply, having taken into account the various matters.

MR JACKSON:   Well, I would treat it, your Honour, as in effect synonymous with the words “make available to supply” in (a) and as used elsewhere.  It seems unlikely that it is raising a different question, particularly when “make available to supply” is used a few lines further down.

Your Honours, I was just going to refer to the point made at the bottom of page 1098, the third point.  What we would say in relation to it, we would not disagree with the views expressed up to line 15 on page 1099.  What we would say is that this case, however, did raise sharply the application of the phrase “commercial, economic and operational matters”, despite the fact that the judge did not seem to take that view in the last four or five lines of paragraph 132.

Your Honours, in relation to the last sentence of paragraph 132, we accept of course that if the question was simply whether the quantity of SMDQ sought was in the abstract available and could be supplied, it could.  But that, we would submit, was not the relevant question.  Finally, your Honours, as the point set out in paragraph 133, we would agree with the conclusion in the paragraph, but that does not really answer the question that was necessary to decide.

Your Honours, could I go to President McLure?  Her reasons commence, relevantly, at page 1071, paragraph 16.  Could I go to paragraph 19 of her reasons which are at page 1072?  We would submit that she there fell into the error that Justice Murphy also fell concerning the term “able” or ability in clause 3.3(b).  At paragraph 20, she dealt with a number of matters with which I have already dealt, but could I just say one thing in relation to it, and that concerns the last two sentences of paragraph 20 where she said:

I would be very slow to conclude that the agreed contractual price for SMDQ was intended to reflect only the floor price.

Your Honours, there may be, perhaps, a question what exactly her Honour meant by that, but that is not our argument and your Honours will have seen that.  Could I turn then, your Honours, to the facts in relation to the application of what we would submit is the correct approach to the present case?  Can I deal with the two short‑term agreements in that order?

GAGELER J:   Mr Jackson, just before you do, can I ask you just two linguistic questions concerning the construction of clause 3.3?  In 3.3(c), to which you drew our attention, there is a reference to the “obligation to supply and deliver Gas”.  Do those terms there or elsewhere have a different meaning, supply on the one hand and deliver on the other?  That is one question.  The other question is this.  Do you draw a distinction between the use of the language of “make gas available” in clause 3.3(a) and (b) and the use of the same terminology in clause 8.1, page 526? 

MR JACKSON:   Your Honour, I do not think I said anything about 8.1, with respect.

GAGELER J:   No, you did not.  That is why I am asking the question.

MR JACKSON:   Well, could I deal with the two questions, your Honour?  So as far as 3.3(c) is concerned, in the nature of things there cannot be delivery without supply and I suppose, in a sense, there cannot be supply without delivery because one is speaking about gas in a pipeline.  I do not know, your Honour, that we make any relevant distinction between them, although one does see the term “delivery” used in various parts of the agreement.  Could I just say, your Honours, if one looks at 3.3(a), you will see that the language of 3.3(a) is to:

use reasonable endeavours to make available for delivery –

That, inevitably, does involve supply and that concept seems to be also contemplated by the opening words of 3.3(b) where it speaks of:

In determining whether they are able to supply SMDQ on a Day –

It goes on, then, to say in the third line –

it is acknowledged and agreed by the Buyer that nothing in paragraph (a) requires the Sellers to make available for delivery any quantity by which –

and so on.  Now, the area, your Honour, where there is a kind synonym existing although if one was speaking about grammar that might not be exactly the right word, but the concept I am seeking say was that the opening words of 3.3(b):

whether they are able to supply –

really means the same thing as making available for delivery.  If I could come then to 8.1, your Honour ‑ ‑ ‑

CRENNAN J:   I think clause 1 in a way bears on these issues too.

MR JACKSON:   I am sorry, your Honour?

CRENNAN J:   Clause 1 has some bearing in explicating the issue of delivery, I think.

MR JACKSON:   Yes, your Honour, 1.1, page 510, yes.  Your Honours, going to clause 8.1.  Your Honour, I am not quite certain of the aspect of it with which your Honour is concerned.   

GAGELER J:   Clause 8.1(b), it uses exactly the same terminology, apparently referring to various forms of physical delivery of the gas.

MR JACKSON:   Yes, and you will see it speaks of, in the last sentence of that, that a quantity will have been delivered:

when that quantity of Gas has passed the Delivery Point –

which is of course defined –

or is otherwise deemed to have been made available for delivery –

Your Honour, I do not know, with respect, that that expression “made available” is similar to the one in 3.3(a).  I do not know that anything turns on it, so far as the case is concerned.  Your Honour, I think we would accept that making available is available through the pipeline and to the delivery point and so on.

Your Honours, could I come then to the first short‑term agreement.  The fire occurred at the Apache Varanus Island facility on 3 June 2008 and there was a significant demand for gas in consequence of that.  Your Honours will see that referred to in the primary judge’s reasons at page 1007 in volume 3, paragraphs 11 and 12.  Your Honours, also paragraph 75 in his Honour’s reasons at page 1028.  You will see then, if one goes to paragraph 76, the start of the dealings between the two bodies.

But if I could just go before that, your Honours, to Mr de la Fuente who is marketing manager for the sellers, he gave evidence that he received on 3 June calls from customers and others seeking gas supply.  Your Honours, I do not think I need to take your Honours to the reference.  It is volume 1, page 365, paragraph 81.  He spoke with other managers and said:

we needed to act quickly to assist in providing additional gas to cover some of the shortfall in supply –

That is paragraph 82, volume 1, page 366.  The Karratha gas plant was the plant from which the sellers and the Japanese company which is described shortly as MIMI supplied under two joint ventures.  One joint venture was called the Domgas Joint Venture which involved the sellers.  There was also a second incremental – it was described as incremental pipeline gas joint ventures which involved the five sellers plus also the Japanese company, MIMI.

You will see those referred to in two passages which I could give your Honours without taking your Honours to them.  First of all in Dr McKeagney’s statement and her statement is page 314, paragraphs 7 to 9 and also one can see it in Mr de la Fuente’s statement at page 358, paragraph 9.  The plant at Karratha was set up to produce 630 TJ – if I could use the abbreviation – per day on a firm basis.  You will see that in paragraph 10 of the primary judge’s reasons for judgment at page 1007 and also in an email that is in volume 2, page 603 about line 15.

Following the Apache incident, production was ramped up “by about 100 TJ per day” to assist the shortage in supply.  You will see that at volume 2, page 603, lines 15 and following and also in a number of places in volume 1.  Could I just give your Honours the references without going to them:  volume 1, page 369, paragraph 92; page 327, paragraph 55; and page 351, again, paragraph 55.  Now, your Honours, the sellers representatives met at 8 am on 4 June, the day after the explosion.  They discussed the need to:

act quickly to respond to the significant shortage of available gas –

and they decided to sell the gas that was available above their “firm commitments” and by “firm commitments” they meant, in the present case, MDQ, above their firm commitments on a “fully interruptible” basis at the prevailing market price.  You will see that referred to, your Honours, if I could take your Honours to this for a moment at page 329 in volume 1, Dr McKeagney’s statement at paragraph 64, and in particular 64.3:

After meeting all our firm commitments . . . to existing customers, our highest priority was to ‘mums and dads’ in the regional areas who needed electricity supply.  This meant that we would supply gas required to generate electricity in regional areas, which was usually supplied by Apache.

After meeting all our firm commitments and supplying gas to Apache for electricity generation in regional areas we would make gas available and enter into short‑term gas supply contracts with other buyers on an interruptible basis for a maximum daily quantity.  The supply had to be fully interruptible because the supply was more than the committable capacity of the Plant; and

…existing interruptible gas was to be interrupted –

This is at 64.5 -

including Verve’s SMDQ tranche.  Views to that effect were expressed and accepted by all of the Sellers’ representatives –

Your Honours, at the time – I will check on this, your Honours but my learned friend said 64.5 might not have made it.  If so, I apologise, your Honours, I had thought that I had made the crossing that is through it myself but I do not know – in error, but if I made a mistake I will tell your Honours and apologise profusely in doing so.

Your Honours, could I come to say then that at the time they believed that they had – at the time the sellers genuinely believed that they were not required to supply SMDQ to Verve or to any other buyer on whom they had a similar – in relation to whom they had a similar obligation on a reasonable endeavours basis.  Could I refer your Honours to the passages where those findings were made?  You will see that in volume 3 in the Court of Appeal page 1100, paragraph 139.

HAYNE J:   Was the fact that they were acting with pure hearts matter for the legal disposition?

the appropriate approach.  Your Honours, I see the time.  May I say I expect to be an hour, perhaps just a little bit more?

FRENCH CJ:   Do both counsel expect it will finish tomorrow?

MR HUTLEY:   Your Honour, I expect so.  I did not expect I would have to go quite into the contract in the detail I am now going to have to go into, but it will take a little longer than I expected.  I will make sure it is concluded by the end of tomorrow, looking at the sort of – we will make it, your Honour.

FRENCH CJ:   We will adjourn until 10 o’clock tomorrow morning.

AT 4.18 PM THE MATTER WAS ADJOURNED
UNTIL THURSDAY, 5 DECEMBER 2013