Energy World Corporation Limited v Martech International Pty Ltd

[2008] HCATrans 162

[2008] HCATrans 162

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth   No P38 of 2007

B e t w e e n -

ENERGY WORLD CORPORATION LIMITED

Applicant

and

MARTECH INTERNATIONAL PTY LTD

Respondent

Application for special leave to appeal

HAYNE J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 18 APRIL 2008, AT 3.12 PM

Copyright in the High Court of Australia

MR P.G. McGOWAN:   If it please the Court, I appear on behalf of the applicant.  (instructed by Christensen Vaughan)

MR S.J. GAGELER, SC:   May it please the Court, I appear with my learned friend, MR T.J. CARMADY, on behalf of the respondent.  (instructed by Williams & Hughes)

HAYNE J:   Yes, Mr McGowan.

MR McGOWAN:   Your Honours, the question which distinguished the approach of Justice French in the Full Court was in relation to where in circumstances the original agreement had been discharged by a mutual agreement replaced with a new agreement, whether that enshrined in the new agreement or carried forward as an ongoing obligation, the so‑called termination payment.

HAYNE J:   That characterisation of the issue simply concludes the question, does it not?

MR McGOWAN:   Yes.

HAYNE J:   The moment you say that the old agreement is discharged by a new agreement and supplanted by the new agreement, end of question.

MR McGOWAN:   In that respect we say that that is what Justice French said.  That is how he approached the matter.

HAYNE J:   Exactly.

MR McGOWAN:   And we agree with the analysis and conclusions.

HAYNE J:   I understand that.  Why, though, in the events that happened, was clause 8.6 not engaged?

MR McGOWAN:   Can I deal with it this way, by first addressing how the Full Court said it was engaged.  At page 136 of the application book at paragraph 20 of the reasons their Honours note the observations before about how you could effect and discharge by mutual agreement and then observe:

Whatever the limits and operation of any such principle, it could have no operation in the present circumstances.  Clause 8.6 is directed to what happens at the point of termination and expressly provides for that event.  The very act which terminated the contract triggered the obligation to pay the Fee.

That is the point of distinction.  The language, that is, the Act implies some unilateral action.  What Justice French found was it was a consensual arrangement and it was that consensual arrangement that effected the discharge.  In so doing, as his Honour observes at paragraph 174 of his reasons, which is found at page 62 of the application book, and in particular down at paragraph 175 at the bottom of page, the circumstances in which the parties may in effect, by consensual agreement, discharge are many and various.  It is therefore, with respect, inappropriate to determine the interpretation of clause 8.6 by reference to the date of the agreement. 

It is the facts and circumstances as they obtained which led his Honour Justice French to conclude that it had been discharged by agreement that creates the circumstances in which one looks to see whether clause 8.6 survives in those circumstances.  So his Honour has approached it on two bases; firstly, that the terms of clause 8.6 themselves could not and did not lead to the conclusion as a matter of construction, that discharge by consent in these circumstances would ensure the maintenance of that provision; and, secondly, on the facts as they unfolded, that is, how the parties dealt with themselves, from which he inferred their intention, it did not justify that conclusion.

HAYNE J:   Do you support both approaches?

MR McGOWAN:   I do, your Honour.

HAYNE J:   Take the first approach thus identified.  How do you support the proposition that clause 8.6 is not to be construed as extending to the case of termination by agreement?

MR McGOWAN:   Because the essence of, in this case, termination by agreement is the coming together of the parties to give effect both to the termination of the extant agreement and to the creation of a subsequent agreement.  As his Honour Justice French observes, it is how they came together to do that which could not be precluded by the language, let alone the terms of 1999 agreement, that justifies in fact what they did do as a basis to conclude that discharge involved discharge of all obligations under the 1999 agreement.  They are the submissions, your Honours, unless there is anything else.

HAYNE J:   We need not trouble you, Mr Gageler.

The decision of the Full Court of the Federal Court of Australia from which the applicant seeks special leave to appeal depended upon the application in the events that had happened of well-established principles to the particular agreement made by the parties.

An appeal to this Court would enjoy insufficient prospects of success to warrant a grant of special leave to appeal.  Special leave accordingly is refused.  It must be refused with costs.

AT 3.18 PM THE MATTER WAS CONCLUDED