Golden Sands Pty Ltd v Davegale Pty Ltd (No 3)

[2004] VSC 42

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION
COMMERCIAL LIST

No. 8743 of 2002

F5536

GOLDEN SANDS PTY LTD (ACN 096 491 913)	Plaintiff
v
DAVEGALE PTY LTD (ACN 096 359 527) and ORS	Defendants

---

JUDGE:	Byrne J
WHERE HELD:	Melbourne
DATE OF HEARING:	11 February 2004
DATE OF JUDGMENT:	20 February 2004
CASE MAY BE CITED AS:	Golden Sands Pty Ltd v Davegale Pty Ltd (No. 3)
MEDIUM NEUTRAL CITATION:	[2004] VSC 42

---

Contract – interpretation of document – whether “sand shipped” includes sand shipped from another site.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M.W. Shand QC	Bazzani Brand Lawyers
For the Defendants	Mr M. Adams QC and Mr D.F. Hyde and Mr D. Crennan	Phillip Hamilton

HIS HONOUR:

1. I have on 21 November 2003[1] and on 19 December 2003[2] published reasons for my decisions on a number of questions arising in this proceeding.  As a consequence, there remains only the taking of certain accounts and the assessment of equitable compensation payable to the plaintiff. 

   [1][2003] VSC 458.

   [2][2003] VSC 494.

1. In the early months of the joint venture Golden Sands quarried sand from a site owned by Davegale and which was called the Davegale site.  During the period after June 2001 Golden Sands quarried sand also from a nearby property owned by Excel Quarries which was called the Darra site. 

1. I have found that Golden Sands was, since April 2001, and is, entitled to access to the Davegale site as a licensee upon terms which include compliance with the obligations under cl. 9, 10, 11, 12, 13 and 15 of an agreement executed on 23 April 2001.  Clause 9 of this April Agreement deals with royalties for sand payable by Golden Sands.  It is in the following terms:

“Golden Sands will pay to Derham royalties at $1.00 per ton of sand shipped and the royalty will be increased in line with the royalty index as published by the Bureau of Statistics.”

1. One matter which is involved in the taking of accounts is the entitlement of Davegale to royalties pursuant to this clause.  On its behalf, it is said that the agreed royalties are payable in respect of all sand shipped by Golden Sands;  the position taken by Golden Sands was that the royalties were payable only in respect of that sand which had been quarried from the Davegale site. 

1. Having heard argument I formed the clear view that the interpretation urged on behalf of Golden Sands was correct and I announced this in court.  As requested, I now give my reasons for this conclusion.

1. As I observed in my first judgment, the April Agreement was drawn by a non-lawyer following a number of meetings between the venturers.  It has a number of drafting deficiencies and I must attempt to interpret it in a commercial way.  At the time of its execution, Mr Derham’s company had purchased the Davegale site for the purpose of the sandmining joint venture.  In the course of their discussions the venturers considered the prospect of taking over the nearby Darra site and operating it together with the Davegale site as the one business.  Nevertheless, on 23 April 2001 this was not settled:  it was not until 1 June 2001 that Golden Sands obtained access to the Darra site for the purpose of taking sand from it and also for the purpose of processing this sand and sand mined from the Davegale site. 

1. By cl. 8 of the April Agreement it was agreed between the venturers that:

“8.Golden Sands Pty Ltd will carry on the business of mining, processing and selling sand and any other business as agreed by the parties at a later date.”

1. The April Agreement in its introductory part recites the fact that Mr Derham was purchasing the Davegale site.  Indeed, the agreement was to be effective only when his offer to purchase was accepted.  Much of the agreement is concerned with the property, the land and the plant, which Mr Derham was purchasing.  I instance cll. 10, 11, 12, and 13.  These provisions were part of cll. 9 – 20 which deal with the operation of the mining venture and, in particular, with its being conducted from the Davegale site.  It is consistent with this that cl. 9 should also be so limited. 

1. Clause 9 is concerned with the payment of royalties upon sand which had been mined.  It is unlikely that the parties intended that Mr Derham or Davegale should receive royalties for sand mined on land in which he or it had no interest.  It will be noted that the profits from the mining were in any event to be shared between the venturers, including Mr Derham who took 40 percent.

1. It was put on behalf of the defendants that the April Agreement should be construed in the light of matters which now exist.  This, it was said, followed from my determination that the licence under which Golden Sands held and holds its right to enter the Davegale site includes cl. 9 of the April Agreement.  In a sense this is correct, but the agreement must be construed as things stood when it was executed, subject to any subsequent variation.  The fact that Golden Sands has taken sand from the Darra site and has entered into a Royalty Agreement in December 2001 had the effect of amending the arrangement between the parties to the licence but it did not affect the meaning of the words of cl. 9.

1. I should add that, while I have no doubt about the correctness of this conclusion, I am comforted by the fact that it was one shared by the parties to the April Agreement in their implementation of it, at least until it was raised on behalf of the defendants very recently. 

1. I conclude therefore that Davegale is entitled to royalties on sand shipped which has been quarried only from the Davegale site.  It is common ground that the quantity of sand upon which royalties are payable is the weight when shipped, that is its weight after processing.

---