Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd - [2012] WASCA 216

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: HANCOCK PROSPECTING PTY LTD -v- WRIGHT PROSPECTING PTY LTD [2012] WASCA 216

CORAM: McLURE P
NEWNES JA
LE MIERE J

HEARD: 12-15 JUNE 2012

DELIVERED : 30 OCTOBER 2012

FILE NO/S: CACV 43 of 2011

BETWEEN: HANCOCK PROSPECTING PTY LTD
Appellant
AND
WRIGHT PROSPECTING PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :MURRAY J
Citation  :WRIGHT PROSPECTING PTY LIMITED -v- HANCOCK PROSPECTING PTY LIMITED [No 9] [2010] WASC 44
File No  :CIV 1279 of 2001

Catchwords:

Contract law - Partnership agreement - Contractual right of partners to call for transfer of certain partnership property including temporary reserves granted under the Mining Act 1904 (WA) - Prohibition in temporary reserves on entry into 'any arrangement to transfer' the property without ministerial consent - Prohibition in State Agreement on assignment or 'other disposition' of the property without ministerial consent - Prohibition in Joint Venture Agreement on the assignment or transfer of, or the creation of any charge, lien, encumbrance or trust over, the property without the joint venturers' consent - Whether entry into partnership agreement, alternatively exercise of the right to call for transfer of the partnership property, breached prohibitions - Nature of partner's interest in partnership property and manner in which transfer effected - Proprietary effect of contract for transfer of property which is conditional on third party consent - Whether breach of statutory prohibition resulted in illegality of partnership agreement - Whether right to call for transfer superseded by subsequent partnership agreement

Contract law - Construction of partnership agreements - Codelfa and the 'true rule' of contractual interpretation - Meaning of ambiguity - Whether regard may be had to surrounding circumstances

Contract law - Abandonment - Scope of doctrine - Whether necessary to demonstrate an implied agreement to abandon the contract

Property law - Whether right to occupy a temporary reserve an interest in land under s 7 of the Property Law Act 1969 (WA) - Construction of 'easement, right, privilege or benefit in, over or derived from the land' - Assignment of chose in action at law and in equity

Equity - Equitable estoppel - Whether estoppel established on facts as pleaded - Role of equity in face of statutory illegality - Whether possible to fashion equitable relief protective of third party rights and interests

Legislation:

Iron Ore (Rhodes Ridge) Agreement Authorisation Act 1972 (WA)
Mining Act 1904 (WA), s 3, s 273, s 276, s 277
Mining Act 1978 (WA)
Partnership Act 1895 (WA), s 30(1), s 33
Property Law Act 1969 (WA), s 7, s 20, s 110
Supreme Court (Court of Appeal) Rules 2005 (WA)

Result:

Appeal dismissed
Notice of contention upheld in part
Crossappeal allowed in part

Category: A

Representation:

Counsel:

Appellant: Mr S Finch SC & Mr S Rushton SC & Mr C Bova
Respondent: Mr R Smith SC & Mr R Brender

Solicitors:

Appellant: Corrs Chambers Westgarth
Respondent: Lavan Legal

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

Ace Insurance Ltd v Trifunovski [2011] FCA 1204; (2011) 200 FCR 532
Adamson v Hayes (1973) 130 CLR 276
Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570
Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101
Australian Anglo American Prospecting Ltd v CRA Exploration Pty Ltd [1981] WAR 97
Australian Broadcasting Corporation v Redmore Pty Ltd [1989] HCA 15; (1989) 166 CLR 454
Australian Competition and Consumer Commission v Channel Seven Brisbane Pty Ltd [2009] HCA 19; (2009) 239 CLR 305
Bahr v Nicolay (No 2) [1988] HCA 16; (1988) 164 CLR 604
Ballas v Theophilos (No 2) (1957) 98 CLR 193
Bannister v Bannister [1948] 2 All ER 133
Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137
Bell v Federal Commissioner of Taxation (1953) 87 CLR 548
Bofinger v Kingsway Group Ltd [2009] HCA 44; (2009) 239 CLR 269
Bowtell v Goldsbrough, Mort & Co Ltd [1905] HCA 60; (1905) 3 CLR 444
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Bristol Corporation v Westcott (1879) 12 Ch D 461
Brown v Heffer (1967) 116 CLR 344
Burton v Camden LBC [2000] 2 AC 39
Butts v O'Dwyer (1952) 87 CLR 267
Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd [1974] HCA 22; (1974) 131 CLR 321
Central Trust & Safe Deposit Co v Snider [1916] 1 AC 266
Chan v Cresdon Pty Ltd [1989] HCA 63; (1989) 168 CLR 242
Chief Commissioner of Stamp Duties (NSW) v ISPT Pty Ltd (1998) 45 NSWLR 639
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337
Coles Myer Ltd v Commissioner of State Revenue [1998] 4 VR 728
Commissioner of Main Roads v North Shore Gas Co Ltd (1967) 120 CLR 118
Commissioner of State Taxation of the State of South Australia v Cyril Henschke Pty Ltd [2010] HCA 43; (2010) 242 CLR 508
Commissioner of Taxation (Cth) v Lutovi Investments Pty Ltd (1978) 140 CLR 434
Commissioner of Taxes (Qld) v Camphin (1937) 57 CLR 127
Commonwealth v Maddalozzo (1980) 29 ALR 161
Corin v Patton [1990] HCA 12; (1990) 169 CLR 540
Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124
Delhi International Oil Corporation v Olive [1973] WAR 52
DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431
DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423
Emerald Quarry Industries Pty Ltd v Commissioner of Highways (1976) 14 SASR 486
Enzed Technology Pty Ltd v Benge (1989) 1 WAR 164
Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 286 ALR 12
Federal Commissioner of Taxation v Everett [1980] HCA 6; (1980) 143 CLR 440
Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420
Gander v Murray (1907) 5 CLR 575
Giumelli v Giumelli (1996) 17 WAR 159
Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101
Glegg v Bromley [1912] 3 KB 474
GPT RE Ltd v Lend Lease Real Estate Investments Ltd [2005] NSWSC 964
Halloran v Minister Administering National Parks and Wildlife Act 1974 [2006] HCA 3; (2006) 229 CLR 545
Harding v Harding (1886) 17 QBD 442
Helby v Matthews [1895] AC 471
Hornsby Council v Roads and Traffic Authority of NSW (1997) 41 NSWLR 151
Inland Revenue Commissioners v Gray [1994] STC 360
John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1
Khoury v Khouri (2006) 66 NSWLR 241
KLDE Pty Ltd v Commissioner of Stamp Duties for the State of Queensland [1984] HCA 63; (1984) 155 CLR 288
Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993
Langton v Henson (1905) 92 LT 805
Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57
Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406
Lend Lease Real Estate Investments Ltd v GPT RE Ltd [2006] NSWCA 207
Lewisham Borough Council v Maloney [1948] 1 KB 50
Livingston v Commissioner of Stamp Duties (Qld) (1960) 107 CLR 411
MacDonald v Robins [1954] HCA 5; (1954) 90 CLR 515
Maddalozzo v Commonwealth (No 2) (1979) 39 FLR 254
McWilliam v McWilliams Wines Pty Ltd (1964) 114 CLR 656
Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273
Muschinski v Dodds [1985] [1985] HCA 78; (1985) 160 CLR 583
Neumann Contractors Pty Ltd v Traspunt No 5 Pty Ltd [2011] 2 Qd R 114
Nicholas v The State of Western Australia [1972] WAR 168
Norman v Federal Commissioner of Taxation (1963) 109 CLR 9
Old Papa's Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11
Oughtred v Inland Revenue Commissioners [1960] 1 AC 206
Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal [1983] 1AC 854
Re Fuller's Contract [1933] Ch 652
Sharp v Union Trustee Co of Australia Ltd (1944) 69 CLR 539
Shiloh Spinners Ltd v Harding [1973] AC 691
Stern v McArthur [1988] HCA 51; (1988) 165 CLR 489
Swan Resources Ltd v Southern Pacific Hotel Corporation Energy Pty Ltd [1983] WAR 39
Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315
TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (2010) 241 CLR 576
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Varley v Coppard (1872) 7 CP 505
Wade v New South Wales Rutile Mining Company Pty Ltd (1969) 121 CLR 177
Wallace v Love (1922) 31 CLR 156
Western Export Services Inc v Jireh International Pty Ltd (2011) 86 ALJR 1
Wik Peoples v State of Queensland [1996] HCA 40; (1996) 187 CLR 1
Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 11] [2011] WASC 74
Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410
Yarri Mining Pty Ltd v Eaglefield Holdings Pty Ltd (2010) 41 WAR 134
Zhu v Treasurer of NSW [2004] HCA 56; (2004) 218 CLR 530

Table of Contents

The State Agreement, Temporary Reserves and Joint Venture Agreement
The partnership agreements
The trial judge's holdings and findings
Nature of a partner's interest in partnership property
The range of property the subject of the cl 4 option
The nature of a temporary reserve
The scope of the 'true rule' of construction
The proper construction of the 1984 Agreement
Dead issues
Trial judge's reasons and appellant's contentions relating to the construction of cl 4
Condition 3 - construction and effect
Condition 3 - illegality
Section 25.04 - construction
Section 25.04 - illegality
Section 11.01 - construction
Brown v Heffer and other cases
The proper construction of cl 4 of the 1984 Agreement
Section 110 of the PLA

The effect of the 1989 Agreement
The law relating to abandonment
Other alleged errors
HPPL's narrow abandonment claim
HPPL's broader abandonment claim
Abandonment - other relevant factual background
Grounds of appeal 22 and 23
Cross-appeal: Unconscionability
Other grounds of cross-appeal

Conclusion

McLURE P: I would dismiss this appeal. These are my reasons. The appellant, Hancock Prospecting Pty Ltd (HPPL), and the respondent, Wright Prospecting Pty Ltd (WPPL), commenced carrying on business in partnership under the firm name 'Hancock and Wright' in the latter part of the 1950s. Lang Hancock was the life governing director of HPPL. Peter Wright was the life governing director of WPPL. The men had gone to school together and were friends as well as business partners. Peter Wright died on 13 September 1985. Lang Hancock died on 27 March 1992. The partnership of Hancock and Wright continued after their deaths.
The genesis of this dispute is an agreement entered into when the men were in their 70s and Mr Hancock was concerned that the hitherto harmonious and cooperative relationship between the partners would not survive the changing of the guard to the next generation who would take control of the corporate vehicles. As this litigation demonstrates, Mr Hancock's concern was soundly based.
HPPL appeals from orders made by Murray J upholding claims by WPPL that it had, by notice dated 11 December 1997, validly exercised a right under cl 4 of a partnership agreement between HPPL and WPPL dated 15 February 1984 (the 1984 Agreement). The trial judge found that cl 4 conferred on each partner a right to call for the necessary steps to be taken to transfer the individual partnership assets identified as the 'HPPL interests' and the 'WPPL interests' to HPPL and WPPL respectively.
The orders made by the trial judge were confined to the property referred to in par (a) of Schedule 2 of the 1984 Agreement, being '[t]he assets and interests of the Partnership in and to the Rhodes Ridge joint venture and the Temporary Reserves … and other mining or mineral areas' referred to in an attached map (Rhodes Ridge).
At the heart of the litigation as it was conducted by the parties is the question whether cl 4 of the 1984 Agreement, alternatively the exercise of the right under cl 4, contravened prohibitions against transferring or disposing of an interest in certain assets without the approval or consent of nominated persons.
The parties raise a multitude of issues. HPPL relies on 23 grounds of appeal. A large number of additional issues lurk in its voluminous written submissions. WPPL relies on 19 grounds of contention and 13 grounds of cross‑appeal.
The primary issues in the appeal involve the proper construction of (1) the 1984 Agreement; (2) the Rhodes Ridge Joint Venture Agreement dated 11 October 1972 between Rhodes Ridge Mining Co Ltd (RRM), HPPL and WPPL (the Rhodes Ridge Joint Venture Agreement); (3) the Iron Ore (Rhodes Ridge) Agreement dated October 1972 between the State of Western Australia, RRM, HPPL, WPPL and Texas Gulf Inc, the guarantor of RRM (the State Agreement); (4) an agreement dated 14 September 1989 between HPPL, WPPL, Lang Hancock and Mr Kevin Dalby (a director of both HPPL and WPPL) (the 1989 Agreement); and (5) condition 3 of the temporary reserves forming part of Rhodes Ridge.
The execution of the State Agreement on behalf of the State was authorised by the Iron Ore (Rhodes Ridge) Agreement Authorisation Act 1972 (WA) (the Authorisation Act). By the time of this litigation, RRM's interest in the Rhodes Ridge Joint Venture Agreement and the joint venture assets came to be held within the Rio Tinto group of companies.
As to the issues of contractual construction that arise for determination, and noting the observations of the High Court in the special leave application in Western Export Services Inc v Jireh International Pty Ltd (2011) 86 ALJR 1, I propose to apply the law as stated by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 that:
The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning (352).
I will return to the scope and application of the 'true rule' later. I will also proceed on the basis that subsequent conduct cannot be taken into account in construing a contract: Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 [35].

The State Agreement, Temporary Reserves and Joint Venture Agreement

Hancock and Wright gained control of temporary reserves in the Rhodes Ridge area in 1967. They were issued under s 276 of the Mining Act 1904 (WA) (the 1904 Mining Act). Section 276 relevantly provided:
The Minister … may temporarily reserve any Crown land from occupation, and the Minister may at any time cancel such reservation: Provided that if such reservation is not confirmed by the Governor within twelve months, the land shall cease to be reserved.
The Minister may, with the approval of the Governor, authorise any person to temporarily occupy any such reserve on such terms as he may think fit, but subject to the provisions of section two hundred and seventy‑seven.
By s 3 of the Authorisation Act, when the State Agreement is duly executed by all parties it shall, subject to its provisions, 'operate and take effect as though those provisions were enacted in this Act'. Under the State Agreement, the 1904 Mining Act was deemed amended as if s 277 and s 282 thereof were both deleted (s 1.05).
At the time of the State Agreement, Rhodes Ridge comprised nine temporary reserves (4192H, 4193H, 4266H, 4267H, 4737H, 4881H, 4882H, 4883H and 4884H). By s 3 of the State Agreement, RRM, HPPL and WPPL (the Joint Venturers) had to acquire by transfer all existing rights of occupancy the subject of the existing nine temporary reserves, surrender them to the Crown and the Minister for Mines, in the exercise of the power in s 276 of the 1904 Mining Act, would grant nine new temporary reserves in substitution of those which had been surrendered.
Condition 3 of the nine temporary reserves issued under the State Agreement (the Temporary Reserves) is in the same terms as condition 3 of the surrendered temporary reserves. Condition 3 provides:
The occupant shall not enter into any arrangement to transfer any direct or indirect interest in the right of occupancy without first obtaining the written approval of the Minister which approval may be given or withheld in the discretion of the Minister.
Section 25.04 of the State Agreement addresses the same subject. It relevantly provides:
The Joint Venturers jointly or any one of them severally may at any time ‑
(a)by an assignment mortgage charge subletting or other disposition assign mortgage charge sublet or otherwise dispose of to an associated company as of right or to any third party with the consent of the Minister the whole or any part of their or its rights (including their or its rights to or as the holder of any lease licence easement grant or other title) and obligations hereunder; …
(b) …
subject however to the assignee (as hereinbefore defined) executing in favour of the State a Deed of Covenant in a form to be approved by the Minister to comply with observe and perform the provisions of this Agreement by or on the part of the Joint Venturers to be complied with observed or performed in regard to the subject of such assignment subletting or other disposition or appointment.
The occupancy period of the Temporary Reserves is 12 months with a right of renewal for a further 12 months but (unless the State shall otherwise agree) the period of the right of occupancy will not be renewed beyond the fifth anniversary of the commencement date: State Agreement, s 3.05, s 3.06.
Section 11.01 of the Rhodes Ridge Joint Venture Agreement also deals with transfers. It relevantly provides:
[A] Participant shall not without the prior written consent of Participants having at least 80% of the aggregate Share of all the other Participants, sell, convey, assign, transfer, mortgage, pledge, charge, encumber, lease, sublease or otherwise dispose of or create or suffer to exist any charge, lien or encumbrance upon, security interest in, or trust in respect of all or any part of its Share, whether by act or deed, by amalgamation, merger or consolidation … or by operation of law provided that the foregoing shall not apply to any charge, lien or encumbrance upon the Share of a Participant arising by operation of law in the ordinary course of operation of the Project with respect to which the indebtedness, if any, secured by such charge, lien or encumbrance is not then due or is being contested in good faith.
Section 11.07 relevantly provides that 'any … transfer or other disposition of all or any part of the Share of a Participant … shall be effective only upon the execution and delivery by the … transferee and the other Participants of an instrument satisfactory to the parties evidencing the agreement of such … transferee … to become a Participant, or if already a Participant, to increase its Share, to be bound by … this Agreement' and other specified agreements.
'Participant' is defined to mean a party to the Rhodes Ridge Joint Venture Agreement. 'Share' means the percentage interest of each Participant in the joint venture and joint venture assets which at the date of the Agreement was recorded as RRM ‑ 50%; HPPL ‑ 25%; WPPL ‑ 25%. However, it was accepted by the parties, correctly on any view, that the HPPL and WPPL interests in the Rhodes Ridge Joint Venture Agreement and its assets were partnership property.
The Hancock and Wright partnership has a right to be paid a royalty in respect of iron ore produced and sold from the Temporary Reserves and the exploration licences referred to in [22] below: Rhodes Ridge Joint Venture Agreement, s 6.01.
The 1904 Mining Act was repealed by the Mining Act 1978 (WA) (the 1978 Mining Act) which came into operation on 1 January 1982. Section 4 of the latter applies transitional provisions in the second schedule (cl 1). The effect of the transitional provisions is that temporary reserves under the 1904 Mining Act continue to be reserved until the reservation is cancelled by the Minister. The Temporary Reserves have not been cancelled. The transitional provisions also provide for temporary reserves to be 'transitioned' to a prospecting licence or an exploration licence under the 1978 Mining Act (cl 1(3)).

In addition to the nine Temporary Reserves granted under the State Agreement, par (a) of Schedule 2 of the 1984 Agreement identified five other temporary reserves (4885H, 4985H, 4986H, 5003H and 5735H) forming part of Rhodes Ridge. These additional five temporary reserves were transitioned to exploration licences under the 1978 Mining Act. As a result of inadvertence, each of the five exploration licences lapsed. However, new exploration licences over the same area were subsequently granted (the Exploration Licences).
In relation to the Temporary Reserves, the appellant contends that entry into the 1984 Agreement, alternatively the exercise of the option in cl 4 of 1984 Agreement, contravenes condition 3 of the Temporary Reserves, s 25.04 of the State Agreement and s 11.01 of the Rhodes Ridge Joint Venture Agreement. It was common cause that the Minister did not give his approval under condition 3 or his consent under s 25.04. The appellant conceded in the appeal the respondent's contention that only s 11.01 of the Rhodes Ridge Joint Venture Agreement applies to the Exploration Licences. RRM had not given its consent under s 11.01. Indeed, approvals and consents were not sought by HPPL or WPPL at any relevant time.
HPPL also contended that the failure to obtain ministerial approval under condition 3 and consent under s 25.04 rendered the 1984 Agreement, alternatively the exercise of the option, void for illegality. In relation to both the Temporary Reserves and the Exploration Licences, the appellant contends that the 1984 Agreement, alternatively the exercise of the option, is ineffective because of the failure to obtain the prior consent of RRM.

The partnership agreements

The first formal Hancock and Wright partnership agreement was dated 2 March 1978. It was superseded by a new partnership agreement dated 24 May 1983 (the 1983 Agreement).

The 1983 Agreement

The 1983 Agreement provides that all losses, profits and liabilities of the partnership were to be shared equally and that all authorities, claims, permits, licences etc held by HPPL or WPPL under any Mining Act of any State at the date of the agreement 'are held in trust for and comprise assets of the Partnership' (cl 2).
By cl 7, each partner was required to be 'just and faithful to the other Partner in all transactions relating to the Partnership business'.
Clause 12 addressed what was to happen in the event of the death of either Lang Hancock or Peter Wright. It provides that the survivor shall become the managing partner of the partnership and have the right solely to conduct, manage, maintain, control and make all decisions in connection with the partnership including, inter alia, all dealings with the assets of the partnership in such manner as he may think fit, other than the sale or transfer of any or all of the rights subsisting in certain royalty agreements (being a reference to royalties then payable by Hamersley Iron Pty Ltd to the partnership).
Clause 14 provided for the continuation of the partnership until terminated by written agreement of both partners or by either partner serving a notice requiring the partnership to cease all business activities (other than receipt of income pursuant to the royalty agreements) and the sale or division of the assets of the partnership and the distribution of the net proceeds from such sale in accordance with the provisions of the 1983 Agreement subject to the Partnership Act 1895 (WA).

The 1984 Agreement

Although the primary focus of the parties was on cl 4 of the 1984 Agreement, that provision has to be construed in its context. The third recital identifies an intention to vary the 1983 Agreement (defined as the 'Second Partnership Agreement'). The fourth recital is in the following terms:
[T]he Partners have agreed that each Partner shall assume individual control over certain of the assets and interests of the Partnership to the exclusion of the other Partner and shall have the option to require the division of such assets between the Partners.
The relevant operative provisions of the 1984 Agreement provide:
1.AS FROM 1 JANUARY 1984 and notwithstanding Clause 12 of the Second Partnership Agreement:
(a)HPPL shall assume sole control over and responsibility for the administration, development and disposal of the assets and interests of the Partnership set out in Schedule 1 hereof other than royalties in respect thereof or premiums referred to in Clause 5 hereof (hereinafter called the 'HPPL interests').
(b)WPPL shall assume sole control over and responsibility for the administration, development and disposal of the assets and interests of the Partnership set out in Schedule 2 hereof other than royalties in respect thereof or premiums referred to in Clause 5 hereof (hereinafter called the 'WPPL interests').
(c) …
2.HPPL IN RESPECT OF the HPPL interests and WPPL in respect of the WPPL interests shall determine from time to time whether and to what extent the Partnership shall expend partnership funds in respect of such interests and upon any such determination the relevant Partner shall contribute to the Partnership an amount equal to the funds to be expended.
3.NOTWITHSTANDING CLAUSE 2 of the Second Partnership Agreement all income or profits earned and expenses incurred by the Partnership in respect of the HPPL and WPPL interests during any year of income shall be to the account of the relevant Partner whose share in the profits or losses of the Partnership shall be adjusted accordingly PROVIDED THAT any expenses or monies which have already been paid by the Partnership and are later refunded in respect of any existing mining joint venture shall be to the account of the Partnership.
4.EACH PARTNER SHALL HAVE the option exercisable at any time during the continuation of the Partnership to require the transfer of the HPPL interests to HPPL and the transfer of the WPPL interests to WPPL.
5.SUBJECT TO Clauses 7, 8 and 9 hereof on a division of interests in accordance with Clause 4 hereof the right to all capital contributions or subscriptions of share capital (hereinafter called the 'Premiums') agreed to be made by any party to a joint venture agreement which comprises part of such interests shall devolve on the Partner acquiring the interest in such joint venture.
6.IN THE EVENT OF A PARTNER organising full scale major development and commencement of substantial mining activities in respect thereof of any of the HPPL or WPPL interests such Partner shall to the best of its ability keep the other Partner fully informed on the progress of all negotiations and other matters pertinent to such development and commencement and shall offer to such other Partner one half of its own right to participate in such mining venture at a cost equal to one half of all costs as recorded in the accounts of the Partnership in relation to any such interests reduced by all premiums paid by other parties upon their becoming members of such mining venture, subject to the acceptance of such offer within one month of the making of such offer.
7.IN THE EVENT of any offer referred to in Clause 6 hereof being made by HPPL to WPPL in respect of the McCamey joint venture WPPL shall be entitled to receive one half of any premiums paid or to be paid in respect of such joint venture whether or not such offer shall be accepted by WPPL.
8.IN THE EVENT of any offer referred to in Clause 6 hereof being made by HPPL to WPPL in respect of the Marandoo joint venture or by WPPL to HPPL in respect of the Rhodes Ridge joint venture WPPL and HPPL shall respectively be entitled to receive one half of any premiums paid or to be paid in respect of the relevant joint venture upon acceptance of the said offer by WPPL or HPPL respectively but neither Partner shall be entitled to any part of any such premiums in other circumstances.
9.THE INTENT of this Agreement and Clauses 6, 7 and 8 in particular is that upon commencement of mining activities both HPPL and WPPL (as near as is practical and equitable) should be in the same position as they would have been if the Partnership had continued in its present form until the date of such commencement and on the assumption that the other Partner had concurred in each and every decision that HPPL or WPPL had made under Clause 1 hereof in the intervening period.
10.BOTH PARTNERS SHALL at all times be free to undertake any type of prospecting, mining or other activity on its own account … but shall offer such interests it may determine in any venture resulting from such activity to the other Partner on a 'Best Friends' basis.
SCHEDULE 1
(a)The assets and interests of the Partnership in and to the McCamey and Marrandoo joint ventures, the balance of the Wittenoom Agreement and the Temporary Reserve and other mining or mineral areas more particularly set out in the map attached hereto and described as LGH Mining Tenements Sheet C, which Sheet also contains particulars of certain of the assets hereafter described in this Schedule.
(b)Kevin's Corner and all other coal interests in Queensland.
(c)All manganese tenements and interests in Western Australia.
(d)The Wittenoom Settlement including offices and houses but excluding the Power House and Mill.
SCHEDULE 2
(a)The assets and interests of the Partnership in and to the Rhodes Ridge joint venture and the Temporary Reserves (including Giles) and other mining or mineral areas more particularly set out in the map attached hereto and described as EAW Mining Tenements Sheet B, which Sheet also contains particulars of certain of the assets hereafter described in this Schedule.
(b)All limestone interests in Western Australia (including limestone areas held in trust for the Partnership.
(c)All interests in Barrett-Lennards.
(d)Chrome and base metal interests in Western Australia.
(e)Wittenoom Hotel and town houses.

The 1987 Agreement

By an agreement dated 12 June 1987 the partners agreed to further vary the 1983 Agreement as varied by the 1984 Agreement (the 1987 Agreement). Under the 1987 Agreement, cl 1(c) of the 1984 Agreement was in effect deleted. Clause 1 of the 1987 Agreement otherwise relevantly provides:
(b)subject to sub‑clause (d) hereof, WPPL relinquishes in favour of HPPL its interest in Hope Downs;
(c)HPPL relinquishes in favour of WPPL all of its interest in Temporary Reserve 5623H (Marandoo);
(d)HPPL and WPPL shall be entitled to any contributions of capital to be made by joint venture participants in respect of the area comprised in the project covered by the Wittenoom Agreement in the proportions of 25% to HPPL and 75% to WPPL;
(e)Royalties received from third parties by the Partnership in respect of iron ore produced and sold by them from the following tenements or projects shall be divided equally between the Partners, namely:
(i) Rhodes Ridge;
(ii) Hope Downs;
…
(j)each of HPPL and WPPL is hereby released from the obligation to offer to the other one half of its own right to participate in any mining venture undertaken in respect of HPPL interests and WPPL interests respectively or in respect of any areas allocated to each party under this Agreement.
Clause 1(j) removed the buy back provisions (cl 6 to cl 9) of the 1984 Agreement. The Hope Downs temporary reserves were granted in HPPL's name after entry into the 1984 Agreement. It was accepted by both parties that Marandoo is intended to include the Marandoo extension (ts 76).

The 1989 Agreement

The 1989 Agreement postdated the death of Peter Wright. At the time of entry into the 1989 Agreement, Kevin Dalby was the general manager of the Hancock and Wright partnership and a director of both HPPL and WPPL. Mr Dalby died, unexpectedly, in October 1991.
The recitals to the 1989 Agreement relevantly provide that 'the parties hereto desire to record their intentions concerning the management of certain of the interests of the Partners'. The relevant operative provisions are as follows:
1.LGH to manage certain Partnership interests
LGH shall during his lifetime and, on his death, KD shall manage the interests of the Partners in the joint ventures comprising:
(a)the Wittenoom, including Marandoo and Marandoo extension; and
(b)Rhodes Ridge, including exploration licences 47/57, 47/58, 47/59 and 47/60,
for a term of ten (10) years, or until the death of the survivor of LGH and KD, whichever shall occur first PROVIDED THAT in the event of LGH becoming incapacitated to an extent that he is unable to discharge his obligations hereunder during this term, then the powers conferred upon him hereunder shall be exercised by KD and in so doing KD shall not become an interested party.
2.Extension of Term
If upon the expiration of the term referred to in Clause 1 above substantial negotiations, in the reasonable opinion of LGH or on his death KD, are underway for the turning to account or development of any one or more of the said interests, then:
(a)the term referred to in Clause 1 above shall be extended until the completion of those negotiations, satisfactorily or otherwise; but
(b)during such further term, the powers as set forth in Clause 3 below shall be limited to completing negotiations in respect of the relevant interest or interests as aforesaid.
3. Powers of LGH and KD
LGH during his lifetime and, on his death, KD shall have the right solely:
(a)to conduct, manage, maintain, control, sell, barter or in any other way to dispose of the said interests of the Partners;
(b)to make all decisions in connection therewith; and
(c)to promote actively the sale, development or turning to account the said interests of the Partners.
4.Proceeds
It is the intention of the Partners that they shall be equally entitled to all proceeds from the sale or turning to account of the said interests, or any part thereof, whether from royalties, premiums, purchase monies or other arrangements.
5.Development of Interests
If any of the said interests are developed the Partners are to participate equally from all benefits derived from such development.
6.WPPL to contribute towards management costs
WPPL is to contribute fifty per cent (50%) of the costs incurred in maintaining the leases of the said interests, but otherwise shall not be required to contribute (whether from proceeds from such interests or otherwise) towards any management, promotion, development or sales costs in respect thereof.
7.HPPL to contribute towards management costs
All costs incurred in maintaining the said leases together with all management fees, promotion, development and sales costs in respect thereof to be incurred at the discretion of LGH and KD, on his death or incapacity, but reduced by the contributions of WPPL under Clause 6 hereof, shall be borne by HPPL and shall be paid promptly to LGH or KD as rendered and such management fees shall include all reasonable payments to LGH during his lifetime and to KD on the death or incapacity of LGH for work done, time spent and results achieved under this Agreement.

The trial judge's holdings and findings

In addition to the contractual construction issues centred on the provisions requiring approval or consent to the transfer or disposition of assets, HPPL claimed at trial that, inter alia: (1) cl 4 of the 1984 Agreement was an option for the purposes of s 110 of the Property Law Act 1969 (WA) (PLA); (2) cl 4 and cl 5 of the 1989 Agreement continued after the death of Mr Hancock; and (3) cl 4 of the 1984 Agreement had been abandoned by HPPL and WPPL.
In addition to resisting the appellant's claims, WPPL also claimed at trial that HPPL's conduct in denying that cl 4 of the 1984 Agreement was valid and effectual was unconscionable. That claim was unsuccessful and is the subject of the cross‑appeal. Of relevance to the unconscionability and abandonment claims is that between entry into the 1984 Agreement and WPPL's exercise of the cl 4 option in December 1997, HPPL had, with the full cooperation of WPPL, disposed of most of its Schedule 1 assets.
The holdings and findings made by the trial judge challenged by either HPPL or WPPL in this appeal are that:
•condition 3 of the Temporary Reserves, s 25.04 of the State Agreement and s 11.01 of the Rhodes Ridge Joint Venture Agreement were not breached by HPPL and WPPL entering into the 1984 Agreement or by WPPL exercising the option in cl 4 of the 1984 Agreement (the cl 4 option);
•a breach of condition 3 would render the 1984 Agreement illegal and thus void and unenforceable [316], [349];
•on the proper construction of the 1984 Agreement, it was not a condition precedent to the exercise of the cl 4 option that the consents required by condition 3, the State Agreement and the Rhodes Ridge Joint Venture Agreement were obtained;
•it was not an implied term of the 1984 Agreement that the consents required pursuant to condition 3, the State Agreement and the Rhodes Ridge Joint Venture Agreement were a condition precedent to the exercise of the cl 4 option;
•neither the entry into the 1984 Agreement nor the exercise of the cl 4 option effected any alteration to the interests of the partners in the Schedule 2 assets [349], [356];
•it was an implied term of the 1984 Agreement that the partners were required to 'do all things necessary, including executing documents and joining in the seeking of the consents of any Minister or joint venture party, which may be necessary to enable WPPL to have the benefit of the transfer';
•cl 4 of the 1984 Agreement:
(a)was not an option at law in favour of WPPL in respect of the interests of WPPL in Rhodes Ridge; and
(b)was not an option for the purposes of s 110 of the PLA;
•the 1989 Agreement was essentially a management agreement which came to an end on 27 March 1992 upon the death of Lang Hancock;
•cl 4 of the 1989 Agreement had no effect on the exercise of the cl 4 option;
•cl 4 of the 1989 Agreement did not mean that HPPL had an entitlement to share equally in the proceeds of any sale, turning to account or development of Rhodes Ridge regardless of when the sale, turning to account, or development occurred;
•in order for HPPL to make good its plea that the cl 4 option had been abandoned by HPPL and WPPL, HPPL must prove that the conduct of the parties generally was such as to be consistent only with the conclusion that both parties were proceeding upon the basis that cl 4 of the 1984 Agreement was no longer operative;
•HPPL failed to establish that, as a result of the conduct of HPPL and WPPL during the period around June 1987 to around March 1992, it should be inferred that cl 4 of the 1984 Agreement had been abandoned by HPPL and WPPL;
•the Exploration Licences were subject to the State Agreement [352];
•s 25.04 applied to a disposition of one joint venturer's rights under the State Agreement to another joint venturer;
•s 25.04 required the Minister's consent to be obtained before the property is assigned or otherwise disposed of [355];
•an agreement can be partially abandoned;
•WPPL never gave its agreement to partnership transactions relating to the Schedule 1 assets upon the express or tacit condition that the parties mutually accepted that the cl 4 option remained available and would be valid and effectual;
•subsequent consensual dealings by each of the partners with the partnership assets were outside the terms of the 1984 Agreement;
•WPPL's unconscionability claim was misconceived because the effect of the claim was to impermissibly achieve a remedy by way of the imposition of a constructive trust to recover an asset lost by reason of the unenforceability or invalidity of the cl 4 option;
•WPPL's unconscionability claim failed because it impermissibly sought an equitable remedy in the face of and contrary to the legal ruling that relief is not available;
•HPPL would not be unjustly enriched if it was permitted to retain its 25% interest in Rhodes Ridge.

Before addressing the grounds of appeal and contentions it is necessary to address some preliminary matters, including the law relating to the nature of a partner's interest in partnership property and the nature of a temporary reserve under the 1904 Mining Act. It is also necessary to identify issues that were not litigated at trial or in the appeal.

Nature of a partner's interest in partnership property

Section 33 of the Partnership Act 1895 (WA) (PA) defines the meaning of a 'partner's share'. It provides:
The share of a partner in the partnership property at any time is the proportion of the then existing partnership assets to which he would be entitled if the whole were realised and converted into money, and after all the then existing debts and liabilities of the firm had been discharged.
Thus, a partner's share in the property of the partnership is a right to his proportion of the surplus after the realisation of assets and payment of debts and liabilities: Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321, 327; Commissioner of State Taxation of the State of South Australia v Cyril Henschke Pty Ltd (2010) 242 CLR 508, 517 ‑ 518. The 'right' referred to is a present equitable chose in action: Cyril Henschke (518). The source and nature of the right is related to the requirement that partnership property must be held and applied by the partners exclusively for the purposes of the partnership: PA, s 30(1).
Partners are not entitled in their individual capacity to exercise proprietary rights over any partnership asset: Re Fuller's Contract [1933] Ch 652, 656; Inland Revenue Commissioners v Gray [1994] STC 360, 377. As a consequence, the interest of a partner in an asset of the partnership is characterised as equitable, sui generis and of a non‑specific kind: Canny Gabriel (328). Each partner has an undivided interest in the whole of the assets of the partnership. The interest of a partner in partnership assets is not a fixed proportion of each item nor is it an immediately ascertainable quantity of the item; it is an indefinite and fluctuating interest: Sharp v Union Trustee Co of Australia Ltd (1944) 69 CLR 539, 551; Livingston v Commissioner of Stamp Duties (Qld) (1960) 107 CLR 411, 453; Canny Gabriel (328).
The mechanism by which partnership property is converted into the separate property of one of the partners (whether by way of transfer, release, surrender or otherwise) was not fully explored at trial or in the appeal. However, it was accepted that the partners could, by agreement, alter the status of partnership property. As Lord Lindley explained:
It is competent for partners by agreement amongst themselves to convert that which was partnership property into the separate property of an individual, or vice versa. And the nature of the property may be thus altered by any agreement to that effect … but so long as the agreement is dependent on an unperformed condition, so long will the ownership of the property remain unchanged (RI Banks, Lindley & Banks on Partnership (2010) [18-44]).
Lord Lindley speaks of the 'conversion' of partnership property into separate property and the 'alteration of its nature' by agreement. The terms 'transfer', 'assign' and 'dispose of' are not used. As to which, see Varley v Coppard (1872) 7 CP 505; Bristol Corporation v Westcott (1879) 12 Ch D 461; Langton v Henson (1905) 92 LT 805; Burton v Camden LBC [2000] 2 AC 399; Cyril Henschke [28] ‑ [29].
However, the trial and the appeal were conducted on the basis that cl 4 contemplated a transfer in the technical sense. Accordingly, I will proceed on the basis that there may (not must) be multiple aspects, how and in which order they occur being a matter of construction. The aspects are:
•conversion of the partnership property to the personal property of the partners;
•transfer of equitable ownership;
•transfer of legal ownership.

The range of property the subject of the cl 4 option

A wide range of different types of property are included in the Schedules to the 1984 Agreement. For example, the partnership assets and interests in Rhodes Ridge include:
(a)contractual rights under the State Agreement;
(b)contractual rights under the Rhodes Ridge Joint Venture Agreement;
(c)the Temporary Reserves and Exploration Licences;
(d)plant and equipment comprising the joint venture assets.
The property in (a) and (b) can only be the benefits of the agreements, not the burdens thereof, which are not assignable. There are other categories of property in the Schedules, including real property. As far as I am aware, all of the property comprising Rhodes Ridge is legal in character, not equitable. The requirements for effecting a transfer or disposition of legal (or equitable) title to property will vary according to the type and category of property in question. To the extent that legal title is presently vested in the partners, it is held and applied exclusively by them for the purposes of the partnership.
Putting the proposition in its most neutral form, the objective of the cl 4 option is the conversion and transfer of the partnership property listed in the Schedules into the separate, wholly owned property of the nominated partner. Whether and if so how the conversion and transfer is effected and what if any 'transitional' proprietary interests exist before conversion and/or transfer are issues for determination.

The nature of a temporary reserve

An issue of significance is whether a temporary reserve under the 1904 Mining Act is real or personal property. It is relevant to whether or not s 110 of the PLA applies. It is also relevant to the proper construction and effect of condition 3 of the Temporary Reserves. It is convenient to deal with the issue at this stage.
Section 110 is not the only relevant provision of the PLA. Part IV of the PLA (s 32 ‑ s 35) deals with the formalities required for effecting a conveyance (transfer) of a legal interest in land. All conveyances of land or any interest therein are void for the purpose of conveying or creating a legal estate unless made by deed: PLA, s 33(1).
The Temporary Reserves are not land or an estate or interest in land under the 1904 Mining Act or at common law. That conclusion is compelled by a long line of High Court authority: Wade v New South Wales Rutile Mining Company Pty Ltd (1969) 121 CLR 177, 189 ‑ 190; Gander v Murray (1907) 5 CLR 575, 579 ‑ 580, 588 ‑ 590; Adamson v Hayes (1973) 130 CLR 276, 289, 312; TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (2010) 241 CLR 576 [28] ‑ [36]. See also Commissioner of Main Roads v North Shore Gas Co Ltd (1967) 120 CLR 118, 127.
The issue in contention is whether a temporary reserve under the 1904 Mining Act is 'land' within the extended definition in the PLA. The respondent at trial did not contest the appellant's claim that the issue was answered in the affirmative by the High Court in Adamson. The respondent sought to advance a contrary position in the appeal. The appellant opposed that course. As this is a discrete legal issue and the respondent's change of position occasions no relevant prejudice to the appellant, it is appropriate that this court determine it. See TEC Desert [20].
The High Court in Adamson held that a 'claim' under the 1904 Mining Act constitutes 'land' within the definition of that term in s 7 of the PLA as extended by the definition of 'mines and minerals' in the same section.
The term 'land' is relevantly defined in s 7 as including:
[L]and of any tenure and mines and minerals whether or not they are held apart from the surface of the land … and also includes a rent and other incorporeal hereditaments and an easement, right, privilege or benefit in, over or derived from the land …
'Mines and minerals' are defined in s 7 to include:
[A]ny strata or seam of minerals or substances in or under any land and the right to work and get the minerals and substances.
The reasoning from 'claim' to 'mines and minerals' and thus 'land' crucially depends on a person with a miner's right being in possession of land because a person with a miner's right is entitled to extract minerals.
'Claim' is relevantly defined in s 3 of the 1904 Mining Act as:
The portion of land which any miner shall lawfully have taken possession of and be entitled to occupy for mining purposes … but no land comprised in any mining lease, or in any application therefor, shall be deemed to be a claim. (emphasis added)
'Miner' is defined as any person being the holder of a miner's right and 'mining' means all modes of prospecting for and obtaining minerals (s 3). Thus, a statutory right is only a claim within the definition if the holder of a miner's right has taken possession of land for a mining purpose. The holder of a miner's right (who is also the holder of a 'claim') was entitled to extract minerals from the land the subject of the claim and, when extracted, those minerals became his absolute property: s 26, s 31(1), s 31(2).
The purpose of a temporary reserve is to be found solely in the conditions attached to it. The Temporary Reserves were for prospecting purposes only. Condition 2 of the Temporary Reserves provides:
The occupant shall prospect this reserve for iron ore during the term hereof to the satisfaction of the Minister and shall not use this reserve for any other purpose.
Under condition 11 of the Temporary Reserves, the Minister is obliged, if he is satisfied with proposals furnished by the occupant under condition 10, to offer to grant a mining tenement for the mining of iron ore. See also s 9.01 of the State Agreement. 'Mining tenement' is relevantly defined in s 3 of the 1904 Mining Act as '[a]ny land applied for, held, occupied, used or enjoyed under a lease or application therefore, or as a claim'.
Section 276 and s 277 of the 1904 Mining Act constitute a code for temporary reserves, with the consequence that the holder of a right of occupancy could occupy the reserve for prospecting without anyone being entitled to acquire claims over the reserve during the continuance of the right: Delhi International Oil Corporation v Olive [1973] WAR 52; Nicholas v The State of Western Australia [1972] WAR 168; Australian Anglo American Prospecting Ltd v CRA Exploration Pty Ltd [1981] WAR 97. It follows that the provisions of the 1904 Mining Act relating to miner's rights, and thus claims and mining tenements, have no application to temporary reserves. The holders of the Temporary Reserves do not have a right to work and get minerals or substances.
Accordingly, the Temporary Reserves are not land under the 'mines and minerals' extension of the definition of land in the PLA. A further consequence is that there is no provision in the 1904 Mining Act, or the regulations made thereunder, regulating the transfer or creation of any interest in a temporary reserve. The regulations relating to transfers, registration and forfeiture (regs 162, 178 ‑ 189) are confined to 'mining tenements'.
But for the definition of land in the PLA, a 'claim' under the 1904 Mining Act was, by virtue of s 273, a chattel personal: Adamson. Section 273 applies to '[e]very mining tenement, and every share and interest therein' and a 'claim' is a mining tenement. Section 273 does not apply to the Temporary Reserves because they are not 'mining tenements'.
Not every statutory right is 'property': Cummings v Claremont Petroleum NL (1996) 185 CLR 124, 133. As to the categorisation of statutory property, see North Shore Gas (127); Wik Peoples v State of Queensland (1996) 187 CLR 1, 243 ‑ 244. However, the appeal was conducted on the assumption that a right of occupancy under s 276 of the 1904 Mining Act is 'property', the issue in contention being whether it was land or a chattel personal. Chattels personal are subdivided into choses in possession (tangible property other than land) and choses in action.
The appellant asserts in the alternative that the Temporary Reserves are within the extended definition of land in the PLA as 'an easement, right, privilege or benefit in, over or derived from the land'.
The appellant relies on the decision in Maddalozzo v Commonwealth (No 2) (1979) 39 FLR 254 for its claim that the Temporary Reserves are 'an easement, right, privilege or benefit in, over or derived from the land' within the extended definition in the PLA. The question in Maddalozzo was whether two statutory mining leases were an interest in land within the meaning of the Lands Acquisition Act 1955 (Cth). An 'interest' in relation to land was defined in s 5 of the Act to mean:
(a)a legal or equitable estate or interest in the land; or
(b)a right, power or privilege over, or in connexion with, the land.
The majority (Forster & Brennan JJ) concluded that the rights which the mining leases conferred fell within one or other of the paragraphs of the statutory definition (255 ‑ 256). The case went on appeal to the High Court: Commonwealth v Maddalozzo (1980) 29 ALR 161. The reasons of the Federal Court and the High Court (see 163, 166, 168) do not assist in elucidating why the mining leases constituted an interest in land under the statutory definition.
The Full Court in Maddalozzo referred to Emerald Quarry Industries Pty Ltd v Commissioner of Highways (1976) 14 SASR 486. In both cases the court was construing legislation relating to the compulsory resumption of land or an interest in land. In Emerald Quarry the South Australian Full Court held that a statutory right to mine was an interest in land within a statutory definition which included the words 'right, power or privilege … over, affecting, or in connection with, land' (490 ‑ 491, 494, 500 ‑ 501).
Unlike the definition considered in Maddalozzo, the expression in the PLA commences with the term 'easement'. Unlike the definitions considered in Maddalozzo and Emerald Quarry, the PLA does not use the wide expression 'in connection with'. Further, the holders of the Temporary Reserves have no right to mine. The Temporary Reserves are solely for the purpose of prospecting for iron ore.
In my view, the words 'right, privilege or benefit' in the definition of land in the PLA are to be read ejusdem generis with the word 'easement'. An easement, which is an interest in land at common law, is classically defined as 'a privilege … without profit': Bradbrook & Neave, Easements and Restrictive Covenants (2011) [1.2]. Both easements and profits a prendre, which are also interests in land, are commonly described as 'rights' over another person's land such as rights of way, rights of light, rights of water and rights to dig gravel, cut turf and to take game or fish: Harpum, Bridge & Dixon, Megarry and Wade: The Law of Real Property (2008) [27-001].
The expression 'right, privilege or benefit' in s 7 of the PLA should be construed narrowly to cover the myriad of rights that give rise to an interest in land at common law. Anything but a narrow approach to the construction of the expression would enlarge the definition of land so as to render the preceding aspects of the inclusive definition of land in the PLA otiose. There would certainly be no need to extend the common law definition to include 'mines and minerals'. Indeed, the express extension of the definition to mines and minerals indicates an intention to exclude any other sui generis statutory property under the 1904 and 1978 Mining Acts. The narrow construction is consistent with the approach to similar legislation in New South Wales (Hornsby Council v Roads and Traffic Authority of NSW (1997) 41 NSWLR 151, 155) and in England: Lewisham Borough Council v Maloney [1948] 1 KB 50, 57 ‑ 58; Shiloh Spinners Ltd v Harding [1973] AC 691, 720. See also CV Davidge, 'Equitable Easements' (1937) 53 Law Quarterly Review 259, 263.
I turn now to the Exploration Licences. If a mining lease under the 1978 Mining Act does not give rise to an estate or interest in land (TEC Desert) it must be the case, by parity of reasoning, that an exploration licence granted under the 1978 Mining Act does not give rise to an estate or interest in land.
The Temporary Reserves and the Exploration Licences are property but are not land or an interest in land and are not choses in possession. They are, in my view, legal choses in action.

The scope of the 'true rule' of construction

Both parties rely on extrinsic material in support of their submissions as to the proper construction of the 1984 and 1989 Agreements. Accordingly, it is necessary to enlarge on the scope of the 'true rule' in Codelfa.
The role of the court in construing a written contract is to give effect to the common intention of the parties. The common intention of the parties is to be ascertained objectively. That is, the meaning of the terms of a contract in writing is to be determined by what a reasonable person would have understood them to mean: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165. The subjective intention or actual understanding of the parties as to their contractual rights and liabilities are irrelevant in the construction exercise.
The practical limitation flowing from the Codelfa true rule is that surrounding circumstances cannot be relied on to give rise to an ambiguity that does not otherwise emerge from a consideration of the text of the document as a whole, including whatever can be gleaned from that source as to the purpose or object of the contract.
The word 'ambiguous', when juxtaposed by Mason J with the expression 'or susceptible of more than one meaning', means any situation in which the scope or applicability of a contract is doubtful: Bowtell v Goldsbrough, Mort & Co Ltd (1905) 3 CLR 444, 456 ‑ 457. Ambiguity is not confined to lexical, grammatical or syntactical ambiguity.
Moreover, the extent to which admissible evidence of surrounding circumstances can influence the interpretation of a contract depends, in the final analysis, on how far the language of the contract is legitimately capable of stretching. Generally, the language can never be construed as having a meaning it cannot reasonably bear. There are exceptions (absurdity or a special meaning as the result of trade, custom or usage) that are of no relevance in this context.
Further, on my reading of Codelfa, pre‑contractual surrounding circumstances are admissible for the purpose of determining whether a term is implied in fact. That may be because the stringent test for the implication of a term in fact excludes any possibility of an implied term contradicting the express terms.
If extrinsic evidence is admissible, the next issue is the scope of the 'surrounding circumstances' for the purpose of construction. Mason J in Codelfa also answered that question. He said:
Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although … if the facts are notorious knowledge of them will be presumed.
It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable (352).
However, in construing the 1984 Agreement it is essential, even in the absence of ambiguity, to have regard to the provisions of the prior agreements expressly or impliedly referred to in the 1984 Agreement. That includes the 1983 Agreement and the Rhodes Ridge Joint Venture and State Agreements forming part of the partnership property listed in the Schedules. The 1984 Agreement is part of an inter‑connected series of agreements which must be construed as a whole. They cannot, in my view, fall within Mason J's 'true rule' in Codelfa. That is consistent with the approach to contractual construction taken by the High Court in Gardiner [32] ‑ [36], [38].

The proper construction of the 1984 Agreement

The intention and purpose of the 1984 Agreement is unambiguously clear. If evidence of surrounding circumstances is admissible, it confirms what is evident from the text.
Clause 1 of the 1984 Agreement confers rights on each partner, to the exclusion of the other, to deal with the partnership assets identified as their respective interests in Schedule 1 and Schedule 2 as if those assets were in effect their own, save in relation to royalties and 'premiums' (as that term is defined in cl 5) in connection with relevant assets. Clause 1 is an intended departure from cl 12 of the 1983 Agreement.
Clause 2 operates in aid of cl 1. Each partner, in respect of their respective interests in the Schedule 1 and Schedule 2 property, could determine to the exclusion of the other the extent to which the partnership would spend partnership funds on the divided assets. The expenditure was to be to the account of the partner making that decision.
Clause 3 is the consequence of cl 1 and cl 2. Both the benefit of dealing with a partnership asset (being all income and profits earned) and the burden (expenses incurred) are to the account of the partner having the sole control and responsibility for the relevant assets.
Clauses 1, 2 and 3 on the one hand and cl 4 on the other provide different avenues and mechanisms for disposing of or dealing with the partnership assets in Schedule 1 and Schedule 2. Under cl 1 the relevant partner has the power and authority, on behalf of the partnership, to dispose of an individual asset identified as its interest in the Schedule. Moreover, there would be a term implied by law requiring the other partner to cooperate and take all necessary steps, including obtaining third party consents, to facilitate the completion of the formalities of the disposal.
On the unchallenged finding of the trial judge, the cl 4 mechanism applies to all the assets in both Schedules that remain partnership assets as at the date of the exercise of the option. Looking at the text in isolation (that is, without reference to the prohibitions), the intention is that the partnership assets be converted into the separate property of the individual partners and transferred to them.
Thus, the two avenues are part of an integrated scheme for achieving the objective of the 1984 Agreement, being the division, transfer and conversion of the nominated assets out of the partnership to the relevant partner or as directed by it. Once transfers under cl 4 have taken place, cls 1 to 3 would become functus.
An issue in contention in the appeal is whether the net proceeds of sale of a scheduled asset under cl 1 is solely to the account of HPPL or WPPL respectively. HPPL says the capital profit is to be allocated on a 50:50 basis. WPPL says the expression 'all … profits earned' in cl 3 includes capital profits. Both parties accept that after a cl 4 transfer of the partnership assets in the Schedule to the relevant partner, that partner is entitled to the entire proceeds of any subsequent sale thereof (ts 137 ‑ 139). That is clearly so. The text and purpose of the 1984 Agreement as a whole compels the conclusion that 'profit' in cl 3 of the 1984 Agreement includes capital profit. The two avenues (cl 1 and cl 4) are directed to the same end and effect.

Dead issues

There was no contention at trial or in the appeal that the effect of the 1984 Agreement, at its commencement or up to the exercise of the cl 4 option, was to alter the status of the property specified in each of Schedule 1 and Schedule 2 of the 1984 Agreement from partnership property to property belonging (at law or in equity) to HPPL and WPPL respectively.
Indeed, the trial judge expressly found that entry into the 1984 Agreement did not change the status of the specified property, which remained partnership property. He said:
It is clear, I agree, that upon the proper construction of the 1984 Agreement as a whole … the HPPL interests and the WPPL interests, respectively, remained, although identified with the management and control of a particular partner, partnership assets. Clause 4, in my view, was the provision directed to ending that state of affairs in relation to the nominated assets falling within the schedules [162].
See also [239], [267], [269]. Any claim to the contrary would, no doubt, have been met with an estoppel‑based defence. In all the circumstances, I see no alternative but to proceed on the basis of the unchallenged finding of the trial judge.
Moreover, the case advanced by HPPL at trial and in the appeal was that the existence or exercise of the cl 4 option was the sole basis for its claim of a breach of condition 3, s 25.04 and s 11.01. In particular, it was no part of the appellant's case at trial or in the appeal that, without changing their status as partnership assets, cl 1, cl 2 and cl 3 of the 1984 Agreement effected a transfer, disposition or trust of the beneficial ownership of, or any lesser equitable interest in, the Schedule 1 and Schedule 2 assets to or in favour of HPPL and WPPL respectively. The trial judge clearly and unequivocally found that the 1984 Agreement did not alter the partners' equitable interests in the relevant property before the exercise of the cl 4 option [339] ‑ [340]. As a matter of logic, that cannot be based on the trial judge's construction of cl 4 of the 1984 Agreement.
WPPL's stance on this issue in the appeal was inconsistent. It accepted the correctness of the trial judge's conclusions on the subject except in connection with its contention 16 that cl 4 is not an option for the purpose of s 110 of the PLA. That is clearly a fallback position in the event the appellant is successful in its grounds 1 to 10 of the appeal.
Putting to one side the effect of the known requirement for prior third party approvals and consents, the question whether the 1984 Agreement, from its commencement and independently of the existence or exercise of cl 4, effected an alteration in the equitable interests of HPPL and WPPL in the Schedule 1 and Schedule 2 assets raises difficult questions on which the parties have provided no assistance. There is no doubt that there was a variation of the partners' rights under the 1983 Agreement to a 50% share in the income and profits of the partnership, including the capital profit from the disposal of a scheduled partnership asset. Further, the partners' proportionate rights to so much of the s 33 PA surplus attributable to a particular asset would also change from 50% to 100% or 0% depending on whose 'interest' it is. If, as would appear to be the case, there would be an alteration in the equitable interests, it would then be necessary to determine its mechanism and whether there was any breach of the prohibitions. For example, it is arguable that the surrender or extinguishment of an equitable interest is not a transfer or disposition: Meagher, Heydon & Leeming, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (2002) [7-255]. I do not intend to venture further into these issues. Having regard to the way this litigation has been conducted, I am satisfied that HPPL refrained from taking this point for broader strategic and/or forensic reasons. Moreover, there is no reason to believe that a change in focus from cl 4 to cls 1 to 3 would change the overall outcome if the trial judge is correct as to the consequence of the requirement for third party approvals and consents. In the circumstances, nothing further needs to be said on this subject.
Finally, both parties conducted the appeal on the assumptions that: (1) the prohibitions in condition 3, s 25.04 and s 11.01 are valid; and (2) would result in any transaction in breach thereof being contractually ineffective. I can now return to the grounds.
Grounds 1 to 6 of HPPL's appeal are to the effect that cl 4 of the 1984 Agreement or the exercise of the cl 4 option contravened condition 3 of the Temporary Reserves, s 25.04 of the State Agreement and s 11.01 of the Rhodes Ridge Joint Venture Agreement with the consequence that cl 4 or the exercise of the option is illegal, unenforceable and of no effect.
The trial judge held that the proper construction of cl 4 was informed by the existence and effect of those consent provisions. I propose to address matters in the following order: (1) the trial judge's construction of cl 4 and the appellant's contentions in relation thereto; (2) the proper construction and effect of condition 3, s 25.04 and s 11.01; and (3) the proper construction of cl 4.

Trial judge's reasons and appellant's contentions relating to the construction of cl 4

A number of the challenges to the trial judge's findings relating to the proper construction of cl 4 of the 1984 Agreement turn on their precise terms. Accordingly, it is necessary to set them out.
The trial judge commenced by considering whether a term should be implied into the 1984 Agreement relating to the mechanics of cl 4. That required him to address the scope and effect of cl 4. He said:
It is clear, I agree, that upon the proper construction of the 1984 agreement as a whole … the HPPL interests and WPPL interests, respectively, remained, although identified with the management and control of a particular partner, partnership assets. Clause 4, in my view, was the provision directed to ending that state of affairs in relation to the nominated assets falling within the schedules.
The parties should be taken to have well known that many of the most important of those assets, McCamey, Marandoo and Rhodes Ridge, were the subject of joint ventures in relation to which the terms of agreement required third party consents by joint venture partners and the relevant State Minister before any dealing with the land held under mining tenements by way of transfer, assignment or other disposition by either or both of HPPL and WPPL could occur.
Using Rhodes Ridge as an example, the provision of those consents and the assumption by any new owner of obligations under the joint venture was a necessary condition precedent to any transaction of the kind under discussion becoming effective. There was, until that point, no 'division of such assets between the Partners'. Nor was there any 'transfer' by one partner of its interest in the asset to the other who had exercised the option afforded by cl 4 to 'require the transfer' [162] ‑ [164].
The trial judge then concludes that he would imply the term sought in par 20(b) of the respondent's statement of claim [170], which was in the following terms:
Pursuant to the said exercise of option the Partners are [required to]:
(a) …
(b)do all things necessary including executing documents and joining in the seeking of the consent of any Minister or joint venture party which may be necessary to enable WPPL to have the benefit of the transfer.
The implied term was stated in somewhat broader terms in [363]. The trial judge later returned to the construction issue in greater detail:
It is necessary to commence by saying again what, in my view, is the proper construction of cl 4 of the 1984 agreement. The 'option' exercisable at any time during the continuation of the partnership is, 'to require the transfer' of the interests in the partnership identified by cl 1 and the Schedules as being those referable to the particular partner who seeks the transfer. In this case, as we have seen, the notices by WPPL were drawn consistently with the way in which cl 4 is expressed.
I have, in different contexts on a number of occasions, made the point that, in my view, cl 4 does not, of itself or upon the exercise of the option, effect any dealing with the relevant interest or any transaction by way of a transfer or alienation, in any form, of the asset concerned. The right of the party exercising the option is to call upon the other partner to take steps appropriate to the nature of the asset and the circumstances of the case, to effect a transfer out of the partnership and the present manner in which the interest is held, to the partner calling for the transfer. In the meantime, the asset or interest remains a partnership asset and carries with that status the equitable interest provided for and vested in the partners, and their fiduciary obligations in dealing with each other and with partnership property [339] ‑ [340].
In the context of considering s 25.04 of the State Agreement, the trial judge said:
[T]he making of the 1984 agreement, and specifically cl 4 of that agreement, and the exercise of the option pursuant to cl 4 calling for or requiring a transfer by HPPL to WPPL, does not constitute an assignment or disposition of the Rhodes Ridge Interest, but is a demand that HPPL join with WPPL to do whatever may be required by them jointly and severally to make the transfer lawfully [356]. (emphasis added)
In the context of considering s 11.01 of the Rhodes Ridge Joint Venture Agreement, the trial judge said:
Having regard to my interpretation of cl 4 of the 1984 agreement, it will be abundantly clear that in my view neither that clause nor the notices given under it themselves effect any sale, conveyance, assignment, transfer or other disposition of the defendant's interest as a partner in the Rhodes Ridge Joint Venture and the mining tenements which are its subject. Under cl 4 and by the notices served upon the defendant there is no reason … why WPPL should not call upon HPPL to transfer the Rhodes Ridge Interest to it because, by doing so, no transfer is effected and the notices do not cut across what will be required to satisfy the terms of s 11.01 of the Joint Venture Agreement if the transfer is to be made.
I arrive at that conclusion because I interpret the words 'sell, convey, assign, transfer … or otherwise dispose of' in their ordinary meaning as understood by the law. In short, to require a party to dispose of its interest does not, of itself, make the disposition [362] ‑ [363].
He continued:
[N]either cl 4, nor the attempt by the plaintiff to put it into effect, constitute an agreement to sell, convey, assign, transfer or otherwise dispose of the HPPL interest in the Rhodes Ridge Joint Venture [364].
The trial judge also concluded that the exercise of the cl 4 option did not create a trust [365] ‑ [367]. He did not deal with the appellant's contention that the cl 4 option or its exercise created a 'charge, lien or encumbrance'.
The appellant contends that the trial judge had earlier found that the exercise of the cl 4 option gave WPPL an equitable interest in HPPL's interest in Rhodes Ridge, relying on the following statement:
It must certainly be right in this case, upon the exercise of the option, if it may be effectively and lawfully exercised, that in relation to any property the subject of the option, until its performance, WPPL would have, regardless of any other contractual provisions affecting the situation, an equitable interest which would entitle it, subject to the discretionary nature of the remedy, to an order of specific performance of the option … [149].
The appellant says that holding is inconsistent with the trial judge's conclusion that, on his construction of cl 4, there is no breach of s 11.01 of the Rhodes Ridge Joint Venture Agreement.
The appellant's grounds of appeal 1 to 6 do not comply with the requirement in the Supreme Court (Court of Appeal) Rules 2005 (WA) (Court of Appeal Rules) for precision and clarity. The appellant's grounds are to the effect that the trial judge erred in holding that cl 4, alternatively the exercise of the option, did not breach condition 3 of the Temporary Reserves, s 25.04 of the State Agreement or s 11.01 of the Rhodes Ridge Joint Venture Agreement. It is necessary to trawl through the voluminous written submissions supplemented by the oral submissions to winkle out the precise issues that arise for determination. Doing my best, the appellant's broad contentions appear to be that:
(a)cl 4 of the 1984 Agreement, alternatively the exercise of the option, constitutes a prohibited assignment, and/or transfer, and/or disposition, of an equitable interest and/or created a trust and/or a 'charge, lien or encumbrance';
(b)alternatively, if the trial judge is correct and cl 4 or the exercise of the option did none of the aforementioned, the trial judge should have held that it was a condition precedent to the exercise of the cl 4 option that the consents required pursuant to condition 3 of the Temporary Reserves, s 25.04 of the State Agreement and s 11.01 of the Rhodes Ridge Joint Venture Agreement be obtained, with the result that the exercise of the option was of no effect. In the further alternative, the trial judge should have held that there was an implied term to that effect.

Condition 3 - construction and effect

The separate components of condition 3 of the Temporary Reserves are as follows:
•the occupant
•shall not enter into any arrangement
•to transfer any direct or indirect interest
•in the right of occupancy
•without first obtaining the written approval of the Minister.
The trial judge held that the 'occupant' was the joint venturers jointly holding each right of occupancy [345] and that the words 'direct or indirect' related to the interest, not the transfer [350]. He also held that condition 3 is concerned with 'any arrangement or transaction which bears a particular character' and continued:
It must effect a 'transfer' of any direct or indirect interest in the right of occupancy. In this context it seems to me that what is required for a transfer to occur is an alteration in the existing arrangements by which the interests in the right of occupancy are held [347].
He put the proposition somewhat differently in [350]:
[W]hat is prohibited by condition 3, without prior written ministerial approval, is a transaction or arrangement by which the interest held at law is changed, divested or qualified in some manner recognised at law.
The appellant contends that the passage at [350] is inconsistent with what is said in [347] and that the judge erred in concluding that condition 3 required the arrangement to actually effect a transfer. To the extent that [350] refers to dispositions beyond that of a transfer, it is inconsistent with [347] and indeed with condition 3. It is not clear whether in [350] the trial judge intended to confine the scope of condition 3 to changes in legal title only. There is little explanation or analysis leading to any of the trial judge's conclusions relating to condition 3.
The parties accept that condition 3 applies to a transfer of both legal and equitable (proprietary) interests in a Temporary Reserve. I will proceed on that assumption: cf MacDonald v Robins (1954) 90 CLR 515, 520; Old Papa's Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11 [33] ‑ [42].
The appellant's construction submissions are to the following effect. Condition 3 does not in terms require an actual transfer of any interest in the right of occupancy. Such an interpretation ignores and renders otiose the words 'enter into any arrangement to'. If the intention was to prohibit an actual transfer, the condition would have shortly stated that 'the occupant shall not … transfer any … interest in the right of occupancy without first obtaining the written approval of the Minister'. The expression 'any arrangement to transfer' is not to be read as 'any arrangement which transfers' or 'any arrangement having the effect of transferring any interests'. The nub of the appellant's submission is that the expression 'any arrangement to transfer' embraces both arrangements that actually effect a transfer as well as arrangements that will or may lead to a transfer in the future.
The respondent supports the trial judge's construction, relying on a contextual analysis. It claims that condition 3 is inconsistent with s 25.04 of the State Agreement and should be read down to apply only to arrangements that effect an actual transfer of an interest in the Temporary Reserves. The respondent's analysis in support of this claim is as follows.

Seventh, WPPL sought, inter alia, a declaration that (1) if the exercise of the cl 4 option was invalid, unenforceable or illegal, HPPL held any equitable or legal interest in Rhodes Ridge upon constructive trust for WPPL (par 25B); and (2) HPPL is estopped from denying that WPPL has validly exercised the option granted to it by cl 4 of the 1984 Agreement (par 25F).
The trial judge dismissed the unconscionability claim. WPPL claims the trial judge: (1) erred in finding that WPPL never gave its consent to partnership transactions upon the express or tacit condition that the parties mutually accepted that cl 4 of the 1984 Agreement remained available and would be valid and effectual; (2) erred in finding that subsequent consensual dealings by each of the partners with those partnership assets were outside the terms of the 1984 Agreement; (3) erred in failing to consider or impliedly rejecting the evidence of Michael Wright and Angela Bennett that they believed and acted upon the common assumption; (4) misdirected himself by asking whether, on the basis of the common assumption, WPPL refrained to its detriment from taking action under the cl 4 option when the proper question was whether WPPL had acted to its detriment; (5) erred in concluding that the unconscionability claim was misconceived because its effect was to impermissibly achieve a remedy by way of the imposition of a constructive trust to recover an asset lost by reason of the unenforceability or invalidity of cl 4; (6) erred in concluding that the unconscionability claim failed because it impermissibly sought an equitable remedy in the face of and contrary to the legal ruling that relief was not available; (7) erred in declining to find that HPPL would be unjustly enriched if it was permitted to retain 'its 25% interest in Rhodes Ridge'; and (8) erred in failing to consider and find that HPPL's conduct in failing to comply with the cl 4 notices was a breach of its fiduciary duty.
I begin with the challenges to the findings of fact and then return to the law and the application of the law to those facts. It is unclear whether the trial judge found that the consensual dealings by each of the partners with the Schedule 1 and Schedule 2 assets, other than Rhodes Ridge, were outside the terms of the 1984 Agreement or the more limited (and correct) finding that the dealings were outside cl 4 of the 1984 Agreement [214], [220], [240], [243], [293] ‑ [295], [535]. If it is the former, that conclusion is wrong. The completed dealings with the Schedule 1 and Schedule 2 assets prior to the exercise of the cl 4 option (the dealings) were not only consistent with the 1984 Agreement, they were pursuant thereto. As previously noted, there is an argument that the transfer of Kevin's Corner to WPPL must have been pursuant to cl 4 rather than cl 1 of the 1984 Agreement. However, it was not advanced by any party and can be put to one side. As WPPL's defence of HPPL's abandonment claim and its unconscionability claim demonstrate, the question whether the relevant transactions were pursuant to cl 1 of the 1984 Agreement was clearly a live issue at trial. HPPL disputes that the transactions were pursuant to the 1984 Agreement, whilst at the same time accepting that it received the entire purchase price for the McCamey's transactions without accounting to WPPL and the full benefit of the other transactions involving HPPL interests. It is far‑fetched and fanciful to suggest that WPPL intended to gift its interests to HPPL. The only reasonable inference on the evidence is that the partners were acting pursuant to the 1984 Agreement.
The next issue is whether the trial judge erred in not finding that WPPL consented to the dealings upon the condition that cl 4 of the 1984 Agreement remained available and would be valid and effectual. It is not clear why the proposition is put on the basis of a 'condition'. The trial judge found that the partners had dealt with each other on the basis that the 1984 Agreement as varied operated effectively according to its terms [533]. That finding, which must include cl 4, is in accordance with the evidence detailed in the abandonment claim. Indeed, the evidence supports all of the facts pleaded in propositions 1 to 5 of the unconscionability plea (save for the claim that WPPL received no benefit from the disposal of McCamey's).
The trial judge did not determine whether Michael Wright and Angela Bennett (on behalf of WPPL) acted on the pleaded common assumption in facilitating HPPL's disposal of the HPPL interests under the 1984 Agreement. Both gave evidence to that effect (Ex E [70] ‑ [72], [123] ‑ [126]; Ex I [29] ‑ [30], [35]). Their evidence is supported by the objective probabilities. Moreover, the trial judge found that Lang Hancock, Peter Wright and Michael Wright understood the 1984 Agreement to be valid and effectual generally [533].
Turning to the law. A court does not enter into consideration of a case at the high level of abstraction involved in notions of unconscientious conduct in some loose sense where all principles are at large: Tanwar Enterprises [20]. A claim for an equitable right or remedy must be based on, and found in, an existing body of doctrine or principle.
There are multiple causes of action and equitable doctrines and principles rolled up in WPPL's pleading of the material facts. The first and second allege breach by HPPL of its contractual and (separate) fiduciary duties to act fairly and justly to its partner, WPPL. The existence of a fiduciary duty between HPPL and WPPL and the duty to act fairly and justly are also relied on as part of the factual circumstances for a claim of a constructive trust within the category recognised in Baumgartner v Baumgartner (1987) 164 CLR 137 and Muschinski v Dodds (1985) 160 CLR 583. Finally, WPPL pleads and relies on what it characterises in its written submissions as equitable estoppel.
It is clear from the pleading as a whole that WPPL relies on a variety of different causes of action, doctrines and principles that are associated with the imposition of a constructive trust. Constructive trusts are imposed by operation of law in a wide variety of circumstances. I have already referred to the role of a constructive trust in the disposition of property such as where a title holder is bound by contract to dispose of property or to perfect an incomplete gift. A constructive trust may also be imposed to enforce the carrying out of common intentions in the absence of an enforceable contract (Bannister v Bannister [1948] 2 All ER 133); when an estoppel is established (Giumelli v Giumelli (1999) 196 CLR 101); and where there is unconscientious reliance on or denial of title to property, legal or equitable: Muschinski v Dodds. Further, a constructive trust can be imposed as a remedy for unjust enrichment (when within the established categories giving rise to an entitlement to relief).
The facts of this case do not fall within the orthodox scope of a Muschinski v Dodds claim (there being no contribution by WPPL to HPPL's legal and beneficial title in the Rhodes Ridge joint venture or its assets) or a claim in unjust enrichment (HPPL's interest in Rhodes Ridge was not gained at WPPL's expense). Moreover, any contractual duty falls with an invalid or unenforceable contract.
HPPL contends that estoppel is not pleaded. Although there is no express reference to the doctrine, none is required as all material facts are pleaded. HPPL also contends that there is a fatal defect in the pleading, there being no, or no sufficient, connection between the common assumption and the detriment. The common assumption relates to the validity of the cl 4 option and the conduct in reliance to its detriment is WPPL's facilitation of HPPL's disposal of its Schedule 1 assets pursuant to cl 1(a) of the 1984 Agreement. There is a relevant and sufficient nexus. First, there was a pleaded (and proven) connection in the form of actual reliance. Secondly, the validity or otherwise of the cl 4 option flowed on to the validity of the 1984 Agreement as a whole. The whole focus of HPPL's defences centred on cl 4. Thirdly, cls 1 to 4 are part of an integrated scheme for effecting a present allocation and future division of partnership assets.
The proven facts would give rise to an estoppel (promissory, equitable or by convention). The real issue is what, if any, role equity can play when a statutory prohibition renders a contract illegal and is imposed for the benefit of, inter alia, third parties who are not parties to the litigation.
There is no blanket prohibition on equity intervening where a contract is illegal. Whether or not equity may achieve a result which the illegal contract cannot turns upon a consideration of the policy and purpose of the statutory prohibition: Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993, 1015 ‑ 1016; Ace Insurance Ltd v Trifunovski (2011) 200 FCR 532 [134] ‑ [137]; Neumann Contractors Pty Ltd v Traspunt No 5 Pty Ltd [2011] 2 Qd R 114 [67]. That statement of principle is consistent with the approach of the High Court in Equuscorp Pty Ltd v Haxton (2012) 286 ALR 12 [34] ‑ [38]. Equuscorpconsidered the availability of restitutionary relief where a contract was void or unenforceable for illegality.
The sole purpose of the statutory prohibitions in condition 3 of the Temporary Reserves, s 25.04 of the State Agreement and s 11.01 of the Rhodes Ridge Joint Venture Agreement is to secure the prior consent of the Minister and the joint venturers to the relevant transaction. In this case WPPL and HPPL had already provided their consent. The prohibitions are conditional, not absolute. In those circumstances, there is no reason in principle for refusing to grant equitable relief even if the 1984 Agreement is illegal. However, the relief must be appropriately moulded, including in ways that protect third party interests: Giumelli v Giumelli [10], [49] ‑ [50]; Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 [47]; John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1 [116].
The High Court said in Giumelli v Giumelli that a constructive trust is a remedial response to a claim to equitable intervention made out by the plaintiff and need not be proprietary in character [3] ‑ [4]. In the context of discussing the estoppel doctrine, the High Court said a court is entitled to do what is required to avoid relevant detriment and does not, in every case, require the making good of the assumption [44]. Because of third party interests in the property in question, the High Court in Giumelli concluded that the appropriate remedy was an award of equitable compensation.
In my view, declaratory relief in the terms sought by WPPL would not be available in circumstances where the third party interests of the State and the other Rhodes Ridge joint venturer (Rio Tinto) would be overridden. This is not a case which requires or indeed permits the making good of the common assumption.
My preliminary view (the matter not having been argued) is that there would be no objection in principle to the court satisfying WPPL's equity by ordering that HPPL do all things reasonably necessary in accordance with the relevant provisions (condition 3, s 25.01 and s 11.01) to obtain the necessary consents to the transfer of Rhodes Ridge from HPPL to WPPL and, if such consents and approvals are obtained, order that HPPL transfer Rhodes Ridge to WPPL. An order in those terms would respect the public policy of the prohibitions. The Full Court in Giumelli v Giumelli (1996) 17 WAR 159 had ordered that, in the event consent or approval to subdivision of the relevant land was refused, the respondent had liberty to apply for an award of equitable compensation. No such order was sought in this case. WPPL's fallback position is reliance on cls 1 to 3 of the 1984 Agreement (see below).
WPPL also contends that the trial judge erred in failing to consider and find that HPPL's conduct in not complying with the cl 4 notices was a breach of its fiduciary duty (ground 10). This ground must also fail. Again, it overlooks the fact that HPPL and WPPL are not the only parties interested in whether or not HPPL is obliged to transfer its interest in Rhodes Ridge to WPPL. The interests of the State and Rio Tinto are ignored.
The trial judge was correct to refuse the declaratory relief sought by WPPL in its unconscionability claim. The same relief was sought in the appeal and should be refused. In those circumstances, grounds 1 to 10 of the cross‑appeal should be dismissed.

Other grounds of cross-appeal

WPPL also claims the trial judge's discretion miscarried in declining to make a declaration in accordance with par 25A of HPPL's prayer for relief. WPPL sought a declaration that:
[B]y virtue of the rights conferred on WPPL by clauses 1 and 3 of the 1984 Agreement:
(a)WPPL is entitled to the sole control over and responsibility for the administration, development and disposal of the Rhodes Ridge Interest.
(b)All income or profits earned and expenses incurred by the Partnership in respect of the Rhodes Ridge interest during any year of income is to the account of WPPL.
(c)HPPL is obliged to do all things necessary (including executing documentation and joining in the seeking of the consent of any Minister or joint venture party which may be necessary) to enable WPPL to have the benefit of the rights conferred on it by the 1984 Agreement.
(d)(i) Subject to (ii), WPPL is entitled to the exclusion of HPPL to any proceeds of sale or other benefits derived on disposal by WPPL of the Rhodes Ridge Interest.
(ii)WPPL's rights under (i) are subject to its obligation to ensure that any royalty obtained on such disposal shall be shared equally between HPPL and WPPL.
HPPL objects to the making of the declaration on a variety of grounds, one of which deserves special mention. HPPL says it 'may wish to contend [that WPPL cannot rely on cls 1 and 3 of the 1984 Agreement] because … the clauses are in breach of the State Agreement, the Rhodes Ridge Joint Venture Agreement and Condition 3'. I take it from the reference to condition 3 that HPPL is intending to refer to s 25.04 of the State Agreement and s 11.01 of the Rhodes Ridge Joint Venture Agreement. Those issues were squarely enlivened in the determination of the matters in this litigation. HPPL elected to run a different and inconsistent case. It is bound by the election.
A declaration in the terms sought by WPPL would only be necessary and appropriate if third party consents to the transfer of Rhodes Ridge are refused or delayed. The primary question is whether these issues were real controversies litigated by the parties at trial. The primary focus of the parties at trial and in the appeal was the scope, effect and validity of cl 4 of the 1984 Agreement. However, the proper construction of cls 1, 2 and 3 of the 1984 Agreement was necessary for the determination of HPPL's claims relating to the proper construction of the 1989 Agreement, abandonment and estoppel by convention. It was also central to WPPL's unconscionability claim. Although the trial judge did not make any findings on the construction of cls 1 to 3, I have found it necessary to do so for the determination of the appeal. In those circumstances it is proper to make a declaration.
However, the declaration should be amended to make it clear that cls 1 to 3 do not survive the transfer of HPPL's interest in Rhodes Ridge to WPPL pursuant to cl 4 of the 1984 Agreement. Moreover, par (c) of the declaration should be confined to the rights conferred on WPPL by cl 1 of the 1984 Agreement as varied by the 1987 Agreement. Finally par (d)(ii) should reflect the language of cl 1 which refers to the disposal of royalties. With those alterations, I would uphold ground 11 of the cross‑appeal.
Ground 12 was abandoned at the hearing. Ground 13 of the cross‑appeal seeks an order that HPPL pay WPPL's costs of the unconscionability claim. That order is predicated on the assumption that WPPL's grounds 1 - 10 of the cross‑appeal have been successful. As those grounds have been dismissed, so too must the claim for costs.
Finally, WPPL contends in ground 14 that the primary judge erred in describing two tenements as M 47/539 and M 47/540 in Schedule 2 of the orders made on 22 March 2011. The correct tenement references are E 47/539 and E 47/540. These errors have been conceded. They ought to be corrected.

Conclusion

For these reasons, I would dismiss the appeal; uphold the respondent's contentions 1, 3, 5, 8, 9, 11, 12, 14 and 15; and uphold grounds 11 and 14 of, but otherwise dismiss, the cross‑appeal.
NEWNES JA: I agree with McLure P.
LE MIERE J: I agree with McLure P.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: HANCOCK PROSPECTING PTY LTD -v- WRIGHT PROSPECTING PTY LTD [2012] WASCA 216 (S)

CORAM: McLURE P
NEWNES JA
LE MIERE J

HEARD: 12-15 JUNE 2012, 12 DECEMBER 2012 AND ON THE PAPERS

DELIVERED : 27 FEBRUARY 2013