Lime Nominees Pty Ltd v Adelaide Brighton Cement Ltd - [2014] WASC 503

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: LIME NOMINEES PTY LTD -v- ADELAIDE BRIGHTON CEMENT LTD [2014] WASC 503

CORAM: LE MIERE J

HEARD: 3 DECEMBER 2014

DELIVERED : 23 DECEMBER 2014

FILE NO/S: CIV 2533 of 2014

BETWEEN: LIME NOMINEES PTY LTD
Plaintiff
AND
ADELAIDE BRIGHTON CEMENT LTD
Defendant

Catchwords:

Application for interlocutory injunction - Prima facie case for final relief - Damages not adequate compensation - Balance of convenience favours the granting of an interlocutory injunction

Legislation:

Nil

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff: Mr C R C Newlinds SC & Mr P D C Robinson
Defendant: Mr M D Howard SC & Mr D R Chandler

Solicitors:

Plaintiff: Williams & Hughes
Defendant: Herbert Smith Freehills

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

Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57
Baycolt Investments Pty Ltd v Raynard Pty Ltd [2002] WASC 11
Castlemaine Tooheys Ltd v The State of South Australia (1986) 161 CLR 148
Johnson v Cetin [2011] WASC 344
Masters v Cameron (1954) 91 CLR 353
National Australia Bank Ltd v Joyce [2012] WASC 224
Rototek Pty Ltd v AD Engineering Pty Ltd [2004] WASC 108
Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156

LE MIERE J: The defendant, Adelaide Brighton Cement Limited (ABCL) is the holder of mining lease 70/697. From 2008 the plaintiff, Lime Nominees Pty Ltd has been quarrying limesand from part of mining lease 70/697. I will refer to the area from which the plaintiff has been quarrying limesand as the Ledge Point Deposit. Lime Nominees' primary use for limesand is in the supply of unprocessed and screened lime to the agricultural sector. Lime Nominees conducts limesand extraction on a seasonal basis. The season runs from around January to June each year which corresponds to the seasonal requirements of the agriculture industry.
ABCL disputes Lime Nominees' ongoing entitlement to quarry limesand at the Ledge Point Deposit. Lime Nominees says that since 2009 it has been quarrying limesand from the Ledge Point Deposit on the terms of an unexecuted sublease entitled Limesand Quarrying Sublease (M70/697), Draft 9 (Limesand Sublease Draft 9).
In September 2014 Lime Nominees' solicitors gave notice of its intention to apply for an interlocutory injunction to preserve its right to quarry limesand at the Ledge Point Deposit. On 24 October 2014 ABCL, whilst denying that Lime Nominees has any entitlement to mine limesand, offered to grant Lime Nominees a licence to quarry limesand from the Ledge Point Deposit for six months commencing 1 January 2015 on the terms of a document entitled Lime Sands Quarry Licence Deed. ABCL stated that it does not consent to Lime Nominees having access to the Ledge Point Deposit for the 2015 season other than on the terms of Lime Sands Quarry Licence Deed. Lime Nominees did not accept the offer and applied for an interlocutory injunction restraining ABCL from conducting itself inconsistently with the terms of the Limesand Sublease Draft 9. In effect, Lime Nominees seeks an injunction which will entitle it to extract limesand from the Ledge Point Deposit on the terms of the Limesand Sublease Draft 9. ABCL subsequently informed Lime Nominees that its offer remains open for acceptance by Lime Nominees and will not be withdrawn until 5.00 pm on the second business day after the court delivers its judgment on the interlocutory injunction application.
The parties will move expeditiously towards a trial in the first half of 2015 and hence Lime Nominees' entitlement to quarry limesand from the Ledge Point Deposit will be determined before the commencement of the 2016 season. The outcome of this interlocutory injunction application will determine the terms on which Lime Nominees will quarry limesand from the Ledge Point Deposit for the 2015 season.

Lime Nominees' claim

Lime Nominees' statement of claim pleads a series of agreements and causes of action founded in contract, estoppel and unconscionable conduct. Lime Nominees' primary claim is for specific performance that ABCL execute the Limesand Sublease Draft 9 and the Limestone Quarrying Sublease (M70/138) Draft 9 (Limestone Sublease Draft 9) and Deed of Settlement Draft 12. Lime Nominees claims that there is a binding and enforceable contract between it and ABCL on the terms of those instruments and that the parties will execute those instruments.

How did things get to this point?

In 1985 Lime Nominees agreed with Swan Portland Cement Limited (Swan Portland) that Swan Portland would grant Lime Nominees a licence to extract limestone from mining leases held by Swan Portland at Coogee Springs or an alternative site to be agreed by the parties if Coogee Springs was not available or suitable (the 1985 Agreement). The 1991 Agreement was recorded in a document executed by Lime Nominees and Swan Portland (the Written Agreement). The Written Agreement did not accurately record the parties' agreement. In 1987 ABCL acquired the assets of Swan Portland, including the right to extract limestone from Coogee Springs. In July 2001 Lime Nominees commenced proceedings in this court (CIV 2063 of 2001) seeking, amongst other things, orders that the Written Agreement be rectified so as to record the true agreement between the parties. Pursuant to a deed dated 27 July 2001 (Deed of Assumption) between Lime Nominees, ABCL and Adelaide Brighton Ltd, ABCL assumed and became subject to all the same rights, obligations and liabilities as Swan Portland and became relevantly in the same position in respect to Lime Nominees as Swan Portland was prior to the sale of its assets to ABCL. On 10 May 2002 ABCL conceded that Lime Nominees was entitled to rectification of the Written Agreement and it was a term of the Written Agreement as rectified that if ABCL gave Lime Nominees notice to cease operation at Coogee Springs ABCL must make an alternative site available to Lime Nominees to mine limestone. Lime Nominees further says that on the proper construction of, or alternatively as an implied term of, the Written Agreement as rectified if Coogee Springs was not suitable for Lime Nominees' purposes then the parties would use their best endeavours to identify another suitable site to be used in accordance with the Written Agreement. The parties agreed to adjourn the trial of CIV 2063 of 2001 and to use their best endeavours to procure the Coogee Springs land for the use contemplated by the 1985 Agreement, or to identify and agree to a replacement parcel of land and to negotiate to resolve all outstanding issues in CIV 2063 of 2001 including compensating Lime Nominees for its legal costs.
ABCL identified an area known as Wesco Road for Lime Nominees to extract limestone instead of the land at Coogee Springs. On 26 June 2002 Lime Nominees accepted Wesco Road as a substitute for the Coogee Springs site. Between 2002 and 2006 Lime Nominees and ABCL negotiated to resolve the outstanding issues between them. They discussed a settlement which would involve three parts:
•ABCL would grant a sublease to Lime Nominees to carry out limestone quarrying on a parcel of suitable land to be agreed;
•ABCL would grant a sublease to Lime Nominees to extract limesand from the Ledge Point Deposit as payment for the loss suffered by Lime Nominees as a result of the delay in performance of the 1985 Agreement; and
•ABCL would pay Lime Nominees $95,000 in respect of its costs of CIV 2063 of 2001
On 17 March 2006 ABCL delivered to Lime Nominees, for consideration and discussion, three draft instruments to progress the settlement negotiations. The three instruments were draft 1 of each of a Limestone Quarrying Sublease, Lime Sand Quarrying Sublease and Deed of Settlement.
From March 2006 until about March 2009 multiple versions of the settlement documents were exchanged between Lime Nominees and ABCL but no final agreement was reached. By late 2007 the limesand deposits that Lime Nominees had previously used for its limesand business were no longer available. On 15 February 2008 Ms Menchetti, the managing director of Lime Nominees, emailed ABCL stating that Lime Nominees required significant amendments to the most recent draft settlement documents and that the matter could not be finalised in time to enable Lime Nominees to commence extracting limesand from the Ledge Point Deposit for the 2008 season. Ms Menchetti proposed that ABCL allow Lime Nominees to extract limesand from the Ledge Point Deposit in consideration for Lime Nominees paying a royalty of $1.10 per tonne inclusive of the government royalty of 42 cents per tonne from February until settlement of the negotiations or the end of the season in June 2008. ABCL agreed to the proposal in a letter from ABCL to Lime Nominees dated 18 February 2008 and signed by both parties. The letter agreement recited that the parties' negotiations on the deed of settlement and the subleases had not been completed and Lime Nominees had an urgent need to access the limesand on the mining lease in order to meet its commitments to its customers. By the agreement ABCL granted to Lime Nominees a licence to enter and clear an access road and to quarry and extract limesand from the Ledge Point Deposit for a term commencing on 18 February 2008 and concluding on the earlier to occur of Lime Nominees obtaining access to the access road and Ledge Point Deposit under an executed sublease or 30 June 2008. In consideration of the access granted by ABCL, Lime Nominees agreed, amongst other things, to comply with certain clauses of the then draft sublease and to pay to ABCL a royalty of $1.10 per tonne of limesand extracted by Lime Nominees inclusive of the government royalty of 42 cents per tonne. The agreement stated that the temporary licence thereby created was without prejudice to either party's rights in relation to the 2001 court proceedings should the negotiations in relation to the deed of settlement and the subleases not be successful and did not bind either party to acceptance of any terms of the draft sublease.
On 13 March 2009 draft 8 of the settlement documents was circulated by ABCL. On 23 March 2009 Ms Menchetti sent an email to John Collinson of ABCL attaching draft 9 of the deed of settlement which was draft 8 with amendments proposed by Lime Nominees marked up. Ms Menchetti said in her email that she did not think there were any issues with either of the sublease agreements but Lime Nominees required amendments to the settlement deed as were marked up on draft 9.
From the beginning of the 2009 season Lime Nominees continued to extract limesand from the Ledge Point Deposit. On 13 March 2009 Mr Collinson, who was conducting the negotiations on behalf of ABCL, emailed to Ms Menchetti attaching 'our latest reviewed documents' and stating 'we cannot accept the clauses included in your last version'. Mr Collinson went on to say that he had been led to believe that Lime Nominees was operating in the Ledge Point Deposit and that the temporary access granted for the 2008 season had ended in June 2008. Mr Collinson said that if Lime Nominees was extracting limesand then they needed to discuss the matter. Ms Menchetti replied stating that Lime Nominees had recommenced mining in February for the agricultural season on the same basis as they did the previous season. She stated that her understanding was that the interim agreement remained until such time as the documents were signed. Mr Collinson responded that the temporary agreement was just for a season on the basis they would have the documents signed off which would allow Lime Nominees permanent access. There were then further communications concerning the terms of the proposed settlement deed.
Ms Menchetti says that she had a conversation with Mr Collinson in about March 2009 in which Mr Collinson agreed that Lime Nominees should get a credit for the additional royalty payment it had paid in February. In February 2009 Lime Nominees had paid royalties at the rate of $1 per tonne, that being the rate specified in the temporary licence. The amount specified in the draft sublease was the amount of the government royalty payment, then 42 cents per tonne. After that telephone conversation Lime Nominees made no further royalty payments until about August 2009. Ms Menchetti says that is because she was waiting for a meeting to take place with Mr Collinson to resolve the amount of credit owed to Lime Nominees. Ms Menchetti says that she had a further conversation with Mr Collinson on or about 19 August 2009. At the time she had with her a copy of the draft 9 settlement documents. Ms Menchetti said that Lime Nominees should then pay the government royalty rate. Mr Collinson said, '[t]hat is fine, that's what's in the agreement. I will arrange for you to be credited for the amounts paid at the higher rate in February'. Mr Collinson also agreed to reimburse Lime Nominees 50% of the amount of the access road upgrade. Lime Nominees then sent a letter to ABCL attaching an invoice for 50% of the access road upgrade incurred by Lime Nominees. ABCL paid the invoice.
In each limesand season after 2009, Lime Nominees has extracted limesand from the Ledge Point Deposit and paid a royalty to ABCL. The amount of the royalty was equal to the government royalty as specified under Lime Sand Sublease Draft 9.
The limestone sublease drafts provided for ABCL to grant to Lime Nominees a sublease to extract limestone from the Wesco Road area. However, ABCL had not obtained necessary approvals for the extraction of limestone from Wesco Road. In July 2011 the Environmental Protection Authority informed Lime Nominees that it had declined to assess the mining proposal for Wesco Road. From mid to late 2011 Lime Nominees and ABCL began discussing alternative sites for Lime Nominees to access limestone if the Wesco Road site was unsuitable.
On 6 April 2012 Ms Menchetti attended a meeting with representatives of ABCL. Ms Menchetti's note of the meeting shows the following. At the time of the meeting applications for mining approval on the Wesco Road site were in progress. ABCL was prepared to conclude an agreement on the basis of the current settlement documents. Lime Resources was not prepared to conclude an agreement until approvals were obtained for the Wesco Road site or an alternative site was clearly defined in the settlement documents. ABCL was not prepared to better define an alternative site because it believed approvals for Wesco Road would be forthcoming. Lime Resources was willing to conclude an agreement if Wesco Road approvals were achieved within the anticipated timeline but if they were not achieved then an alternative settlement would have to be defined. A note records 'Lime [Nominees] initially given temporary access followed by access as per Deed and Lease. Draft 12 of Settlement Deed amended to acknowledge this'. If Wesco Road approvals were not obtained within a two year period, Lime Resources was seeking to be paid out on the basis of a valuation of 2 million tonnes of limestone or an acceptable alternate settlement. The parties agreed that if approvals were not forthcoming within the anticipated timeframe then they would revisit the specific means of settlement. Further notes include:
Lime: If ABCL cannot deliver what they owe us we want to be paid out or know where we stand. What is ABCL here to table as options for us to consider?
…
Lime: We will consider whatever you are prepared to put forward. On Wesco [the consultant's] advice is to perhaps look at buying freehold as an offset to obtaining clearing approvals. These decisions are for ABCL to make. They are not decisions for Lime to make. Is this the direction in which you will proceed?
Brad: We have considered a few things but we are not here to table anything at this stage.
Lime: We have put forward a number of options: freehold land, script, rebate on purchases, anything to bring this to a conclusion. We want a timeframe committed to.
Brad: I will not commit this company to any timeline and we certainly will not be making any financial pay out.
The discussion broke down.
It is apparent from that note that no agreement had been concluded at that time. On 26 July 2012 Ms Menchetti wrote to ABCL confirming that ABCL was considering an alternative proposal through which Lime Nominees would be able to obtain access to a limestone resource.
On 12 October 2012 Ms Menchetti attended a meeting with representatives of ABCL at which they proposed two other sites as potential locations in place of the land at Wesco Road for the limestone sublease. They were referred to as 'Crown' and 'Hawkins'. There was a further meeting on 19 October 2012. Ms Menchetti said that the Crown site was unsuitable but that the Hawkins site may be suitable if it was amalgamated with the Italia site, both of which had current mining approvals in place. There were further communications in 2012 and 2013. There were discussions between Lime Nominees and Italia. Italia were willing to give up their sublease.
On 4 April 2013 Ms Menchetti sent an email to ABCL in which she said that Italia were prepared to surrender their existing sublease and Lime Nominees considered that combining the Hawkins and Italia subleases provided a way forward in settling the matter. On 3 May 2013 Mr Lemmon, on behalf of ABCL, emailed Ms Menchetti stating that he thought ABCL was 'okay generally with the proposed approach' but needed to work through the details. Ms Menchetti had a meeting with representatives of ABCL on 6 June 2013. Ms Menchetti said that Lime Nominees just needed an amended deed and sublease to reflect the Hawkins/Italia area. Mr Lemmon responded saying that ABCL was working on the documents and would get back to Lime Nominees. On 20 June 2013 Mr Lemmon emailed Ms Menchetti stating that ABCL was in the process of updating the various documents to reflect what they had broadly discussed and were aiming to have that completed shortly. On 23 July 2013 Ms Menchetti asked ABCL for an update of when the settlement documents would be completed. Mr Collinson responded by email stating that ABCL was 'just having the final tweaks completed to the three [documents]' and the changes would cover the new leases.
On 17 September 2013 Mr Collinson emailed to Ms Menchetti further drafts of the three settlement documents (the 2013 drafts). Ms Menchetti says that many of the terms in the 2013 drafts did not feature in the earlier drafts of the settlement documents and nor had such terms been discussed with her. Thereafter there were communications between Lime Nominees and ABCL but no agreement was reached on the terms of the settlement documents. On 11 October 2013 Martin Brydon, a director of ABCL, wrote to Lime Nominees. The letter stated that on 18 February 2009 ABCL had granted Lime Nominees a temporary licence to access the Ledge Point Deposit until 30 June 2008, that in 2009 ABCL contemplated granting Lime Nominees a temporary licence again but decided not to but that Lime Nominees extracted limesand from the Ledge Point Deposit despite having no legal right to do so. Mr Brydon said that he understood that Lime Nominees accessed the tenement again in 2010, 2011, 2012 and 2013 on similar terms to the 2008 temporary licence. Mr Brydon offered 'in order to finally settle the matters' a licence on the terms set out in enclosed drafts together with a draft deed of settlement.
In early 2014 Lime Nominees commenced operations at Ledge Point Deposit for the 2014 limesand season. Lime Nominees extracted limesand throughout the 2014 limesand season and paid monthly royalties in an amount equal to the government royalty rate.

Interlocutory injunction principles

In Castlemaine Tooheys Ltd v The State of South Australia (1986) 161 CLR 148 at 153, Mason ACJ summarised the principles governing the grant or refusal of an interlocutory injunction as follows:
In order to secure such an injunction the plaintiff must show (1) that there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief; (2) that he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction.
These principles were further explained by Gummow and Hayne JJ in Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 [65] ‑ [71] (Gleeson CJ & Crennan J agreeing). Their Honours said that in considering whether to grant an interlocutory injunction the court addresses itself to two main inquiries. The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it were there is a probability that at the trial of the action the plaintiff will be held entitled to relief. The second inquiry is whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted. The phrase 'prima facie case' does not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. How strong the probability needs to be depends upon the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the order he seeks. The court does not conduct any form of preliminary trial. Its task is not to predict the result of a later trial based upon incomplete and untested materials. The court's function is to decide what the application of the organising principles in all the circumstances indicates is the correct balance of justice between the parties pending trial. The nature of the rights which the plaintiff asserts and the practical consequences for the parties which would flow from the interlocutory order sought if granted, govern the requisite strength or seriousness of the plaintiff's case for such an order being made.

In Johnson v Cetin [2011] WASC 344 Edelman J said that there may be some controversy over whether the adequacy of damages is a separate element to be satisfied before an interlocutory injunction is granted. The requirement for damages to be an inadequate remedy was mentioned as a separate requirement by Mason ACJ in Castlemaine Tooheys Ltd v The State of South Australia. It was not mentioned by Gummow and Hayne JJ in Australian Broadcasting Corporation v O'Neill but was regarded as a requirement in that case by Gleeson CJ and Crennan J at [19]. In National Australia Bank Ltd v Joyce [2012] WASC 224 at [40] Edelman J referred to the reconciliation between the approaches of the different joint judgments in Australian Broadcasting Corporation v O'Neill by the Full Federal Court in Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156 at [61]. The reconciliation was to treat the question of the adequacy of damages as one of the matters which would ordinarily need to be addressed in the court's consideration of the balance of convenience and justice rather than as a distinct and antecedent consideration. Edelman J noted that this reconciliation approach has been adopted by other courts. I propose to follow that approach.
The plaintiff submitted that damages are rarely an adequate remedy for the invasion of proprietary rights: Rototek Pty Ltd v AD Engineering Pty Ltd [2004] WASC 108 [29] (Simmonds J). The plaintiff says that the right to take minerals from another person's land is usually considered to amount to a profit a prendre which constitutes a proprietary interest in the land. Furthermore, where there is a licence coupled with a right of grant, even where that right is not strictly a profit prendre but a right that is analogous to, or in the nature of a profit a prendre, this will also create a proprietary interest in favour of the grantee. The plaintiff also relies upon the statement by Pullin J in Baycolt Investments Pty Ltd v Raynard Pty Ltd [2002] WASC 11 [49] that usually a plaintiff claiming an interest in land will not be compensated by damages. In my view those considerations have little application in this case. The refusal of an injunction which would have the effect of preventing Lime Nominees from extracting limesand from the Ledge Point Deposit in 2015 would arguably interfere with Lime Nominees' proprietary rights. On the other hand, the grant of an injunction would arguably interfere with ABCL's proprietary rights. In any event, having regard to the offer made by ABCL, the matter in issue is not whether Lime Nominees will access the Ledge Point Deposit in 2015 but the terms on which it will do so.

Prima facie case

ABCL accepts that Lime Nominees has a prima facie case for final relief but says that Lime Nominees does not have a strong case. Lime Nominees submits that it does have a strong case. Lime Nominees' primary case is that by no later than about June 2013 the parties had agreed that the alternative parcel of land for the limestone sublease would be the Hawkins and Italia subleases. Lime Nominees say that upon the making of that agreement, the parties were bound by the terms of the Limesand Sublease Draft 9, the Limestone Sublease Draft 9 and the Deed of Settlement Draft 12 subject only to such amendments as were necessary to identify the Hawkins/Italia land and such consequential amendments as may be necessary as a result of the agreement in relation to the Hawkins/Italia subleases.
The Lime Nominees alternative contract case is that there was an agreement in terms of the Limesand Sublease Draft 9 even if there was no agreement on a limestone sublease and a deed of settlement. Lime Nominees says that the parties conduct from 2009 is referable only to the Limesand Sublease Draft 9 and is inconsistent with the temporary licence in two key respects. First, the parties adopted the royalty rate specified in the Limesand Sublease Draft 9. Secondly, under the temporary licence Lime Nominees was liable for all road costs. The subsequent conduct of ABCL in paying 50% of the initial road upgrade costs can only be consistent with the parties having moved away from the temporary licence and instead adopting and performing the Limesand Sublease Draft 9.
ABCL says that from the outset the parties negotiated the Limestone Sublease, Limesand Sublease and deed of settlement as a package. Any agreement between the parties was of the third class identified in Masters v Cameron (1954) 91 CLR 353 and thus not binding or enforceable. Lime Nominees' contention that the Hawkins/Italia subleases resolved all matters of substance between the parties is not correct. The notes of the meeting on 6 April 2012, the meeting on 12 October 2012 and the subsequent emails shows that the parties did not reach an agreement notwithstanding their identification of the Hawkins/Italia deposits. The emails from Mr Lemmon, Mr Collinson and Mr Brydon on behalf of ABCL shows that ABCL had not committed to executing the three agreements in the terms alleged by Lime Resources.
It is not appropriate to attempt to predict the outcome of the trial nor to conduct any form of preliminary trial. Lime Nominees has a prima facie case for final relief but faces significant difficulties in making out its case in contract. From the outset of the negotiations between Lime Nominees and ABCL in May 2002, the right of Lime Nominees to extract limesand from the Ledge Point Deposit was part of settlement of all outstanding issues between Lime Nominees and ABCL arising out of the 1985 agreement, the Deed of Assumption and CIV 2063 of 2001. That is apparent from the letter of 26 June 2002 from Lime Nominees' solicitors to ABCL's solicitors. It is apparent from the recitals to deed of settlement draft 1 and cl 1 of that draft deed which provides that ABCL and Lime Nominees acknowledge and agree that in full and final satisfaction of all rights granted to Lime Nominees pursuant to the 1985 agreement and the Deed of Assumption, ABCL will:
(a)grant to Lime Nominees a sublease for the extraction of limestone over part of mining lease 70/138;
(b)grant to Lime Nominees a sublease for the extraction of limesand over part of sublease 70/697; and
(c)pay to Lime Nominees $95,000 on execution of the deed.
It is also apparent from the recitals to Limesand Quarrying Sublease draft 1 and from the terms of Limesand Quarrying Sublease draft 1. Under that draft sublease ABCL subleased the Ledge Point Deposit to Lime Nominees. The only consideration provided by Lime Nominees under the terms of the draft sublease is that Lime Nominees shall pay to ABCL an amount equal to the royalty payable to the Department of Minerals and Energy. The course of the subsequent negotiations between Lime Nominees and ABCL shows that the parties did not at any time depart from negotiating a limesand sublease as part of a settlement of all issues between the parties and did not at any time negotiate a stand-alone agreement by which ABCL was to give Lime Nominees access to the Ledge Point Deposit. In those circumstances Lime Nominees faces a difficult task in establishing a stand-alone agreement on the terms of the Limesand Sublease Draft 9.
The evidence shows that no overall agreement was reached by the parties before Ms Menchetti informed ABCL in April 2013 that Lime Nominees considered that combining the Hawkins and Italia subleases '[provided] a way forward in settling the matter'. Lime Nominees' case is essentially that the communications between, and conduct of, Lime Nominees and ABCL between April and July 2013 resulted in 'a classic Empirnall Holdings type contract'. Lime Nominees says that there was an exchange of draft contracts culminating in a final version which is not signed but nevertheless can be inferred to have been adopted by the parties. That case is arguable but faces the difficulty that the final draft of the limestone sublease does not refer to the Hawkins and Italia subleases. The draft is based upon a sublease of the Wesco Road area and ABCL obtaining the necessary approvals for mining of limestone from that area.
It is unnecessary to refer to Lime Nominees alternative cases based on estoppel and unconscionable conduct.

Balance of convenience

The requisite strength of the plaintiff's case depends upon the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the order it seeks. As a result of the offer made by ABCL the practical consequences likely to flow the granting or refusal of an injunction are limited. Lime Nominees will have the opportunity to quarry limesand from the Ledge Point Deposit whether the injunction is granted or refused. The outcome of this interlocutory injunction application will determine only the terms on which Lime Nominees will quarry limesand from the Ledge Point Deposit and only for the 2015 season.
ABCL says that the only difference of consequence between the terms proposed by Lime Nominees and those proposed by ABCL is the amount of the royalty. The difference between the royalty payable under the Limesand Sublease Draft 9 and the Lime Sands Quarry Licence Deed, based on the tonnes extracted by Lime Resources in 2014, is approximately $220,000. Lime Nominees will make a profit from extracting limesand from the Ledge Point Deposit for the 2015 season whichever royalty it pays. If Lime Nominees pays the higher royalty and succeeds in its action it will be able to recover from ABCL the amount it has overpaid. If the injunction is granted and Lime Nominees pays the lower royalty then Lime Nominees has undertaken that it will accept that the damages payable to ABCL under Lime Nominees undertaking as to damages will be at least the amount of the underpayment of royalties. ABCL will be able to recover that amount from Lime Nominees.
Lime Nominees submits that if the injunction is not granted then Lime Nominees will quarry limesand under the terms of the Lime Sands Quarry Licence Deed. Lime Nominees says that the terms of that licence are materially prejudicial to Lime Nominees as compared to the terms of the Limesand Sublease Draft 9. Lime Nominees initially listed 10 terms of the licence which are prejudicial to Lime Nominees as compared to the draft sublease. ABCL has agreed not to enforce some of those terms. Lime Nominees now points to the following terms of the licence offered by ABCL which Lime Nominees says is prejudicial to it.
First, under the terms of the licence Lime Nominees must obtain ABCL's approval for its extraction plan before the start of each contract year. If such approval is not given ABCL may terminate the licence. ABCL submits that the requirement for an extraction plan is similar to the requirement for a mining plan in the draft sublease. Secondly, ABCL retains the benefit of the apportionment legislation if it engages in any breach but Lime Nominees does not. Thirdly, ABCL is not liable for any consequential loss suffered by Lime Nominees if ABCL breaches the licence, including business interruption or loss of profit. Fourthly, Lime Nominees must indemnify ABCL for any breach by Lime Nominees or its subcontractors but there is no corresponding covenant by ABCL. Fifthly, ABCL may take steps to terminate the licence if Lime Nominees experiences an 'insolvency event' or if there is any change in the direct or indirect beneficial ownership or control of Lime Nominees. Sixthly, Lime Nominees says that it is not clear what area of land Lime Nominees is entitled to access under the licence because no plan for the licensed area is attached. Seventhly, the numerous covenants provided by ABCL in the draft sublease are not retained in the licence. Lime Nominees submits that whilst it is difficult to predict how these terms may affect Lime Nominees' operations in 2015 they pose a level of risk to Lime Nominees.
In my opinion Lime Nominees exaggerates the prejudicial effect of the different terms in the proposed licence and the draft sublease. There is no evidence that some of the events which would trigger the relevant obligations or liabilities under the proposed licence are likely to occur. For example, there is no evidence to suggest that Lime Nominees is at risk of experiencing an 'insolvency event' before June 2015. There is no evidence that Lime Nominees is contemplating any change in the beneficial ownership or control of Lime Nominees. The major point emphasised by counsel for Lime Nominees was the requirement that Lime Nominees must obtain ABCL's approval for its extraction plan under the proposed licence and the consequences if approval is not granted. There is a real difference between the 'extraction plan' provisions of the proposed licence and the 'mining plan' provisions of the draft sublease. Whether or not Lime Nominees being bound by the 'extraction plan' provisions of the proposed licence rather than the 'mining plan' provisions of the draft sublease will cause any consequential loss to Lime Nominees depends upon future events and the future conduct of the parties.
If the court refuses the injunction sought by Lime Nominees and Lime Nominees accepts the offer of ABCL and executes the Limesand's Quarry Licence Deed then Lime Nominees will be bound by the obligations imposed on it by that deed. That is, the practical consequences of the court refusing the injunction is that Lime Nominees will incur obligations and potential liabilities in addition to the obligation to pay the higher royalty.
The principal argument by Lime Nominees is that the court should grant the injunction sought because it would maintain the status quo which has been in place since 2009. The principal argument by ABCL is that there is no need for the court to intervene by granting an injunction because Lime Nominees is able to mine limesand for the 2015 season and to pursue any right to contractual damages at trial.
After weighing the evidence I find that the balance of convenience favours the grant of an interlocutory injunction. There is to be a speedy trial of this matter. In those circumstances Lime Nominees should be enabled to mine limesand at the Ledge Point Deposit on the same terms that it has since 2009. To refuse the injunction would result in Lime Nominees mining limesand on the terms of the proposed licence. That would be a change in the conditions under which Lime Nominees has mined limesand since 2009. The changed conditions would operate only for approximately the first six months of 2015. Nevertheless, Lime Nominees would undertake obligations which might give rise to new liabilities in addition to the liability to pay the higher royalty rate. The relevant status quo is the conditions on which Lime Nominees has extracted limesand since 2009. That position should continue until the parties' rights are resolved at trial. Orders should be made which have the effect of permitting Lime Nominees to extract limesand from the Ledge Point Deposit on the terms of the Limesand Sublease Draft 9 until the end of the 2015 season.