Mirabela Nickel Ltd (in Liquidation) (Receivers and Managers Appointed) v Mining Standards International Pty Ltd
[2025] WASCA 82
•30 MAY 2025
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) -v- MINING STANDARDS INTERNATIONAL PTY LTD [2025] WASCA 82
CORAM: BUSS P
MITCHELL JA
VAUGHAN JA
HEARD: 16 - 17 MAY 2024
DELIVERED : 30 MAY 2025
FILE NO/S: CACV 65 of 2023
BETWEEN: MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
First Appellant
MIRABELA INVESTMENTS PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
Second Appellant
MARTIN MADDEN, SCOTT DAVID HARRY LANGDON AND RICHARD SCOTT TUCKER as joint and several receivers and managers of MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
Third Appellant
MARTIN MADDEN, SCOTT DAVID HARRY LANGDON AND RICHARD SCOTT TUCKER as joint and several receivers and managers of MIRABELA INVESTMENTS PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
Fourth Appellant
AND
MINING STANDARDS INTERNATIONAL PTY LTD
Respondent
FILE NO/S: CACV 70 of 2023
BETWEEN: MINING STANDARDS INTERNATIONAL PTY LTD
Appellant
AND
MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
First Respondent
MIRABELA INVESTMENTS PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
Second Respondent
MARTIN MADDEN, SCOTT DAVID HARRY LANGDON AND RICHARD SCOTT TUCKER as joint and several receivers and managers of MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
Third Respondent
MARTIN MADDEN, SCOTT DAVID HARRY LANGDON AND RICHARD SCOTT TUCKER as joint and several receivers and managers of MIRABELA INVESTMENTS PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
Fourth Respondent
ON APPEAL FROM:
For File No: CACV 65 of 2023
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: HILL J
Citation: MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) -v- MINING STANDARDS INTERNATIONAL PTY LTD [No 5] [2023] WASC 62
File Number : CIV 1806 of 2019
For File No: CACV 70 of 2023
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: HILL J
Citation: MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) -v- MINING STANDARDS INTERNATIONAL PTY LTD [No 7] [2023] WASC 155
File Number : CIV 1806 of 2019
Catchwords:
Contract - Asset Sale Agreement - Where buyer and seller agree to variation without consent of another party to the agreement - Whether variation legally effective - Turns on own facts
Contract formation - Acceptance - Mutual assent determined from objective perspective - Whether respondent objectively agreed to contract variation
Contract formation - Consideration - Mutual exchange of promises to vary time for performance sufficient consideration
Contractual construction - Asset Sale Agreement - Turns on own facts
Contract - Estoppel by convention - Detrimental reliance - Alleged loss of opportunity to negotiate different position - Detriment must be real or material - Where opportunity to negotiate different position not lost - Where early payment of $25,000 by nine days so insignificant as to not constitute relevant detriment
Contract - Election - Where request and acceptance of return of deposit alleged to be election to treat otherwise invalid termination notice as valid - Where contract treated as repudiated by primary judge - Election requires action consistent with accepting one of two truly alternative rights - Acceptance of repudiation not election that validates otherwise invalid termination notice
Appeals - Practice and procedure - Leave to appeal - Where primary judge allowed amendment to pleadings after decision handed down - Where amendments reflected case run by parties at trial - Decision not attended by material error - No substantial injustice
Legislation:
Nil
Result:
CACV 65 of 2023
Appeal allowed
Declaration made
CACV 70 of 2023
Application for extension of time dismissed
Application for leave to appeal dismissed
Appeal dismissed
Category: B
Representation:
CACV 65 of 2023
Counsel:
| First Appellant | : | S K Dharmananda SC & S C M Wong |
| Second Appellant | : | S K Dharmananda SC & S C M Wong |
| Third Appellant | : | S K Dharmananda SC & S C M Wong |
| Fourth Appellant | : | S K Dharmananda SC & S C M Wong |
| Respondent | : | L A Warnick SC |
Solicitors:
| First Appellant | : | Clayton Utz |
| Second Appellant | : | Clayton Utz |
| Third Appellant | : | Clayton Utz |
| Fourth Appellant | : | Clayton Utz |
| Respondent | : | Russells |
CACV 70 of 2023
Counsel:
| Appellant | : | L A Warnick SC |
| First Respondent | : | S K Dharmananda SC & S C M Wong |
| Second Respondent | : | S K Dharmananda SC & S C M Wong |
| Third Respondent | : | S K Dharmananda SC & S C M Wong |
| Fourth Respondent | : | S K Dharmananda SC & S C M Wong |
Solicitors:
| Appellant | : | Russells |
| First Respondent | : | Clayton Utz |
| Second Respondent | : | Clayton Utz |
| Third Respondent | : | Clayton Utz |
| Fourth Respondent | : | Clayton Utz |
Case(s) referred to in decision(s):
Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570
AIG Insurance Australia Ltd v McMurray [2023] WASCA 148
Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2022] HCA 38; (2022) 277 CLR 445
Austral Standard Cables Pty Ltd v Walker Nominees Pty Ltd (1992) 26 NSWLR 524
Baume v The Commonwealth [1906] HCA 92; (1906) 4 CLR 97
Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; (2008) 39 WAR 1
Birla Nifty Pty Ltd v International Mining Industry Underwriters Ltd [2014] WASCA 180; (2014) 47 WAR 522
Black Box Control Pty Ltd v TerraVision Pty Ltd [2016] WASCA 219
Boothey v Boothey (Unreported, FCt SCt of WA, Library No 970092B, 13 March 1997)
Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424
Brien v Dwyer [1978] HCA 50; (1978) 141 CLR 378
CA & Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31
Campbell v Christie (1817) 2 Stark 64; (1817) 71 ER 573
Clough Ltd v Forge Group Ltd (in liq) (receivers and managers appointed) [2022] WASCA 179
Commissioner of Taxation (Australia) v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35; (2000) 201 CLR 520
D & C Builders Ltd v Rees [1966] 2 QB 617
Director of Public Prosecutions for Victoria v Le [2007] HCA 52; (2007) 232 CLR 562
Electricity Generation and Retail Corporation trading as Synergy v EIT Kwinana Partner Pty Ltd [2022] WASCA 3
Electricity Generation Corporation trading as Verve Energy v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Ermogeneous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95
Fazio v Fazio [2012] WASCA 72
Foakes v Beer [1884] 9 App Cas 605
Foran v Wight [1989] HCA 51; (1989) 168 CLR 385
GB Energy Ltd v Protean Power Pty Ltd [2009] WASC 333
GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50; (2003) 128 FCR 1
George 218 Pty Ltd v Bank of Queensland Ltd [2015] WASC 434; (2015) 303 FLR 231
George 218 Pty Ltd v Bank of Queensland Ltd [No 2] [2016] WASCA 182; (2016) 313 FLR 287
Goss v Lord Nugent (1833) 5 B & Ad 58; (1833) 110 ER 713
Grundt v The Great Boulder Proprietary Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641
Gunn v Meiners [2022] WASCA 95
Henderson v Curtis [2008] WASC 283
Hill v Forteng Pty Ltd [2019] FCAFC 105; (2019) 138 ACSR 344
House v The King [1936] HCA 40; (1936) 55 CLR 499
Immer (No 145) Pty Ltd v The Uniting Church in Australia Property Trust (NSW) [1993] HCA 27; (1993) 182 CLR 26
Inness v Waterson [2006] QCA 155
JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [2020] WASCA 112
Khoury v Government Insurance Office (NSW) [1984] HCA 55; (1984) 165 CLR 622
Knight v Simmonds [1896] 1 Ch 653
Kriketos v Livschitz [2009] NSWCA 96; (2009) 14 BPR 26,717
La Mela v Franklexis Pty Ltd [2020] WASCA 83
McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457
Mineralogy Pty Ltd v Citic Ltd [2024] WASCA 168
Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825; (2015) 329 ALR 1
Mineralogy Pty Ltd v The State of Western Australia [2005] WASCA 69
Mirabela Nickel Ltd (in liq) (receivers and managers appointed) v Mining Standards International Pty Ltd [No 5] [2023] WASC 62
Mirabela Nickel Ltd (in liq) (receivers and managers appointed) v Mining Standards International Pty Ltd [No 7] [2023] WASC 155
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104
NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107
Pilbara Iron Ore Pty Ltd v Ammon [2020] WASCA 92; (2020) 14 ARLR 148
Raja v Rubin [2000] Ch 274
Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603
Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634
Sindel v Georgiou [1984] HCA 58; (1984) 154 CLR 661
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80; (2019) 55 WAR 89
Sze Tu v Lowe [2014] NSWCA 462; (2014) 89 NSWLR 317
Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507
Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598
Wollongong Coal Ltd v Gujarat NRE India Pty Ltd [2019] NSWCA 135; (2019) 100 NSWLR 432
Table of Contents
Overview
Background facts
The litigation and the primary judge's conclusions
The appeals - their nature and the issues for consideration
The respondent's interlocutory appeal - appeal CACV/70/2023
Applicable principles
The respondent's grounds of appeal
Leave to appeal: is the interlocutory order productive of substantial injustice?
Leave to appeal: the merits of the respondent's grounds of appeal in CACV/70/2023
Leave to appeal: conclusion
The structure and contents of the Asset Sale Agreement
Ground 4: the proper construction of cl 2.5(a) of the Sale Agreement
Principles of contractual construction
The parties' submissions
Consideration and determination
Ground 1 and the respondent's notice of contention: the alleged further agreement as to the time for satisfaction of the finance condition precedent
The pleaded case and the evidence
The primary judge's conclusions
The arguments on appeal
Submissions on the notice of contention
Submissions on the appeal
Disposition
General principles on the variation of contracts
The notice of contention
Ground 1: Was the further agreement effective to vary the date for satisfaction of the finance condition precedent in the absence of Brazil Co's consent?
Conclusion: the alleged further agreement as to the time for satisfaction of the finance condition precedent
Ground 2: the alleged conventional estoppel
Ground 3: the alleged election
Conclusion and orders
JUDGMENT OF THE COURT:
Overview
These appeals raise for consideration whether all parties to a multi‑party formal written agreement must agree if a putative further agreement is to have the legal effect of varying the original agreement.
The primary judge held that there was no legally effective variation agreement where one of the parties to the original agreement was not a party to the putative further agreement: Mirabela Nickel Ltd (in liq) (receivers and managers appointed) v Mining Standards International Pty Ltd [No 5].[1] For the reasons that follow the primary judge should have held that the further agreement was effective to vary the original agreement as between the appellants and the respondent notwithstanding the lack of any agreement or consent thereto on the part of another party to the original agreement. It follows that appeal CACV/65/2023 must be allowed.
[1] Mirabela Nickel Ltd (in liq) (receivers and managers appointed) v Mining Standards International Pty Ltd [No 5] [2023] WASC 62 (primary reasons) [4](b), [524], [534]. In these reasons, unless otherwise stated, all pinpoint references are to the primary reasons.
The parties raised numerous other issues in addition to the point of principle involving multi‑party agreements. While it has been necessary to address those issues in dealing with the appeals none of the additional matters disclose appellable error.
Background facts
On 28 October 2015 the third and fourth appellants in appeal CACV/65/2023 were appointed as receivers and managers of the first appellant (Mirabela Nickel Ltd - who we will refer to as 'Nickel Co') and the second appellant (Mirabela Investments Pty Ltd - who we will refer to as 'Investments Co'). In these reasons we will refer to Nickel Co, Investments Co and the receivers collectively as 'the appellants'. For the purpose of the appeals it was Richard Tucker, one of the third and fourth appellants, who had day‑to‑day conduct of the receiverships on behalf of the appellants.
Nickel Co and Investments Co are Australian incorporated companies. The assets of Nickel Co and Investments Co included 100% of the 'quotas' (the equivalent of shares) in a Brazilian company, Mirabela Mineração do Brasil Ltda (Brazil Co). Brazil Co was also indebted to Nickel Co in respect of various loans. The loans owed by Brazil Co, together with the quotas in the capital of Brazil Co, were the principal assets of Nickel Co and Investments Co.
Brazil Co's key asset was a nickel mine located in Brazil known as the 'Santa Rita Mine'. From at least early 2017 the nickel mine was not operating, but rather was on care and maintenance.
The respondent in appeal CACV/65/2023 (Mining Standards International Pty Ltd) is also an Australian incorporated company. The respondent's principal is a Walter Milbourne. Mr Milbourne is a lawyer by profession with a degree from Duke University. Mr Milbourne is admitted to practice in certain jurisdictions in the United States of America and was, for a time, a partner in different commercial law firms practising in Australia (albeit as a foreign or international practitioner).
The respondent was engaged to provide consultancy services to Brazil Co. Among other things the respondent was entitled to receive a lump sum cash payment of US$100,000 if there was a sale or substantial sale of Nickel Co and Investments Co's assets in 2017. As it happened, however, the respondent - through Mr Milbourne - itself submitted proposals to the receivers to acquire Nickel Co and Investments Co's assets. On 1 November 2017 the appellants and the respondent executed an asset sale agreement (Sale Agreement) whereby the respondent was to purchase the quotas in and loans owed by Brazil Co for an amount of US$50 million.
The structure and terms of the Sale Agreement are discussed at [87] ‑ [110] below.
A deposit of US$100,000 was payable under the Sale Agreement. The Sellers (ie Nickel Co and Investments Co) issued an invoice for the deposit on 2 November 2017. The invoice noted that the deposit was payable within seven days. The respondent paid an amount on account of the deposit on 10 November 2017. The amount paid was slightly less than the amount of the deposit as stipulated in the Sale Agreement (US$91,650.09 rather than US$100,000). However, the Sellers accepted the lesser amount in satisfaction for the deposit.
The Sale Agreement also named Brazil Co as a party. However, Brazil Co did not execute the Sale Agreement until 10 November 2017. The timing of Brazil Co's execution of the Sale Agreement became important in considering the operation of a condition precedent in the Sale Agreement concerning the execution of binding finance agreements by the respondent.
Relevantly, by cl 2.5(a) of the Sale Agreement, a party who had complied with its obligations under cl 2.2 was entitled to terminate the Sale Agreement by notice if the finance condition precedent was not satisfied 'by the date which is 14 days after the date of the exchange of signed copies of' the Sale Agreement. The appellants took the view that the 14 days for satisfaction of the finance condition precedent commenced to run from 1 November 2017 (ie the date that the Sale Agreement was signed and exchanged by the appellants and the respondent). That was also, at least initially, accepted to be the position from the respondent's perspective. However, on the morning of 8 November 2017 Mr Milbourne read the Sale Agreement. At that time Mr Milbourne, for the respondent, formed the view that the 14 days for the respondent to satisfy the finance condition precedent did not commence to run until after the execution and exchange of the Sale Agreement by all named parties including Brazil Co (which had not then occurred).
These circumstances provided the foundation for the first of the key matters in dispute between the appellants and the respondent. In summary:
1.The appellants contend that on the proper construction of cl 2.5(a) of the Sale Agreement the 14 days for satisfaction of the finance condition precedent commenced to run from 1 November 2017, that being the date that the Sale Agreement was executed and exchanged by the appellants and the respondent. On this construction, termination for non‑satisfaction of the finance condition precedent could have occurred after 15 November 2017.
2.The respondent contends that on the proper construction of cl 2.5(a) of the Sale Agreement the 14 days for satisfaction of the finance condition precedent commenced to run from 10 November 2017, that being the date that the Sale Agreement was executed and exchanged by Brazil Co as well as the appellants and the respondent. On this construction, termination for non‑satisfaction of the finance condition precedent could only have occurred after 24 November 2017.
The appellants did not purport to terminate the Sale Agreement on 15 November 2017. However, the appellants did issue a notice styled as a 'Notice of Failure of Condition Precedent'. Following that notice, by an exchange of text messages and emails over 17 and 18 November 2017, the appellants contend that the parties agreed to vary the time for satisfaction of the finance condition precedent to close of business on 22 November 2017. It is necessary to deal with the evidence in this respect in some detail below because a number of the primary judge's conclusions in relation to the alleged variation agreement are challenged in appeal CACV/65/2023. For now it suffices to identify two material findings on the part of the primary judge.
First, the primary judge was satisfied that as between the appellants and the respondent there was an agreement in writing (albeit not in a document signed by those parties) to vary the time in the Sale Agreement within which the respondent was required to provide binding finance agreements, failing which the appellants were entitled to terminate the Sale Agreement [533] ‑ [534].
That finding is challenged by the respondent by way of notice of contention (see [49] below).
Second, notwithstanding the finding as to the agreement to vary as between the appellants and the respondent, the primary judge rejected the contention that there was a legally binding agreement to vary the Sale Agreement. This was because '[t]here is no pleading nor evidence before the court that [Brazil Co] agreed to vary' the Sale Agreement and there was 'nothing in the terms of [the Sale Agreement] that would support a contention that [Brazil Co's] consent was not required to such a variation' [4](b), [524]. The latter finding is challenged by the appellants by way of ground 1 (see [47.1] below).
The respondent did not satisfy the finance condition precedent - either by 15 November 2017, close of business on 22 November 2017 or at all. Nor did the respondent waive the finance condition precedent. It was also the case that the respondent never tendered the consideration payable under the Sale Agreement.
Late in the night of 22 November 2017, Nickel Co and Investments Co, as the Sellers under the Sale Agreement, issued a notice purporting to terminate the Sale Agreement. The purported termination was said to be effective immediately. The following day, on 23 November 2017, Mr Milbourne sent the receivers an email with the subject header: 'Termination - Return of Deposit Funds'. The email asked the receivers to transfer funds to a particular account in the name of the respondent.
The appellants returned the deposit to the respondent on 27 November 2017.
In the interim, on 24 and 25 November 2017, the respondent by Mr Milbourne informed the receivers that the respondent disputed the validity of the alleged termination of the Sale Agreement. The respondent contended that the Sale Agreement remained valid, was on foot and was to be complied with. Subsequently, on 27 November 2017, the respondent reiterated that it did not accept that the Sale Agreement had been validly terminated. The respondent said that it would seek legal advice as to whether the refunded deposit must be maintained in trust or returned or held under protest. By the time of trial the respondent accepted that it had kept the deposit funds and used them for its own purposes.
On 27 November 2017 the appellants and Brazil Co entered into an agreement with a third‑party to sell the quotas in and loans owed by Brazil Co to that third‑party.
Since 27 November 2017 the appellants and the respondent have been in dispute about whether the Sale Agreement was validly terminated by Nickel Co and Investments Co. The respondent's conduct over that time has not been entirely consistent. For example, on 1 December 2017 the respondent's solicitors wrote to the receivers. By that letter the respondent said that it waived the other parties' 'repudiatory conduct' and elected to hold the other parties to the bargain. On behalf of the respondent the letter threatened proceedings for specific performance and injunctive relief. However, as previously mentioned, the respondent accepted the return of the deposit and applied the deposit funds to its own purposes - thereby, on one view, treating the Sale Agreement as having come to an end.
While, in this way, the respondent's conduct has not been consistent, the respondent has maintained consistently that Nickel Co and Investments Co's termination of the Sale Agreement was unlawful.
Eventually, by the primary proceedings, the appellants decided to confront the dispute about whether or not the termination of the Sale Agreement was lawful. Among other things the appellants sought a declaration that the Sale Agreement had been terminated validly. The respondent contested the lawfulness of the termination. In particular, the respondent denied Nickel Co and Investments Co's entitlement to issue a notice of termination on 22 November 2017.
The litigation and the primary judge's conclusions
The issues at trial included various matters that the primary judge considered and determined that have not arisen for reconsideration on appeal. It is not necessary to refer to or to examine those matters in these reasons. Those aspects of the primary judge's reasons are unchallenged.
In terms of the matters that are before this court, the primary judge characterised the issues for determination as follows [35]:
(a)On a proper construction of [the Sale Agreement], what was the date by which the Finance Condition was required to be satisfied? (Issue 1)
(b)Did the parties agree to extend the date for satisfaction of the Finance Condition until 22 November 2017? (Issue 2)
(c)Is [the respondent] estopped from denying the date [the Sale Agreement] was exchanged was 1 November 2017? (Issue 3)
…
(h)Was the notice of termination issued by the Receivers on 22 November 2017 valid? (Issue 8)
(i)Did [the respondent] elect to accept the Receivers' termination of the Agreement? (Issue 9)
The primary judge traversed the evidence at length and made a series of factual findings. Only particular legal conclusions that her Honour arrived at are challenged on appeal. None of the intermediate factual findings are challenged. We will, in the circumstances, initially confine ourselves to outlining the primary judge's relevant conclusions. Where it is necessary to consider the evidence, or any intermediate factual findings, it is best done in the course of evaluating the grounds of appeal and points raised by way of notice of contention.
The primary judge first considered Issue 1. This, as her Honour correctly identified, turned on the proper construction of cl 2.5(a) of the Sale Agreement. The primary judge concluded that, properly construed, cl 2.5(a) of the Sale Agreement had the effect that each of the parties named in the Sale Agreement - including Brazil Co - was required to have signed and exchanged counterparts of the Sale Agreement before the time period for satisfaction of the finance condition precedent commenced to run. The necessary counterparts as signed by all parties were not exchanged until 10 November 2017. Accordingly, that was the date on which the 14 days for satisfaction of the finance condition precedent commenced [4](a), [511] ‑ [512].
The appellants challenge the primary judge's construction of cl 2.5(a) by ground 4.
Next the primary judge considered Issue 2 - namely, whether the parties agreed to extend the date for satisfaction of the finance condition precedent until 22 November 2017.
Initially the primary judge found for the respondent on this issue as a result of a deficiency in the appellants' pleaded case. The appellants' original pleaded case was that text messages and emails that were exchanged between Mr Tucker and Mr Milbourne constituted an agreement 'to extend' the date for satisfaction of the finance condition precedent to 22 November 2017 [513]. That, however, was inconsistent with the primary judge's determination of Issue 1. The primary judge held that on the proper construction of cl 2.5(a) of the Sale Agreement, and in the events that had happened, the time for satisfaction of the finance condition precedent was 24 November 2017. There could be no agreement to extend the date for satisfaction of the finance condition precedent from 24 November 2017 to 22 November 2017 [522] ‑ [523], [525].
However, by the appeal hearing the pleading deficiency had been overcome so far as - in the circumstances discussed below - post‑trial and before entry of final judgment, the primary judge granted the appellants leave to amend their pleadings to plead an agreement 'to vary' rather than an agreement 'to extend'.
The appellants' agreement to vary case failed irrespective of the pleading point. The primary judge accepted that there was an agreement as between the Sellers and the respondent [526] ‑ [534]. In this respect, contrary to what was contended for by the respondent, the primary judge held that there was good consideration for the agreement [539] ‑ [540]. The primary judge did not accept that Mr Tucker had an honest and bona fide belief as to the proper construction of cl 2.5(a) of the Sale Agreement but considered that this did not mean that there was no genuine dispute between the appellants and the respondent as to the date that the finance condition precedent had to be satisfied. However, in the primary judge's view, there was no consent or agreement to the variation on the part of Brazil Co. The primary judge considered that it could not be found that the 'parties' had entered into an agreement to vary the Sale Agreement by varying the date for satisfaction of the finance condition precedent to 22 November 2017 in the absence of consent or agreement on the part of Brazil Co [4](b), [524] ‑ [525], [534].
These findings are all challenged. The appellants, by ground 1, challenge the necessity for Brazil Co's consent or agreement. The respondent challenges the anterior conclusion that there was an agreement (notice of contention ground 1) and the conclusion that, if there was an agreement, there was good consideration for that agreement (notice of contention ground 2).
In relation to Issue 3, the appellants pleaded a conventional estoppel case. The appellants said, in substance, that between 1 and 7 November 2017 the appellants and the respondent assumed and conducted their affairs on the basis that the Sale Agreement was signed and exchanged on 1 November 2017. In the circumstances the appellants claimed that the respondent was estopped from denying a 1 November 2017 exchange.
The primary judge accepted that from 1 November 2017 until the morning of 8 November 2017 the appellants and the respondent conducted themselves on the common assumption that the 1 November 2017 exchange of the signed copies of the Sale Agreement between the appellants and the respondent enlivened an obligation for the respondent to provide binding finance agreements within 14 days, failing which the appellants were entitled to terminate the Sale Agreement under cl 2.5(a). Moreover, both parties were aware that the other was acting on this basis. Her Honour identified considerable evidence in support of these findings. Her Honour was also satisfied that the common assumption was an assumption as to an existing state of facts, namely, the date as to when the exchange of the Sale Agreement took place [4](c), [552] ‑ [555].[2]
[2] Referring to primary reasons [168], [170], [176], [179], [189], [191], [194], [195], [209], [219], [220], [225], [226], [241].
However, in the primary judge's view, the conventional estoppel case failed on the basis that the appellants had not established that departure from the assumption would cause them detriment [4](c), [556] ‑ [562]. This finding is challenged by ground 2. It is convenient to defer evaluation of the alleged detriment relied on by the appellants until we come to address ground 2.
Lastly, as to Issue 9, the appellants argued that the respondent's request for return of the deposit constituted an acceptance of the validity of the termination notice and an election to treat the Sale Agreement as being at an end. The primary judge held that the respondent's request for the return of the deposit, and subsequent acceptance of the deposit, did not constitute an election to treat the termination notice as a valid notice [4](d), [581] ‑ [586]. Her Honour accepted that the respondent had treated the Sale Agreement as having come to an end [580]. However, in the primary judge's view, if the termination notice was invalid, nothing that the respondent did could make the notice valid as a matter of law [4](d), [581], [584], [586]. The rejection of this aspect of the appellants' case is challenged by ground 3.
On delivery of the primary reasons, and before the pronouncement of final orders, the appellants made an application to amend their pleadings. The appellants sought leave to amend to address the first difficulty identified by the primary judge with the alleged agreement to extend the date for satisfaction of the finance condition precedent (see [32] above). The appellants sought to recast the alleged agreement as an agreement to vary the date for satisfaction of the finance condition precedent.
The primary judge allowed the amendment application. Critically, her Honour considered that, at trial, the issue for determination was not limited to whether there was an agreement to extend the date for satisfaction of the finance condition precedent. The parties litigated whether there was an agreement to fix the time for satisfaction of the finance condition precedent as being the close of business on 22 November 2017. In this respect the primary judge was satisfied that the proposed amendment to the pleadings would reflect the manner in which both parties addressed the issue at trial: Mirabela Nickel Ltd (in liq) (receivers and managers appointed) v Mining Standards International Pty Ltd [No 7].[3]
[3] Mirabela Nickel Ltd (in liq) (receivers and managers appointed) v Mining Standards International Pty Ltd [No 7] [2023] WASC 155 (amendment reasons) [8], [48] - [52], [65](c).
On appeal it was common ground that the post‑trial leave to amend the pleadings overcame the primary judge's first reason for rejection of the appellants' alleged agreement to provide for close of business on 22 November 2017 as the time for satisfaction of the finance condition precedent.[4]
[4] Appeal ts 5, 101.
The appeals - their nature and the issues for consideration
By appeal CACV/70/2023 the respondent seeks an extension of time and leave to appeal to challenge the order granting the appellants leave to amend their pleadings post‑trial.
There are three proposed grounds of appeal in appeal CACV/70/2023. The respondent alleges that the primary judge erred as follows:
1.The primary judge allegedly erred in determining that the respondent disregarded the pleadings and answered or joined issue on the appellants' expanded case of an agreement to vary the date for satisfaction of the finance condition precedent (amendment reasons [52]).
2.The primary judge allegedly erred by applying a wrong principle insofar as her Honour held that the primary consideration was whether the respondent would suffer irremediable prejudice if the amendment was allowed (amendment reasons [74] ‑ [75]).
3.The primary judge allegedly erred by failing to take into account the absence of any satisfactory explanation for the delay in applying for leave to amend (amendment reasons [55] ‑ [65]).
The respondent's appellant's case in support of appeal CACV/70/2023 makes no attempt to articulate the basis on which there ought to be leave to appeal in respect of a matter of practice and procedure - one which the primary judge determined in the exercise of her Honour's discretion.
By appeal CACV/65/2023 the appellants challenge the dismissal of their action. The appellants seek various forms of declaratory relief including that the Sale Agreement was validly terminated by the notice dated 22 November 2017.
There are four grounds of appeal. The appellants allege that the primary judge erred as follows:
1.The primary judge allegedly erred in holding that there was no effective variation of the date for satisfaction of the finance condition precedent insofar as her Honour considered that Brazil Co's consent was required (Primary reasons [524] ‑ [525]). The appellants contend that the primary judge ought to have held that there was a variation binding upon the appellants and the respondent.
2.The primary judge allegedly erred in holding that no conventional estoppel arose to prevent the respondent resiling from a common assumption in the terms found at Primary reasons [552] (in substance that the date of exchange of signed copies of the Sale Agreement for the purpose of cl 2.5(a) was 1 November 2017) insofar as her Honour considered that there was no detrimental reliance (Primary reasons [556] ‑ [562]). The appellants contend that the primary judge ought to have held there was relevant detrimental reliance in respect of one or both of:
(a)the appellants' 'lost opportunity' in not seeking to negotiate or clarify the position as to the commencement of the period for the satisfaction of the finance condition precedent; or
(b)the appellants' payment of a $25,000 invoice rendered by the respondent on the execution of the Sale Agreement.
3.The primary judge allegedly erred in holding that the respondent's request for and acceptance of the reimbursement of the deposit under the Sale Agreement did not constitute an election to accept the valid termination of the Sale Agreement (Primary reasons [581] ‑ [586]).
4.The primary judge allegedly erred in construing cl 2.5(a) of the Sale Agreement in concluding that each person named in the Sale Agreement (including Brazil Co) had to sign and exchange counterparts before the period for satisfaction of the finance condition precedent could commence (Primary reasons [500] ‑ [511]).
In partial answer to appeal CACV/65/2023 - in particular to ground 1 thereof - the respondent relies on two points raised by way of notice of contention. Each, in effect, challenges a finding by the primary judge that is adverse to the respondent in respect of the appellants' variation agreement case (ie that the appellants and the respondent entered into a legally binding agreement to vary the date for satisfaction of the finance condition precedent).
By its notice of contention the respondent alleges that the primary judge should have found as follows (and, in these respects, the respondent impliedly contends that the primary judge erred in finding to the contrary):
1.The primary judge should have found that the element of acceptance necessary for there to be a variation agreement was not established (Primary reasons [533]).
2.The primary judge should have found that the element of consideration necessary for there to be a variation agreement was not established (Primary reasons [539] ‑ [540]).
The respondent's interlocutory appeal - appeal CACV/70/2023
Applicable principles
It is convenient to first deal with appeal CACV/70/2023. This is the respondent's appeal against the post‑judgment delivery grant of leave to amend the appellants' pleadings. Two things should be noted at the outset. First, this is an appeal against an interlocutory order. Leave to appeal is required: Supreme Court Act 1935 (WA) s 60(1)(f). Second, a grant of leave to amend a pleading involves the exercise of a judicial discretion: Baume v The Commonwealth.[5] Accordingly, the principles in House v The King[6] apply.
[5] Baume v The Commonwealth [1906] HCA 92; (1906) 4 CLR 97, 114.
[6] House v The King [1936] HCA 40; (1936) 55 CLR 499, 504 - 505.
The principles that apply in determining whether there should be leave to appeal are well‑established. A recent recitation of the applicable principles appears in NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd.[7] See also Clough Ltd v Forge Group Ltd (in liq) (receivers and managers appointed)[8] and Mineralogy Pty Ltd v Citic Ltd.[9] We adopt those principles but will not repeat them in full. Leave may be granted whenever the interests of justice require it. Often the interests of justice require consideration of two matters. First, whether the decision was wrong or, at the least, attended with sufficient doubt to warrant its being reconsidered. Second, whether substantial injustice would result if the decision is left unreversed, supposing the decision to be wrong.
[7] NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107 [117] - [118].
[8] Clough Ltd v Forge Group Ltd (in liq) (receivers and managers appointed) [2022] WASCA 179 [18] - [23].
[9] Mineralogy Pty Ltd v Citic Ltd [2024] WASCA 168 [56] - [63].
The principles relevant to appellate interference with the exercise of a discretion are well‑established so far as the respondent must show a discretionary error of the kind described in House v The King. Where a discretion is to be exercised, minds may differ as to the appropriate result. It is not enough that an appellate court would have exercised the discretion differently if in the position of the primary court. Instead it must be shown that the primary court acted on a wrong principle, allowed irrelevant matters to affect the decision, mistook the facts, failed to take into account a material consideration or reached a result that is on its face plainly unjust or unreasonable.
The respondent's grounds of appeal
Grounds 2 and 3 are appropriately couched in terms of a recognisable alleged discretionary error - allegedly acting on a wrong principle (as to ground 2) and allegedly failing to take into account a material consideration (as to ground 3).
The nature of ground 1 is more obscure. The allegation is that the primary judge erred in law in determining that the respondent disregarded the pleadings and answered or joined issue with the appellants' expanded case of an agreement to vary. However, when the respondent's written submissions in support of ground 1 are considered, the respondent is essentially contending that the primary judge mistook the facts by adopting an interpretation of the respondent's closing submissions that they could not reasonably bear. The respondent contends that its closing submissions were consistent with the position it adopted throughout the trial: the respondent sought to hold the appellants to their pleaded case of an agreement to extend rather than engaging with an unpleaded case of an agreement to vary.
We will return to the merits of the grounds after first addressing whether substantial injustice would result if the decision to grant leave to amend is left unreversed (assuming the decision to be wrong).
Leave to appeal: is the interlocutory order productive of substantial injustice?
This is not a case where it is obvious that the decision the respondent seeks to appeal is productive of substantial injustice (assuming the decision to be wrong).
At bottom the pleading amendments allowed by the primary judge substituted the word 'vary' for the word 'extend' thereby accommodating the possibility that the relevant date for the purpose of the finance condition precedent might have been 25 November 2017 rather than 15 November 2017. There is no suggestion that the primary judge's grant of leave to amend interferes with or adversely affects any substantive right. The decision was quintessentially a discretionary decision on a matter of practice or procedure by a trial judge who had been the case manager of the proceedings. The decision did not alter the outcome of the litigation before the primary judge. Nor did it require a reopening.
The decision means that, on appeal, the pleading point on which the respondent succeeded before the primary judge is no longer available. However, it remains the case that the various substantive issues on which the respondent prevailed must still be overcome if the appellants are to succeed in their appeal. The decision that is sought to be appealed did not affect the final result in that the primary judge went on to make substantive orders dismissing the appellants' claim.
While in its written submissions the respondent does not, in terms, identify any substantial injustice resulting from the grant of leave to amend, the respondent asserted in support of ground 3 that it might have taken particular steps had the appellants applied at trial to amend to run the variation case. The forensic opportunities said to have been precluded by the timing of the amendment application were:
1.The respondent could have addressed the variation aspect of the case - including, in particular, the inference drawn at primary reasons [539]. This was the inference that the appellants 'considered that there were grounds on which they could contend [the respondent] was estopped from denying the date of exchange of the [Sale Agreement] was 1 November 2017'.
2.The respondent could have applied to reopen its case to tender an affidavit of Mr Tucker in which he deposed that what was agreed to was '22 November 2017 being the extended date for satisfaction of the Finance Condition Precedent'.
Senior counsel for the respondent relied on the second matter when, at the appeal hearing, he was asked to explain how the respondent might have handled the case differently had the appellants' pleaded case at trial been one of an agreement to vary.[10]
[10] Appeal ts 98 - 99.
The respondent said that, in the absence of an application to amend, it did not do either of these things but instead chose to hold the appellants to their pleaded case of an agreement to extend. As will be seen, we do not accept that this is a complete statement of the respondent's approach at trial. In answering the appellants' pleaded case the respondent raised a series of matters that were equally applicable to the wider case based on an agreement to vary as propounded by the appellants at trial. As a matter of substance the respondent answered the appellants' case on an agreement to vary even though the respondent adopted the position that the appellants ought to be held strictly to their pleaded case of an agreement to extend.
Nonetheless, in the absence of any articulated substantial injustice, it is useful to identify the alleged prejudice that the respondent points to in its written case in support of leave to appeal. It might have been contended that these matters of alleged prejudice amounted to substantial injustice sufficient to mean that it was in the interests of justice that there be leave to appeal.
Neither of these matters gives rise to substantial injustice warranting leave to appeal. The inference that the respondent said it might have challenged is unassailable when proper regard is had to the documentary evidence relied on by the primary judge. Nor is the inference gainsaid by the alteration in the pleaded case. In any event, to the extent that the inference is bound up with the question of consideration for the variation agreement as agitated by notice of contention ground 2, the respondent has availed itself fully of the opportunity to advance its case on the point in this court. The second point goes nowhere. Mr Tucker's statement does no more than reflect his then belief that 15 November 2017 was the date for satisfaction of the finance condition precedent. It is entirely consistent with the appellants' case at trial and on appeal. Reopening to tender Mr Tucker's affidavit would not have had any consequence for the proper disposition of the litigation. In that regard it is material that the respondent did not seek leave to adduce the affidavit as additional evidence on the appeal.
Having reviewed the trial record, for reasons that are developed more fully below in relation to ground 1 of the respondent's appeal in CACV/70/2023, We are satisfied that the respondent had a full opportunity, of which it availed itself, to answer the appellants' agreement to vary case at trial. In those circumstances the primary judge was willing to consider and determine that aspect of the appellants' case to avoid difficulties that might arise if her Honour was in error on the pleading point [526]. All the more so the respondent has had a full opportunity, which it has availed itself of, to answer the appellants' agreement to vary case in this court. In the circumstances the respondent's apparent omission to assert substantial injustice in its written submissions is unsurprising: there is no substantial injustice that results from the decision being left unreversed (assuming the decision to be wrong).
In oral submissions, senior counsel for the respondent sought to justify leave to appeal on the basis that there had been a 'significant error' which affected the respondent's 'rights' and changed the character of the appeal.[11]
[11] Appeal ts 102.
There was no identification of the relevant rights that were alleged to have been affected. In this respect the respondent's submission was without substance. There is, in any case, no 'right' whereby a litigant may hold another litigant to a particular pleaded case. The rules contemplate that the court may allow any party to amend its pleadings at any stage of the proceedings on any terms as may be just: Rules of the Supreme Court 1971 (WA) O 21 r 5(2). Where, as here, a litigant has had a full opportunity, of which it availed itself, to answer a case as presented at trial even though that case strictly exceeded the pleaded case, it cannot be said that there is any infringement of the litigant's rights in allowing an amendment so that the pleadings reflect the manner in which the case was conducted at trial.
Senior counsel for the respondent submitted that the amendment changed the character of the appeal as, if the primary judge had found against the respondent on the extension point, the respondent would have had an opportunity to file a notice of contention which included that matter.[12] Senior counsel accepted, however, that the pleading point had no impact on any of the appellants' grounds of appeal in appeal CACV/65/2023.[13] So understood the argument in support of substantial injustice assumed acceptance of the respondent's pleading point based on there being an agreement to extend rather than an agreement to vary. We are not satisfied that the pleading point ought to have been accepted by the primary judge in circumstances where, as we have said, the respondent had a full opportunity, of which it availed itself, to answer the appellants' agreement to vary case at trial. Rather, in our view, the case having been litigated at trial in a manner that was different from the issues as strictly defined by the pleadings, the respondent ought not have been permitted to return to the pleadings as governing the limits of the parties' contest: Gunn v Meiners.[14]
[12] Appeal ts 102.
[13] Appeal ts 101 - 102.
[14] Gunn v Meiners [2022] WASCA 95 [109] - [113].
Nor, for reasons that we will now come to in addressing the merits of the grounds of appeal, are we satisfied that there was a material error in the primary judge's decision to allow the amendments.
The absence of substantial injustice means that, irrespective of the merits of the respondent's appeal from the order for leave to amend, it is not in the interests of justice to grant leave to appeal. However, for completeness, we will consider the merits of the grounds of appeal. The lack of merit in the respondent's appeal also leads to the conclusion that leave to appeal ought to be refused.
Leave to appeal: the merits of the respondent's grounds of appeal in CACV/70/2023
As to the merits of ground 1, it may be accepted that - throughout the trial - the respondent generally sought to differentiate between, on the one hand, the pleaded case of an agreement to extend and, on the other hand, an agreement to vary. The respondent emphasised that there was not, in terms, a plea of an agreement to vary.[15] By contrast, the appellants' position was that to plead an extension was to plead the variation.[16] Ultimately, as has been seen, in the primary reasons the primary judge accepted the distinction relied on by the respondent, holding that there was a 'material difference' between an agreement to vary and an agreement to extend (see [32] above). But, importantly, the primary judge went on to consider and determine the appellants' agreement to vary case so as to deal with the matter in the event that her Honour was wrong on the pleading point [526] ‑ [540].
[15] See eg ts 393 - 394, 557 - 558, 679; respondent's opening submissions dated 25 September 2020 pars 3, 12 (issue 3), 45, 71; respondent's closing submissions dated 23 December 2020 pars 52, 55, 58. The primary judge recognised that this was the position: amendment reasons [32], [35], [37], [43] - [44], [46].
[16] ts 558 (reproduced in amendment reasons [37]). See also ts 717 (reproduced in amendment reasons [47]).
We accept that there is a difference between an agreement to extend and an agreement to vary. In the present context, where the subject matter concerns the time for satisfaction of a condition precedent, an agreement 'to extend' means to make longer or to enlarge. By contrast an agreement 'to vary' encompasses any change or modification to the time for satisfaction - it includes both an abridgment or an extension of the time for satisfaction of the condition precedent.
It might be that there are implications for the question of consideration that arise from whether there is an agreement to abridge or an agreement to extend. But this ought not mask what, in substance, was being contended for at trial. The appellants' plea of an agreement to extend was premised on the assumption that the finance condition precedent was to be satisfied by 15 November 2017 (the 'extension' being consistent with the appellants' view as to the proper construction of the Sale Agreement). In contending that the parties agreed, in substitution thereof, that the date for satisfaction was to be 22 November 2017, the appellants simply characterised the variation agreement as an agreement to extend. Indeed, before the primary judge, senior counsel for the respondent acknowledged that the appellants 'always had a variation by extension case' and accepted that 'an extension is a variation'.[17]
[17] ts 802. There was similar acceptance on appeal: Appeal ts 104.
While, as we have accepted, there is a difference between an agreement to extend and an agreement to vary, it might be questioned whether the difference was material in circumstances where this characterisation issue arose from the parties' differing positions on the date for satisfaction of the finance condition precedent under cl 2.5(a) of the Sale Agreement. In the context of the parties' dispute the distinction was in the nature of mere labelling rather than being a distinction of factual or legal substance. The critical question was not whether there was an agreement by way of extension or an agreement by way of variation but rather whether or not there was a binding legal agreement that the date for satisfaction of the finance condition precedent was to be 22 November 2017. Had the issue been addressed as a matter of substance, rather than a matter of mere labelling, much of the debate as to the amendment would have fallen away.
The respondent's opening submissions at trial recognised the limited nature of the distinction between the two forms of agreement. In alleging non‑compliance with cl 16.1 of the Sale Agreement the respondent submitted:
Whether, as [the appellants] allege, the alleged agreement was to extend the period stipulated by cl 2.5(a) or whether, as [the respondent] contends, any such agreement would have abridged this period, the effect of the alleged agreement was to vary the operation of cl 2.5(a).[18]
[18] Respondent's opening submissions dated 25 September 2020 par 71.
Also, in the respondent's written closing submissions at trial, having first emphasised the precise terms of the appellants' pleaded case, the respondent then sought to analyse what might be meant by an agreement to extend. Three alternatives were advanced:[19]
1.An extension of the time for performance where there was no variation of the contract.
2.An agreement between the parties to a contract to vary an undisputed and unexpired time stipulation in the contract.
3.An agreement between the parties to a contract to settle a dispute over the interpretation of a time stipulation by agreeing on a mutually accepted interpretation.
[19] Respondent's closing submissions dated 23 December 2020 par 58.
The respondent suggested that the third category was the applicable category in the present case.[20] The respondent went on to consider whether there was such an agreement;[21] and, if so, whether there was valid consideration for that agreement.[22] In so doing the respondent answered the appellants' variation case. In oral closing submissions senior counsel for the respondent then developed the respondent's answer to the appellants' variation case conformably with the respondent's written closing submissions.[23] Accordingly, as senior counsel for the respondent accepted at the appeal hearing, at trial the respondent engaged on whether or not - by agreement - the date for satisfaction of the finance condition precedent became 22 November 2017. The respondent joined issue on whether or not there was an agreement and whether or not there was valid consideration for any agreement.[24]
[20] Respondent's closing submissions dated 23 December 2020 par 59.
[21] Respondent's closing submissions dated 23 December 2020 pars 62 - 69.
[22] Respondent's closing submissions dated 23 December 2020 pars 70 - 87.
[23] ts 679 - 682. The primary judge recognised that this was the position: amendment reasons [46].
[24] Appeal ts 106 - 107.
The vice with ground 1 is that it focuses selectively on what was said by the primary judge at amendment reasons [52]. The respondent contends that the primary judge mistook the effect of its written closing submissions. But the primary judge decided the amendment application on a wider basis. Her Honour traversed the whole of the relevant portions of the trial record in considering the manner in which the case was run at trial: amendment reasons [21] ‑ [47]. The primary judge concluded that the proposed amendments reflected the manner in which, ultimately, the case was conducted by both parties at trial: amendment reasons [8], [48] (see also [19]). That conclusion is unchallenged by ground 1. Ground 1 only takes issue with what is stated at amendment reasons [52] - and, in that respect, is confined by the submissions in support of ground 1 to what the primary judge drew from the respondent's written closing submissions.
There was a substantial basis for the primary judge's conclusion that the amendments reflected the manner in which the case was conducted at trial. That basis appears from what is recorded by the primary judge at amendment reasons [21] ‑ [47] and [49] ‑ [51]. Moreover, it is a conclusion where the primary judge had a considerable advantage over this court. Her Honour was immersed in the trial and experienced the parties' arguments and counterarguments as they emerged over the course of the hearing. The recognition of a trial judge's advantage in this respect underpins the accepted position that the reasons of the trial judge are usually the best indication of what matters were in issue at trial: Whisprun Pty Ltd v Dixon.[25]
[25] Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598 [50].
The respondent has not demonstrated error in the findings that the amendments sought by the appellants reflected the manner in which the case was conducted at trial.
Nor, in our opinion, is there substance in the respondent's contention that the primary judge misinterpreted the respondent's written closing submissions. The primary judge accurately recorded the effect of the material part of the respondent's written closing submissions: amendment reasons [43] ‑ [45]. In a finding that is unchallenged by ground 1, the primary judge found that the question of whether there was any consideration for an alleged agreement was only relevant if the issue to be determined was whether there was an agreement to vary the date for satisfaction of the finance condition precedent: amendment reasons [51]. Once that point is reached the impugned conclusion at [52] of amendment reasons becomes inescapable - the respondent answered the appellants' case on variation.
Ground 1 fails.
Grounds 2 and 3 can be dealt with more briefly. They are without merit. Ground 2 alleges that the primary judge applied the wrong principle. It does so by fastening on the primary judge's use of the words 'primary consideration' at [74] of the amendment reasons. The argument reads the primary judge's reasons selectively and out of context. The primary judge had previously provided a comprehensive statement of the applicable legal principles in considering and determining the amendment application: amendment reasons [9] ‑ [16]. Her Honour's statement of the applicable legal principles is in orthodox terms and is not challenged by the respondent's appeal. It is evident that the primary judge had regard to those principles in determining the application. In identifying which of those relevant considerations were, for the purpose of the application, the primary considerations, her Honour was doing no more than specifying the considerations to which her Honour gave substantial weight in determining the proper disposition of the application. There was no appellable discretionary error in so doing. It was well open to the primary judge to attribute weight to the identified considerations of procedural fairness and whether the respondent would suffer irremediable prejudice if the amendment was allowed.
Ground 3 is misconceived. The primary judge did not fail to take account of the appellants' explanation for the lateness of the application. The primary judge noted the respondent's submission in this respect and rejected it in circumstances where the basis for the application was that the pleadings should be amended to reflect the manner in which the case was run at trial: amendment reasons [18] ‑ [19], [55] ‑ [59]. It was well open to the primary judge to accept, in effect, that the timing of the application was explained by the primary judge's acceptance of the pleading point whereas at trial it had always been the appellants' position that the variation case was open on the pleadings: amendment reasons [58]. In any case the primary judge weighed the timing of the application as a factor in the decision whether or not to allow the amendment: amendment reasons [59].
None of the respondent's grounds of appeal would succeed were the court to grant leave to appeal.
Leave to appeal: conclusion
Accordingly, leave to appeal from the primary judge's decision to allow the amendment should be refused due both to an absence of any demonstrated error and the lack of substantial injustice even if the amendment should not have been allowed. It follows that the respondent's appeal CACV/70/2023 should be dismissed. So far as the application for leave to appeal requires an extension of time, while the delay is short and explained, the extension would be without utility given that leave to appeal must be refused. In the circumstances we would dismiss the application for an extension. Prima facie the costs of the appeal should follow the event. If, however, either party contends that some other order should be made as to costs, the parties should be heard on the question of the costs in appeal CACV/70/2023.
We turn then to appeal CACV/65/2023. Before evaluating the grounds of appeal it is necessary to examine the terms of the Sale Agreement in more detail.
The structure and contents of the Asset Sale Agreement
The Sale Agreement is described as an 'Asset Sale Agreement'. On the cover page to the Sale Agreement there is reference to five entities: Nickel Co, Investments Co, the receivers, the respondent (as 'Buyer') and Brazil Co (as 'Company'). Nickel Co and Investments Co are defined, together, as the 'Sellers' (cl 1.1). Each of the five entities are then referred to in the 'Parties' section of the Sale Agreement. The appellants accepted, with respect correctly, that having regard to these matters Brazil Co was a party to the Sale Agreement.[26]
[26] Appeal ts 6. See also the appellants' fifth further amended reply dated 22 May 2023 par 3(a)(iv) BAB 261.
Immediately after the title 'Asset Sale Agreement', on the first page of the Sale Agreement, there is a space for 'Date'. It is clearly intended by this space that the parties should identify the operative date of the agreement at this point of the Sale Agreement. Nothing is written in the space for the 'Date'.
The recitals, in the background section of the Sale Agreement, provide that the Sellers (ie Nickel Co and Investments Co) wish to sell and the Buyer wishes to purchase the 'Assets' (ie the 'Quotas' and the 'Loan') (recital D). That does not explain why Brazil Co is a party to the Sale Agreement. In that respect recital E states:
The Company [ie Brazil Co] is entering into this agreement solely for the purpose of acknowledging and consenting to the transactions contemplated hereby and acknowledging that its obligations as a borrower in respect of the Loan and under the Loan Agreements remain in full force and effect on the date hereof and will continue to remain in full force and effect, and not be altered by, the consummation of the transactions contemplated hereby, except as expressly provided herein.
However, as will be seen, there are operative provisions within the Sale Agreement that mean that Brazil Co does more than merely acknowledge and consent to the transactions contemplated by the Sale Agreement.
The operative provisions of the Sale Agreement have an orthodox structure. The instrument commences with definitions and interpretive rules. There is no definition of the word 'party'. However, the interpretative rules provide that a reference to a party is a reference to a party to the agreement (cl 1.2(k)). More generally headings are for convenience and do not affect interpretation (cl 1.2).
The main operative provisions are cl 4 and 5 dealing with the sale and purchase of the Assets and the assignment of the Loan. The sale and assignment is to occur on the 'Completion Due Date' (ie 10 business days after satisfaction or waiver of the conditions precedent or as otherwise agreed in writing by the Sellers and the Buyer - see cl 1.1 and cl 7.1). A 'Consideration' of US$50 million is payable. In this respect the Buyer is to pay a US$100,000 'Deposit' within '7 days of the exchange of signed copies' of the Sale Agreement (cl 3(a)). On 'Completion' the Deposit is to be applied in part payment of the Consideration (cl 3(b)). The parties' obligations in relation to Completion, and post‑Completion, are provided for in cl 7. These, with some minor exceptions which we will come to involving Brazil Co as 'the Company', are obligations on the part of the Sellers and the Buyers.
Clause 2 is headed 'Conditions Precedent'.[27] Clause 2.1 sets out a series of conditions precedent. Relevantly:
Unless waived by the Buyer [ie the respondent] in its absolute discretion and in writing, the transfer of the Assets from the Sellers to the Buyer and the provision of the Consideration (excluding the Deposit) are subject to and conditional on the following conditions being satisfied:
…
(f)execution of binding finance agreements by the Buyer for an amount equal to the Consideration [ie US$50 million] and satisfaction of all conditions precedent under the finance agreement other than obtaining the Consent and Completion occurring under this agreement.
[27] While 'Conditions Precedent' is a defined term it will be convenient in these reasons to refer to the 'conditions precedent' or a 'condition precedent' unless reproducing the text of the Sale Agreement.
The conditions precedent are plainly for the benefit of the respondent as Buyer. That appears from cl 2.1 - which states that it is for the respondent to waive the conditions precedent in its 'absolute discretion' - but is reinforced by cl 2.4. By cl 2.4 each condition precedent may only be waived by the Buyer.
There is an obligation in cl 2.2 for each 'party' to use reasonable endeavours to satisfy the conditions precedent:
(a)Each party must use all reasonable endeavours to ensure that each Condition Precedent is satisfied as soon as practicable after the date of this agreement and in any event before the End Date.
(b)Without limiting clause 2.2(a), the Sellers and the Company [ie Brazil Co] must provide all reasonable assistance requested by the Buyer to satisfy the Conditions Precedent or otherwise achieve Completion, including:
(i)providing all reasonable access to the business and employees of the Company during normal business hours; and
(ii)facilitating access by the Buyer to Bradesco. (emphasis added)
The appellants accepted that, in cl 2.2(a), the reference to 'party' included Brazil Co.[28] That concession was properly made. Clause 2.2(b) specifically identifies Brazil Co in prescribing the performance of certain matters as and by way of reasonable endeavours.
[28] Appeal ts 8, 10.
Some explanation should be provided for the reference to 'Bradesco' in cl 2.2(b)(ii). Bradesco, meaning Banco Bradesco SA (cl 1.1), was a financier to Brazil Co; Brazil Co had an outstanding loan of about US$50 million to Bradesco [108]. One of the other conditions precedent in cl 2.1 of the Sale Agreement required the obtaining of Bradesco's consent to the entry into the Sale Agreement as well as any other document agreed by the Buyer and the Sellers to be a 'Transaction Document' (cl 2.1(b) - see also the definition of 'Consent' in cl 1.1). As a matter of objective likelihood, it may be seen how the circumstances of the transaction might necessitate Brazil Co's assistance to facilitate the respondent's access to Bradesco. Bradesco, as Brazil Co's financier with resultant duties of confidentiality to Brazil Co, would be unlikely to deal with the respondent for the purpose of satisfaction of the consent condition precedent without Brazil Co's prior introduction and authorisation.
There was an obligation on each party to give notice to the other parties after becoming aware of the satisfaction of a condition precedent (cl 2.3).
Clause 2.5 of the Sale Agreement deals with termination in the case of non‑satisfaction or waiver of one or more of the conditions precedent:
A party is entitled to terminate this agreement by notice to the other parties if it has complied with its obligations under clause 2.2 and:
(a)the Condition Precedent in clause 2.1(f) is not satisfied by the date which is 14 days after the date of the exchange of signed copies of this agreement;
(b)at any time before the End Date a Condition Precedent (other than in clause 2.1(f)) has become incapable of satisfaction prior to the End Date; or
(c)at any time on and from the End Date a Condition Precedent (other than in clause 2.1(f)) has not been satisfied or waived before the End Date.
The 'End Date' is the day that is 90 days after the date of the Sale Agreement or any other date 'agreed in writing between the Sellers and the Buyer' (cl 1.1). Accordingly, as with the Completion Date, the End Date was a matter solely for the Sellers and the Buyer (ie the appellants and the respondent). Any variation thereof did not require the consent or agreement of Brazil Co.
For the purpose of appeal CACV/65/2023, the critical part of cl 2.5 is cl 2.5(a). Clause 2.5(a) is concerned with the finance condition precedent in cl 2.1(f). It permits a 'party' to terminate the Sale Agreement if the finance condition precedent is not satisfied (or waived) by a particular date - that date being '14 days after the date of the exchange of signed copies of' the Sale Agreement.
Accordingly, while the finance condition precedent in cl 2.1(f) is for the benefit of the respondent as the Buyer, non‑satisfaction and non‑waiver of the condition precedent by the relevant date entitles any 'party' to terminate the Sale Agreement (assuming the party purporting to terminate has complied with the reasonable endeavours obligation in cl 2.2).
There is an issue in appeal CACV/65/2023 as to whether the term 'party' in the chapeau to cl 2.5 includes Brazil Co. There is also a constructional issue in relation to cl 2.5(a). In substance, as is contended for by ground 4, the appellants say that on its proper construction cl 2.5(a) permits termination if the finance condition precedent in cl 2.1(f) is not satisfied by the date that is 14 days after the date of the exchange of signed copies of the Sale Agreement by the Sellers, the Receivers and the Buyer, ie the Sellers, the Receivers and the Buyer alone. However, the respondent contends, and the primary judge found, that the 14 days for satisfaction or waiver of the cl 2.1(f) finance condition precedent did not commence until the Sale Agreement had been signed and exchanged by the Company (ie by Brazil Co) as well as the Sellers, the Receivers and the Buyer [4](a), [511].
There are other pre‑Completion obligations under the Sale Agreement. For example, by cl 2.6 the Sellers agree to use reasonable endeavours to ensure that Brazil Co conducts its business materially in the ordinary course. There is also a 'no talk - no shop' type obligation assumed by the Company in cl 2.6(c):
Between the date of this agreement and the earlier of Completion and termination of this agreement the Sellers and the Company must not, and must procure that any employees of the Company do not:
(i)provide information regarding the Assets to any potential purchaser of the Assets other than the Buyer; or
(ii)solicit any offers for the Assets from any person other than the Buyer.
Other provisions, in addition to those in cl 2.2 and cl 2.6(c), contemplating action by Brazil Co are:
1.Clause 2.1(c) - a condition precedent whereby Brazil Co is to acknowledge receipt of a notice of assignment in respect of the Loan owed by Brazil Co to Nickel Co.
2.Clause 7.7 - this requires Brazil Co to file amended articles of association with the relevant regulatory authority. However, this is a post‑Completion obligation.
The Sale Agreement contains two releases in favour of Brazil Co. First, with effect from Completion, the Sellers release and discharge Brazil Co from any amounts that may be owed by Brazil Co to the Sellers (cl 5.3(b)). Second, again with effect from Completion, each Seller releases Brazil Co from any claims by that Seller in respect of events or matters arising prior to Completion (cl 7.9).
The releases are the only continuing benefit that Brazil Co, as the Company, stood to obtain by completion under the Sale Agreement.Relevantly, these benefits are conditional on Completion. The benefits available to Brazil Co under the Sale Agreement could not and would not accrue in the event of termination of the Sale Agreement prior to Completion. In that respect the rights accruing to Brazil Co under the Sale Agreement were subject to the termination rights provided for under the Sale Agreement.
Numerous provisions in the Sale Agreement use the term 'party' or 'parties'. We have already mentioned cl 2.2, cl 2.3 and cl 2.5. Other examples of the use of the term 'party' or 'parties' include: each party has confidentiality obligations as to the existence and terms of the Sale Agreement (cl 10.1); the Sale Agreement constitutes the entire agreement between the parties in relation to its subject matter (cl 15); there are restrictions on a party assigning, novating or otherwise transferring any of its rights or obligations under the Sale Agreement (cl 16.2); the Sale Agreement may be executed in any number of counterparts and by the parties on separate counterparts (cl 16.4); each of the parties must pay their own costs and expenses in connection with the Sale Agreement (cl 16.5); provided it is feasible on commercially reasonable terms, each party must promptly do all further acts and execute all further documents required or reasonably requested to give effect to the Sale Agreement (cl 16.6); a waiver is only effective if given or confirmed in writing by a party (cl 16.7(b)).
Specific mention should be made of cl 16.1 of the Sale Agreement headed '[a]mendments'. This states:
This agreement may only be varied by a document signed by or on behalf of each party.
Two further aspects of the Sale Agreement must be mentioned. Both were relied on by the appellants in support of ground 4. First are the termination rights provided for by cl 13. There are termination rights for the Buyer (cl 13.1) and the Sellers (cl 13.2). However, as the appellants emphasised, there are no contractual termination rights for Brazil Co as the Company. In the event of termination each party retains the rights it has against the others in respect of any breach of the agreement occurring before termination (13.3(b)). Second is the notice provision in cl 14. There were specified addresses for notice for each of the Sellers, the Receivers and the Buyer (these being addresses to which any contractual communication 'must be addressed') (cl 14.1). However, there was no specified address for notice for Brazil Co.
Ground 4: the proper construction of cl 2.5(a) of the Sale Agreement
Ground 4 is logically anterior to each of grounds 1 ‑ 3 as ground 4 is concerned with the proper construction of the Sale Agreement. Accordingly, while the appellants ordered their argument differently, it is appropriate to start consideration of appeal CACV/65/2023 by determining ground 4.
By ground 4 the appellants contend that, properly construed, the phrase 'the date of the exchange of signed copies of this agreement' in cl 2.5(a) of the Sale Agreement refers to the date of exchange of executed copies of the Sale Agreement as between the appellants and the respondent only. The phrase does not, according to the appellants, require the exchange of executed copies of the Sale Agreement with Brazil Co.
Practically, in the events that happened, the appellants' preferred construction would result in the relevant 'date of exchange' being 1 November 2017 rather than 10 November 2017. If the appellants' construction is accepted the last date for satisfaction of the finance condition precedent was 15 November 2017 rather than 24 November 2017.
Principles of contractual construction
There was no issue between the parties concerning the applicable principles of contractual construction. There have been many recent decisions in this court outlining the general principles for the construction of commercial instruments,[29] often by reference to Electricity Generation Corporation v Woodside Energy Ltd[30] and Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd.[31] Nothing useful would be gained by yet another exposition of those principles. It suffices to adopt what has been stated in those recent decisions.
[29] See eg Black Box Control Pty Ltd v TerraVision Pty Ltd [2016] WASCA 219 [42]; Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80; (2019) 55 WAR 89 [295] - [298], [302]; CA & Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31 [51] - [54]; Pilbara Iron Ore Pty Ltd v Ammon [2020] WASCA 92; (2020) 14 ARLR 148 [85] - [86]; JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [2020] WASCA 112 [67] - [72]; Electricity Generation and Retail Corporation trading as Synergy v EIT Kwinana Partner Pty Ltd [2022] WASCA 3 [229] - [230], [232] - [247]; AIG Insurance Australia Ltd v McMurray [2023] WASCA 148 [135] - [140].
[30] Electricity Generation Corporation trading as Verve Energy v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35].
[31] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 [46] ‑ [52].
In summary:
1.The construction of a contractual clause involves an objective determination of the meaning of the words of the contract by reference to text, context (the entire text of the contract) and purpose.
2.The starting point for the proper construction of a contractual clause is the language used in the clause - one must identify the possible meanings that the words chosen by the parties can bear.
3.In determining the meaning of the terms of a commercial contract it is necessary to ask what a reasonable business person would have understood the terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract. The instrument must be read as a whole.
4.Absent a contrary intention in the contract, the court approaches the task of giving a commercial contract an interpretation on the assumption that the parties intended to produce a commercial result - one that makes commercial sense. This requires that the construction be consistent with the commercial object of the agreement. Similarly, a commercial contract should be construed so as to avoid it making commercial nonsense or working commercial inconvenience. However, it must be recognised that business common sense is a topic on which reasonable minds may differ.
5.If the words used are unambiguous the court must give effect to them. The court has no power to remake or amend a contract for the purpose of avoiding a result that is considered to be inconvenient or unjust.
Finally, a contract should be construed practically so as to give better effect to its commercial purpose. The law seeks to uphold commercial contractual obligations and the expectations that derive from them. The court should not adopt a narrow or pedantic approach to construction, particularly in the case of commercial arrangements. See Mineralogy Pty Ltd v The State of Western Australia.[32]
The parties' submissions
[32] Mineralogy Pty Ltd v The State of Western Australia [2005] WASCA 69 [15].
In substance the respondent submits that the primary judge's reasoning on the proper construction of cl 2.5(a) of the Sale Agreement was correct and should be upheld.
The appellants organised their submissions in support of ground 4 by reference to three aspects of cl 2.5(a) of the Sale Agreement. Presumably this was to suggest that there was a textual foothold for the appellants' preferred construction. Initially the appellants focused on the words '[a] party … entitled to terminate'. The appellants submit that Brazil Co was not a party that could terminate the Sale Agreement.
A leading textbook explains 'detriment' as requiring some prejudicial effect on temporal interests: P Feltman et al Spencer Bower: Reliance‑Based Estoppel (5th ed) (2017) [5.41], [5.51]. The concept of 'detriment' has also been equated to being placed in a position of 'material disadvantage': Thompson v Palmer;[95] or 'significant and unjust material disadvantage': Foran v Wight.[96]
[95] Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507, 547.
[96] Foran v Wight [1989] HCA 51; (1989) 168 CLR 385, 436.
Whether the requisite detriment has been suffered is judged only at the moment when the defendant resiled from the common assumption: Grundt v The Great Boulder Proprietary Gold Mines Ltd; Spencer Bower: Reliance‑Based Estoppel (5th ed) [5.51] ‑ [5.53].
We have already referred to the accepted position that detriment has to be real or material; a speculative possibility is insufficient. In that respect, as is implicit in our reasoning for rejecting the appellants' case on the $25,000 payment, it is well established that a trivial detriment will not found an estoppel: Spencer Bower: Reliance‑Based Estoppel (5th ed) [5.43] (see also the authorities cited at fn 195). However, an estoppel may be established even if the evidence does not justify a finding that the claimant would otherwise have avoided the detriment; it is enough that a party loses the benefit of a 'real chance' to avoid the detriment: Foran v Wight (436 ‑ 437); Austral Standard Cables Pty Ltd v Walker Nominees Pty Ltd;[97] Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [3510]. But where, as here, the contended for detriment is some 'loss of opportunity', the claimant must prove on the balance of probabilities that it would have done something to pursue the opportunity in question: Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [3510].
[97] Austral Standard Cables Pty Ltd v Walker Nominees Pty Ltd (1992) 26 NSWLR 524, 537 - 538, 540.
The last proposition explains the primary judge's statement that there is 'no evidence' of what the receivers did in reliance on the common assumption or what opportunity was said to be lost [559]. The appellants did not call oral evidence in this respect. The failure to do so means that the appellants had to rely on inference. There is no inconsistency between the primary judge's recognition of the lack of any direct evidence and her Honour's acceptance, as a matter of fact, that due to the common assumption the receivers did not seek to negotiate or clarify when the 14‑day period commenced [557]. There remained an evidential lacuna as to what the receivers would have done but for the common assumption - in particular, what steps and opportunities the receivers would have pursued had the appellants not been acting (or, more pertinently, had the appellants not been in a state of inaction) because of the common assumption. The primary judge did not make any inferential findings on what, if anything, would have been done to pursue any opportunity. And, on appeal, the appellants did not contend that her Honour was in error in failing to do so and should have made a specific finding in this respect in support of the appellants' estoppel by convention case.
This alone stands as an insurmountable obstacle to allowing ground 2 in relation to the alleged loss of opportunity.
There remains the primary judge's finding that her Honour was not satisfied that the receivers' reliance on the common assumption caused the appellants to lose a real chance of avoiding the detriment pleaded. We can detect no error in that finding as it applies to the alleged loss of opportunity case. The issue must be viewed from the time that the respondent resiled from the common assumption. At that time, on or about 9 November 2017, there continued to be an opportunity whereby the appellants might have sought to have negotiated and clarified the position with respect to the commencement of the 14‑day period for the purpose of cl 2.5(a) of the Sale Agreement. Accordingly, there was no detriment as pleaded because that opportunity still existed and had not been lost. Indeed, as the primary judge explained, over 9 and 10 November 2017 Mr Tucker sought to obtain the respondent's agreement to that end [560].
There were at least three occasions on which the appellants sought to pursue the very opportunity which was said to be lost in contending that there was detriment to ground an estoppel by convention:
1.First, on 9 November 2017 at 1.55 pm, Mr Tucker responded to an email in which, among other things, Mr Milbourne sought a copy of the Sale Agreement as executed by Brazil Co. Mr Tucker said that this was in the process of being returned to him. Mr Tucker went on to say: 'Our position is that exchange occurred on 1 November 2017. Please confirm you agree with this?'. Subsequently Mr Milbourne said that this should be discussed [291] ‑ [292].
2.Second, by a further 9 November 2017 email, sent at 11.20 pm, Mr Tucker proposed an 'extension' of the date for satisfaction for the finance condition precedent from 15 November 2017 to 17 November 2017 [311].
3.Third, during a telephone call between, among others, Mr Tucker and Mr Milbourne on the morning of 10 November 2017, Mr Tucker informed Mr Milbourne that they needed to agree when the Sale Agreement came into effect and said that Mr Milbourne could not have it both ways [333], [336], [339]. Mr Tucker asked Mr Milbourne to accept that the Sale Agreement was binding as of 1 November 2017 [336], [339]. Mr Tucker also proposed that the parties agree 22 November 2017 as being the date for binding finance [339].
The appellants criticise the primary judge for referring to events after the respondent resiled from the common assumption. That criticism is based on a misconception as to why the primary judge referred to those matters. The primary judge referred to those matters in concluding, in substance, that the appellants did not lose a real chance of avoiding the pleaded detriment. The appellants did not lose the contended for opportunity because it remained available to them - something demonstrated by the steps in fact taken by or on behalf of the appellants. The primary judge did not err in referring to events after the respondent resiled from the common assumption in circumstances where those events were informative of the circumstances that prevailed at the time that the respondent resiled from the common assumption.
Nor is there merit in the appellants' complaint about the primary judge's consideration of whether the respondent was required to renegotiate. That observation is not material to the primary judge's reasoning. In any event the appellants correctly identify that the real issue is whether there was 'scope to negotiate or clarify the start date'.[98] It may be accepted that there was such an opportunity. The point at which the appellants' argument breaks down is when the appellants go on to assert that this opportunity was lost. It was not. There was no 'lost' opportunity as a result of the appellants' reliance on the common assumption.
[98] Appellants' submissions par 56 WAB 20.
At the time Mr Tucker was alive to the fact that the opportunity for negotiation subsisted while the Sale Agreement as executed by Brazil Co remained unexchanged. On 9 November 2017 at 2.53 pm Mr Tucker sent an email to one of his employees telling him not to send a fully executed version of the Sale Agreement to Mr Milbourne [294]. It is clear, on the facts, that the receivers were at all times able to procure and did in fact procure execution of the Sale Agreement by Brazil Co [306], [310], [313], [339]. The appellants were in a position to provide a fully executed copy of the Sale Agreement as and from 12.38 am on 10 November 2017 [313].
Also confirming the appellants' appreciation of the opportunity to negotiate and clarify the position with respect to the commencement of the 14‑day period for satisfaction of the finance condition precedent is the fact that, in the late afternoon of 9 November 2017, the appellants prepared a draft deed of acknowledgement as to the date of exchange (although this was never sent by the appellants to the respondent) [295]. Additional confirmation is provided by the circumstance that, on 9 November 2017 at 7.04 pm, Mr Tucker informed Mr Milbourne that there needed to be agreement as to the funding deadline before a copy of the Sale Agreement was provided [303]. The appellants' insistence that there be such an agreement demonstrates that there was a continuing opportunity - which the appellants sought to avail themselves of - to negotiate and clarify the position with respect to the commencement of the 14‑day period for the purposes of cl 2.5(a) of the Sale Agreement.
At the time Mr Tucker also appreciated that, logically, if time had not commenced to run on the 14‑day period for satisfaction of the finance condition precedent, there was not a binding agreement [315] (see also [323], [333], [336], [339]). In that respect the opportunity said to be lost subsisted until the Sale Agreement was executed and exchanged by all parties. This, as we have explained, was within the control of the appellants. Despite having said that the fully executed Sale Agreement would not be provided, the appellants subsequently decided to provide the respondent with a fully executed version of the Sale Agreement - one signed by all parties including Brazil Co - before negotiating and clarifying the position with respect to the commencement of the 14‑day period for satisfaction of the finance condition precedent. The appellants provided the respondent with a copy of the fully executed Sale Agreement by an email sent on 10 November 2017 at 12.01 pm [343]. It was only then - and by the appellants' own actions - that the opportunity ceased to be available.
The circumstance that the opportunity relied on by the appellants subsisted after the respondent resiled from the common assumption further distinguishes the present case from George 218 Pty Ltd v Bank of Queensland Ltd. In George 218 Pty Ltd v Bank of Queensland Ltd the opportunity ceased to be available at the point when the bank advanced the funds pursuant to the latter facility. At that time the guarantors had not resiled from the common assumption that money owed under the latter facility would constitute 'money secured' by the guarantees.
The primary judge was correct to hold that the receivers' reliance on the common assumption did not cause the appellants to lose a real chance so far as it was alleged that there was a loss of opportunity to negotiate and clarify the position with respect to the commencement of the 14‑day period for satisfaction of the finance condition precedent. That opportunity remained available to the appellants after the respondent resiled from the common assumption and was only brought to an end by the appellants' own act in circulating a fully executed copy of the Sale Agreement.
Ground 2 fails.
Ground 3: the alleged election
By ground 3 the appellants allege error in the primary judge's determination of the election point. The primary judge held that the respondent's request for return of the deposit and subsequent acceptance of the deposit did not constitute an election to treat the termination notice as a valid notice [4](d), [581] ‑ [584], [586]. By ground 3 the appellants contend that the request for and acceptance of the deposit amounted to an election preventing the respondent from denying the termination notice was valid.
The background facts are uncontroversial (see [10], [19] ‑ [21] and [23] above). In summary:
1.Nickel Co and Investments Co issued the termination notice on 22 November 2017.
2.The following day Mr Milbourne, for the respondent, requested return of the deposit. The primary judge interpreted Mr Milbourne's email as requesting the return of the deposit on the basis that the Sale Agreement had been terminated [579].
3.The appellants returned the deposit to the respondent on 27 November 2017.
4.By the trial the respondent accepted that it had kept the deposit funds and used them for its own purpose.
The appellants relied on cl 3(d) of the Sale Agreement. This provided:
If the agreement is terminated under clause 2.5 the Sellers must refund the Deposit (inclusive of all interest earned on the Deposit) to the Buyer.
The primary judge accepted that, having requested return of the deposit and accepting its return, the respondent had treated the Sale Agreement as having come to an end [580]. But the primary judge did not accept that the respondent had thereby elected to accept that the termination notice was valid. The primary judge reasoned that, if the termination under cl 2.5(a) of the Sale Agreement was not effective, the appellants' conduct in giving notice of termination was a repudiation of the agreement. In those circumstances the respondent had two choices: (1) to accept the repudiation, discharge the appellants from future performance and, potentially, claim damages; or (2) to affirm the agreement and seek specific performance [583]. This did not lead to a conclusion that an otherwise invalid termination notice was valid as a matter of law [584]. If the termination notice was invalid, nothing that the respondent did could make it valid [581].
In contending that the appellants elected to treat the termination notice as valid the appellants said that, following 22 November 2017, there were inconsistent rights between which the respondent could elect. They were:
1.To treat the termination notice as valid and exercise its rights consequent on that state of affairs - those rights including the return of the deposit under cl 3(d) of the Sale Agreement.
2.To treat the termination notice as invalid and exercise its rights consequent on that state of affairs.
The appellants submit that, in requesting return of the deposit under cl 3(d) - a course that was only available if there was a valid termination under cl 2.5 - an election was made. The respondent was bound by that election. The consequence was not to render the notice valid but rather to preclude the respondent from treating the termination notice as invalid. In this respect the appellants' submission on appeal exceeds the scope of the relief sought at trial. At trial the appellants sought a declaration that they validly terminated the Sale Agreement - not a declaration that the respondent was precluded from treating the termination notice as invalid.[99] The appellants sought to overcome this difficulty by seeking a different declaration in the orders wanted in their appellant's case.[100]
[99] SOC prayer for relief pars 1 ‑ 2 BAB 259.
[100] Orders wanted par 2(c).
This is not the only way in which the appellants' case on appeal departed from their case at trial. The appellants' pleaded case was that having requested the return of the deposit:
[The respondent] admitted by conduct that [the Sale Agreement] was not operative as at 23 November 2017.[101]
[101] SOC par 19 BAB 256.
There was a further plea, by way of reply, that:
[The respondent's] request for the return of the deposit pursuant to cl 3.5(d) [sic] of [the Sale Agreement] or, alternatively, [the respondent's] request together with its admission in par 21(a) of the defence that it received the sum of US$91,650.09 on 28 November 2017 and its failure to return the sum of US$91,650.09, constituted acceptance of the validity of the default notice and an election to treat [the Sale Agreement] as at an end.[102]
[102] Reply par 8 BAB 280 - 281.
Accordingly, while the appellants alleged that the respondent accepted the validity of the termination notice, the doctrine of election was only raised in contending that the Sale Agreement was at an end.
In submissions to this court the respondent notes the way in which the appellants advance a new case on appeal but deals with that case on its merits. The respondent says that the primary judge addressed and correctly answered the correct legal question, namely, was the termination notice valid? In that respect the respondent embraces the primary judge's reasoning. Specifically, there being no challenge to the primary judge's finding that the appellants had repudiated the Sale Agreement, the respondent says that it had a right of election: the respondent could accept the repudiation and terminate the Sale Agreement or the respondent could affirm the Sale Agreement. The respondent submits that in the former case it would be entitled to return of the deposit and to damages. There was, in this respect, no election between inconsistent rights in requesting and accepting return of the deposit.
A party can act in a manner that affirms the existence of a contractual right by exercising what is commonly described as an election between inconsistent 'sets of rights' (this including all rights, privileges, powers and immunities): Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788.[103] The doctrine of election presupposes that something happens which gives rise to the existence of two alternative rights: Agricultural and Rural Finance Pty Ltd v Gardiner.[104] The doctrine only applies if the rights are inconsistent; it is the concurrent existence of inconsistent rights which explains the doctrine. Where the rights are inconsistent neither may be enjoyed without the extinction of the other: Sargent v ASL Developments Ltd;[105] Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [50] ‑ [51]. The words or conduct ordinarily required to constitute an election must be unequivocal - it must be consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other: Sargent v ASL Developments Ltd (646).
[103] Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2022] HCA 38; (2022) 277 CLR 445 [38].
[104] Agricultural and Rural Finance Pty Ltd v Gardiner [58].
[105] Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634, 641.
In Immer (No 145) Pty Ltd v The Uniting Church in Australia Property Trust (NSW) the plurality (Deane, Toohey, Gaudron and McHugh JJ) stated:
The true nature of election is brought out in this sentence from the seminal work of Spencer Bower and Turner, The Law Relating to Estoppel by Representation: 'It is of the essence of election that the party electing shall be "confronted" with two mutually exclusive courses of action between which he must, in fairness to the other party, make his choice'.[106] (citations omitted)
[106] Immer (No 145) Pty Ltd v The Uniting Church in Australia Property Trust (NSW) [1993] HCA 27; (1993) 182 CLR 26, 41.
Accordingly, a person confronted by two truly alternative rights may lose one by acting in a manner which is consistent only with having chosen to rely on the other: Khoury v Government Insurance Office (NSW).[107]
[107] Khoury v Government Insurance Office (NSW) [1984] HCA 55; (1984) 165 CLR 622, 633.
In this respect it was critical to ground 3 that the respondent's right to seek return of and retain the deposit was a right that only arose under cl 3(d) of the Sale Agreement, there having been a valid termination under cl 2.5 of the Sale Agreement, and there was no other basis for the respondent to seek return of and retain the deposit. Senior counsel for the appellants submitted that this was the position.[108] We disagree. Nickel Co and Investments Co had no right to retain the deposit where the appellants had repudiated the Sale Agreement by wrongly purporting to terminate it and the respondent had accepted the repudiation bringing the agreement to an end. In those circumstances the respondent was able to recover the deposit as on an ordinary failure of consideration: McDonald v Dennys Lascelles Ltd;[109] Foran v Wight (432), (438), (455).
[108] Appeal ts 47 - 51.
[109] McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457, 467 - 468, 479.
This is not a case where the respondent had inconsistent alternative rights. On the primary judge's finding of repudiation, which is unchallenged by the appellant for the purpose of this ground, there was a legal basis for the respondent to seek return of and retain the deposit independent of cl 3(d) of the Sale Agreement. The respondent did not have alternative, mutually exclusive, inconsistent rights; but, rather, alternative grounds on which to claim what was in substance the same right. In the circumstances there is no scope for the operation of the doctrine of election. In any event it cannot be concluded that the respondent's conduct was unequivocal in the sense required for an election. The respondent's conduct was consistent with both an exercise of the right under cl 3(d) of the Sale Agreement and also with an exercise of the right under the general law to seek return of the deposit having accepted the appellants' repudiation of the Sale Agreement thereby bringing the Sale Agreement to an end.
We acknowledge that senior counsel for the appellants argued that the respondent had invoked cl 3(d) of the Sale Agreement. There is, however, no mention of cl 3(d) in Mr Milbourne's email [577].[110] Senior counsel also asserted that the primary judge concluded, in effect, that the respondent invoked cl 3(d) and that her Honour's finding was not the subject of challenge by cross‑appeal or a notice of contention.[111] The primary judge made no such finding. The primary judge simply stated that the only reasonable interpretation of Mr Milbourne's email was that he 'was requesting the return of the deposit on the basis that [the Sale Agreement] had been terminated' [579]. There was no finding that Mr Milbourne's request for the return of the deposit was grounded in cl 3(d) of the Sale Agreement. All the more so there was no finding that the respondent, by Mr Milbourne, accepted the validity of the termination notice because the appellants had validly terminated the Sale Agreement pursuant to cl 2.5(a).
[110] GAB 721.
[111] Appeal ts 46 - 47, 51, 53.
Ground 3 fails.
Conclusion and orders
Orders should be made on the respondent's appeal (ie CACV/70/2023) to the following effect:[112]
1.The appellant's application for an extension of time to appeal from the orders of the Supreme Court of Western Australia made 19 May 2023 in action CIV/1806/2019 granting leave to amend is dismissed.
2.The appellant's application for leave to appeal from the orders of the Supreme Court of Western Australia made 19 May 2023 in action CIV/1806/2019 granting leave to amend is dismissed.
3.The appeal is dismissed.
[112] In sub-pars 1 and 2 that follow the reference to 'appellant' is a reference to the appellant in appeal CACV/70/2023, ie Mining Standards International Pty Ltd.
The parties should be heard on the precise terms of the orders and the costs of appeal CACV/70/2023.
Orders should be made on the appellants' appeal (ie CACV/65/2023) to the following effect:
1.The appeal is allowed.
2.Paragraphs 1 and 2 of the final orders of the Supreme Court of Western Australia made 19 May 2023 in action CIV/1806/2019 dismissing the appellants' claims are set aside.
3.In lieu of those orders it is ordered that:
The court declares that by notice dated 22 November 2017 the first and second plaintiffs[113] validly terminated the undated agreement entitled 'Asset Sale Agreement' as between the plaintiffs[114] and the defendant.[115]
[113] Being the first and second appellants in the appeal.
[114] Being the appellants in the appeal.
[115] Being the respondent in the appeal.
The parties should be heard on the precise terms of the orders, the costs of the primary proceedings and the costs of appeal CACV/65/2023.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CG
Associate to the Hon Justice Vaughan
30 MAY 2025
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