Nannup Timber Processing Pty Ltd v Minister for Commerce
[2014] WASC 438
•26 NOVEMBER 2014
| JURISDICTION | : | SUPREME COURT OF WESTERN AUSTRALIA IN CIVIL |
| CITATION | : | NANNUP TIMBER PROCESSING PTY LTD -v- MINISTER FOR COMMERCE [2014] WASC 438 |
| CORAM | : | KENNETH MARTIN J |
| HEARD | : | 28 AUGUST 2014 |
| DELIVERED | : | 26 NOVEMBER 2014 |
| FILE NO/S | : | CIV 2609 of 2013 |
| BETWEEN | : | NANNUP TIMBER PROCESSING PTY LTD Plaintiff |
| AND | ||
| MINISTER FOR COMMERCE Defendant | ||
| Catchwords: |
Contract - Interpretation - Preliminary issues - Agreed facts - Timber supply obligations - Annual minimum - Payment obligations by clause - Engagement questioned - Timing issues for payment - Alleged discharge of payment obligation by varied or fresh borrowing arrangements - Reasonable time to comply with provision of evidence to Minister - Implied term
Legislation:
Nil
Result:
Answers provided
[2014] WASC 438
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr C J Graham |
| Defendant | : | Mr R M Mitchell SC & Mr A Shuy |
Solicitors:
| Plaintiff | : | Graham & Associates |
| Defendant | : | State Solicitor for Western Australia |
Case(s) referred to in judgment(s):
Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238
CLR 570
Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; (2004) 217 CLR 424
Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15;
(1987) 162 CLR 549
Australian Broadcasting Commission v Australasian Performing Right
Association Ltd [1973] HCA 36; (1973) 129 CLR 99
Caratti Holdings Pty Ltd v Coventry Group Ltd [2014] WASC 403
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982]
HCA 24; (1982) 149 CLR 337
Dan v Barclays Australia Ltd (1983) 57 ALJR 442
EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78;
(2010) 41 WAR 23
Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd
[2014] HCA 7; (2014) 88 ALJR 447
Government Employees Superannuation Board v Martin (1997) 19 WAR 224
Hampton v BHP Billiton Minerals Pty Ltd [No 2] [2012] WASC 285
Hughes v St Barbara Mines Ltd [No 4] [2010] WASC 160; (2010) 4 ARLR 99
International Air Transport Association v Ansett Australia Holdings Ltd [2008]
HCA 3; (2008) 234 CLR 151
Kidd v The State of Western Australia [2014] WASC 99
Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184; (2014) 310
ALR 113
McCann v Switzerland Insurance Ltd [2000] HCA 65; (2000) 203 CLR 579
[2014] WASC 438
McCourt v Cranston [2012] WASCA 60
Perri v Coolangatta Investments Pty Ltd [1982] HCA 29; (1982) 149 CLR 537
Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603
Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd [2010] WASCA 222; (2010)
41 WAR 318
Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd
[2014] WASCA 164
Vincent Nominees Pty Ltd v Western Australian Planning Commission [2012]
WASC 28; (2012) 187 LGERA 303
York Air Conditioning and Refrigeration (Australasia) Pty Ltd v The
Commonwealth [1949] HCA 23; (1949) 80 CLR 11
Zhu v Treasurer of the State of New South Wales [2004] HCA 56; (2004) 218
CLR 530
[2014] WASC 438
KENNETH MARTIN J
KENNETH MARTIN J:
Introduction
I am resolving a trial of four preliminary agreed issues.
2 These agreed issues essentially raise issues of contractual
construction and interpretation in relation to one clause within a written agreement, entered between the plaintiff ('Nannup') and the defendant ('the Minister') on 15 June 2001.
3 The agreement in question is referred to as a financial assistance
agreement and, thereby, under the acronym 'the FAA'. The four issues of construction and interpretation I am required to determine focus heavily upon the true meaning of cl 5, and its asserted engagement within the FAA by Nannup in its favour.
Materials
4 Argument proceeded upon the basis of a large amount of agreed facts
and documents - submitted by the parties to the Court as the 'playing field' for their mostly differing construction views as regards cl 5 in the FAA and its implementation in practice.
5 The parties' 45 underlying agreed facts annex 23 agreed documents
(annexures A - W). These materials uncontroversially became exhibit 1
for the purposes of the issues trial.6 Exhibit 1 also identifies the four agreed issues raised by the parties
for the court's determination (see between pars 46 - 50). As a matter of convenience, I will append to these reasons as schedule 'A', the parties' statement of agreed facts and issues for preliminary determination, but without the annexures.
7 Of the parties' 23 agreed documents, four agreements were referred
to recurrently in submissions. I have already mentioned the FAA, which is the only document of the four to be entered between Nannup and the Minister. The others concern Nannup and a State government body known as the Forest Products Commission ('the FPC'). It is helpful to identify these key agreements (and their abbreviated titles) at the outset as:
1.
Financial assistance agreement between the Minister and Nannup dated 15 June 2001 (annexure T) ('the FAA');
[2014] WASC 438
KENNETH MARTIN J
2. Production Contract No 2629 (Sale of Hardwood) between Nannup and the FPC dated 24 April 2001 (commencing 1 May 2001, expiring 31 December 2003) (annexure Q) ('the First FPC Contract');
3. Production Contract No 2714 (Sale of Hardwood Log Timber) between Nannup and General Manager of FPC dated 19 December 2003 (commencing 1 January 2004, expiring 30 June 2004) (annexure R) ('the Second FPC Contract'); and
4. Production Contract No 2772 (Sale of Hardwood Log Timber) between Nannup and General Manager of FPC dated 1 July 2004 (commencing 1 July 2004, expiring 31 December 2013) (annexure S) (also 'the Second FPC Contract', as will be explained).
8 At the outset I propose to set out the pivotal clause under
interpretation, namely cl 5 of the FAA. I will then proceed to list the four agreed preliminary issues requiring resolution (drawing on pars 46 - 50 of the statement of agreed facts). After that, I will render some preliminary observations.
Clause 5 of the FAA
9 The text of cl 5 in the FAA appears under the heading 'Insufficient
Timber'. As regards the utility of headings, cl 1.2 of the interpretation clause in the FAA states in orthodox fashion that headings are for ease of reference and are to be ignored in construing the FAA - unless a contrary intention appears.
Clause 5 of the FAA says:
5. Insufficient Timber
(a) If Forest Products Commission:
(i)
is, at any time during the term of the First FPC Contract; unable to deliver to Nannup Timber 20,000 m3 of timber each year under the First FPC Contract; or
(ii)
is, at any time during the term of the Second FPC Contract, unable to deliver to Nannup Timber 20,000 m3 of timber each year under the Second FPC Contract
[2014] WASC 438
KENNETH MARTIN J
then the Minister agrees to provide to Nannup Timber a sum equivalent to the total outstanding balance of loan funds:
(iii) under Commercial Bill Line No 1, having a limit of $1,560,000 and Commercial Bill Line No 2, having a limit of $2,340,000, provided to Nannup Timber by Westpac Banking Corporation under a Business Finance Agreement dated 20 April 2001; and
(iv) sourced by Nannup Timber for the establishment of the Facility under clause 2 of this Agreement.
(b)
The parties agree that the Minister will not be required to make any payment under clause 5(a) unless and until Nannup Timber provides documentary evidence to the Minister:
(i)
that the volume of jarrah timber offered under the First FPC Contract, or the Second FPC Contract, as the case may be, is unable to be delivered by the Forest Products Commission as referred to in clause 5(a); and
(ii)
detailing the amount of the outstanding balance of loan funds under clauses 5(a)(iii) and 5(a)(iv).
The four agreed preliminary issues
The preliminary issues agreed by the parties for early resolution by the Court are as follows.
First issue (46)
Is the reference in cl 5 of the FAA to '20,000 m3 of timber each year':
(a) as Nannup contends, a reference to a minimum quantity of timber each year; or (b) as the Minister contends, a reference to an annual average quantity of timber over the term of the production contract then in force? 13 As may be seen, in framing the agreed issues for the Court, the
parties have also incorporated their rival contentions of construction as regards each issue. This approach is of assistance in terms of narrowing the parameters of disputation. But rival interpretations of a clause per se will not necessarily rise to a level of demonstrating ambiguity (or show there is more than one meaning) for the purpose of satisfying (if required)
[2014] WASC 438
KENNETH MARTIN J
the 'true rule', as it was stated by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337. The rival interpretation may not, after analysis, be assessed as a credible interpretation. As to that, I note the recent observations of the Western Australian Court of Appeal in Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2014] WASCA 164 [74] (McLure P), [189] (Murphy J). The rival interpretations may signify the opening shots in a long battle to follow.
14 For present circumstances, however, I am more than well satisfied
that the true rule, if it needs to be met, is comfortably surmounted as regards an admission of relevant evidence of surrounding circumstances to assist the construction exercise. See Technomin [45], [143], [215] - [216], cf Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184; (2014) 310 ALR 113 [71], [86] (Leeming JA) .
Second issue (47)
What is the correct interpretation and meaning of the words 'unable to deliver' at cl 5(a)(i) and cl 5(a)(ii) of the FAA?
In particular, is it:
(a) as the Minister contends, a reference to the FPC lacking the capacity to deliver that timber by reason of circumstances beyond the power and control of the FPC; or (b) as Nannup contends, a reference to the FPC being unable to deliver that timber for any reason, the fact of which is evidenced by failure by the FPC to deliver the contractually agreed volume? 17 It may now be seen that both issues 1 and 2 concern cl 5(a) of the
FAA. But there is a certain element of artificiality in dividing up phrases found effectively in one subclause. Clearly, they interrelate and need to be viewed under an aggregate analysis of the clause as a whole. As long as that requirement is not forgotten, it is nevertheless convenient, as the parties have agreed, to approach the aspects of the construction puzzle on this piecemeal basis.
Third issue (48)
18 What effect (if any) do the Variations and further Business Finance
Agreements (BFAs) (see pars 5 - 39 in Schedule A to these reasons) have on the rights and obligations of the parties pursuant to cl 5 of the FAA?
[2014] WASC 438
KENNETH MARTIN J
In particular, is the effect:
(a)
as the Minister contends, that the Minister is not obliged to make any payment under cl 5 of the FAA in circumstances where:
(i)
the Variations and further BFAs were entered into without the Minister's prior knowledge and without its consent;
(ii)
the terms of the facilities provided for in the 2001 BFA had expired when the letter referred to in par 44 of the statement of agreed facts was sent; and
(iii)
Nannup has not made any payment of the principal loan sum; or
(b) as Nannup contends:
(i)
the Variations and further BFAs have no effect on the rights and obligations of the parties under cl 5 of the FAA in circumstances where:
(A) it was not an express or implied term of the FAA that Nannup was prohibited from varying the facilities; (B) the facilities were validly extended by agreement between Nannup and Westpac, as evidenced in the Variations and Further BFAs; (C) the limits on the facilities have not been raised; (D) Nannup has made all payments required under the
facilities (as amended); and(E) the facilities were and remain current; (ii) alternatively the Minister is obliged to pay Nannup the amount that would have been payable if the Variations and Further BFAs had not been entered into.
20 The third issue really addresses questions about the engagement or
otherwise of clauses in the FAA - and cl 5 specifically - beyond the meaning of a clause, as is the task under the first and second issues. Nevertheless, there is the limited interpretive question as to what the
[2014] WASC 438
KENNETH MARTIN J
reference in cl 5(a)(iii) to a BFA of 20 April 2001, as between Nannup
and Westpac, actually encompasses.
Fourth issue (49) (Aspect one)
21 Is the reference to 'the total outstanding balance of loan funds' in cl 5
of the FAA a reference to the amount outstanding at the time the FPC is 'unable to deliver' pursuant to cl 5(a)(i) or cl 5(a)(ii); or the amount outstanding at the time that notice is provided pursuant to cl 5(b)?
Fourth issue (50) (Aspect two)
If:
(a) the reference to 'the total outstanding balance of loan funds' in cl 5 of the FAA is a reference to the amount outstanding at the time the FPC is 'unable to deliver' pursuant to cl 5(a) (i) or cl 5(a)(ii); then (b) is it an implied term of the FAA that the notice referred to in cl 5(b) of the FAA must be given by Nannup to the Minister within a reasonable time after the FPC is unable to deliver pursuant to cl 5(a)(i) or cl 5(a)(ii)? 23 It may now be confirmed that the four agreed issues framed by the
parties are heavily targeted at ascertaining the true meaning in context of cl 5 of the FAA. The FAA document is before the Court uncontroversially as annexure T to the statement of agreed facts, forming part of exhibit 1.
24 It goes without saying that cl 5 needs to be construed in the context
of its overall setting and place within the FAA by reference to surrounding clauses. The interpretive exercise will also extend to embrace, if relevant, surrounding circumstances that bear upon an understanding of the true meaning of cl 5 within the framework of the FAA as a whole.
Preliminary observations
25 Having now seen cl 5 in the FAA, the four issues posed for
resolution and the parties' rival interpretations under each issue, I can proceed to offer the following relatively uncontroversial preliminary observations.
(a)
Clause 5 in the FAA displays an express reference to other documents, such as to the First FPC Contract. It is permissible
[2014] WASC 438
KENNETH MARTIN J
and generally necessary in an exercise in contractual construction to have regard to the terms of the documents that are referred to within the text of a contractual clause, if they are in existence at the time that the contractual instrument under construction came to be perfected.
There has never been any real controversy over that proposition even under the strictest applications of the so-called 'true rule' of construction. As to that, see EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23 [104] (Buss JA); Government Employees Superannuation Board v Martin (1997) 19 WAR 224, 236 (Ipp J) and by analogy when referring to legislation that is referred to in a clause, see Vincent Nominees Pty Ltd v Western Australian Planning Commission [2012] WASC 28; (2012) 187 LGERA 303 [59] (Beech J).
(b)
Subclause 5(a) is seen introduced on a premise of what is (ie, 'if FPC') a hypothetical proposition regarding the FPC. As I earlier observed, only Nannup and the Minister are parties to the FAA. The FPC is not a party to the FAA. However, the FPC was the other party engaging with Nannup in the First FPC Contract, as referred to in cl 5(a)(i), and the FPC was the anticipated party under the putative Second FPC Contract, as mentioned (twice) under cl 5(a)(ii).
(c)
The terms 'First FPC Contract' and 'Second FPC Contract' are the subject of express definitions under cl 1.1 of the FAA - which I set out in due course. The First FPC Contract, however, was an agreement already entered and subsisting as between Nannup and the FPC at 24 April 2001. Hence, it was well and truly in existence as a surrounding agreement, obviously known to both Nannup and the Minister at 15 June 2001, being the date the FAA was perfected.
(d)
By contrast is a Second FPC Contract, next referred to under cl 5(a)(ii) and again the subject of definition under cl 1.1 of the FAA. Such an agreement between Nannup and the FPC was anticipated, but had not, at 15 June 2001, then been perfected and brought into existence.
(e)
Subsequent to the entry of the FAA, two agreements were entered, both meeting the FAA's definition of 'Second FPC Contract'. First was a six-month contract (Production Contract 2714) dated
[2014] WASC 438
KENNETH MARTIN J
19 December 2003. There followed the further production contract entered between the FPC and Nannup (Production Contract 2772) dated 1 July 2004 and which was to span the period of nine years and six months, to 31 December 2013.
(f)
For the purposes of construing cl 5 of the FAA, it is impermissible to have any regard to subsequent events. That rules out using the content of documents that only came into existence subsequent to 15 June 2001. There was no disagreement between the parties over that limiting principle. See observations of the High Court in Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 [35].
(g)
This court can, of course, have regard to the FAA's own internal definition as found in cl 1.1 of 'Second FPC Contract' - an agreement that the parties to the FAA clearly anticipated to emerge at a subsequent point in time after the FAA was perfected.
(h)
As is now evident, the FAA contains extensive definitions by its cl 1.1. Those definitions identify many terms and address their meaning on a basis that the meaning will apply 'unless the contrary intention appears'. In that respect, I would note, without quoting at this point, the significance of many relevant FAA definitions. To that end, I mention the FAA's internal definitions for:
Amount Repayable Facility;
Financial Year;
Forest Products Commission,
First FPC contract;
Loan;
Nannup Saw Mill Business Plan;
Nannup Timber Mill;
Second FPC contract;
Term; and
Year.
[2014] WASC 438
KENNETH MARTIN J
(i) Finally, by way of early observation concerning the FAA, I must set out its one recital, which says:
In order to assist Nannup Timber to establish an integrated timber production facility in Nannup, Western Australia, the Minister [for State Development, being the body corporate referred to in s 5 of the Industry and Technology Development Act 1998 (WA)] has agreed to provide the Loan and other moneys to Nannup Timber on the terms and conditions set out in this Agreement.
26 From that recital, I would identify and highlight the word 'assist'
(used vis-à-vis Nannup) in the first line as of overall thematic policy
importance for the work of the FAA, as will be seen.
A brief contextual discussion
27 The four preliminary issues arise in the context of circumstances
where Nannup commenced proceedings against the Minister by writ in
this court on 22 October 2013.28 By Nannup's further re-amended writ and statement of claim
('FREAWSOC') of 16 June 2014, it essentially contends the Minister is required to perform their obligations under cl 5(a) of the FAA by paying to Nannup the sum equal to the current total of Nannup's outstanding balance on Nannup's loans from Westpac.
29 In other words Nannup seeks to enforce what it argues is the
monetary obligation of the Minister to provide to it by cl 5(a) of the FAA 'a payment equivalent to the total outstanding balance of loan funds' which, Nannup argues, has been triggered.
30 But the Minister firmly resists that payment obligation contention of
Nannup at a number of levels. The first level of resistance is on the basis that, as a matter of law, the Minister argues that Nannup has wholly misconstrued the meaning of cl 5 of the FAA. The Minister says that, correctly understood, any payment obligations to Nannup which might have been carried by that cl 5(a) have not been engaged, as far as the Minister is concerned.
31 The parties' divergence of interpretations over the correct meaning of
cl 5 in the FAA in numerous respects is apparent in the rival positions
seen set down in the four agreed preliminary issues above.32 At the next level, the Minister also raises some issues of factual
disputation concerning the non-engagement of cl 5. However, a
[2014] WASC 438
KENNETH MARTIN J
resolution of those matters, if necessary, is for another day as the parties at this point are essentially grappling over the correct meaning of cl 5 of the FAA.
33 In terms of an argued engagement of cl 5 as is contended by Nannup
however, it is convenient to note at an early point both how, and then when, Nannup contends that clause's obligations were actually engaged, as against the Minister.
In that respect, I need to mention par 19 of Nannup's FREAWSOC, which pleads in the following terms:
19. The FPC was unable to deliver 20,000 m3 of jarrah first and second grade saw logs to the Plaintiff each year during the Term of the First FPC Contract.
35 I interpolate at this point that the First FPC Contract as referred to
above was identified in cl 1.1 of the FAA as meaning Production Contract
2629, between Nannup and the FPC of 24 April 2001.36 It is necessary to refer to some provisions of the First FPC Contract
later as a part of the overall construction exercise. The duration of the First FPC Contract between Nannup and the FPC expressly spanned the 32-month period, between 1 May 2001 and 31 December 2003 - see First FPC Contract agreement Schedule 1 Item B (page 26). That 32-month term of operation then bears upon how the FPC's timber supply obligations to Nannup operated, as a matter of practice, across a calendar year (ie, 2002 or 2003) or financial year (ie, 2001/02, 2002/03) given what was a supply and delivery relationship under the First FPC Contract of two years and eight months.
Returning to Nannup's pleading, I note the particulars given by Nannup to par 19, then par 20, of the FREAWSOC.
Particulars [to par 19]
(a) From 1 July 2002 to 30 June 2003 the FPC delivered 14,490.41 m3 of jarrah saw logs to the Plaintiff. (b) …
38 As I have mentioned, the FAA anticipates - but does not expressly
identify, as they did not exist at the time - what turned out to be two subsequently entered agreements. They both meet the FAA's definition of what is called the Second FPC Contract. Each such agreement was consummated after the 15 June 2001 FAA. It is necessary to have regard
[2014] WASC 438
KENNETH MARTIN J
to the definition of the (anticipated) Second FPC Contract within the FAA. This definition says that the Second FPC Contract would 'commence on 1 January 2004 and will end on or after 1 January 2013'. Hence, an anticipated Second FPC Contract, at the time the FAA was entered on 15 June 2001, was envisaged to span a duration of at least nine years (ultimately the two agreements meeting the description of Second FPC Contact would extend for 10 years).
Paragraph 20 of the FREAWSOC and its particulars then plead:
20.
The FPC was unable to deliver 20,000 m3 of jarrah first and second grade saw logs to the Plaintiff each year during the term of the Second FPC Contract
Particulars to par 20
(a) From 1 July 2004 to 30 June 2005 the FPC delivered 25,618 tonnes (19,481m3) of jarrah saw logs to the plaintiff ('FY 05 Shortfall'); (b) From 1 July 2006 to 30 June 2007 the FPC delivered 18,704 tonnes (14,223m3) of jarrah saw logs to the plaintiff ('FY 07 Shortfall'); (c) From 1 July 2010 to 30 June 2011 the FPC delivered 17,347.66m3 of jarrah saw logs or equivalent bole saw logs; (d) From 1 July 2011 to 30 June 2012 the FPC delivered 19,964.16m3 of jarrah saw logs or equivalent bole saw logs; (e) …
40 Thus it may be seen that via pars 19 and 20 of its FREAWSOC
Nannup complains of timber supply shortfalls by the FPC arising under the duration of the First and Second FPC Contracts, ie, between 1 May 2001 and 30 June 2012.
41 Delivery shortfalls by the FPC thereby, according to Nannup, cause
an engagement against the Minister of cl 5 in the 2002/03 financial year (fy 03) under the Nannup/FPC regime under the First FPC Contract (cl 19).
42 Subsequent (par 20) alleged engagements of cl 5 as regards failure of
the FPC to provide the 20,000 m3 of timber under the Second FPC Contract, arose separately in four following financial years, namely fy 05,
[2014] WASC 438
KENNETH MARTIN J
fy 07, fy 11 and fy 12, according to Nannup's pleaded case. For fy 05 and fy 12, the particularised par 20 timber supply shortfalls by the FPC were for amounts of timber which, superficially at least, look to be numerically very modest (fy 05 a deficiency of 519 m3 of timber, and for fy 12 a deficiency of only 35.84 m3). Nevertheless those shortfalls in the FPC's timber delivery supply obligation are all alleged to trigger the Minister's payment obligation under cl 5(a) of the FAA.
Next I mention par 21 of the FREAWSOC, which alleges:
On or about 20 September 2007, the FPC notified the Plaintiff that the FPC had been unable to deliver to the Plaintiff 20,000m3 of timber in each year during the Term of the Second FPC Contract.
Nannup's particulars to par 21 seem to display a contention as regards the engagement of cl 5 in respect of just the fy 05 and fy 07 shortfalls but this is not entirely clear.
45 Towards the necessary engagement of cl 5(b) of the FAA, Nannup
then contends under its FREAWSOC par 22 that 'in or around September 2013 it supplied the defendant with documentary evidence, in order to satisfy cl 5(b) of the FAA'. Particulars are provided to par 21 which presently do not require detailed discussion. The point is that despite what looks to be some deep history Nannup's claim emerged only in September 2013.
Under par 23 of the FREAWSOC Nannup contends, by reason of matters pleaded, that the Minister was
obliged to pay to Nannup the Loan Amount [owed by Nannup to Westpac]
calculated as at the earlier of either:
(a) 30 June 2003; alternatively (b) 30 June 2005; alternatively (c) 30 June 2007; alternatively (d) 30 June 2011; alternatively (e) 30 June 2012; alternatively (f) September 2013.
47 It will be remembered Nannup only issued these proceedings on
22 October 2013. That should be considered in light of its plea, at FREAWSOC par 22, that it supplied the Minister with documentary
[2014] WASC 438
KENNETH MARTIN J
evidence for the purpose of meeting FAA cl 5(b), in September 2013. In other words, Nannup only provided documentary evidence addressing FAA cl 5(b) to claim a payment from the Minister in respect of the FPC's alleged timber supply shortfalls, dating back to fy 03, in September 2013, over a decade later.
Under its further re-amended defence the Minister joins issue in respect of most of Nannup's contentions under FREAWSOC pars 19 - 23.
49 As I understood the submissions of Nannup's counsel, it seeks to
contend that the obligation of the Minister to render payment to it in accord with FAA cl 5(a) and cl 5(b) was engaged by reason of shortfall events arising under the First FPC Contract as well as under the Second FPC Contract (reading FREAWSOC pars 19, 20, 22 and 23 together). Nevertheless, Nannup puts a payment entitlement position in the alternative against the Minister. It contends for an engagement of the cl 5 payment obligation against the Minister, by reason of FPC supply shortfalls in fy 03, fy 05, fy 07, fy 11 and fy 12, under the First or Second FPC Contracts.
Other limited trial evidence
50 I have already identified a large measure of agreement between the
parties as reflected under their agreed facts and the attached agreed
documentation.51 Likewise there was very little difference between the parties over the
applicable legal principles of contractual construction, in undertaking an
interpretation exercise of this character.52 Prior to the hearing of the preliminary issue the parties exchanged
full written submissions as to their cases. They were then
comprehensively addressed by respective counsel during oral argument.53 As regards the underlying surrounding context in which the FAA
came into existence on 15 June 2001, I noted counsel for Nannup (ts 11) was content to adopt and accept what was set out in pars 2 - 7 of the Minister's written submissions. I agree that is a convenient starting point. I will mention those paragraphs from the Minister's written submissions shortly.
54 In terms of trial evidence going beyond what the parties agreed, there
is minimal additional material. Nannup adduced two written statements from its managing director, Mr Paul Baldock. But this followed a hefty
[2014] WASC 438
KENNETH MARTIN J
excision of paragraphs properly objected to as inadmissible in a contractual construction exercise. In the end, both statements of Mr Baldock, heavily edited, were admitted into evidence without a need for Mr Baldock to be cross-examined (exhibits 2 and 3).
55 In a moment I will set out the substance of that additional material. I
can observe now, however, that it did not by my assessment contribute
greatly, if at all, to the construction exercise.56 I now propose to render some brief observations about the nature of
an exercise in contractual construction - in terms of the approach of a
commercial court.
Evaluation and determination of construction issues
57 The much referred to observations by Gibbs J (as his Honour then
was) in Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99 still provide a helpful starting point for an excursion into contractual construction. I referred to them in Hughes v St Barbara Mines Ltd [No 4] [2010] WASC 160; (2010) 4 ARLR 99. Nevertheless, it is of guidance to note them again. Gibbs J said at 109 - 110:
It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of anyone part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, 'even though the construction adopted is not the most obvious, or the most grammatically accurate', to use the words from earlier authority cited in Locke v Dunlop, which, although spoken in relation to a will, are applicable to the construction of written instruments generally; see also Bottomley's Case. Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument. Finally, the statement of Lord Wright in Hillas & Co Ltd v Arcos Ltd, that the court should construe commercial contracts 'fairly and broadly, without being too astute or subtle in finding defects', should not,
[2014] WASC 438
KENNETH MARTIN J
in my opinion, be understood as limited to documents drawn by businessmen for themselves and without legal assistance (cf Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd). (footnotes omitted)
58 During the course of submissions on day two of argument counsel
for Nannup referred to a decision of Edelman J in Hampton v BHP Billiton Minerals Pty Ltd [No 2] [2012] WASC 285 [198]. He did so on the basis his Honour had cautioned as 'problematic' use of the term 'windfall' towards circumstances where clear words used by the contract delivered a particular result. But as I read his Honour's observations, they do no more than reiterate the sentiment of the observations of Gibbs J of 41 years ago concerning a result that might at first appear as inconvenient or unjust, but nevertheless is the construction outcome required, because the text is otherwise unambiguous. Nevertheless, the thrust of the now well known observations by Gibbs J show that the construction approach to be followed by a commercial court is much more sophisticated than simply following the literal meaning of the text of an agreement.
59 Recently, in Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2014] HCA 7; (2014) 88 ALJR 447, French CJ, Hayne, Crennan and Kiefel JJ said as regards the approach to construction of a commercial contract that
[t]he meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties … intended to produce a commercial result'. A commercial contract is to be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience' [35]. (footnotes omitted)
60 Those observations in Verve by the High Court have been recently applied in Technomin [106] per McLure P referring to extracts I have mentioned above from the High Court, as well as from Zhu v Treasurer of the State of New South Wales [2004] HCA 56; (2004) 218 CLR 530. Likewise, I note the observations of Murphy JA at [203] - [205] in Technomin, also mentioning Zhu at [82] - [83], and International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3;
[2014] WASC 438
KENNETH MARTIN J
(2008) 234 CLR 151 at [204], and at [190] mentioning (as regards a policy of insurance) McCann v Switzerland Insurance Ltd [2000] HCA 65; (2000) 203 CLR 579 per Gleeson CJ [22].
61 In Technomin, McLure P (with whom Newnes JA agreed) concurred with the primary judge's assessment that the appellant's construction of a particular clause under consideration was 'commercially unreasonable' [110], [112]. See also Murphy JA [169] generally agreeing with McLure P's reasons.
62 Further local, helpful and contemporary repositories of these
constructional principles may be found in the reasons of Murphy JA in Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd [2010] WASCA 222; (2010) 41 WAR 318 [77(d)] and in the reasons of Beech J in Kidd v The State of Western Australia [2014] WASC 99 [117(5)] and importantly there - emphasising the objective nature of the construction exercise. I have also recently addressed these issues at greater length in Caratti Holdings Pty Ltd v Coventry Group Ltd [2014] WASC 403, published 31 October 2014.
63 Lastly, by reference to observations of the New South Wales Court
of Appeal in Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603 (discussed in my reasons in Hughes [No 4] [594] - [595]), I should remind myself that the exercise in contractual construction must not, at the end, be allowed to 'morph' - that is, to become, in truth, an application of the equitable remedy of rectification, echoing the observations of Mason J in Codelfa (346).
Mr Baldock's limited trial evidence
By reference to what became exhibit 2 (pars 1 - 10, 15 - 23, 47 - 51, 53 - 56), Mr Baldock's statement of 7 August 2014 provides some background to cl 5 within the FAA.
65 Mr Baldock explains he has been managing director of Nannup since
May 2001 and that Nannup has owned and operated the Nannup Mill since 2001.
66 Mr Baldock was also managing director of a related corporation,
M & B Sales Pty Ltd (M & B) since 2005, and general manager of M & B since 1999. Nannup and M & B have common shareholders.
67 By way of background to the Western Australian timber industry,
Mr Baldock relates certain matters in the period 1999 to 2001 to show an
[2014] WASC 438
KENNETH MARTIN J
uncertain time in the timber saw milling industry in Western Australia. Uncertainty had arisen as regards operators accessing reliable future supplies of hardwood timber from the south-west of Western Australia. There would appear to be, at least, common ground between the parties over the existence of the timber supply uncertainty in the lead-up to the FAA.
68 Supply uncertainty as regards hardwood emerged out of the 20-year
Regional Forest Agreement of 4 May 1999 (RFA), entered between the Commonwealth of Australia and the State of Western Australia (see the RFA, which is the document annexure B to the statement of agreed facts).
69 The RFA covered the south west forest region of Western Australia.
Its consequence in a politically charged environment with tensions over the use for industry of WA's old growth forests was to cause a downsizing of the timber processing industry of Western Australia. In real terms, from a reduced supply of timber perspective for producers, there was to follow under the RFA, according to Mr Baldock:
(a) a reduction of more than 40% in the annual available volume of jarrah saw logs from 2004 onwards (reduced from 490,000 m3 to 286,000 m3); and (b) a reduction of more than 75% in the annual available volume of karri saw logs from 2004 onwards (reduced from 203,000 m3 to approximately 50,000 m3). 70 Mr Baldock observed (par 5) in the period 1999 - 2001 the 'Saving
Our Old Growth Forests' campaign, undertaken at a political level. Following a change of government in Western Australia in 2001, there soon followed an introduction of an 'Old Growth Policy'.
71 These matters are said by Mr Baldock to have 'created doubt as to the
volume of timber that would be available to the saw milling industry moving into the 21st century, and in particular whether the smaller volumes allocated pursuant to the RFA would be reduced even further' (par 6).
72 Again, there appears to be very little dispute factually over all that
and such circumstances may be accepted as established, showing a part of the contractual 'climate' surrounding the FAA's consummation in June 2001.
[2014] WASC 438
KENNETH MARTIN J
73 Mr Baldock then relates the circumstances in which a subsidiary
corporation of Wesfarmers Ltd (Sotico) had formerly owned the Nannup Mill, prior to its purchase by Nannup in 2001. In August 2000 the Nannup Mill had been officially offered for sale by its then owner through an expression of interest process. Mr Baldock observed that the sale of the Nannup Mill (to a new owner) was supported and also 'incentivised' by the State government 'due largely to the adverse consequences for employment in the Nannup region if the mill were to be shut down rather than continue to operate under different ownership' (par 10). Again, this is uncontroversial. Most of that seems rather self-evident already from the terms and structure of the FAA as a whole.
74 By pars 15 and 16 of his 7 August statement, Mr Baldock would seek
to refer to an 'offer to purchase' document of November 2000 in respect of the Nannup Mill by Nannup. The documentation and offer is all admitted. But this evidence was objected to by the Minister as not constituting any legitimate evidence of surrounding circumstances. The Minister's objection is on the well understood basis that even where the 'true rule' in Codelfa has been satisfied, if that is necessary, evidence of a party's subjective intent, as expressed in prior contractual negotiations, is not admissible (see Codelfa (352)) - for what is an exercise in the objective evaluation of the parties' intentions under their agreement (here, the FAA). The Minister's objection must be upheld. PRB 2, which is a negotiation document antecedent to the FAA, will not be used for the present exercise of construing the FAA.
75 Between pars 17 - 23, Mr Baldock explains that Nannup submitted a
proposal to the State government for financial assistance, in respect of its then proposed acquisition of the Nannup Mill. Nannup submitted what was called a 'FISAP proposal' accompanied by a detailed business plan. There followed a subsequent revised FISAP proposal of November 2000 which, again, Mr Baldock would seek to put before the Court as PRB 3 for the purposes of construing the FAA. Again, I assess PRB 3 as an inadmissible antecedent negotiation document. It was overtaken by the ultimate FAA of June 2001 which the parties subsequently signed off upon in writing. It should surprise no-one that in commercial negotiations there is frequently movement in positions before a consensus is reached. This inevitably means give and take on both sides before a final deal is struck. A final deal usually renders the earlier positions sought in preceding negotiations as ancient history, unhelpful and irrelevant. So it is here. It is the final agreement entered into that matters.
[2014] WASC 438
KENNETH MARTIN J
76 Mr Baldock would also endeavour to put before the Court for the
purposes of construing the FAA the fact that many of the incentives Nannup requested from the State government were not ultimately agreed to, or at least not agreed to in their entirety, by the State government. But, again, an evolution of such negotiations over time should not be retraced for the same reason.
77 Between pars 47 - 53, Mr Baldock explains the lending arrangements
entered between Nannup and Westpac, relating to Nannup's purchase of the Nannup Mill. He relates that a BFA was entered into between Nannup with Westpac, on 20 April 2001. This agreement also forms part of the parties' agreed documentation. It is annexed to the statement of agreed facts (see annexure D). It is also referred to in the FAA in cl 5(a)(iii). Accordingly, it is fully permissible to have regard to the April 2001 BFA, to the extent that it bears upon the construction exercise.
78 Essentially then, there was a commercial loan (Bill Line No 1) made
by Westpac to Nannup. The loan was taken out by Nannup to assist with its purchase of the Nannup Mill. This BFA loan was initially made on the basis of it being interest only (with fees) to April 2006. But from that point on principal repayments were also to be made with the interest by Nannup to effectively extinguish the capital of the loan over a period until April 2011. At that point the loan would have been entirely repaid to Westpac.
79 There was a second loan (Bill Line No 2) taken out and expressed to
assist with capital and construction costs associated with the purchase of the Nannup Mill. The second loan displayed similar features, being an interest only repayment arrangement (with fees) until December 2003, but thereafter to incorporate principal loan repayments until April 2011 - at which time the principal under this loan would also have been entirely repaid as well.
80 Mr Baldock, at par 48, refers to these two 2001 bill lines taken out by
Nannup as the 'Westpac facilities'. It would appear that there were no actual bills of exchange ever issued under this lending transaction but, in the end, that matters not. The principal amounts of each BFA loan when advanced by Westpac in 2001 to Nannup were respectively $1,560,000 and $2,340,000.
81 Mr Baldock then relates that the Minister received a copy of the
20 April 2001 BFA [this is an accepted matter under the agreed statement
of facts].
[2014] WASC 438
KENNETH MARTIN J
82 Contextually again, the April 2001 BFA entered between Nannup
and Westpac, (annexure D, page 4) but taken to be known to the Minister
as well, said this:the Bank's loan facilities … will be repaid in full by the WA Government if log supply is unable to be delivered (for any reason) as required under the Forest Products Commission Sale of Hardwood Production Contract Agreement …
And further:
the Forest Products Commission Sale of Hardwood Production Contract Agreement is in accordance with the stated 20,000 cubic metre per annum minimum.
83 There is again no dispute the Minister was not only aware of the
2001 BFA, but also aware of conditions applicable to the Westpac facilities, prior to perfecting the FAA in June 2001 (par 53 of Mr Baldock's statement).
Possibly relevant to issue 3 are some more factual matters as related under pars 54 - 56 of his statement by Mr Baldock. Here he now says:
[Nannup] and Westpac agreed a number of variations and extensions to the
facilities between 2004 and 2013.I confirm that I have been provided with a copy of the Agreed Statement of Facts and Issues dated 17 July 2014 (Agreed Statement), and that the facts set out in paragraphs [10] to [38] of the Agreed Statement accurately reflect the terms of those variations and extensions.
Essentially, the Facilities were varied to defer the requirement to start repaying the principal on the loans. The extensions were a natural consequence of the deferments.
85 Once issue 3 is reached, it will be seen that the question explores the
circumstances under which there arose, as between Westpac and Nannup, a consensual replacement of the original BFA arrangement. As may now be appreciated, Westpac/Nannup loan terms under the BFA, prior to the FAA, would have seen, upon their faithful implementation, progressive reductions in the outstanding principal sum of each loan, culminating in all principal amounts being repaid to Westpac by 2011. But this loan deal was consensually altered later by Westpac and Nannup, changing the borrowing facilities to interest only repayments - under which no principal at all would be repaid by Nannup. In short, the Minister, in consequence, contends that these altered lending arrangements for the funds borrowed by Nannup from Westpac, are new circumstances. The Minister says
[2014] WASC 438
KENNETH MARTIN J
under issue 3 they reflect a different lending regime that does not engage the FAA cl 5 obligation, even if issues 1 and 2 are found against it. Nannup disagrees. It argues that the Westpac lending variations to its arrangements were always in June 2001 a potentiality - invoking particularly cl 1.2(e) of the FAA. Nannup argues that the altered lending arrangements can make no difference to the workings of cl 5 of the FAA.
Mr Baldock's supplementary statement of 14 August 2014 (exhibit 3) provides some further details concerning his dealings prior to June 2001 with Mr John Loney, the Executive Director of the Industry Development Division of the Department of Commerce and Trade (WA). Mr Baldock relates he had a number of meetings with Mr Loney leading up to the FAA prior to it being executed in June 2001. Of itself, the fact of many meetings is hardly surprising or even remarkable. But that factor does not assist in a contractual construction exercise.
87 Mr Baldock seeks to gain some assistance for Nannup from
document PRB 6, saying that he accepted it on behalf of Nannup, on 11 April 2001. Clearly again, this document does not constitute what became the underlying FAA agreement that is sued upon by Nannup. Again, the document is, on my assessment, just another irrelevant aspect of the parties' anterior negotiations, prior to their consummation of the FAA, on 15 June 2001. It is not relied upon by Nannup, as I understand it, to separately identify any particular relevant mutually known extrinsic facts that would assist a contractual construction exercise by forming part of the surrounding circumstances relied upon (see Codelfa at 352). On that basis, the document once again is wholly inadmissible.
88 In short then, the limited factual evidence proffered under
Mr Baldock's two trial statements in terms of underlying surrounding circumstances, may address the commercial purpose, objects and the background and genesis of the transaction (objectively assessed), including the market in which the parties operated. However, most of these matters were already canvassed by the parties' statement of agreed facts.
89 It is convenient now to collect the factual background given in the
Minister's written submissions at pars 2 - 7. These facts are uncontroversial (ts 11) as part of the context (ie, surrounding circumstances) for the FAA.
[2014] WASC 438
KENNETH MARTIN J
Uncertainty in the Timber Industry
2. The Financial Assistance Agreement (FAA) was entered into at a time where there was a considerable uncertainty about the capacity of the Forest Products Commission (FPC) to continue existing supplies of timber to sawmills, including that which NTP proposed to operate.
3. On 4 May 1999, Western Australia and the Commonwealth entered into a Regional Forest Agreement (RFA), providing for an increase in the areas from which timber harvesting was excluded, and which identified expected sustainable yield levels. The sustainable yield levels for first and second grade jarrah sawlogs in the southwest forest region of Western Australia was to be considerably less than those provided for in the Forest Management Plan 1994 - 2003 (Forest Management Plan). That Forest Management Plan was due to expire on 31 December 2003 and it was not known, in 2001, what provision would be made in any subsequent forest management plan for the harvesting of jarrah sawlogs. Any contract entered for the period after 31 December 2003 would need to be made in accordance with, and subject to, the provisions of the relevant forest management plan, which was yet to be made under the Conservation and Land Management Act 1984 (WA) (see s. 58 and 61 of the Forest Products Act 2000 (WA).
4. On the same day that Western Australia and the Commonwealth entered into the RFA, the Minister for the Environment released a media statement announcing the State and Commonwealth Governments' support for a modern sawmilling and processing facility for Nannup. The media statement announced that a contract for 20,000 m3 of jarrah sawlogs would be specifically allocated to the Nannup facility. This was to be derived from allocation of logs available following the exit of sawmilling businesses under the Business Exit Assistance component of the forest industry adjustment program. (Baldock Statement [8], pp. 10 - 11)
5. A few months after the RFA was signed, the State government announced further changes to forest management in Western Australia including:
(a)
A 'jarrah strategy' which emphasised value adding, and aimed to limit timber harvesting to a minimum; and
(b)
A government directive that native timber was no longer to be used for railway sleepers, except for third grade timber or otherwise at the discretion of the State. (Baldock Statement [4])
[2014] WASC 438
KENNETH MARTIN J
6. The period 1999 - 2001 also saw the launching of the 'Saving Our Old Growth Forests' campaign, and the introduction of the 'Old Growth Policy' when the State Labor party was elected to power in 2001. (Baldock Statement [5])
7. These matters created doubt as to the volume of material that would be available to the sawmilling industry moving into the 21st Century, and in particular whether the smaller volumes allocated pursuant to the RFA would be reduced even further. (Baldock statement [6])
First issue: aspects of the parties' different interpretations of cl 5 of the
FAA
I now move to consider the parties' respective submissions in respect of the four agreed preliminary issues.
91 Issues 1 and 2 both address FAA cl 5(a)(i) and (ii) and, in particular,
the content and meaning of the common phrase used (vis-à-vis either the First FPC Contract, or the Second FPC Contract) 'unable to deliver to Nannup Timber 20,000 m3 of timber each year under the [First/Second] FPC Contract'.
92 By issue 1 the question posed is whether, as Nannup would contend,
that volume of timber is a strict annual (ie, absolute) FPC quantitative timber supply obligation. Nannup also contends, as appears from its submissions, that the word 'year', as regards the FPC's 20,000 m3 of timber is to be read as an amount to be calculated across a Financial Year, rather than over a calendar year.
93 The Minister contends the FPC's 20,000 m3 amount under cl 5 in the FAA, properly understood, means an average annual quantity of timber calculated across the term of either the First FPC Contract (32 months), or the Second FPC Contract (calculated over 10 years - between January 2004 to December 2013).
94 Clearly, from an overall coherence perspective, the first issue cannot
be totally resolved without achieving an allied understanding of the import of the phrase 'unable to deliver' used in cl 5, in reference to the FPC. That exercise arises under issue 2 - but the interdependency of the phrase in cl 5 as a whole must be remembered. These issues provide the edifice for any ensuing obligation of the Minister to potentially provide funds to Nannup under cl 5, in a context of their FAA relationship.
[2014] WASC 438
KENNETH MARTIN J
95 It is convenient to extract Nannup's more detailed construction
arguments from pars 91 - 103 of its written submissions, which are in
these terms:91. The phrase 'each year' is not ambiguous.
92. Considering the whole of the FAA, the Plaintiff's obligation to maintain full employment at the Mill is an ongoing and inflexible obligation that applies for the duration of the Agreement.
93. There is a direct relationship between the volume of timber nominated at clause 5 of the FAA, the Plaintiff's obligation to maintain full employment at the Mill pursuant to clause 13(n), and the consequences of an Event of Default.
94. If clause 5 of the FAA allowed an 'annual average quantity of timber over the term of the Production Contract then in force' as contended by the Defendant, the Plaintiff would have no remedy under that clause if provided with 15,000m3/year for the first half of a 10 year production contract, and 25,000m3/year for the second half of the contract.
95. This is despite the fact that it would not be commercially viable to maintain full employment at the Mill with only 15,000m3/year.
96. Viewed objectively, and having regard to the nature and purpose of the FAA, it cannot have been the intention of the parties that the Plaintiff would, as a result of circumstances beyond its control and through no fault of its own, be forced into a situation where it had to choose between operating at a loss or committing an Event of Default under the FAA.
97. Rather, the intention of the parties was for the Plaintiff to be relieved of its debt obligations to Westpac if it was ever forced into an Event of Default under the FAA.
98. The surrounding circumstances only serve to reinforce this conclusion.
99. The 2001 FBA refers to the Defendant repaying the Plaintiff's facilities in full if 'the stated 20,000 cubic metre per annum minimum' is not delivered to the Plaintiff.
100. The Second FPC Contract (as defined in the FAA) requires a minimum annual volume of 20,000m3.
101. Condition 2 of the Plaintiff's non-binding offer to Sotico was a 'Jarrah log quota for a minimum of 20,000m3 per annum …'
[2014] WASC 438
KENNETH MARTIN J
102. The Plaintiff's FISAP Application in November 2000 made repeated references to minimum 20,000m3 per annum; and
103. The Nannup Mill's economic forecasts were based on 20,000m3 per annum. (footnotes omitted)
96 At the hearing counsel for Nannup put a considerable emphasis upon
what he identified as a full employment covenant. This provision is found in cl 13(n) of the FAA as one of Nannup's undertakings. Clause 13(n) reads:
Nannup Timber undertakes in favour of the Minister that:
...
(n) (Employees) for the duration of this Agreement, it will employ not fewer than the number of Full Time Employees employed to work at the Nannup Timber Mill and the Facility as at the day of settlement for the sale of the Nannup Timber Mill from Sotico to Nannup Timber.
97 Nannup seeks to show an asserted inflexible rigidity of that
covenant, referring to cl 16.1(o) of the FAA and listing events of default (carrying potential consequences under cl 16.2, including termination of the FAA, under cl 16.2(c)) in terms:
(o) Nannup Timber fails to comply with the employment provision specified in clause 13(n) at any time during the Term.
98 It may be accepted that an objectively assessed commitment of
Nannup towards maintaining full employment at the Nannup Timber Mill once acquired and running was one of a number of structurally important covenants found in the FAA.
99 But Nannup goes even further than that to assert this employment
rigidity accepted by Nannup by a long term full employment covenant for the duration of the term of the FAA (see the definition of 'Term' under cl 1.1 of the FAA - which ends on the date that all amounts owing under or in connection with the FAA have been repaid or are no longer repayable) carries a structural policy significance in the FAA from a quid pro quo perspective. It provides a rationale for what Nannup sees as an obligation favouring Nannup of a similar inflexible rigidity applicable to the Minister's payment obligation to Nannup under cl 5 of the FAA.
100 This argument is perhaps best summarised under a submission of
counsel for Nannup in answer to a question I posed concerning the taking
of a strict literal view of the text of cl 5 of the FAA:
[2014] WASC 438
KENNETH MARTIN J
I think there's two sides to the commerciality, your Honour. The first is look at the actual financial assistance agreement and look at the circumstances in which it was entered into. This was - there had to be a counterbalance in circumstances where this is an industry that some might say no one in their right mind would want to get into at that time, and we were imposing very, very rigid obligations to maintain quite a large workforce. There had to be something counterbalancing it on the other side, and if the literal - literal - literal interpretation perhaps seems something that may be a little bit rigid, well, again, that's because, number 1, the employment obligation the plaintiff had was rigid and, also, because those are the terms, on the face of the document, on which it was prepared to take on all of the obligations, to take on the mill, invest in value and commit itself to being in that industry for a - for - for - for decades to come and all the risks - all the risks that came with that (ts 21).
101 Nannup puts some emphasis on the word 'each' - used before the
word 'year' under cl 5(a)(i) and cl 5(a)(ii), although, as discussed above, it is inherent in Nannup's submissions it actually contends for an interpretation of FAA cl 5(a) on the basis of the word 'year', correctly understood, as meaning 'financial year', rather than meaning 'calendar year'. That is notwithstanding that the word 'year' and the term 'financial year' are each the subject of specific definitions, by cl 1.1 of the FAA.
102 Nannup also points to asserted injustice and an overall impracticality
of implementing the Minister's rival annual average quantity of timber approach, to meeting the 20,000 m3 figure, if worked out as an average across the duration of the First FPC Contract (32 months), or the Second FPC Contract (10 years).
103 Nannup contends it should enjoy a cl 5 benefit from the Minister
where it has received an uneconomic supply amount of timber from the FPC in a particular 12-month period. It says it should not need to wait for the end of a FPC Contract in order to secure the payment benefit from the Minister via cl 5 - particularly in the face of the FAA's clear phrase 'at any time during the term' which precedes the reference to both FPC Contracts under cl 5(a)(i) and cl 5(a)(ii).
104 Towards its stance regarding the first construction issue it is
convenient to incorporate from the Minister's written submissions
pars 31 - 44:31. The Minister accepts that less than 20,000 m3 of first and second grade jarrah sawlogs, or equivalent bole sawlog, was delivered to NTP in the particular years alleged by NTP. However, he contends that the annual average of jarrah first and second grade sawlogs, or
[2014] WASC 438
KENNETH MARTIN J
equivalent bole sawlogs, delivered over the term of the contracts,
has exceeded 20,000 m3 each year.32. That defence gives rise to the question of whether the reference in clause 5 of the Financial Assistance Agreement to '20,000 m3 of timber each year' under the first and second FPC contracts is a reference to a minimum quantity of timber delivered in each and every year, or a reference to an average annual quantity.
33. It must be accepted that the language of clause 5(a)(ii) of the Financial Assistance Agreement suggests the former construction is correct. The clause does not mention an average amount, and refers to the volume of timber to be delivered each year.
34. However, it is necessary to read the material part of the definition of 'Second FPC Contract' into the operative text of clause 5(a)(ii): Halford v Price (1960) 105 CLR 28 at 28 per Dixon CJ. When this is done, the clause reads as follows:
If Forest Products Commission … is, at any time during the term of [a contract to be entered into between Nannup Timber and Forest Products Commission, which contract … will contain a provision that, in each year, Forest Products Commission will deliver, and Nannup Timber will accept delivery of, the same volume of timber required to be delivered each year under the First FPC Contract], unable to deliver to Nannup Timber 20,000 m3 of timber each year under [a contract to be entered into between Nannup Timber and Forest Products Commission, which contract … will contain a provision that, in each year, Forest Products Commission will deliver, and Nannup Timber will accept delivery of, the same volume of timber required to be delivered each year under the First FPC Contract] …
35. As the reference to 'Log Timber Intake' for each year in clause 2 of the Contract 2629 is to an annual average of quantity of first and second grade jarrah sawlogs, or bole log equivalent, clause 5(a)(ii) relates to an annual average quantity of first and second grade jarrah sawlogs, or bole log equivalent.
36. NTP contends that clause 5(a)(ii) should be construed by reference to Production Contract 2772. That contract was entered into after the parties entered into the Financial Assistance Agreement. It was an agreement between NTP and FPC. To the extent that that agreement provided 20,000m3 to be delivered, rather than an annual average quantity (NTP incorrectly contends that the agreement provided for a 'minimum' quantity of timber to be delivered as the FPC had no obligation to deliver, and NTP had no obligation to accept, any more than 20,000m3) the Minister does
[2014] WASC 438
KENNETH MARTIN J
not deny that clause 5(a)(ii) could still operate in relation to Production Contract 2772, but contends that the Minister would only be liable if the FPC was unable to deliver an average annual quantity of timber. That is, while it was open for NTP to negotiate a more favourable contract with the FPC than that contemplated by clause 5(a)(ii), the circumstances in which the Minister was liable under clause 5(a)(ii) did not change.
37. On NTP's construction of clause 6(a)(ii), the Minister's obligation to make a $3.9 million payment could be activated by delivered in accordance with Contract 2629. Indeed, that is what happened in this case. NTP does not assert that the FPC breached Contract 2629 by failing to deliver the contracted amount of timber, but asserts that deliveries in accordance with that contract engaged the Minister's obligation under clause 5 of the Financial Assistance Agreement. That is an uncommercial outcome, which is not required to achieve the objective of the contract. In the above context, it can be seen that the objective was to protect the investment by NTP from changes in statutory policy settings which would override the contractual provisions or prevent entry into a second contract. The objective was not to provide for payment if Contract 2629 operated according to its terms.
38. The Minister's construction is also supported by the terms of clause 5(b), which refers to 'the volume of timber offered under the First FPC Contract'. This indicates that the promise in clause 5(b) is concerned with the inability of the FPC to provide the amount offered under Contract 2629, not some other amount. It confirms that the volume of timber which FPC is unable to deliver, as referred to in clause 5(a), is the annual average quantity provided for in Contract 2629.
39. NTP attempts to counter the Minister's argument by contending that it would have no remedy under clause 5, if provided with 15,000m3 per year for the first half of a 10 year production contract and 25,000m3 per year for the second half of the contract.
40. NTP's counter-argument fails to take proper account of clause 6 of Contract 2629, which provides for deliveries in accordance with an agreed or reasonably determined delivery schedule. The regularity of supply is provided for in that clause.
41. Further NTP's proposed construction produces an uncommercial result, at least from the perspective of the Minister. On NTP's construction a shortfall of any amount of log timber in a particular year, even of a very small quantity, would produce a liability of the Minister to pay an amount which may be, in the early stages of the agreement, close to $4 million. That may be so notwithstanding that the average annual quantity of timber received well exceeds 20,000 m3 per year, so that it cannot be said that the purpose of the
[2014] WASC 438
KENNETH MARTIN J
investment which clause 5 of the Financial Assistance Agreement
is designed to protect has been frustrated.42. Further, the consequence that only an average annual quantity is required to be provided is a result of the construction of the First FPC Contract. The terms of that contract clearly provided that only an average annual quantity was required to be delivered. In circumstances where that was the bargain struck between the plaintiff and the FPC, there is no reason to think that NTP would not have reached an equivalent arrangement with the Minister. The reference in clause 5(a)(i) of the Financial Assistance Agreement is to the amount of timber delivered each year under the First FPC Contract.
43. In circumstances where the First FPC Contract only requires an annual average quantity of 20,000 m3 of timber to be delivered each it is reasonable to conclude that the reference in clause 5(a)(i) of the Financial Assistance Agreement is to an average rather than an absolute amount. The same phrase used in relation to the Second FPC Contract in clause 5(a)(ii) should be similarly construed when the Second FPC Contract:
(a) had not been entered into at the date the Financial Assistance Agreement was signed; (b) was required to be on substantially the same terms and conditions as the first FPC Contract; and (c) was required to contain a provision that in each year the FPC will deliver the same volume of timber required to be delivered each year under the First FPC Contract. (See clause 1.1 of the Financial Assistance Agreement, definition of Second FPC Contract). 44. While there are factors counting in favour of each party's argument, on balance the preferable view is that the reference to a quantity of timber to be delivered in each year under the relevant contract in clause 5 of the Financial Assistance Agreement is to an average annual quantity of timber to be supplied.
105 I apprehend the Minister's submission accepts that cl 5(a), in
referring to the amount of 20,000 m3 of timber each year from the FPC, does not make express reference to using an annual averaging process towards the quantity of timber supplied over the duration of each FPC Contract. Nevertheless, the Minister reaches that end point, having regard to the surrounding circumstances - namely the mutually known terms of the First FPC Contract (Production Contract 2629 of 24 April 2001), particularly cl 6.2. That supply clause saw the FPC commit to making 'deliveries in each Year [being a financial year as defined in the
[2014] WASC 438
KENNETH MARTIN J
FPC Contract] in accordance with the delivery schedule for that Year, in quantities sufficient to ensure that the Log Timber Intake is achieved' (my emphasis in bold).
106 The definition given under cl 1.1 of the First FPC Contract defines
'Log Timber Intake' as 'the quantity of Log Timber as set out in part A of schedule 1 to be delivered to the buyer in a Year, as that quantity may be adjusted from time to time by agreement or determination under clauses 9 and 11'.
107 Finally, the long march through the First FPC Contract to its
schedule renders a sch 1. There item A1 of the First FPC Contract refers
to 'quantity and description of Log Timber':
(1) Subject to sub-paragraph A1(2) and the proviso hereinafter contained, for the period commencing on the commencement date and thereafter for the residue of the Term an average annual quantity of:
• 16 000 m3 (21 040t) of jarrah 1st grade sawlogs; and • 4 000 m3 (5 260t) of jarrah 2nd grade sawlogs. (my emphasis in bold)
108 The incorporation by reference of a timber supply calculation
approach of the First FPC Contract into the FAA vis-à-vis FPC's supply obligations to Nannup, by using an 'average annual quantity' to specify the quantity of the 'Log Timber Intake' is of vital importance to the core underlying construction approach to FAA cl 5 as advocated by the Minister in contrast to the literal approach of Nannup earlier related.
So also is a definition for 'Second FPC Contract' found in cl 1.1 of the FAA, which states that this then anticipated FPC/Nannup contract:
(a)
will commence on 1 January 2004 and will end on or after 1 January 2013;
(b)
will be on substantially the same terms and conditions as the First FPC Contract; and
(c)
will contain a provision that, in each year, Forest Products Commission will deliver, and Nannup Timber will accept delivery of, the same volume of timber required to be delivered each year under the First FPC Contract.
[2014] WASC 438
KENNETH MARTIN J
110 Clause (b) of that definition is the key. At the time the FAA was
entered into the expectation of the parties was for the terms of the Second FPC Contract to be akin to those of the First FPC Contract - thereby importing the First FPC Contract's averaging methodology. The fact that later on the Second FPC Contract as entered used an altered calculation methodology is not to the point, as regards the intentions of the parties as at June 2001. At that time, of course, a further long-term contract which would be the Second FPC Contract was 'on the horizon', but had not been finally consummated by them.
Duration of the FAA
111 Clause 1.1 of the FAA provides that '"Term" means the period which
commences on the date of this Agreement and ends on the date when all amounts owing under or in connection with this Agreement have been repaid or are no longer repayable'. Given how the word 'Term' is defined in the FAA, the actual duration of the FAA, as assessed at June 2001, is a putative notion, anticipating the eventual entry into the Second FPC Contract, which would commence in January 2004 and end, in the ordinary course of events, 'on or after 1 January 2013'. There were, in addition, some mechanisms by which the term might end before 2013.
112 For example, one surrounding aspect of the FAA is the Minister's
quite distinct promise of a loan of an amount 'to equate to 50% of the total cost of establishing the Facility [meaning, according to cl 1.1, the "integrated timber production facility Nannup would establish at the site of the Nannup Timber Mill"], to a maximum of $991,900'. But the burden to Nannup of repaying that loan to the Minister was capable of being ameliorated by Nannup's satisfaction of conditions stated in:
(1) cl 10.2(a) (as regards $500,000); and (2) cl 10.2(b) (as regards $491,000). 113 Clause 10.1 of the FAA provides that the Minister's loan to Nannup
could in certain circumstances, cease to be repayable, before 31 January
2013.114 The relocation expenses grant and the infrastructure expenses grant
under FAA cl 3 and cl 4 (respectively) were never, as regards Nannup,
repayable.115 Broadly speaking then, if Nannup in due course successfully met
benchmarks under cl 10.2(a) and cl 10.2(b) of the FAA by commencing
[2014] WASC 438
KENNETH MARTIN J
the operation of its dry processing facility and then achieved value added saw log outputs from its facility, the Term of the FAA may have come to an earlier end. That feature is relevant as regards cl 16.1(a) and the practical duration of the full employment covenant Nannup assumed for the duration of the FAA, whatever that turned out to be.
The term 'shortfall' used in cl 1.1 of the First FPC Contract
116 As part of the overall evaluation of this first issue, I should note
discretely that cl 1.1 of the First FPC Contract contains a definition of
'shortfall':Shortfall in respect of a Year means the amount (expressed in tonnes or cubic metres, as the case may require) by which the quantity of Log Timber determined by the [Forest Products] Commission to be the quantity which would have had to be delivered to satisfy the Log Timber Intake for that Year exceeds the aggregate of:
(a) the quantity of Log Timber which actually accepted in that year by the Buyer in accordance with this agreement; (b) the quantity of Log Timber which was not delivered to the Buyer by the Commission in that Year due to the default of the Commission under this agreement; and (c) the quantity of Log Timber which the Buyer or the Commission is, or both are, excused from accepting or delivering (as the case may be) in that Year pursuant to clause 22.
117 Several observations can be drawn from this First FPC Contract
definition. First, inclusion of the term indicates that, objectively assessed, the First FPC Contract parties had anticipated and applied some thought to the potential that the FPC might deliver less than the agreed Log Timber Intake for a particular Year (as that term was defined). Second, the definition explicitly defines how a shortfall is to be calculated. Both points suggest that shortfalls in Log Timber Intake were an anticipated part of the expected relationship. Third, the shortfall definition specifies that it is the responsibility of the FPC (not Nannup) to determine the quantity of timber needed to be delivered to satisfy the Log Timber Intake for a particular Year. This suggests a Nannup/FPC contractual relationship in which the parties anticipated that any Log Timber Intake would need to be calculated with some precision by FPC, taking account of specified factors. Finally, the definition of 'shortfall' anticipates that shortfalls might arise because FPC breached its contractual delivery requirements (ie, under (b)), or because a force majeure scenario emerged (ie, under (c), as is provided for in cl 22 of the First FPC Contract).
[2014] WASC 438
KENNETH MARTIN J
118 Despite the definition, the term 'shortfall' does not appear to be
actively deployed anywhere else in the text of the First FPC Contract. The parties did not refer to the definition in their submissions. I note that the definition of 'shortfall' presents in the same terms in both production contracts (2714 and 2772) which meet the description of a Second FPC Contract.
Issue 1 - conclusions upon construction
119 In the end, I am of the view that the Minister's suggested averaging
approach over the life of an FPC Contract for cl 5(a) under issue 1 must
be accepted. This is essentially for the following reasons.120 First, that interpretation appropriately produces a coherent and
harmonious approach to the day to day functioning of both the First FPC Contract of April 2001 between FPC and Nannup, and the subsequent June 2001 FAA.
121 Second, the entity then supplying timber to Nannup was the FPC, not
the Minister. An understanding of the basis upon which the FPC, as the timber supplier, undertook and discharged that underlying commitment to Nannup is therefore key. The terms of the First FPC Contract and in particular its cl 6 with a delineation of a Log Timber Intake are, as I see it, at the heart of the delivery obligations of the FPC as supplier.
122 Third, it makes little commercial sense for the Minister by cl 5 of the
FAA to be potentially paying out public funds to Nannup as public assistance, upon terms that differ significantly to those of the timber supply relationship committed to by the timber supplier FPC - another public body.
123 Fourth, there is every reason for the Minister as a legitimate timber
industry assistance measure in 2001 to be offering backup comfort to Nannup to meet circumstances where Nannup's new business undertaking becomes economically marginalised or prejudiced, due to problems from its supplier of timber - which supply problems inhibit timber processing capacity and thereby impact negatively on Nannup's financial viability.
124 Fifth, it is hard to accept the notion of the Minister, under Nannup's
approach to cl 5, being called on to pay out to Nannup possibly up to $4 million for trivial or de minimus scenarios of under supply just below the annual 20,000 m3 figure, but which cause no production prejudice issues for Nannup as regards its business. Consider in that light the circumstances where the FPC may in two of four years of the Second FPC
[2014] WASC 438
KENNETH MARTIN J
Contract in which Nannup claims a cl 5 shortfall occurred, have actually supplied 19,481 m3 and 19,964 m3 of timber (see par 20(d) of the FREAWSOC). Absent any suggestion of prejudice to Nannup's value adding processing operation, and where Nannup's business would almost surely carry at least some minimum level of annual stockpiled timber, supply quantity deficiencies of 519 m3 or 36 m3 by the FPC present as trivial by comparison with the contended for cl 5 liability of the Minister. Yet Nannup on its approach to cl 5 should receive from the Minister for either year, an amount sufficient to pay off all of its subsisting BFA debt to Westpac. That result presents to me as more than a little incongruous from a commercial perspective.
125 Yet Nannup does not shirk from such a literal, 'hair trigger'
construction approach to cl 5 of the FAA. Instead it points back to Nannup's full employment covenant to the Minister and argues it is equally inflexible - so there is mutuality in the rigour of both clauses of the FAA and hence cl 5 is engaged even if 19,999 m3 of timber was supplied in a financial year.
126 If the Minister's substantial cl 5 obligation is to be engaged by a
de minimus timber supply shortfall of even 1 m3 (or perhaps less), it is more palatable in a commercial sense to assess that shortfall by reference to an average annual delivery deficit across the life of an FPC Contract. Even then, there is still an element of the 'hair trigger' liability which Nannup contends ought to be imposed on the Minister, in the sense that the shortfall averaged out across the duration of an FPC Contact might be very small, and so the Minister might still be required to pay a sum out of all proportion to any economic prejudice to Nannup. But there has been a more than reasonable opportunity over time for the Minister to avoid that outcome, and so 'pulling the trigger' in such circumstances is much easier to accept as commercially sensible than doing so where there is a de minimus timber supply shortfall assessed only in a single 12 month period.
127 Sixth, I am wholly unmoved by Nannup's quid pro quo full
employment trade-off argument as regards it assisting a literal, or what I describe as its 'hair trigger', interpretation of cl 5(a). As seen, there is nothing at all within the text of the FAA to directly link distinct clauses. Nannup's retaliatory argument that because compliance by it with a full employment undertaking might turn out to be onerous over time, cl 5 should be read literally to catch trivial supply deficiencies, carries no appeal to me as a matter of business commonsense.
[2014] WASC 438
KENNETH MARTIN J
128 Nannup's full employment commitment is framed as an 'undertaking'
under the FAA (see cl 13). Were Nannup to breach it, that could result in a default under FAA cl 16.1(o). In contrast, the commitment of the Minister by cl 5 is, within the context of the FAA as a whole, seen as a promise of future financial assistance if needed and bound up with other financial commitments of the Minister under the FAA to make a loan available to Nannup, which may be forgiven, (cl 2) and to provide various grants to Nannup (cl 3, cl 4, cl 6 and cl 7). In other words, the attempted linkage under Nannup's arguments is wholly unconvincing.
129 Seventh, I am not convinced by Nannup's argument by reference to it
hypothetically suffering a disadvantage if the FPC were to first provide it with a chronic undersupply of timber for most of an FPC Contract period, and then provide a massive oversupply in the final year.
130 The 'straw man' example is contrived. But in any event, the so-called
problem is seen to not be a problem at all - on a true understanding of cl 6 in the First FPC Contract - in particular under the workings of the term 'Log Timber Intake' as properly understood.
131 Under the 'Log Timber Intake' definition in the First FPC Contract,
which is necessarily carried across to the FAA, the parties to the First FPC Contract are (objectively assessed) expected to act rationally in setting down a workable timber delivery schedule for a year, on or before commencement of that year. If they cannot agree, their schedule is to be as reasonably determined by the FPC.
The chronic undersupply/acute oversupply example is fanciful.
133 Eighth, the strict literal construction advocated by Nannup does not
work comfortably within a 32 month duration of the First FPC Contract commencing in May 2001 - unless the first two months are simply ignored. Such an approach would be to arbitrarily dispose of an inconvenient part of the agreement for the sake of it.
134 Ninth, the fact that the Second FPC Contract(s) once agreed as
Production Contracts 2714 and 2772 did not follow the First FPC Contract's averaging methodology, in terms of working on the criteria of an 'average annual quantity', is wholly irrelevant. Those later contracts were not in existence at the time the FAA was consummated. In June 2001 the FAA parties' objectively assessed anticipation of the workings of the FAA was for a Second FPC Contract (as defined in the FAA) on substantially the same terms and conditions as the First FPC Contract. Hence, in June 2001, objectively assessed, they expected a future Second
[2014] WASC 438
KENNETH MARTIN J
FPC Contract to say that the FPC would deliver and Nannup would accept delivery of 'the same volume of the timber required to be delivered each year under the First FPC Contract'. If the question is asked as to what that volume was, under the First FPC Contract, the enquiry leads back to the Log Timber Intake - defined by reference to sch 1, and so to 'an annual average quantity'.
135 Tenth, the construction of cl 5 of the FAA advocated by the Minister
is harmonious and commercially sensible, effectively seeing the clause operate, if needed, to provide a proper level of assistance by placing Nannup in funds in circumstances where the expected level of supply of timber from the FPC has proven over time to be so poor as to be economically prejudicial to Nannup. In that serious case of supply prejudice Nannup is then entitled to be put in funds by the Minister to meet its loan obligations to Westpac. The clause was designed to provide some publicly funded assistance to Nannup if needed, not to provide a 'Lotto' dividend.
Issue 1 is so answered.
Second issue - meaning of 'unable to deliver' in cl 5
137 There is obviously a close inter-relationship as between the first and
second preliminary issues - given the proximity of the 20,000 m3 supply
figure to the phrase, 'unable to deliver', used vis-à-vis the FPC.138 The term 'unable to deliver' is used in FAA cl 5(a)(i) and (ii). A
close parallel is found as well in cl 5(b)(i) by the phrase 'unable to be delivered' - as regards the cl 5(b)(i) requirement for a provision of documentary evidence to the Minister, thereby perfecting the Minister's obligation to pay Nannup, at that point.
139 As regards the rival interpretations on issue 2, Nannup contends
again for what is essentially a literal interpretation of the disputed phrase - asserting it will embrace the FPC's inability to deliver for any reason whatsoever, and which is evidenced by an event of the FPC's failure to deliver the contractually agreed 20,000 m3 of timber to Nannup.
On the other hand, the Minister contends for a narrower meaning. Under the Minister's written submissions, it is submitted:
47. The term 'unable' appears in a context in which Contract 2629 provided for an obligation of the FPC to deliver a certain amount of timber in each year, but contained, in clause 22, a force majeure provision. Clause 22 provided that a failure to perform an
[2014] WASC 438
KENNETH MARTIN J
obligation under the Agreement will be excused to the extent that such failure is caused by or arises from circumstances beyond the power and control of the party responsible for the performance of the obligation and without that party's fault or privity. Under clause 22.1, the plaintiff shall have no claim against the State or the FPC arising from such failure. Where the force majeure clause did not apply, and the failure to deliver the required amount was not otherwise excused, then the plaintiff would have a cause of action for breach of contract against the FPC.
48. In that context, there is every reason to read the reference to the FPC being 'unable' to deliver log timber where there was a supply contract as contemplating the situation to which the force majeure clause would apply, where the failure to deliver arises from circumstances beyond the power and control of the FPC. It is only in those circumstances that NTP will suffer a relevant loss, as it will not have a right to seek an award of damages against the FPC. If the failure to deliver is due to the FPC's breach of its obligations under the relevant contract, or an agreement by NTP and the FPC to reduce the amount of timber delivered in accordance with the provisions of the contract, then there will be no relevant loss tending to frustrate the purpose of the investment protected by clause 5 of the Financial Assistance Agreement. If the FPC is in breach of its obligations under the relevant supply agreement, then NTP will still be able to sue the FPC and receive an award of damages which should place NTP in the same position as it would have been if the breach of contract had not occurred. If the reduction in the quantity of timber delivered is due to an agreement between the FPC and NTP, then the cause of the reduction cannot be said to be the inability of the FPC to deliver the required amount.
49. It may also be that clause 5 might have applied if the FPC was unable to enter into a Second FPC Contract at all, for example by reason of a reduced sustainable yield provided for in a forest management plan. However, the reference to the FPC being 'unable' in this context also suggests that the cause of the absence of any contract must stand outside the control of the FPC.
Second issue - evaluation
141 By my assessment the construction advocated by the Minister is too
narrow. I am not attracted by the Minister's proposition that FAA cl 5 would only have application in circumstances where, in effect, there arose an inability of Nannup to successfully prosecute an action for damages against the FPC for a supply breach of the relevant FPC Contract - in terms of the FPC not meeting the level of its delivery obligations in respect of a Log Timber Intake under cl 6 of an FPC Contract. That
[2014] WASC 438
KENNETH MARTIN J
construction of cl 5 of the FAA effectively would limit the invocation of cl 5 of the FAA against the Minister, to scenarios in which the FPC was otherwise exculpated vis-à-vis any supply breach under cl 22.1 (read with cl 22.6 of the First FPC Contract).
142 I have some difficulty accepting that where the FPC is, under its
supply agreements with Nannup, exposed to damages for breach of its contractual obligation to meet the Log Timber Intake, Nannup is always thereby deflected from invoking cl 5 of the FAA and receiving a payment from the Minister - in circumstances where the underlying criteria for invoking cl 5 are otherwise met.
143 I have already indicated by the answer provided under issue 1 that a
'hair trigger' application of FAA cl 5 should not be accepted. Working from an averaged timber supply deficiency outcome significantly reduces the potential scope for the activation of FAA cl 5. From that starting point, a simpler approach, as advocated by Nannup, to the phrase 'unable to deliver' operates viably in the FAA and, as Nannup submits, harmoniously so, in conjunction with Nannup's documentary evidence verification requirements by cl 5(b).
144 Accordingly, I prefer Nannup's construction on issue 2. I would only
add that the phrase 'unable to deliver' seems to be wide enough to embrace a clear anticipatory default scenario - whereby it became clear that the FPC (for example, by reason of a devastating forest fire or a disease that wipes out most of the FPC's timber stocks) could not, on a long term basis, supply timber to Nannup to accord with economically viable criteria under the FPC Contracts. For such anticipatory circumstances Nannup should also be able to avail itself of the financial assistance promised by the Minister under FAA cl 5.
Issue 2 is so answered.
Third issue - effect of variations to the plaintiff's commercial loan facilities
(BFAs) with Westpac after the FAA is entered into
146 Unlike the answers to the first and second agreed issues, which may
not be determinative of the ultimate merits of Nannup's action, the answer
to the third issue will most likely deliver that outcome.147 The rival positions as contended for by the parties are seen in the
agreed facts under pars 48(a) and (b) of their respective formulations for
this issue.
[2014] WASC 438
KENNETH MARTIN J
148 It will have been noted that a hefty chunk of the parties' agreed facts
manifest under the heading 'Business Finance Agreements'. These facts canvass the Nannup/Westpac lending arrangements over time. They extend to include the 2001 BFA, 2004 Variation Agreement, 2006 BFA, 2007 BFA, 2008 Variation Agreement, 2009 Variation Agreement, 2010 BFA, 2011 BFA, 2012 BFA, 2013 BFA and 2013 Variation Agreement. Such matters comprise the bulk of the parties' agreed facts - seen assembled under pars 5 - 39.
149 The 2001 BFA, providing for Commercial Bill Line No 1 and
Commercial Bill Line No 2, was dated 4 April 2001. It was entered on 20 April 2001 (see Annexure D and pars 5 - 8 of the statement of agreed facts), prior to the FAA of June 2001. Subsequent Variation Agreements and BFAs, through to a 2013 Variation Agreement, affected further Commercial Bill Lines, albeit with the same loan limits for Nannup ($1,560,000 for Bill Line No 1 and $2,340,000 for Bill Line No 2) (see Annexures F and H - P). As will be seen, the lending facilities extended by Westpac to Nannup which emerged in the lending agreements after the 2001 BFA were distinctly different to the facilities extended under the 2001 BFA. The loan facilities established by means of Commercial Bill Line No 1 and Commercial Bill Line No 2 in the 2001 BFA were borrowings by Nannup established at a particular time, duration, and with particular repayment and interest arrangements
150 The third agreed issue focuses attention on cl 5(a)(iii) of the FAA
and particularly the chapeaux preceding subpar (iii) in terms, 'then the Minister agrees to provide to Nannup Timber a sum equivalent to the total outstanding balance of loan funds'.
151 Neither party contends that cl 5 of the FAA operated as a legal
guarantee or an indemnity by the Minister of the obligations of the FPC. Nevertheless, the Minister's legal submissions seek to draw some policy support for its construction position from a well-established body of law applicable to the guarantee cases. That line of case authority establishes that where there has been a subsequent alteration to the character of a primary debtor's obligations, which were obligations the subject of a third party's guarantee, the scope of the guarantor's original promise will be strictly construed so as not to cover the altered arrangements reached as between the primary borrower and the lender - unless the guarantor has agreed to extend its obligations in this way. To that end, I mention the authorities collected in leading decisions of the High Court of Australia including Ankar Pty Ltd v National Westminster Finance (Australia) Ltd
[2014] WASC 438
KENNETH MARTIN J
[1987] HCA 15; (1987) 162 CLR 549, 561 and Andar Transport Pty Ltd
v Brambles Ltd [2004] HCA 28; (2004) 217 CLR 424.
But as more direct case authority favouring its argument on issue 3, the Minister invokes the High Court's decision in what was a non-guarantee case, more akin to the present facts, Dan v Barclays Australia Ltd (1983) 57 ALJR 442, citing the observations of Mason, Brennan and Deane JJ at 445, particularly:
The facility in a larger amount and on different terms and conditions was a different facility which was made available in substitution for the original facility.
153 The observations are invoked by the Minister to support the issue 3
construction argument, which is that the Minister's cl 5 FAA obligation to provide funds to Nannup was only ever in respect of the sum equivalent to the total outstanding balance of loan funds provided to the plaintiff by Westpac by the terms of the 2001 BFA. It is said that despite many subsequent BFA variations, all consensually effected as between Nannup and Westpac, there notionally remain no outstanding loan funds due by Nannup to Westpac under the 2001 BFA. This is because the 2001 BFA agreement had effectively run its course, and had been replaced by fresh lending arrangements, which were not entered into with the Minister's knowledge or approval. Certainly it is said that was the case as at September 2013, when Nannup attempted for the first time to meet FAA cl 5(b) and thereby trigger from then the Minister's obligations to pay funds to Nannup.
154 The Minister says that this 2001 BFA replacement point is no
theoretical or technical concern. It is accepted that the 2001 BFA arrangements, if followed as agreed, had provided for Nannup's full repayment of the principal sums by instalments. By 30 April 2011, the capital amounts advanced ought by then to have been repaid in full under the terms of the 2001 BFA. Implementation by Nannup of the repayment instalment regime of the 2001 BFA would have then resulted in the exposure of the Minister under cl 5 of the FAA being incrementally reduced over time, and eventually extinguished completely.
155 So much, the Minister says, would have been the objective
expectation of reasonable parties assessed as at 15 June 2001, when the
FAA was entered into.156 In fact, it is proved without controversy that as time passed after
2001, the Westpac/Nannup 2001 BFA borrowing arrangements were
[2014] WASC 438
KENNETH MARTIN J
converted by them, to interest only repayments. The capital sums of each loan were not reduced by repayments of principal and so remain outstanding, even now.
In answer, Nannup joins issue and asserts by written submission:
115.
Subsequent to entering into the 2001 BFA, the Plaintiff varied the commercial facilities created by that Agreement by:
(a) deferring the commencement date for principal repayments; and (b) extending the terms of those facilities. 116. These variations were made by mutual agreement between the Plaintiff and its Bank.
117. The FAA does not, on its face, prohibit variations of this nature.
118. The only means by which such variations could have an effect on the Minister's obligations pursuant to clause 5 are:
(a) if there was a general principle of law which applied to clause 5 of the FAA in a way which varied or voided the Minister's obligations; or (b) if a term were to be implied into clause 5. 119. The Plaintiff's position is that neither of the above are applicable, and any further comments in that regard will largely be left to a reply (if required).
… 122. Further, whether or not that obligation is analogous to a guarantee (which the Plaintiff denies in any event) is irrelevant. Either an obligation satisfies the criteria of a guarantee or it does not. 123. The nature of a contract of guarantee in Australia has been defined by the High Court in Sunbird Plaza Pty Ltd v Maloney. There, Mason CJ, following detailed discussion of authorities on what a guarantee is, said at 254: 'a contract of guarantee is, subject to any qualifications made by the particular instrument, a collateral contract to answer for the debt, default or miscarriage of another who is or is contemplated to be or has become liable to the person to whom the guarantee is given.'
[2014] WASC 438
KENNETH MARTIN J
124. Another definition was given in Jowitt v Callaghan (1938) 38 SR NSW 512. At 516 - 517, Jordan CJ described the characteristics of contract of guarantee as:
' … a contract between two persons which is intended by them to secure the performance of the obligation of a third person to one of them. The existence, present or future, of the obligation of a third person, and an intention in the parties to the contract to secure the performance of that obligation, are essential features of a contract of guarantee. If these elements are present, the contract is one of guarantee whether the promise be collateral in the promise of a principal obligator and in the nature of a distinct and separate promise to perform the principal obligation if he does not …'
125. Both of those statements have been applied as being well settled law by the Supreme Court of Western Australia: Beagle Holdings Pty Ltd & Anor v Equus Financial Services Ltd [2000] WASC 27 at 50 - 51.
126. In Maloney, Mason CJ further explained that in modern times there are two common classes of guarantee.
127. The first is an undertaking by the guarantor that if a debtor fails to pay an instalment the guarantor will pay.
128. The second is an undertaking by the guarantor that the debtor will carry out his contract, in which case a failure by the debtor to perform his contract puts the guarantor in breach of his.
129. The relevant obligation in the FAA is not in the nature of a guarantee. It is not an obligation to answer for any default by the FPC. There is no contractual intention to secure the performance of any obligation of the FPC.
130. The Minister's obligation in the FAA does not fall within the first common class of guarantee. It is not an undertaking that the Minister will perform the FPC's obligation. That is, to provide 20,000m3 of timber to the Plaintiff each year.
131. Similarly, it does not fall within the second category. A breach by the FPC of its contractual obligations to NTP does not constitute a breach of contract by the Minister.
132. Rather, the failure of the FPC to deliver a specified volume of timber 'each year' to the Plaintiff acts as a trigger for the Minister's payment obligation.
[2014] WASC 438
KENNETH MARTIN J
133. It is not even the case that a breach by the FPC of its obligation under the production contract will necessarily lead to the Minister's obligation under clause 5 of the FAA being triggered.
134. For instance, the threshold at clause 5, in respect of both the First and Second FPC Contract (as defined in the FAA) is 20,000m3 of timber 'each year'.
135. However, under the First FPC Contract, the FPC had an obligation to deliver an additional 10,350m3 - 16,000m3 to the Plaintiff, on top of the standard annual quantity of 20,000m3.
136. If the FPC had failed to deliver this additional volume it would have been in breach of the First FPC Contract.
137. However, this would not have triggered the Minister's obligation under clause 5 of the FAA, provided that the minimum quantity of 20,000m3 had been delivered.
Determination of the third issue
158 The written submissions of Nannup seen above do not really engage
with the essence of the construction for which the Minister contends. The Minister relies particularly upon the full meaning and import of the FAA cl 5 phrase 'under a business finance agreement dated 20 April 2001', as seen in cl 5(a)(iii) of the FAA, and says that the present exposure is different in character.
159 During oral argument, some attempt was made by counsel for
Nannup to draw support for its position from cl 1.2(e) of the FAA. This provision says that 'references to this Agreement or any other instrument include this Agreement or any other instrument as varied or replaced, and notwithstanding any change in the identity of the parties'. That interpretation provision of course is introduced by the preface 'unless the contrary intention appears'.
160 On my view, cl 1.2(e) FAA does not assist Nannup's answering
position in the present case. Nor is any support derived as was advocated by Nannup from cl 5(a)(iv) and its conjoining with cl 5(a)(iii) for a requirement as regards the total outstanding balance of loan funds 'sourced by Nannup for the establishment of the Facility under clause 2 of this Agreement'. By my assessment, cl 5(a)(iv) is neutral in terms of its implications concerning this issue.
161 The loan documentation between Nannup and Westpac provided as
part of the agreed materials indicates the following incongruous features,
namely:
[2014] WASC 438
KENNETH MARTIN J
(a)
that the loan advances as ultimately made to Nannup were not, in fact, accompanied by any bills of exchange; and
(b)
that at least part of the moneys advanced from Westpac appears to have been used by Nannup for purchasing the Nannup Timber Mill, rather than being devoted to capital infrastructure commitments, as regards an establishment of the Facility (as defined) - in furtherance of the so-called value added objectives of the FAA by entitlement of the Facility (see the definition of 'value added' in cl 1.1).
But neither incongruity bears in the end upon the present construction
exercise for issue 3.
At the end, my assessment is that the construction submissions of the Minister on issue 3 must be accepted.
163 As a matter of the proper construction of the FAA, the public money
the Minister may need to provide to Nannup by cl 5(a), was to be identified in a specified way. The criteria for identifying and ascertaining the sum that might need to be paid in the future existed at 15 June 2001, when the FAA was entered. The Westpac/Nannup 2001 BFA lending agreement of 20 April 2001 was expressly identified. But subsequently, it is impossible to use that 2001 designate criteria to ascertain the outstanding balance of loan funds due by Nannup to Westpac under a BFA. This is because Nannup's loan from Westpac came to be re- regulated by altered lending terms. This happened consensually between Nannup and Westpac, but without any reference to the Minister. Nannup's Westpac loans changed to become due under new and different lending agreements, especially as regards Nannup's loan repayments becoming, in effect, interest only.
164 Accordingly, it is now no longer possible to ascertain any sum for
the purposes of quantifying the Minister's obligation under cl 5(a)(iii) by reference to the 2001 BFA initial governing criteria. The 2001 criteria have been replaced and now become redundant as between Nannup and Westpac.
165 A further issue is posed under issue 3 (ie, in the alternative, is the
Minister obliged to pay Nannup the amount that would have been payable if the Variations and Further Business Finance Agreements had not been entered into). That question must also be answered in the negative.
[2014] WASC 438
KENNETH MARTIN J
166 Effectively, the 2001 BFA as between Nannup and Westpac was
replaced with new and altered lending agreements. I conclude that happened it seems by the 2004 Variation Agreement, but in any event clearly, it was not later than under the 2006 BFA.
Under those altered and revised Westpac/Nannup finance circumstances, it is not open to pretend now for the purpose of trying to make cl 5 'bite' in September 2013, as Nannup seeks, that the 2001 BFA only remained dormant, or is capable of being somehow revived.
168 The 2001 BFA is at an end, and fatally so to Nannup in my view -
terminating any subsequent efforts of Nannup to invoke FAA cl 5(a) (in
September 2013).
Issue 3 is so answered.
Fourth issue - Total outstanding balance of loan funds
170 The last issue focuses attention on cl 5(b) of the FAA. It addresses
the parties' agreement that the Minister would not be required to 'make any payment under clause 5(a)', unless and until the plaintiff had provided documentary evidence to the Minister, in the respects identified under cl 5(b)(i) and (ii) (first as regards a volume of jarrah timber the FPC was unable to deliver, then second by cl 5(b)(ii), as to the amount of the outstanding balance of loan funds under cl 5(a)(iii)). There appears to be a drafting error under cl 5(b)(ii), insofar as it refers to the loan funds under cl 5(a)(iv). That subclause (a)(iv) does not separately designate any amount of loan funds from Westpac. It refers to cl 2 of the FAA dealing with a separate loan from the Minister of up to $991,000 'for the purpose of establishing the Facility': see FAA cl 2.2 and 2.3.
171 It is reasonably clear from the terms of cl 5(b) that it deals with the
issue of timing for the making of a payment by the Minister, if arising
under cl 5(a).172 In other words, once a payment obligation by the Minister from FAA
cl 5(a) has otherwise been engaged, cl 5(b) deals with the timing of the payment - as regards when the Minister must pay any cl 5(a) amount (as ascertained). It is also clear from cl 5(b) the Minister is not required to pay anything at all, until the specified documentary evidence has been provided by Nannup to the Minister, in the respects identified under cl 5(b)(i) and (ii).
[2014] WASC 438
KENNETH MARTIN J
173 Nannup argues the total outstanding balance of the loan funds
borrowed by Nannup from Westpac - at the time FAA cl 5(a) is engaged - is what must be paid by reason of the ascertained failure of the FPC to supply 20,000 m3 of timber (assessed on the basis of an annual average calculated over the duration of any FPC Contract, as I have concluded, in answer to issue 1). But the Minister argues the amount that is payable, is only the level of Nannup's loan from Westpac at the time that the required documentation is provided to the Minister, under cl 5(b).
174 As I have observed, cl 5(b) only deals with an issue of timing in
terms of when the Minister must pay, if at all. If cl 5(b) is not met, there will be nothing to pay to Nannup. The amount the Minister needs to pay Nannup is the amount of a sum equivalent to the loan funds outstanding under the 20 April 2001 BFA - due to Westpac at a time that FAA cl 5(a) is properly engaged - in other words, given the answer to issue 1, a conclusion is reached at the end of an averaging process, ultimately showing a quantitative deficit at the end of the life of the relevant FPC Contract.
175 In the ordinary course of commerce, one would not usually expect
there to be an unduly long delay arising as between engagement of a provision such as FAA cl 5(a), and the following provision of documentary evidence under cl 5(b). But that is not so here, at least for the earliest asserted annual deficiencies. Even so, it seems that from the text of the clause the amount which must be the subject of the cl 5(b) documentary evidence provided, is the cl 5(a) date amount - not another monetary amount outstanding at the time when the evidence required to be provided by cl 5(b) is, in fact, actually delivered by Nannup to the Minister.
176 That conclusion engages a further issue that is alternatively posed, at
par 50(b) under the fourth issue, namely whether it is an implied term of the FAA, as contended by the Minister, that the provision of the documentary evidence by Nannup, as is required by cl 5(b) of the FAA, must be given to the Minister within a 'reasonable time' after the FPC has been unable to deliver for the purposes of triggering cl 5(a)(i) (under the First FPC Contract), or cl 5(a)(ii) (under the Second FPC Contract).
The submissions of Nannup put against the implied term are assembled under pars 143 - 151 of its written submissions.
143. The Plaintiff says that there is no such implied term .
[2014] WASC 438
KENNETH MARTIN J
144. However, the Plaintiff does note that, in order for the Defendant to establish the existence of an implied term, one of many hurdles would be the need to show that such a term was required in order to give business efficacy to the Agreement.
145. This could not be satisfied unless there was an unidentifiable prejudice to the Defendant if the demand under clause 5(b) was not made within a reasonable time.
146. The only identifiable prejudice arising from a delay in making the demand under clause 5(b) of the FAA is to the Plaintiff.
147. Conversely, delay under clause 5(b) is actually to the Defendant's benefit.
148. If payment is fixed at the date of failure to deliver, the Plaintiff has the right to that sum from the Defendant immediately upon making demand.
149. The longer the Plaintiff delays in making the demand:
(a) the longer the Defendant is able to retain the benefit of those demands; and (b) the longer the Plaintiff is deprived of the benefit of those funds, and is obliged to keep paying interest on its commercial loans. 150. The FAA does not provide for any interest to accrue on the sum fixed under clause 5(a) between the date on which the Minister's liability to pay arises and the date on which payment is made following demand from the Plaintiff.
151. There is no scope to imply the term sought by the Defendant.
178 Against that position, the affirmative contentions of the Minister
pressing for such an implied term arising as a matter of law, invoke York Air Conditioning and Refrigeration (Australasia) Pty Ltd v The Commonwealth [1949] HCA 23; (1949) 80 CLR 11, 50 - 51, Perri v Coolangatta Investments Pty Ltd [1982] HCA 29; (1982) 149 CLR 537 and McCourt v Cranston [2012] WASCA 60.
In York, Dixon J said:
The ordinary prima-facie rule is that when a contract provides for the doing of an act and there is no express provision as to time the law implies that it must be done within a reasonable time (62).
[2014] WASC 438
KENNETH MARTIN J
I set out pars 70, 71 and 72 and 73 of the Minister's written submissions, which assert:
70. On that construction, it is not the case that there is no prejudice occasioned to the Minister by delay (cf Mango Boulevard Pty Ltd v Mio Art Pty Ltd & Ors [2013] QCA 271 per Fraser JA at [23]. The Minister will have an ongoing static liability, rather than a reducing contingent liability. An assessment of the evidence produced by NTP and investigation of whether there is any contradictory evidence will be made more difficult by the passage of time.
71. What is a reasonable time is a question of fact to be determined in the light of all the circumstances and what is fair to both parties: Perri v Coolangatta, 567 - 568 (Brennan J).
72. In the present case there is no question that evidence under clause 5(b) was provided after a reasonable time had expired. NTP asserts a failure to deliver which engaged clause 5(a) in the financial year ending 30 June 2003. It asserts that the evidence was provided in September 2013, over a decade later. If the provision of evidence which creates the Minister's liability to pay can be provided so late, the Minister will be subject to a liability for which he could reasonably have assumed (and ordered his financial affairs on the basis that) the contingencies which could give rise to the alleged liability had not occurred.
73. The plaintiff gives no reason to justify the delay of over a decade for the provision of the evidence it alleges satisfies clause 5(b).
Conclusion as regards implied terms under issue 4
181 Given the position that I have reached concerning issue 1, there may
be a potential engagement of FAA cl 5(a)(i) reached upon an averaging calculation, ascertainable at the end of the 32-month duration of the First FPC Contract, that is, at the end of 2003. That being so, it must then - speaking objectively - strike a reasonable person as somewhat incongruous that a payment obligation might be sprung upon the Minister only in September 2013 to pay out public funds to the potential level of $3.9 million (as is contended). Or, as regards the definition of the Second FPC Contract in the FAA, cl 5(a)(ii) could be engaged at the end of at least a 9-year period, ending on or after 1 January 2013.
Given normal circumstances, I see no reason why the usual reasonable time implication as was stated in York by Dixon J at 62 - 63 should not apply. Clearly, as more and more time goes by, the ability to investigate underlying circumstances to verify facts, must diminish.
[2014] WASC 438
KENNETH MARTIN J
Prejudice is capable of being sustained by the Minister if the delay in providing the cl 5(b) documents required, is too long.
183 The public character of the payment assistance obligations upon the
Minister under the FAA suggests that any obligation payment to Nannup under cl 5(a) should not subsist in a sort of 'balance sheet' hibernation, possibly indefinitely, only to be awoken at Nannup's whim. The Nannup view presents to me as both unworkable and unreasonable.
184 Here, a 10-year gap between the end of the First FPC Contract and
Nannup's provision of documentary notice under cl 5(b) as regards an asserted engagement of the Minister's obligation under cl 5(a) of the FAA for fy 2003, is an unusual event that speaks volumes as to the commercial unworkability of Nannup's approach and the potential prejudice to the Minister from such a delay. The implied terms sought by the Minister are necessary for cl 5(b) to function effectively.
Issue 4 is so answered.
| Conclusion |
186 The parties should hold an opportunity to consider the reasons
underlying the answers I have now provided in response to the questions the subject of each preliminary issue. The parties obviously need to confer about appropriate dispositive orders, including as to costs. The Minister, as the substantially successful party, shall have the carriage of preparing a minute of proposed orders to be circulated between the parties for the purpose of their conferral, hopefully on the basis of producing a set of agreed orders. But in the absence of agreement, after a period of 28 days from the provision of a proposed minute of orders by the Minister, then the matter may be brought back for me to complete that task, if that is necessary.
[2014] WASC 438
KENNETH MARTIN J
SCHEDULE A
[2014] WASC 438
KENNETH MARTIN J
[2014] WASC 438
KENNETH MARTIN J
[2014] WASC 438
KENNETH MARTIN J
[2014] WASC 438
KENNETH MARTIN J
[2014] WASC 438
KENNETH MARTIN J
[2014] WASC 438
KENNETH MARTIN J
[2014] WASC 438
KENNETH MARTIN J
[2014] WASC 438
KENNETH MARTIN J
[2014] WASC 438
KENNETH MARTIN J
[2014] WASC 438
KENNETH MARTIN J
[2014] WASC 438
KENNETH MARTIN J
[2014] WASC 438
KENNETH MARTIN J
[2014] WASC 438
KENNETH MARTIN J
2
1