New Standard Energy PEL 570 Pty Ltd v Outback Energy Hunter Pty Ltd

This appeal concerned the rights and duties owed between Outback Energy Hunter Pty Ltd (Outback), Santos Queensland, New Standard Energy PEL 570 Pty Ltd (NSE), and Sundance Energy International Ltd (Sundance) under a series of contractual agreements relating to petroleum exploration licence PEL 570 in South Australia. The dispute arose from a proposed transaction between Sundance and the Quintanilla Group, which the appellants alleged constituted a breach of the Implementation Agreement by Outback. The appeal was heard by the Full Court of the Supreme Court of South Australia.

The legal issues before the court included whether clause 7 of the Implementation Agreement was promissory in the material respect, whether a term requiring cooperation should be implied into the agreement, and whether Outback and Santos Queensland had unreasonably withheld consent to the proposed transaction. The court was also required to consider, in the alternative, if any such obligation not to unreasonably withhold consent was promissory, to whom it was owed and whether any breach had caused loss to the Sundance parties.

The Full Court, by majority, dismissed the appeal. Nicholson J, with whom Kourakis CJ and Lovell J agreed, held that clause 7 was not promissory in the material respect, upholding an alternative contention by the Santos parties. Consequently, this finding was sufficient to dispose of the appeal. The court also determined that no term requiring cooperation should be implied into the agreement. Furthermore, it was found that, in any event, the primary judge had correctly concluded that Outback and Santos Queensland had not breached any obligation not to unreasonably withhold consent. Nicholson J further clarified that if any such obligation were to be promissory, it would have been owed to NSE, not Sundance, in the circumstances of the matter.

The court ordered that the appeal be dismissed and the primary judge's dismissal of the cross-action and third party action be confirmed. Due to the findings on liability, it was unnecessary to consider the grounds relating to causation and assessment of loss.