Paterson Mining Pty Ltd v David Oriel Industries Pty Ltd
[2021] QLC 37
•15 October 2021
LAND COURT OF QUEENSLAND
CITATION: Paterson Mining Pty Ltd v David Oriel Industries Pty Ltd [2021] QLC 37 PARTIES: Paterson Mining Pty Ltd ACN 133 613 797 (applicant) v David Oriel Industries Pty Ltd ACN 001 571 544 (in liq) (respondent) FILE NO: MRA207-18 DIVISION: General Division PROCEEDING: General application DELIVERED ON: 15 October 2021 DELIVERED AT: Brisbane HEARD ON: 6 September 2021 HEARD AT: Brisbane MEMBER: JR McNamara ORDERS:
1. It is declared that the applicant has lawfully terminated the sale agreement executed on or about 1 December 2014 between the applicant and the respondent (the Sale Agreement).
2. It is declared that the applicant is entitled to retain the $500,000 deposit forfeited under the Sale Agreement.
3. The Court orders that the respondent pay the
applicant licence fees pursuant to cl 7.4(f) of the Sale
Agreement in the amount of $76,922.4. The Court orders that the respondent deliver up
possession of the assets and equipment contained in
‘Annexure A’ to the Further Amended Statement of
Claim filed 31 May 2019, being the assets and equipment set out in Annexure A to this order.
5. The Court orders that the respondent pay the
applicant interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld) on the amount described in Order 3 from 28 April 2018 up until the date of judgment.
6. The respondent pay the applicant’s costs of the
proceeding on a standard basis.
CATCHWORDS:
ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – GENERALLY – where the respondent has been placed into liquidation – where the Land Court has substantive jurisdiction – where the applicant and respondent
had an agreement for the sale and purchase of mining tenements and other assets and equipment – whether the applicant is entitled to recovery of the assets and equipment – whether the applicant is entitled to licence fees and the deposit pursuant to the sale agreement – where the applicant transferred title to the mining tenements but not the assets and equipment unless or until completion of the sale agreement – where the sale agreement was not completed – where there
was valid termination of the sale agreement Civil Proceedings Act 2011 (Qld) s 58
Land Court Act 2000 (Qld) s 7A
Mineral Resources Act 1989 (Qld) s 363Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 25) [2020] QLC 22, cited Goldhounds Mining and Exploration Pty Ltd v Department of Natural Resources, Mines and Energy [2019] QLC 10,
applied
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457;
[1933] ALR 381, distinguishedMitchell Ogilvie Menswear Pty Ltd v Rapid Edge Pty Ltd [2019] QSC 136, applied Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; (2015) 325 ALR 188, cited
Shevill v Builders Licencing Board (1982) 149 CLR 620;
(1982) 42 ALR 305, considered
Tropical Trades Ltd v Goonan (1964) 111 CLR 41; [1964]
ALR 585, citedWestralian Farmers Ltd v Commonwealth Agricultural Services Engineers Ltd (in liq) (1936) 54 CLR 361; (1936) 9 ALJR 423, considered APPEARANCES: T Jackson (instructed by James Conomos Lawyers) for the
applicantNo appearance from the respondent
Introduction
In 2014, the applicant vendor (Paterson Mining) and the respondent purchaser (DOI)
entered into an agreement (sale agreement) for the sale and purchase of ML 20633,
EPM 18088, EPM 18180 and EA EMPML00564113 (Mining Tenements) and other
assets and equipment (the Assets) used to operate the Pannikin tin mine on Wolverton
Station in far North Queensland.
Proceedings were commenced in the Land Court by Paterson Mining by Originating
Application filed 15 June 2018. The basis of the action was that as completion of the
sale agreement had not occurred, Paterson Mining had lawfully terminated the sale
agreement and sought consequential declarations and orders.
Orders were made for the filing and service of pleadings and amended pleadings. A
Statement of Claim was filed 1 August 2018, followed by a Defence on 29 August
2018. A Reply to the Defence was filed on 19 September 2018; an Amended
Statement of Claim was filed on 29 April 2019; an Amended Defence was filed on
13 May 2019; and a Further Amended Statement of Claim (FASOC) was filed on 31
May 2019. The last of the pleadings was a Further Amended Defence (FAD) filed on
19 June 2019.
Court orders were also made for the nomination of experts, the production of single
expert and joint expert reports, and the filing and service of lay witness evidence.
Witness statements filed during this period include the affidavit of Kathryn Margaret
Hughes (authorised representative of Paterson Mining) filed 15 June 2018, affidavits
of Mervyn David (David) Oriel (Managing Director, DOI), and affidavits of various
legal and other representatives.[1] Valuation experts were nominated by the parties but
for reasons that will become apparent, expert reports were not filed.
[1] Affidavits filed in 2018 include: Affidavit of Kathryn Margaret Hughes filed 15 June 2018; Affidavit of Mervyn David Oriel filed 21 June 2018; Affidavit of Michael Sean Kelly filed 21 June 2018; Second affidavit of Michael Sean Kelly filed 21 June 2018; Affidavit of Phillip Moody filed 18 November 2018; Affidavit of Michael Sean Kelly filed 16 November 2018; Affidavit of Mervyn Daviel Oriel filed 16 November 2018; Affidavit of Nashneen Mohammed filed 29 November 2018; Affidavit of Denis Walter Reinhardt filed 30 November 2018; Affidavit of Geoffrey Anthony Shannon filed 30 November 2018; Affidavit of Mervyn David Oriel filed 30 November 2018; Affidavit of Phillip Moody filed 30 November 2018; Affidavit of Michael Sean Kelly filed 30 November 2018; Second affidavit of Michael Sean Kelly filed 30 November 2018.
On 9 July 2019, DOI appointed Mr Neil Cussen (insolvency practitioner) as
administrator. A Deed of Company Arrangement (DOCA) was executed on 3
September 2019. The appointment of the administrator stayed the proceeding by
operation of the Corporations Act 2001 (Cth). An application for leave to proceed
was made and leave granted by the Supreme Court on 23 June 2020.
The matter returned to the Land Court. Mediation was ordered, convened, and a heads
of agreement signed on or about 30 October 2020. DOI was represented at that time
by its agent Mr Shannon. None of the outcomes in the heads of agreement which had
become due were met.
On 18 December 2020, Mr Cussen issued a notice to creditors of DOI advising as a
result of the failure to meet certain obligations under the DOCA, DOI had been
automatically placed into liquidation. The effective date of liquidation appears to be
15 December 2020.
As a result of the liquidation a further Supreme Court application for leave to proceed
was necessary,[2] was made, and on 29 April 2021 Davis J ordered Paterson Mining be
granted leave to proceed against the respondent in liquidation.
[2] Corporations Act 2001 (Cth) s 471B.
The relief claimed in the FASOC included an order that DOI take all necessary steps
to cause the transfer of the Mining Tenements into the name of Paterson Mining.
Of the Mining Tenements, only ML 20633 survives.[3] The Assets are particularised in
Annexure A to the FASOC. There is evidence in the 15 June 2018 affidavit of Ms
Hughes concerning the condition of some of the Assets as at February 2016.[4]
[3] EPM 18088 expired 2 July 2019: Hearing book provided to the Court without filing, page 451; EPM 18180 expired 1 November 2017: Hearing book provided to the Court without filing, page 456; EA EMPML00564113 suspended 12 April 2018: Hearing book provided to the Court without filing, page 289.
[4] Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [59](c).
A hearing was conducted on 6 September 2021. The respondent did not participate in
the hearing. At a review before me on 19 August 2021, Mr Grunert of Taylor David
Lawyers appeared on behalf of the liquidator. Mr Grunert informed the Court that the
liquidator did not intend to participate in the proceedings in its own capacity or to put on any positive defence on behalf of DOI.[5] DOI does not consent to any relief but
will abide by the orders of the Court.[6]
[5] Affidavit of Anthony Angeli filed 31 August 2021 [7]-[9]
[6] Applicant’s outline of submissions filed 3 September 2021 [10].
DOI does not seek any relief and although the FAD includes numerous complaints
about the FASOC being liable to be struck out, no application for strike out was
brought.[7]
[7] Respondent’s further amended defence filed 14 June 2021.
The relief sought at the hearing is as follows:
“(a) a declaration that PM has lawfully terminated the sale agreement;
(b) a declaration that PM is entitled to $500,000 being the deposit forfeited
under the sale agreement;
(c) an order that DOI pay the plaintiff licence fees pursuant to clause 7.4(f)
of the sale agreement in the amount of $76,922;
(d) an order that DOI deliver up possession of the Assets;
(e) interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld); and
(f) costs.”[8]
[8] Applicant’s outline of submissions filed 3 September 2021 [3].
The pleaded case against DOI as described by Paterson Mining is rooted in alternative
causes of action for breach of contract, constructive or express trust,
misrepresentation or misleading or deceptive conduct under Australian Consumer
Law.[9] They say that because of events that have occurred in the intervening period
since commencing this proceeding, they do not presently press the actions for
misrepresentation, misleading or deceptive conduct, promissory estoppel or common
intention trust.
[9] Applicant’s outline of submissions filed 3 September 2021 [8].
The key differences between the relief claimed in the FASOC and the relief sought at
the hearing include: the quantum of licence fees payable pursuant to cl 7.4(f) of the
sale agreement; and that Paterson Mining “do not press… at this stage”[10] for an order
that DOI take all necessary steps to cause the transfer of the Mining Tenements to
Paterson Mining, an order for the payment of royalties pursuant to cl 7.4(g) of the
sale agreement, and damages for breach of the sale agreement.
[10] Applicant’s outline of submissions filed 3 September 2021 [5].
Paterson Mining say that while they reserve their rights to enforce the balance of the
claim, in particular the right to seek indemnity for any loss or damage caused to the
Assets, they do not press for the orders for the balance of the relief at this stage
because DOI is in liquidation and Paterson Mining does not know the extent of any
liabilities incurred in relation to the Mining Tenements.[11]
[11] Applicant’s outline of submissions filed 3 September 2021 [5]-[6].
Jurisdiction
The originating application filed 15 June 2018 referenced s 363 of the Mineral
Resources Act 1989 (Qld) (MRA) and s 7A of the Land Court Act 2000 (Qld) (LCA)
as the applicable provisions.
In Goldhounds Mining and Exploration Pty Ltd v Department of Natural Resources,
Mines and Energy,[12] the Court noted that s 363(1) of the MRA grants jurisdiction to
the Land Court in broad and general terms. In Goldhounds, the Court considered the
question of jurisdiction in depth:
[12] [2019] QLC 10.
“[9] The words “actions”, “suits” and “proceedings” are capable of various
meanings. The MRA does not define those terms. The Acts Interpretation
Act 1954 defines “proceeding” to mean a “legal or other action or proceeding”. That does no [sic] clarify the meaning of s 363(1).
[10] The meaning of the terms used in that section must be derived from the
statutory context and the objects of the MRA.
[11] The principal objectives of the MRA are set out in s 2…Those objectives
provide little assistance in interpreting s 363(1). There are other features of
the Act, however, which provide important context for interpretation.[12] Firstly, the Land Court is not the only court to which the MRA gives jurisdiction. The MRA gives the Supreme Court jurisdiction to hear and determine proceedings challenging the validity of a grant made pursuant to the MRA. The MRA also gives the Magistrates Court jurisdiction to hear proceedings for the offence of contravening the MRA.
[13] Secondly, s 363(1) must be read in the context of the specific provisions
that permit applications to and decisions by the Land Court.
[14] Section 363(2) provides some assistance. It identifies a number of
specific actions, suits and proceedings for which the Court has jurisdiction…
[15] I have included that provision in full because it illustrates the nature of the actions, suits and proceedings that fall within the general grant of jurisdiction in s 363(1). Expressly, or by implication, they are disputes
between persons asserting competing rights, whether as applicants for or holders of mining tenements or as persons holding interests in land that may be or have been affected by mining activities.
[16] That indicates the actions, suits and proceedings referred to in s
363(1) are civil in nature.
[17] That interpretation is reinforced by s 363(3) which gives jurisdiction
to the Land Court for demands for debt or damages relating to activities
under mining tenements or agreements about mining tenements, but not for recovery of wages or entitlements under industrial agreements or awards. [18] Thirdly, s 363(1) must be read in the context of other provisions of the MRA that confer specific and limited administrative review jurisdiction.
…
[21] …I consider s 363(1) gives the Land Court jurisdiction of a civil, not
administrative nature…”[13] (citations omitted) (emphasis added)
[13] Goldhounds Mining and Exploration Pty Ltd v Department of Natural Resources, Mines and Energy
The applicant in Goldhounds could not rely on s 363(1) of the MRA as they were
seeking an administrative and not a civil determination. They sought an injunction to
halt a penalty imposed by the Department of Natural Resources Mines and Energy in
breach of its exploration permit conditions. As the decision in that case was a decision
of the Minister, it was held that the Land Court did not have jurisdiction. In this matter
it is a civil determination which is being sought.
At the hearing, Counsel for Paterson Mining was of the view that in addition to s 7A
of the LCA, the most relevant of the possibly applicable provisions of s 363 of the
MRA were ss 363(2)(a) and 363(2)(h), and possibly 363(2)(d), and ss 363(3)(a) and
363(3)(b). In my view, the jurisdiction to afford any or all the relief sought falls under
one or more of these provisions.
The applicant summarises their case as follows:
“(a) pursuant to the sale agreement, PM granted DOI a license to use the
Assets (being the mining tenements and the equipment) until completion of the sale agreement;
(b) PM transferred title to DOI of the mining tenements at which point DOI
went into possession of the mining tenements and the equipment;
(c) title to the equipment did not pass to DOI until completion of the sale
agreement;
(d) the sale agreement was not completed;
(e) DOI has breached the sale agreement;
(f) PM terminated the sale agreement;
(g) PM are entitled to delivery up of the equipment.”[14] (citations omitted)[14] Applicant’s outline of submissions filed 3 September 2021 [9].
The applicant summarises the issues as:
“(a) what were the terms of the sale agreement;
(b) whether the terms of the sale agreement varied, and if so, what were the
terms of that variation;
(c) whether DOI breached:
(i) clause 8.2 by failing to indemnify PM against loss or liability
arising from DOI’s use of the Assets;
(ii) clause 7.4(c) by failing to keep the Assets in the same condition
as the Assets were received;
(iii) clause 7.4(d) by failing to comply with the terms and
conditions of the Mining Tenements;
(iv) clauses 3.2, 7.4(f) and 7.4(g) by failing to pay PM the licence
fee and the royalties;
(d) whether PM validly terminated the sale agreement;
(e) whether the sale agreement was completed.”[15]
[15] Applicant’s outline of submissions filed 3 September 2021 [13].
The sale agreement
The FASOC asserts that on or about 1 December 2014, Paterson Mining executed a
written document with DOI for the sale of the Mining Tenements and the Assets.[16]
The written “Agreement for Sale and Purchase of Assets” is exhibited to the affidavit
of Kathryn Margaret Hughes filed 15 June 2018.
[16] Applicant’s further amended statement of claim filed 31 May 2019 [4].
The key terms of the sale agreement are those pleaded in paragraph [7] of the FASOC.
They are as follows:
“(a) by clause 1:
“DEFINITIONS AND INTERPRETATION
Definitions
…
1.1.5. “Authorisations” means the statutory licences, permits,
consents, planning permissions and other authorisations under or pursuant to any statute or regulation held by the Vendor and which are necessary for the conduct of the Mining Tenements;
1.1.6. “Balance Purchase Price” means the sum of four hundred
thousand dollars ($400,000.00);
…
1.1.11. “Completion Date” means the latter of;
(a) 90 days from the execution of this Agreement; or
(b) 7 days after the Vendor gives the Purchaser a notice
pursuant to clause 4.3 of this Agreement.
…
1.1.13. “Deposit” means the sum of five hundred thousand dollars
($500,000.00);
…
1.1.22. “Licence Fee” means the sum of $3,333.00 plus GST per
month;
…
1.1.29. “Possession Date” means the date the Purchaser pays the
Deposit to the Vendor;
…
1.1.31. “Purchase Price” means the sum of $900,000.00
comprised of:
(a) the Deposit; and
(b) the Balance Purchase Price.
…
1.1.37 “Sunset Date” means the date which is six (6) months from
the date of this Agreement.”
(b) by clause 3:
“3. CONSIDERATION
3.1 Payment of Purchase Price
The Purchaser will pay the Purchase Price to the Vendor as follows:
3.1.1 the Deposit upon the Purchasers execution of this Agreement; and
3.1.2 the Balance Purchase Price on the Completion Date.
3.2 Other payments
The Purchaser shall discharge any other known liabilities it may have to the
Vendor at Completion.”
(c) by clause 5:
“5 Completion
5.1 Time and Place for Completion
Subject to satisfaction or waiver (as the case may be) of each of the conditions in clause 4.1 and the payments made pursuant to clause 3, Completion will take place at Cairns on the Completion Date or such other date or place as the parties may agree.
5.2 Possession and transfer
Contemporaneously with and as part of Completion, the Vendor will deliver up to the Purchaser:
…
5.2.4 registrable forms in favour of the Purchaser (or as the Purchaser may
otherwise direct) for the Vendor’s interest in the Mining Tenements duly
executed by the Vendor and, all documents of title evidencing the Vendor’s
interest in the Mining Tenements; …”
(d) by clause 7:
“7 Early Possession
7.1 On the Possession Date the Purchaser and Vendor shall meet on the Mine
Site to inspect all of the Assets and will execute the Asset list.7.2 The Vendor shall grant the Purchaser a licence to possess and utilise the Assets and Mine Site on the Possession Date. To remove any doubt the licence shall apply to the Mine Site.
7.3 The Licence shall remain in full force and effect until Completion unless the Purchaser defaults on any obligations created by this Agreement at which point the Licence may be terminated immediately by written notice from the Vendor to the Purchaser.
7.4 During the term of the Licence, the Purchaser shall:
(a) Obtain all Authorisations necessary to facilitate the Purchaser utilising
the Assets pursuant to the Licence.
(b) Indemnify the Vendor against any and all loss or liability in any way
arising from the Purchaser’s utilisation of the Assets in accordance with the
Licence.
(c) Maintain and keep the Assets in the same condition that they were in as
at the date the Licence was granted.(d) Comply with all terms and conditions attached to the Mining Tenements, the Authorisations (including but not limited to any plans of operation lodged
by the Vendor or the Purchaser with the Minster’s department).
…
(f) Pay the Vendor the Licence Fee each month other than January, February
and March each year during which this obligation is suspended.
(g) Pay the Vendor the Royalty
…”
(e) by clause 12:
“12. Default
12.1. If the Purchaser fails to:
12.1.1. pay the Balance Purchase Price in accordance with clause 3, or
12.1.2. comply with any of the terms or conditions of this Agreement, thenthe Vendor may:
(a) affirm this Agreement;
(b) terminate this Agreement.
…
12.4 If the Vendor terminates this Agreement pursuant to clause 12.1, then
the Vendor may elect to do any or all of the following:
12.4.1. Forfeit the Deposit (or so much of it as has been paid); and/or
…
12.4.3 Either:
(a) Sue the Purchaser for damages for breach
(b) Resell the Mining Tenements and Assets and any deficiency or expense arising from the resale may be recovered from the Purchaser as liquidated damages;
…”[17] (emphasis in original)
[17] Applicant’s further amended statement of claim filed 31 May 2019 [7].
Paterson Mining further assert the following, drawn from the FASOC, at [22] to [26]
of their written submissions:
“22. On about 1 December 2014:
(a) DOI paid PM the sum of $500,000, being the deposit pursuant to cl 3.1.1
of the sale agreement;
(b) DOI was granted a license to go into possession of the Mine pursuant to
cl 7.
23. On 26 October 2015, DOI registered the transfer of the Mining
Tenements from PM.
24. On 20 November 2015, the date for Completion and the Sunset Date of
the sale agreement were extended to 29 February 2016.
25. On 14 March 2017, DOI paid PM the sum of $310,490 being part of the
balance purchase price.
26. On 23 November 2017, DOI paid PM the sum of $98,510 being part of
the balance purchase price.”[18] (citations omitted)[18] Applicant’s outline of submissions filed 3 September 2021 [22]-[26].
It is apparent that the date of payment referred to in FASOC [25] ought to be 14
March 2016 and the sum referred to would more likely be $301,490 rather than
$310,490. Further the date of the payment of the sum of $98,510 was in fact 23
November 2016 (not 2017).[19]
[19] By reference to the Applicant’s further amended statement of claim and the Respondent’s further
The respondent in the FAD accepted these facts subject to noted corrections.
However, where Paterson Mining say payment of the sum of $98,510 was “part of
the balance purchase price”,[20] DOI say “the only amount left owing ... was the amount
of $98,510.”[21]
[20] Applicant’s further amended statement of claim filed 31 May 2019 [26].
[21] Respondent’s further amended defence filed 14 June 2021 [18].
In that regard DOI asserted in the FAD,[22] inter alia, that the sale agreement was
amended by mutual agreement on 19 November 2015 to the effect that only the
amount of $400,000 (being the Balance Purchase Price) was required to be paid in
full satisfaction of DOI’s obligation to pay any monies to Paterson Mining, as any
other amounts such as licence and royalty fees were removed from the sale process.[23]
Paterson Mining say that this (amendment) was contingent on DOI paying $400,000
in one payment prior to the amended sunset date.[24] Paterson Mining say the extended
date for completion and the sunset date was (ultimately) 7 December 2017.[25]
[22] Respondent’s further amended defence filed 14 June 2021 [7].
[23] Reply by the Applicant filed 19 September 2018 [4]; Respondent’s further amended defence filed 14
[24] Reply by the Applicant filed 19 September 2018 [4].
[25] Applicant’s outline of submissions filed 3 September 2021 [37].
Having made a part payment of $301,490 of the Balance Purchase Price to Paterson
Mining on 14 March 2016, DOI say completion occurred on 23 November 2016 when
the remaining $98,510 was paid.[26] They say that they were not required to pay either
the licence fee or royalties because the sales agreement was varied.
[26] Respondent’s further amended defence filed 14 June 2021 [21]-[22].
Paterson Mining say this contention should be rejected. They say that DOI’s pleaded
position is in contrast to the position adopted by DOI,[27] while the contract was on
foot.[28]
[27] Citing 7 September 2017 correspondence from DOI’s lawyer; Applicant’s outline of submissions
[28] Applicant’s outline of submissions filed 3 September 2021 [41].
Paterson Mining are not saying that the sales agreement was not amended on or about
19 November 2015. They are not saying that $400,000 was not paid prior to 7
December 2017. It is evident that that amount ($400,000) was not made in one
payment.
Paterson Mining are saying that there were numerous breaches of the terms of the
“Early Possession”[29] clause of the agreement which entitled Paterson Mining under
cl 12 to terminate the sale agreement. The breaches were identified in a report
prepared by Ms Hughes in February 2016. Further, Paterson Mining say DOI does
not deny the events, rather they allege the events occurred after the varied sale
agreement was completed such that, as at 23 November 2016, DOI had assumed
ownership of and liability for the Assets and Paterson Mining could not suffer loss or
liability as alleged.
[29] Sale agreement dated 1 December 2014 cl 7.
On 28 April 2018, Paterson Mining wrote to DOI electing to terminate the sale
agreement pursuant to cl 12 and informing DOI that they would take possession of
the equipment.[30] Paterson Mining are not in possession of the equipment. The order
Paterson Mining seek in relation to the assets and equipment is that DOI deliver up
possession.[31]
[30] Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [61], Ex KMH-1, pages 153-154.
[31] Applicant’s outline of submissions filed 3 September 2021 [3](d); T 2-36, line 40 to line 47; T 2-37,
Paterson Mining note in submissions that the only evidence before the Court is the
affidavits filed and relied upon by them, and that evidence is unchallenged by DOI in
the hearing.[32] Further, no evidence was led by DOI in support of any of the positive
allegations pleaded in the FAD, or any of the denials pleaded in the FAD.
[32] Applicant’s outline of submissions filed 3 September 2021 [29]-[30].
The evidence of Ms Hughes
Ms Hughes is the sole proprietor of Hughes Consulting where she provides
consultancy services in tenement management, geology, geography and the
environment.[33] She says she was appointed Company Secretary of Paterson Mining
on 27 April 2018 but that prior to her appointment she was the authorised
representative for Paterson Mining in its mining activities in Australia. Ms Hughes commenced that role on 1 March 2011, affirmed on 25 July 2012. She says that she
was authorised to act on behalf of Paterson Mining in relation to the negotiation and
performance of the sale agreement.
[33] Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [1]-[4]; Hearing book provided to the Court without filing, page 127.
In her 15 June 2018 affidavit,[34] Ms Hughes indicates that she represented Paterson
Mining in the negotiation of the sale agreement which was entered into on 1
December 2014.[35] Her affidavit references negotiations and conversations with David
Oriel, the authorised agent and director of DOI.[36]
[34] Hearing book provided to the Court without filing, pages 129-386.
[35] Applicant’s outline of submissions filed 3 September 2021 [20].
[36] Applicant’s further amended statement of claim filed 31 May 2019 [1](d); Respondent’s further
The October 2014 conversation
It is Ms Hughes’ evidence that as a result of conversations she had with Mr Oriel in
October 2014, prior to execution of the agreement, that Paterson Mining would take
the necessary steps to transfer the Mining Tenements to DOI once the deposit was
paid, and that if completion did not occur, DOI would transfer the tenements back to
Paterson Mining. DOI denies that that conversation occurred.
This arrangement according to Ms Hughes was to accommodate the wishes of Mr
Oriel to gain access to the mine prior to completion to commence mining.[37]
[37] Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [12].
In Paterson Mining’s Outline of Submissions, and as discussed at the hearing, s 17 of
the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) and
Regulations 4(d) and 4(e) of the Mineral and Energy Resources (Common
Provisions) Regulation 2016 (Qld), have the cumulative effect that the mining
tenements could not be leased to DOI without a (sub)lease being registered. The
consequence they say is that cl 7 of the sale agreement could not, without more, give
DOI a right to enter the mine site or carry out mining activities.
Paterson Mining submit that “mindful of that limitation” in order to enable DOI to
carry out mining activities prior to completion, the parties agreed that Paterson
Mining would transfer the tenements to DOI upon the deposit being paid.[38] They
submit that the October 2014 agreement informed how the “licence” would work, that
is, the tenements would be transferred so that the licence could effectively operate. In
Paterson Mining’s submission, the transfer however only applied to the mining
tenements, not the equipment or other assets. Further, in the event that completion of
the sale agreement did not occur, DOI would transfer the mining tenements back to
Paterson Mining.
[38] Applicant’s outline of submissions filed 3 September 2021 [67].
It is noted that the sale agreement does not otherwise provide for Paterson Mining to
transfer title in the mining tenements to DOI prior to completion. Noting the fact that
Paterson Mining could not give right or title to the tenements prior to completion
without registering a sublease – a step not apparently attractive or appropriate, lends
itself to a conclusion that the October 2014 conversations (although denied by DOI)
were intended to form part of the sale agreement.
On 22 January 2016, DOI consented to the registration of a caveat over the mining
tenements “to protect the Plaintiff’s interests in the Mining Tenements until the Sale
Agreement reached Completion”.[39] This, Paterson Mining says,[40] in addition to the
fact that the tenements were in fact transferred, is conduct by DOI which supports Ms
Hughes’ account of the October 2014 conversation.
[39] Applicant’s further amended statement of claim filed 31 May 2019 [15].
[40] Applicant’s outline of submissions filed 3 September 2021 [36].
I agree. The conduct of the parties in seeking to give effect to Early Possession,
including the attitude of DOI to registration of a caveat, supports the evidence of Ms
Hughes that the October 2014 conversations were intended to form part of the sale
agreement.
The November 2015 correspondence
As noted already at [29] above, DOI say that on 19 November 2015 Paterson Mining
and DOI agreed in writing that: the sale agreement be varied to the effect that DOI
would be required to pay the Balance Purchase Price of $400,000 in full satisfaction
of its obligation to pay any monies to Paterson Mining; and that other amounts
(licence fee and royalties) be removed from the sale process, the sunset date be
extended, and the terms of the agreement otherwise remain the same. DOI say all
monies were paid prior to the extended sunset date, such that the agreement was
completed.
The 19 November 2015 correspondence is an email from Ms Hughes to Mr Oriel
which outlined “the proposal as agreed” between Paterson Mining and DOI.[41] The
[41] Hearing book provided to the Court without filing, page 205.
proposal appears to modify the sale agreement to remove an amount which is or may
include the royalty from the sale process, while structuring payment of that amount
outside the agreement and seeking a personal guarantee of the debt. The email
stipulates that the balance payment would be one payment prior to the amended sunset
date, and that any failure to do so would render the agreement described in the email
null and void. Finally, the email states:
“With the exception of the amended sunset date, nothing in this agreement
would prevent Paterson Mining Pty Ltd from invoking any or all the terms of the original sale and purchase agreement dated 1st December 2014 and
signed by both parties.”[42]
[42] Hearing book provided to the Court without filing, page 205.
Paterson Mining say that properly considered,[43] the 19 November 2015 email was a
conditional offer to vary the sale agreement by varying the requirements to complete
the sale agreement contained in cl 5, subject to DOI fulfilling the condition that it pay
$400,000 by 29 February 2016, and DOI and Mr Oriel personally signing an
acknowledgement letter assuming liability for the “other amounts” referred to at [44]
above. They say DOI failed to fulfill both these conditions which preclude them from
seeking to rely on and enforce the terms of the conditional offer to vary the sale
agreement.
[43] Applicant’s outline of submissions filed 3 September 2021 [55].
The amended sunset date stipulated in the 19 November 2015 correspondence was 29
February 2016.
The 7 December 2017 completion and sunset date
Paterson Mining say the date for completion and the sunset date was extended by
agreement a number of times, ultimately until 7 December 2017.[44] Prior to that date
Paterson Mining issued DOI notices to complete on two occasions.[45] Following the
extended completion and sunset date (7 December 2017) a notice to complete was
issued on 7 February 2018.
[44] Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [52].
[45] Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [53].
I note that as at 23 November 2017, prior to the extended completion date, DOI had
paid a deposit of $500,000, and individual payments of $310,490 and $98,510,
totalling a further $400,000.
Paterson Mining say that by the 7 December 2017 completion date, DOI had failed
to pay them any monies in respect of the licence fee, and any monies in respect of
royalties. DOI contend that they were not obliged to pay either because the sale
agreement was varied.[46] The licence fee pursuant to cl 1.1.22 was $3,333 (plus GST)
per month. At the hearing, Counsel for Paterson Mining confirmed that orders in
respect of unpaid royalties was not pressed as there was no evidence by either party
of what the value of the royalties would be, and consequently it could not be made
out.[47]
[46] Applicant’s further amended statement of claim filed 31 May 2019 [24](a); Respondent’s further
[47] T 2-5, lines 8 to 10.
Paterson Mining say DOI’s pleaded position is in contrast to the position DOI adopted
while the contract was on foot.[48] In that regard they reference a letter from DOI’s
lawyers dated 7 September 2017 which advances a proposal to resolve the matter
which is presented in a way which does suggest that compensation other than the
Balance Purchase Price was due.
[48] Applicant’s outline of submissions filed 3 September 2021 [41].
The 28 April 2018 termination letter
Determined objectively, Paterson Mining say that:[49] the sale agreement contemplated
an arrangement between Paterson Mining and DOI whereby prior to completion of
the sale DOI would be granted a licence to go into early possession in order to operate
the mine;[50] DOI would pay a licence fee and royalties until completion; all
outstanding amounts owing by DOI would be paid at completion; DOI would be
liable for loss or damage during the licence period; and title in and to the Mining
Tenements and the equipment would not pass to DOI until completion.
[49] Applicant’s outline of submissions filed 3 September 2021 [61].
[50] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 [46], per French, Nettle and Gordon JJ.
Key clauses of the sale agreement are set out at [24] above. The early possession
clause[51] provides the purchaser a licence to possess and utilise the Assets and Mine Site until completion unless the purchaser defaults. It required the purchaser to
indemnify the vendor for loss or liability arising from the utilisation of the Assets in
accordance with the licence, and to maintain and keep the Assets in the same
condition as at the date the licence was granted. The sale agreement set out the
circumstances giving rise to default;[52] the options in the event of default to affirm or
terminate the agreement; and the consequences should the vendor elect to terminate.
[51] Sale agreement dated 1 December 2014 cl 7.
[52] Sale agreement dated 1 December 2014 cl 12.
Paterson Mining contend that based on an inspection of the mine site carried out by
Ms Hughes in February 2016,[53] DOI failed to keep the equipment in the same
condition as the equipment was received, and failed to keep the tenements in the same
condition as they were received.[54]
[53] Applicant’s outline of submissions filed 3 September 2021 [42].
[54] Hughes alleges that mercury was stored and possibly used on site in contravention of the EA; Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [59](d).
They also say that DOI failed to comply with conditions of the Environmental
Authority (EA) such that:[55] an Environmental Protection Order was issued on 18
January 2017;[56] DOI failed to pay annual fees in respect of the EA; the EA was
suspended; and DOI failed to maintain the currency of EPM 18088, EPM18180 and
the EA.
[55] Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [59], [69].
[56] Hearing book provided to the Court without filing, pages 289-295.
Finally, Paterson Mining say that DOI had not indemnified them in respect of any
liability in connection with the tenements or Assets as required by the sale
agreement.[57]
[57] Applicant’s outline of submissions filed 3 September 2021 [46].
By letter dated 28 April 2018,[58] Paterson Mining elected to terminate the sale
agreement pursuant to cl 12 informing DOI that they would take possession of the
equipment. The sale agreement did not require the right to terminate to be exercised
within a specified or reasonable time. Paterson Mining submit that an agreement to
extend time in which to perform is not, without more, sufficient to constitute an
election to affirm the contract,[59] and DOI had not pleaded a case that the right to
terminate had been lost.
[58] Hearing book provided to the Court without filing, pages 153-154; Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [61].
[59] Tropical Trades Ltd v Goonan (1964) 111 CLR 41, 55.
I accept that breaches of the agreement were several and ongoing and any decision to
affirm the contract by extending the time for completion was temporary and
revocable.
The evidence of Ms Hughes supports a conclusion that there were ongoing breaches
of cl 7.4(c) and cl 7.4(d) in failing to keep the Assets in the condition they were
received and to comply with all terms and conditions attached to the Mining
Tenements. The evidence of Gregory John Paterson points to breaches of cl 7.4(b)
failure to indemnify Paterson Mining,[60] cl 7.4(f) failure to pay licence fee from May
2015 until the termination date, and cl 7.4(g) failure to pay royalties as required under
the agreement.
[60] Affidavit of Gregory John Paterson filed 5 August 2021.
I also note at [10] above that as at the date Paterson Mining elected to terminate the
agreement, only ML 20633 survived.
I accept that Paterson Mining had the right to terminate the agreement pursuant to cl
12, and by notice dated 28 April 2018 terminated the agreement.[61]
[61] Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [61].
The effect of termination
In oral submissions,[62] Counsel reference Shevill v Builders Licencing Board[63] where
Chief Justice Gibbs opined a “fairly simple contractual principle” that parties are at
liberty to stipulate in a contract which breaches will give rise to a right to terminate;
and Westralian Farmers Ltd v Commonwealth Agricultural Services Engineers Ltd
(in liq)[64] to the effect that not only are parties free to stipulate what breaches might
give rise to a right to terminate, but also the obligations that flow.
[62] T 2-44, lines 31 to 43.
[63] (1982) 149 CLR 620, 627.
[64] (1936) 54 CLR 361; T 2-45, lines 34 to 38.
Clause 12.4 of the agreement deals with Paterson Mining’s rights on termination
pursuant to cl 12. While cl 12 entitles Paterson Mining upon termination to forfeiture
of the deposit and to terminate the licence, they are also entitled to resell the Mining
Tenements and Assets and recover any deficiency from DOI as liquidated damages
and sue DOI for damages for breach. There are future obligations under the agreement which Paterson Mining is released from upon termination including, for example, the
passing of title to the Assets to DOI upon completion.
The right to terminate the agreement and the right to recover moneys owing are the
rights pursued by Paterson Mining. In submissions they say “the balance of the
parties’ rights on termination are not in issue or being pressed by the parties at this
stage for commercial reasons.”[65]
[65] Applicant’s outline of submissions filed 3 September 2021 [87].
Paterson Mining maintain that cl 7 of the sale agreement did not transfer title to the
equipment to DOI, rather a licence to DOI to use the equipment.
While it is apparent that there were arrangements made for the transfer of the Mining
Tenements to DOI, to enable them to conduct mining activities, there was no
agreement, actual or implied for the transfer of the equipment prior to completion.
The arrangements for utilising the equipment operated pursuant to cl 7. There is
nothing to suggest that title to the equipment passed to DOI. Upon termination
Paterson Mining was entitled to terminate the licence to use the equipment. It is in
Paterson Mining’s submission that rather than a case for recovery (of the equipment,
in the true sense) they are seeking a declaration for delivery up.[66] They say that in this
case, the contract contemplates that the licence might be terminated and the
equipment could be returned.[67]
[66] McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457; T 2-46, lines 15 to 17.
[67] This is in contrast with the equitable cause of action for relief against forfeiture, that a vendor terminating a contract cannot have both. However here, the contract contemplates something different.
It is not in evidence, or able to be determined from the provisions of the contract,
what part of the purchase price is referable to what terms. DOI has been in possession
of the mining tenements and equipment since 2015. DOI had the benefit of the use
and possession of the mining tenements and equipment during that time. There is
evidence to indicate that DOI conducted some mining activities which may have
generated income which Paterson Mining might otherwise have had. In that regard I
can conclude that DOI received a benefit arising from the agreement. It is not a case
where the purchaser pays money for an asset but receives no benefit because of the
agreement’s termination.[68]
[68] Cf McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457.
As noted, DOI and the liquidator chose not to participate in these proceedings.
Accordingly, there is no equitable action pleaded upon which I could consider what,
if any of the balance purchase price should be returnable to DOI if it were able to
establish what had been forfeited.
Pursuant to the sale agreement cl 7.4(f), DOI was required to pay Paterson Mining
the sum of $3,333 plus GST per month other than January, February and March each
year. Paterson Mining says DOI were in possession of the Mining Tenements and
Equipment from November 2015 (shortly after the transfer of the tenements were
registered on 26 October 2015) to 28 April 2018, a total of 21 months at $3,333 plus
GST per month, totalling $76,992.
Conclusion
I accept that pursuant to the sale agreement, Paterson Mining granted DOI a licence
to use the Assets (being the mining tenements and the equipment) until completion
of the sale agreement. The evidence confirms that Paterson Mining transferred to DOI
title to the mining tenements at which point DOI went into possession of the mining
tenements and equipment, however, title to the equipment did not pass to DOI unless
or until completion of the sale agreement. I accept that the sale agreement was not
completed, that DOI breached the sale agreement and that Paterson Mining validly
terminated the sale agreement. There is no evidence before me to consider what, if
any, of the balance purchase price might be recoverable by DOI.
Section 27A LCA provides that subject to the provisions of the LCA or another Act
to the contrary, the Land Court may order costs for a proceeding in the court as it
considers appropriate. In the circumstances of this matter, there are no applicable
contrary provisions that have been brought to my attention, or of which I am aware.
The power to award costs must be exercised judicially, by reference to relevant
considerations and facts connected with or leading up to the litigation. The respondent
was actively engaged in the litigation of this matter, before and subsequent to
administration, but following liquidation, their participation through the liquidator
has been limited to a watching brief. The rule that costs follow the event may inform
the exercise of the discretion as there is justice in this approach. It protects those put to unnecessary and substantial expense at the behest of others.[69] The financial position
of the unsuccessful party is not a sufficient reason to deprive a successful party of an
order for costs. In the circumstances of this matter the applicant is entitled to costs of
the proceeding on a standard basis.
[69] Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 25) [2020] QLC 22 [5]-[6]; Goldhounds Mining and Exploration Pty Ltd v Department of Natural Resources, Mines and Energy (No 2) [2019] QLC 16 [3]-[4].
The applicant also seeks an order that the respondent pay interest pursuant to s 58 of
the Civil Proceedings Act 2011 (Qld). Section 58(3) provides that the court may order
that there be included in the amount for which judgment is given interest at the rate
the court considers appropriate for all or part of the amount and for all or part of the
period between the date when the cause of action arose and the date of judgment.
The date from which interest is sought is the date Paterson Mining elected to terminate
the sale agreement being 28 April 2018. Paterson Mining commenced proceedings
by Originating Application on 15 June 2018. Any delay in the prosecution of the
claim was largely beyond their control. In Mitchell Ogilvie Menswear Pty Ltd v Rapid
Edge Pty Ltd[70] the Court considered relevant principles in relation to interest saying
that the purpose of s 58 is to compensate a successful party from being kept out of the
judgment sum, and the Court noted that the proper approach to the exercise of
discretion is that interest ought to be granted, unless there are proper reasons for
withholding it. I am presented with no proper reason for withholding an order for
interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld).
[70] [2019] QSC 136 [139].
In the circumstances Paterson Mining is entitled to the relief it seeks.
Orders
1. It is declared that the applicant has lawfully terminated the sale agreement
executed on or about 1 December 2014 between the applicant and the
respondent (the Sale Agreement).
2. It is declared that the applicant is entitled to retain the $500,000 deposit
forfeited under the Sale Agreement.
3. The Court orders that the respondent pay the applicant licence fees pursuant
to cl 7.4(f) of the Sale Agreement in the amount of $76,922.
4. The Court orders that the respondent deliver up possession of the assets and
equipment contained in ‘Annexure A’ to the Further Amended Statement of
Claim filed 31 May 2019, being the assets and equipment set out in Annexure
A to this order.
5. The Court orders that the respondent pay the applicant interest pursuant to s
58 of the Civil Proceedings Act 2011 (Qld) on the amount described in Order 3
from 28 April 2018 up until the date of judgment.
6. The respondent pay the applicant’s costs of the proceeding on a standard basis.
Annexure A
[2019] QLC 10 [9]-[18], [21].
amended defence.
June 2021 [7], including the email of Hughes to Oriel dated 19 November 2015 and the email of
Oriel to Hughes dated 20 November 2015; DOI in the Respondent’s further amended defence filed
14 June 2021 [14] refer to this as the Agreement to Limit the Purchase Price.
filed 3 September 2021 [41].
line 1.
amended defence filed 14 June 2021 [1](d).
amended defence filed 14 June 2021 [24](d).
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