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Pilbara Iron Ore Pty Ltd v Ammon

Pilbara Iron Ore Pty Ltd v Ammon

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JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT :   THE COURT OF APPEAL (WA)
CITATION:   PILBARA IRON ORE PTY LTD -v- AMMON [2020] WASCA 92
CORAM:   BUSS P
MURPHY JA
VAUGHAN JA

HEARD:   22 OCTOBER 2019 & WRITTEN SUBMISSIONS 15 & 22 MAY 2020
DELIVERED          :   11 JUNE 2020
FILE NO/S:   CACV 92 of 2018
BETWEEN:   PILBARA IRON ORE PTY LTD
Appellant
AND
DEREK NOEL AMMON
First Respondent
DIRECTOR GENERAL OF MINES
Second Respondent

ON APPEAL FROM:
Jurisdiction              :   SUPREME COURT OF WESTERN AUSTRALIA
Coram:   FIANNACA J
Citation: PILBARA IRON ORE PTY LTD -v- AMMON [2018] WASC 258
File Number            :   GDA 12 of 2014

Catchwords:

Contract - Joint Venture Agreement between appellant and first respondent - Mining - Feasibility study - Where Joint Venture Agreement provided that appellant would earn an 80% interest in the Joint Venture upon completion of feasibility study - Whether feasibility study completed in accordance with the Joint Venture Agreement - Alleged implied terms in fact to give business efficacy - Where primary court and Mining Warden had not properly construed express terms of Joint Venture Agreement before finding alleged implied terms - Where the question of whether appellant had completed a feasibility study in accordance with Joint Venture Agreement on proper construction of its express terms had not been litigated or determined by primary court or in proceedings in Warden's Court - Remitter to Warden's Court to consider any application by first respondent for leave to plead proper construction of Joint Venture Agreement

Legislation:

Nil

Result:

Appeal allowed in part

Category: B

Representation:

Counsel:

Appellant	:	Mr B W Walker QC & Mr J J Hutton
First Respondent	:	Mr C P Shanahan SC & Mr A P Hershowitz
Second Respondent	:	No appearance

Solicitors:

Appellant	:	Allen & Overy
First Respondent	:	JDK Legal Services
Second Respondent	:	State Solicitor's Office

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

Ammon v Pilbara Iron Ore Pty Ltd & DG DMP [2014] WAMW 18
Ammon v Pilbara Iron Ore Pty Ltd [2012] WAMW 14
Australian Communication Exchange Ltd v Deputy Commissioner of Taxation [2003] HCA 55; (2003) 201 ALR 271
Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334
Bell v Lever Brothers Ltd [1932] AC 161
Black Box Control Pty Ltd v TerraVision Pty Ltd [2016] WASCA 219
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Carlton & United Breweries Ltd v Tooth & Co Ltd (1985) 6 IPR 319
Chapmans Ltd v Australian Stock Exchange Ltd (1996) 67 FCR 402
Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337
Collector of Customs v Agfa‑Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389
Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169
Coplin v Al Maha Pty Ltd [2019] NSWCA…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] WASCA 92
Decision Date: 11 JUNE 2020

CaseChat Overview and Summary

Pilbara Iron Ore Pty Ltd was the appellant and Ammon was the first respondent in this case heard by the Supreme Court of Western Australia. The dispute involved a joint venture agreement related to mining operations, specifically whether the appellant had completed a feasibility study in accordance with the agreement. The primary issue was whether the primary court and the Mining Warden had properly construed the express terms of the joint venture agreement before finding any implied terms. The appellant argued that the feasibility study was completed as per the agreement, while the respondent contended otherwise.

The court examined whether the primary court and the Mining Warden had correctly interpreted the express terms of the joint venture agreement before concluding on the existence of implied terms. The court noted that the general principle in contract construction is to provide a businesslike interpretation, ensuring that the contract's commercial object is met. The court highlighted that business commonsense may vary among parties, and the more detailed the contract, the less likely it is that the parties overlooked an issue. The court found that the primary court and the Mining Warden had not properly construed the express terms of the agreement, which led them to improperly find implied terms.

The court concluded that the matter should be remitted to the Mining Warden's Court to consider any application by the first respondent for leave to plead the proper construction of the joint venture agreement. The court emphasised that the question of whether the appellant had completed a feasibility study in accordance with the agreement had not been properly litigated or determined in the previous proceedings. This decision underscores the importance of correctly interpreting the express terms of a contract before implying any terms.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The general principle applicable to the construction of commercial contracts is that they should be given a businesslike interpretation.[86] Absent a contrary intention, the court approaches such contracts on the basis that the parties intended to produce a result which makes commercial sense. This requires that the construction placed on the term or terms in question is consistent with the commercial object of the agreement.[87] However, it must also be borne in mind that business commonsense may be a topic on which minds may differ.[88] [86] Electricity Generation Corp v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35]; Hancock Prospecting Pty Ltd v BHP Minerals Pty Ltd [2003] WASCA 259 [72].[87] Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 261 CLR 544 [17]; Woodside [35]; Black Box [42(9)].[88] Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181 [43]; Black Box [42(9)]. At one time, the terms 'construction' and 'interpretation' were held to signify different things. The word 'interpretation' was said to concern the meaning of words, whereas 'construction' concerned the legal effect of the words used. That distinction has not been maintained, on the basis that notions of meaning and construction are interdependent.[89] A term may be deduced by implication or interpretation from the express terms of the contract.[90] [89] Collector of Customs v Agfa‑Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389, 396 - 397; Wilson v Anderson [2002] HCA 29; (2002) 213 CLR 401 [8].[90] Marcus Clark (Victoria) Ltd v Brown [1928] HCA 12; (1928) 40 CLR 540, 553 ‑ 554; Vickery v Waitaki International Ltd [1992] 2 NZLR 58, 64; Carlton & United Breweries Ltd v Tooth & Co Ltd (1985) 6 IPR 319, 320; Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 [28]; Servcorp WA Pty Ltd v Perron Investments Pty Ltd [2016] WASCA 79; (2016) 50 WAR 226 [66]. The task of determining whether a contract contains terms implied by law or in fact (to give business efficacy to the contract) is undertaken in order to ascertain the meaning and effect of the contract as a whole and is thereby an exercise in construction.[91] Nevertheless, the process of implication is not one of 'interpretation' in the narrow sense, in that it does not involve assigning a meaning to a particular express provision in the contract.[92] Rather, an implied term in fact (to give business efficacy to the contract) is a term that the parties have not actually agreed upon, but which, it is presumed, the parties would have agreed upon had they turned their minds to it. For reasons which include not rewriting the contract for the parties, the courts are slow to imply a term.[93] The party alleging that a term should be implied bears the onus of proof.[94] The more detailed and comprehensive the contract the less ground there is for supposing that the parties have failed to turn their minds to address the question in issue.[95][91] Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337, 345 ‑ 346; Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169 [22]; Sino Iron [299].[92] Codelfa (345).[93] Codelfa (346).[94] Heimann v The Commonwealth (1938) 38 SR (NSW) 691, 695.[95] Codelfa (346).