Platina Resources Ltd v Artemis Resources Ltd - [2021] WASC 42

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   PLATINA RESOURCES LTD -v- ARTEMIS RESOURCES LTD [2021] WASC 42
CORAM:   ALLANSON J
HEARD:   14 DECEMBER 2020
DELIVERED          :   23 FEBRUARY 2021
FILE NO/S:   CIV 1774 of 2020
BETWEEN:   PLATINA RESOURCES LTD
Plaintiff
AND
ARTEMIS RESOURCES LTD
First Defendant
MUNNI MUNNI PTY LTD
Second Defendant
KARRATHA METALS PTY LTD
Third Defendant

Catchwords:

Contract - Construction of commercial agreements - Where plaintiff and third defendant parties to Heads of Agreement creating joint venture - Where Heads of Agreement provides for formal agreement to be made - Where parties make Deed of Variation prospectively amending definition of first defendant's name in Heads of Agreement to include a Related Body Corporate - Where second defendant a related body corporate - Whether second defendant became party to Heads of Agreement and joint venture

Contract - Where first defendant holding company of second and third defendants - Where first and second defendants grant option to third parties to acquire majority equity interest in second defendant - Where exercise of option conditional on execution of a formal joint venture agreement between second defendant and plaintiff or waiver of that condition - Whether first, second or third defendants in material breach of heads of Agreement - Whether first or third defendant has assigned or transferred rights or obligations under or relating to the Heads of Agreement or granted created or disposed of any right or interest in it

Legislation:

Nil

Result:

Application for declaration granted
Action otherwise dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	T J Porter
First Defendant	:	J C Giles SC & A Campbell
Second Defendant	:	J C Giles SC & A Campbell
Third Defendant	:	J C Giles SC & A Campbell

Solicitors:

Plaintiff	:	Hopgoodganim Lawyers (Perth)
First Defendant	:	Clayton Utz
Second Defendant	:	Clayton Utz
Third Defendant	:	Clayton Utz

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

Black Box Control Pty Ltd v TerraVision Pty Ltd [2016] WASCA 219
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 261 CLR 544
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Gibson Motor Sport Merchandise Pty Ltd v Forbes [2005] FCA 749
Mann v Paterson Constructions Pty Ltd [2019] HCA 32
Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; (1988) 166 CLR 245
United Dominions Corporation Ltd v Brian Pty Ltd [1985] HCA 49; (1985) 157 CLR 1

ALLANSON J:

Platina Resources Limited commenced these proceedings by writ filed 16 July 2020. The action was initially against Artemis Resources Limited and Munni Munni Pty Ltd. The writ was amended on 26 October 2020 and Karratha Metals Pty Ltd added as the third defendant.
The plaintiff claims relief by way of declarations and injunctions, alternatively damages, relating to a contract made 4 August 2015 between Platina, Artemis, and Karratha (the Heads of Agreement), and varied by Deed of Variation in about May 2019.
On 17 November 2020, the court ordered, pursuant to O 32 r 4 of the Rules of the Supreme Court 1971 (WA), that all issues raised in the pleadings, except the plaintiff's claim for damages for breach of contract, be tried separately and prior to all other issues in the proceedings. The action was tried on 14 December 2020.

Factual outline

The parties

Platina Resources Limited is a company incorporated in Western Australia.[1]
[1] Exhibit 1.96.
Artemis Resources Limited is a company incorporated in Victoria. Munni Munni Pty Ltd and Karratha Metals Pty Ltd are wholly owned subsidiaries of Artemis.[2]
[2] Exhibit 1.97 - 1.99. In these reasons I will follow the usage of the parties, and refer to the parties as Platina, Artemis, Karratha and MMPL.
Correspondence between the parties was regularly between Corey Nolan, a director of Platina[3] and Edward Clinton Mead, a director of Artemis, Karratha, and MMPL.[4] Mr Mead signed correspondence as Executive Director and Chief Executive Officer of Artemis.[5]
[3] Exhibit 1.96.
[4] Exhibit 1.97 ‑ 1.99.
[5] See, eg, exhibit 1.52.
The action also relates to agreements made by Artemis and MMPL with two third parties, Empire Metals PLC and Almeera Ventures Limited. Both are incorporated and registered in the British Virgin Islands.[6]

The Heads of Agreement

[6] Exhibit 1.70.

The Heads of Agreement set out the principal commercial terms on which Karratha could farm-in to tenements held by Platina in a mining project known as the Munni Munni Project.
At the time the Heads of Agreement was made, Platina was the registered holder of four mining leases: M47/123, M47/124, M47/125, and M47/126. Karratha held exploration license E47/3322.[7]
[7] Exhibit 1.4.
Each mining lease was subject to a registered mortgage to Franco‑Nevada Australia Pty Ltd.
The Heads of Agreement, in cl 1.1 contained these relevant definitions:
Interest means the interest of the party in the Tenements and if a Joint Venture has been formed, in the Joint Venture Property and includes where the context requires, the Karratha Interest.
Joint Venture means the unincorporated joint venture established by and under this agreement.
Joint Venture Property means all rights, titles, interest, claims, benefits and all other property of whatever kind, real or personal, from time to time owned by any Joint Venturer for the purposes of the Joint Venture, and includes the Tenements and the Mining Information.
Karratha means Karratha Metals Limited ACN 250 289 866, which at the date of this agreement is a wholly owned subsidiary of Artemis Resources Ltd.[8]
Karratha Interest means a 70% Interest.
Mining Information means all information, data and records relating to the Tenements and Joint Venture Activities … and including any such information, data or records generated or created by Karratha as a result of Exploration and Joint Venture Activities on the Tenements carried out by Karratha while acting as the manager and operator.
Tenements means M47/123, M47/124, M47/125, and M47/126, E47/3322
Transaction means Karratha having the right to earn the Karratha Interest.
[8] The definition appears to be wrong in two respects: Karratha ceased to be an Australian Public Company in November 2012; the ACN number is also incorrect: see exhibit 1.99, page 1330.
Clause 2.2 provided that obligations set out in the agreement were conditional on specified conditions precedent. It is not in dispute that those conditions were met.
The key terms of the farm-in transaction were set out in cl 2.6:
(1)Following satisfaction of conditions precedent, Artemis was to cause 100 million Artemis shares to be issued to Platina as consideration for Platina granting the right to Karratha to earn a 70% interest in the Joint Venture Property.[9]
(2)Karratha would earn its interest by paying Exploration Expenditure of an amount of not less than $750,000 within three calendar years of the commencement date (the Farm‑in Expenditure).[10]
(3)On Karratha completing the Farm-in Expenditure, Karratha and Platina were to be co-owners of the Tenements (Karratha holding 70% and Platina holding 30%) and Platina would do all things reasonably necessary to effect the transfer to Karratha of its interest.[11]
[9] Clause 2.6(a). The Joint Venture Property was defined as 'all rights, titles, interest, claims, benefits and all other property of whatsoever kind, real or personal, from time to time owned by any Joint Venturer for the purposes of the Joint Venture, and includes the Tenements and the Mining Information': cl 1.1.
[10] Clause 2.6(b)
[11] Clause 2.6(e).
For so long as Karratha was earning in, pursuant to cl 2.6, Karratha was to be the Manager and operator and carry out all Exploration and Joint Venture Activities on the Tenements and was responsible for outstanding rentals, rates and other sums owing in respect of the Tenements and for ensuring the Tenements were kept in good standing.[12]
[12] Clause 2.7(a)
A Joint Venture would be formed between Karratha and Platina 'when Karratha had spent the Farm-in Expenditure'. [13] Karratha was also to assume responsibility for monies due and owing to Franco-Nevada, secured by a mortgage against the mining leases.[14]
[13] Clause 2.8(a)(f).
[14] Clause 2.7(c).
By cl 2.8(b), upon a Joint Venture being formed, the parties were to prepare and enter into a formal joint venture agreement 'on customary terms', but including the terms set out in cl 2.8. The parties agreed that the agreement in the Heads of Agreement would be legally binding between them.[15]
[15] Clause 3.
The terms included in the Heads of Agreement were limited to:
•a Management Committee was to be formed to supervise and manage the Joint Venture, with the parties entitled to representation in proportion to their interest;
•Karratha was entitled to continue as the manager of the Joint Venture;
•the objectives of the Joint Venture were to progress Exploration and Joint Venture activities with a view to being able to proceed to Development;
•the parties were to contribute to all costs of Exploration and Development proportionate to their interest in the Tenements and the Joint Venture;
•the Manager was responsible for preparing budgets and making calls upon the parties, with provision for dilution should a party fail to contribute to any call.
By cl 2.8 (j) and (k):
If a party becomes insolvent or is in material breach of its obligations (Defaulting Party) the other party shall be entitled to purchase the interest of the Defaulting Party at market value less a discount of 20 per cent.
During the Joint Venture each party shall have the first right of refusal in respect of the other party's interest.
By cl 8.3:
A party must not assign, transfer or novate all or any part of its rights or obligations under or relating to this agreement or grant, declare, create or dispose of any right or interest in it, without the prior written consent of each other party.
Each party gave warranties. Relevantly, Karratha warranted that it has technical capacity to meet its obligations under the agreement.[16]
[16] Clause 2.10; sch 1, pt 2.
Artemis was a party to the Heads of Agreement, but not a party to the Joint Venture. It unconditionally and irrevocably guaranteed the performance of the obligations of Karratha under the agreement, and guaranteed upon demand to pay to Platina all losses suffered or incurred by Platina from or connected with Karratha's failure to perform any of its obligations or to discharge any of its liabilities under the agreement.[17]
[17] Clause 2.12.
The parties did not make any provision in the Heads of Agreement with regard to change of control of one of the participants in the joint venture.
Karratha completed the farm-in in about August 2018.[18] The parties have not entered into a formal joint venture agreement. They were still exchanging drafts in July 2020.[19]

The Deed of Variation

[18] Exhibit 1.15.

[19] See exhibits 1.92 and 1.93.

The Heads of Agreement was amended in 2019.
On 5 April 2019, Artemis provided transfer forms to Platina for the transfer of the tenements from Platina to Karratha.[20]
[20] Exhibit 1.18.
On 13 April 2019, Mr Mead advised Mr Nolan that Karratha was the parent company for another company (KML No 2 Pty Ltd) that held the Artemis tenements. He wrote:
It would be a lot easier if we can create a subsidiary of [Karratha] specifically for the Munni Munni JV, ie Munni Munni Pty Ltd.
…
I would need agreement from Platina to this as our HOA is for [Karratha], and not a new sub of [Karratha] to have the 70%.
Would this be okay?[21]
[21] Exhibit 1.19.
On the same day, Mr Nolan replied, 'yes'.[22] Mr Mead responded that he would 'get this organised' and courier the transfer forms to Mr Nolan.[23]
[22] Exhibit 1.20.
[23] Exhibit 1.21.
MMPL was registered on 15 April 2019.[24]
[24] Exhibit 1.98.
The forms for the transfer of the tenements from Platina to MMPL were signed on behalf of Artemis by 30 April 2019, and sent to Platina by mail.[25] Mr Nolan was advised, and replied 'no worries'.[26]
[25] Exhibit 1.24.
[26] Exhibit 1.25.
On 15 May 2019, Mr Mead advised Mr Nolan that he had a 'small amendment' to the Heads of Agreement which would allow MMPL ‑ described as 'an Artemis subsidiary' ‑ to get the tenement interest transfer.[27]
[27] Exhibit 1.26, page 443.
On about 15 May 2019, Platina, Artemis, and Karratha made a Deed of Variation to the Heads of Agreement.[28] A copy of the Deed was sent to Mr Nolan on 15 May 2019 with the message that it was 'to take into account the change in Artemis subsidiary the tenement interests are going to'.[29]
[28] Exhibits 1.28 and 1.31.
[29] Exhibit 1.28.
On 16 May 2019, Mr Williams wrote to Mr Nolan and asked if the forms 'for the transfer of Munni Munni from Platina to Munni Munni Pty Ltd (ie, Artemis)' had been received.[30]
[30] Exhibit 1.29.
On 21 May 2019, in response to Mr Nolan asking if Artemis had received the joint venture documents, Mr Mead wrote that he had not worried about them yet, and had sent the Deed of Variation to be signed.[31] At this time, the most recent draft Joint Venture Agreement was for a joint venture between Platina and Karratha.
[31] Exhibit 1.32.
The subjective intention of Mr Mead, disclosed in the emails to Mr Nolan, are not admissible as to the construction of the Deed of Variation. But, having regard to the limited terms of the Deed of Variation, the expressed intention of Artemis to transfer the tenements into a subsidiary created for that purpose, that intention being known to and agreed by Platina, is a material objective fact known to both parties when the Deed was executed. It is the commercial purpose for the variation.
The defendants rely on the emails as a nomination by Artemis and Karratha of MMPL as a party to the Heads of Agreement. None of the emails preceding the Deed of Variation refer to MMPL having any role other than to hold the tenements.
The Deed of Variation was expressed to take effect 'from the date of this Deed'. The variation was limited. The Deed varied the Heads of Agreement by adding a definition of Related Body Corporate, by reference to the meaning of that term in the Corporations Act 2001 (Cth), and by replacing the definition of Karratha in cl 1.1 with the following:
Karratha means Karratha Metals Pty Limited ACN 150 289 866 (which at the date of this deed is a wholly owned subsidiary of Artemis Resources Ltd), or any Related Body Corporate.[32]
[32] Deed of Variation, cl 2(b).
Following the making of the Deed of Variation, Platina signed the transfer forms for the transfer of the legal interest in the tenements, M47/123 - M47/126, to MMPL.[33] It was common ground at trial that MMPL was then a subsidiary of Artemis, and that Karratha and MMPL were related bodies corporate.[34]
[33] Exhibits 1.37 - 1.40.
[34] Statement of claim [6D], Defence [6D].
On 28 May 2019, Mr Williams acknowledged receipt of the signed transfer forms.[35] The signed forms are dated 31 May 2019.
[35] Exhibit 1.36.
The transfers have not been registered, Platina remains the registered holder of the mining leases, and Karratha remains the registered holder of the exploration licence.[36] A dealing does not pass any legal estate or interest in a mining tenement or in any way charge or encumber a mining tenement until it is registered in accordance with s 103C of the Mining Act 1978 (WA).[37]

The Almeera Agreement

[36] Exhibits 2.1 - 2.5.

[37] See s 108C(8).

On 8 May 2019, Artemis executed a binding Term Sheet with Almeera Ventures Ltd (as purchaser) for the sale and purchase of all of Artemis' interest in MMPL, being all of the issued shares and inter-company debts (if any).[38] The assets to be held by MMPL at completion were stated to be a 70% interest in the tenements.[39]
[38] Exhibit 1.25A, Item 4.
[39] Exhibit 1.25A, Item 3.
Item 8 set out conditions to completion including a 90 day due diligence period and 'any third-party consents'.[40]
[40] Exhibit 1.25A, Item 8.
The agreement with Almeera did not proceed to completion. In a subsequent agreement with Empire Metals, the Background recited that Artemis, Almeera and MMPL 'are parties to an option agreement pursuant to which Almeera was granted the right to acquire a 100% equity interest in MMPL from [Artemis]'.[41] The agreement of 8 May 2019 is not an option. If there was a written option agreement, it is not in evidence.

The Deed of Assignment, Assumption and Consent

[41] Exhibit 1.69, Background.

In about July 2019, Franco-Nevada, Karratha and MMPL signed a Deed of Assignment, Assumption and Consent by which Karratha would take assignment of the tenement interests and assume the obligations relating to the tenements from the Farm-In Date, and MMPL would take assignment of the tenements and assume the obligations relating to the tenements from the effective date of the Deed (defined as the date on which all parties execute the Deed).[42]
[42] Exhibit 1.43.
The Deed of Assignment, Assumption and Consent was provided to Platina for its signature on 17 July 2019. In his covering email, Mr Mead referred to the requirement for Platina's approval 'to transfer our interest from Platina into [MMPL]'.[43]
[43] Exhibit 1.46.
On 6 August 2019, Mr Nolan advised that Platina would like to suggest a couple of changes to the Deed of Assignment, Assumption and Consent. In the same email, he raised the formal JV document, and whether that should be signed as part of 'completing the process'.[44]
[44] Exhibit 1.50.
In response to a query about the JV document, on 22 August 2019 Mr Mead advised Mr Nolan that Artemis had an offer on the table for Munni Munni, and was inclined to take it.[45] In October 2019, Platina was also considering selling its minority interest.[46]
[45] Exhibit 1.41.
[46] Exhibit 1.56.
At the time of trial, Platina had not executed the Deed of Assignment, Assumption and Consent. The defendants contend that, as a result, Platina has not done all things reasonably necessary to transfer the tenements to MMPL free of encumbrance, and the transfers have not been registered.[47]

The Empire Term Sheet

[47] Defence [6A].

On 10 February 2020, Mr Mead advised Mr Nolan of Artemis' intention to sell 51% of Munni Munni to Empire Metals.[48]
[48] Exhibit 1.61.
In April 2020, Artemis, Almeera, Empire Metals, and MMPL executed a Binding Term Sheet, by which:
(1)Artemis agreed to grant to Empire Metals and Almeera an exclusive option until 31 October 2020, or such later date as the parties agreed in writing, to acquire an aggregate 72.9% equity interest in MMPL - 58.6% to Empire Metals and 14.3% to Almeera.[49]
(2)Exercise of the option was conditional upon satisfaction or waiver of conditions precedent including the execution of a formal joint venture agreement in relation to the tenements between MMPL and Platina, and the parties obtaining all necessary third party approvals. The parties were to use their best efforts to ensure that the conditions were satisfied on or before 30 June 2020. The conditions could be waived, in writing. There was no evidence about whether any condition has been waived.[50]
(3)On exercise of the option, Empire Metals and Almeera agreed to acquire and Artemis agreed to sell the interests in MMPL.[51]
(4)The parties agreed to use reasonable efforts to obtain a release of the guarantee provided by Artemis to Platina under the Heads of Agreement, or consent from Platina for the novation of the guarantee from Artemis to Empire Metals.[52]
[49] Exhibit 1.69, Item 2.
[50] Exhibit 1.69, Item 3.
[51] Exhibit 1.69, Item 5.
[52] Exhibit 1.69, Item 11.
On 27 April 2020, Empire Metals announced that it had entered into a Binding Heads of Agreement with Artemis, to acquire a 41% interest in the Munni Munni Project.[53]
[53] Exhibit 1.72, page 770.

On 28 April 2020, Artemis announced that it had agreed to sell a 51% interest from its total 70% interest in the Munni Munni Project.[54]
[54] Exhibit 1.74. Almeera took 10%, and Empire Metals 41%.
The action proceeded on the basis that the option had not been exercised before 31 October 2020, but Artemis intended to extend the option period. The intentions of Empire Metals and Almeera are not known.

The pleadings

Statement of claim

Platina Resources claims that:
(1)By August 2018, Karratha had spent the 'Farm-in Expenditure', and had earned the Karratha Interest, and a Joint Venture was formed between Platina and Karratha under cl 2.8 of the Heads of Agreement.[55]
(2)On a proper construction of the Heads of Agreement, as amended by the Deed of Variation:
aThe parties to the Heads of Agreement continued to be Platina, Artemis and Karratha.[56]
b.Karratha could be replaced as a party to the Heads of Agreement and as the holder of the Karratha Interest, 'by novation', if the incoming party is a Related Body Corporate of Artemis or of Karratha, but could not novate any part of its rights or obligations to a New Joint Venture Manager that was not a related body corporate.[57]
c.Karratha would be in material breach of the Heads of Agreement if it transferred, or sought to transfer, the whole or part of its rights or obligations (or both) under the Heads of Agreement, including its Interest, to a New Joint Venture Manager that is not a related body corporate.[58]
d.Karratha would be in material breach of the Heads of Agreement if it otherwise ceased to perform 'or evinces an intention to cease to perform' its obligations under the Heads of Agreement.[59]
e.If a New Joint Venture Manager ceases, or will cease, to be a related body corporate, that will constitute a material breach and Platina will be entitled to purchase the interest of the New Joint Venture manager at market value less a discount of 20%.[60]
[55] Statement of claim [6].
[56] Statement of claim [6B(a)].
[57] Statement of claim [6B(c)], [6B(d)].
[58] Statement of claim [6B(e)].
[59] Statement of claim [6B(e)].
[60] Statement of claim [6B (g)].
MMPL, at the date of pleading, had no rights under the Heads of Agreement and Karratha remained the party to the Heads of Agreement.[61]
[61] Statement of claim [6E(h)(j)].
Karratha materially breached and remained in material breach of the Heads of Agreement by reason of entering the Almeera Option Agreement and the Empire Term Sheet.[62]
[62] Statement of claim [9B].
To the extent that MMPL held, or would hold, Karratha's Interest, Artemis and MMPL were in material breach of the Heads of Agreement by reason of Atermis' conduct in causing MMPL, on Completion of the Empire Term Sheet, to cease to be a related body corporate.[63]
[63] Statement of claim [9B].
The grant of the option to Almeera and the agreement to transfer 72.9% of the issued share capital of MMPL constituted the grant, declaration, creation or disposal of a right or interest in the Heads of Agreement.[64]
[64] Statement of claim [9B].
Platina seeks relief including:
B.A declaration that Platina is entitled to purchase the Karratha Interest at market value less a discount of 20%.
C.A declaration that MMPL is not a party to the Heads of Agreement or the Joint Venture.
D.An injunction restraining Artemis from taking any step to 'Complete' under the Empire Term Sheet.
E.An injunction restraining Karratha from taking any step, or further step, to transfer any rights or interests under the Heads of Agreement to MMPL.
F.Alternatively, damages.

The defence

The defendants plead that the Joint Venture has been formed and has commenced, and that Platina and MMPL are the only parties to the Joint Venture.[65] The defendants plead, in [6B], that on the proper construction of the Heads of Agreement and the Deed of Variation,
Karratha could nominate whether it or a Related Body Corporate acquire the Karratha Interest, and from the time of that nomination:
(i)the nominee became a party to the Heads of Agreement in lieu of or in addition to Karratha;
(ii)further or in the alternative to sub-paragraph 6B(b)(i) of this Defence, the Plaintiff and the nominee entered into a contract that included at least clauses 2.6 to 2.8 of the Heads of Agreement, or alternatively clause 2.8 of the Heads of Agreement, with each reference to Karratha to be read as a reference to the nominee.[66]
[65] Defence [6A(j)].
[66] Defence [6B(b)].
The defendants plead that, by no later than 17 July 2019, Karratha nominated MMPL as its related body corporate to receive the Karratha Interest.[67] And by no later than 17 July 2019, MMPL became a party to the heads of agreement in lieu of or in addition to Karratha, further or alternatively, Platina and MMPL entered into a contract as pleaded in [6B(ii)] of the defence.
[67] Defence [6E(b)].
The defendants base the plea that MMPL became a party to the Heads of Agreement, or to a contract with Platina, on the terms of the Heads of Agreement and the Deed of Variation and the 'nomination' by Karratha of MMPL as its Related Body Corporate to receive the Karratha Interest. The defendants do not rely on any ongoing activities by Platina and MMPL from which one might infer the existence of a joint venture.
The defendants say that the Almeera Option, to the extent that it was binding or had not come to an end due to non-fulfilment of conditions, was terminated by the Empire Term Sheet.[68]
[68] Defence [9].
The defendants plead that the terms of the Empire Term Sheet have not been satisfied.[69]
[69] Defence [9(g)].

Consideration

The principles of construction of commercial agreements are settled: the terms of the agreement must be construed objectively by reference to what a reasonable person in the position of the contracting parties would have understood to be the meaning of the language used, when read in light of the document as a whole, the commercial purpose or objects to be secured by the contract, and the surrounding circumstances known to the parties at the time of the transaction.[70] '[The] court is entitled to approach the task of construction … on the basis that the parties intended to produce a commercial result, one which makes commercial sense'.[71]
[70] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35].
[71] Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 261 CLR 544 [17].
The task of construction is made more difficult where the agreement under consideration is limited to the bare bones, with the formal agreement to follow. The court will attempt to avoid frustrating the wishes of the contracting parties. But accepting that the parties intended a commercial result does not justify the court in writing the contract which it believes the parties would have agreed. I remain bound to interpret the language that the parties used, recognising that it was intended to be a temporary position pending the negotiation of a formal agreement.
The term 'joint venture' does not have a settled meaning at law, but 'connotes an association of persons for the purpose of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit, with each participant usually (but not necessarily) contributing money, property or skill'.[72] In Gibson Motor Sport Merchandise Pty Ltd v Forbes, Crennan J identified 'recognisable and common characteristics of joint ventures':
1.Participants hold proprietary interests in the assets of the joint undertaking, often, but not necessarily, as tenants-in-common …
2.Participants exercise joint control of the undertaking.
3.Participants contribute to the joint undertaking, not necessarily equally; such contributions may be disparate.
4.Participants in the joint undertaking enjoy rights and assume obligations, which are often several, and calculated by reference to ownership of shares and/or contributions made.
5.Participants have a joint (or community of) interest in the performance of the undertaking's purpose.
6.Participants associate in the undertaking for mutual commercial gain which can be mutual profits.[73]
[72] United Dominions Corporation Ltd v Brian Pty Ltd [1985] HCA 49; (1985) 157 CLR 1, 10.
[73] Gibson Motor Sport Merchandise Pty Ltd v Forbes [2005] FCA 749 [80]. (citations omitted)
Clause 2.8, read with the farm-in clauses in cl 2.6(e) and 2.7, provided for a joint venture with those characteristics: for co‑ownership of the Tenements; for participation in decision making; for the objectives of the Joint Venture to progress Exploration and Joint Venture Activities; for proportionate contribution to the costs of the undertaking; and the effect of default by any party.
The Deed of Variation varied only the interpretation provisions of the Heads of Agreement. In considering its effect, the definition of Karratha, as varied, does not have substantive effect, and should not be construed in isolation from the operative provisions of the Heads of Agreement in which the term is used. The operative provisions must be construed, where the context permits, by inserting the new definition of Karratha into them.[74]
[74] See Black Box Control Pty Ltd v TerraVision Pty Ltd [2016] WASCA 219 [42].
In construing the Heads of Agreement and Deed of Variation together, it is also important to have regard to the following matters;
(1)the Deed did not vary the Heads of Agreement otherwise than by amending the definition of Karratha to mean 'Karratha or any Related Body Corporate';
(2)the amendment operated from the date of the Deed of Variation, about 15 May 2019;
(3)the Heads of Agreement provided for both the farm-in, by which Karratha obtained an interest in the Tenements, and the continuing joint venture for carrying out the Joint Venture Activities, pending the negotiation of formal agreements;[75]
(4)at the time of the Deed of Variation, Karratha had completed the farm-in and the joint venture between Karratha and Platina had commenced, governed by the terms in cl 2.8 of the Heads of Agreement;
(5)the commercial purpose of the Deed of Variation ‑ known to both parties - was to enable the Tenements to be held by a new subsidiary of Artemis (and Related Body Corporate of Karratha), rather than by Karratha;
(6)MMPL was not a party to the Deed of Variation and was not named in it.
[75] Defined in the Heads of Agreement, cl 1.1 as 'all Exploration activities involved in the acquisition, involved in the acquisition, use, development, operation and maintenance of Joint Venture Property and all other activities, undertakings, and operations engaged in by the Joint Venturers under this agreement, but do not, unless otherwise agreed in writing, include Development, Mining, Treatment or the marketing or sale of Minerals'.
The variation operated prospectively, and did not purport to affect those rights and obligations which had already accrued or been incurred, except to the extent that they might be continuing.

Who are the parties to the joint venture

Having regard to the relief sought by Platina, the first issue is whether MMPL is now a party to the joint venture under the Heads of Agreement.
The Deed of Variation did not affect the transaction by which, following satisfaction of the conditions precedent, and for the consideration set out in cl 2.6, Platina granted to Karratha the right to earn the Karratha Interest. Those matters had been completed well before the execution of the Deed.
Nor could the variation affect the operation cl 2.7(a) and (b), which applied for so long as Karratha was earning in pursuant to cl 2.6.
The position in relation to cl 2.7(c) is less clear: the obligations Karratha assumed under that clause are 'as from the date it earned the Karratha Interest', but are continuing. But, absent some assignment and assumption of the obligations under that sub-clause to an identified Related Body Corporate, the parties could not have intended that Karratha was relieved of its obligations under that clause.
Although it would be possible to read cl 2.8(a) as referring to a joint venture between Platina and 'Karratha or a Related Body Corporate', there are several reasons why it should not be so read. First, the Deed of Variation operates only from its execution, and the Heads of Agreement contemplates the Joint Venture being formed immediately when Karratha has spent the Farm-in Expenditure. Second, the identity of one of the joint venture parties would be uncertain, at least until an agreement with a named party was made. Third, the parties to the Deed of Variation made no express provision for MMPL or any other body to become a party to the Joint Venture, and MMPL was not a party to the Deed of Variation. Fourth, the parties made no provision for the assignment of any rights or obligations to MMPL or another party.
Platina submitted that the Deed of Variation had a limited effect: (1) if Karratha wished to novate its rights and obligations to a Related Body Corporate, Platina could not refuse consent on the basis of the identity of the new entity; and (2) if there was to be a change to the 'Karratha' party to the Heads of Agreement, that 'Karratha' party was required to be, always, a 'Related Body Corporate'.
In my opinion, Platina's proposed construction does not fully accord with the terms of the Deed of Variation, and does not give it full effect. When each clause of the Heads of Agreement in which 'Karratha' (or a reference to a 'party') appears is read with the varied definition of Karratha, the Deed of Variation discloses a wider effect.
But I accept the central point in Platina's argument: MMPL is not a party to the Deed of Variation, and does not, by the Deed of Variation, become a party to the Heads of Agreement. The joint venture between Karratha and Platina was formed in 2018. Nothing has been done to have MMPL assume Karratha's obligations. The formal agreement for a joint venture agreement has not been finalised.
The defendants contend that, on a proper construction of the Heads of Agreement and the Deed of Variation, Karratha could nominate whether it or a Related Body Corporate acquire the Karratha Interest, with the nominee becoming a party to the joint venture in lieu of or in addition to Karratha, alternatively, from the date of execution of the Deed of Variation, the nominee entered into a contract with Platina on terms in the Heads of Agreement.[76] Although the defendants, in their submissions, referred to this as a 'novation', they accepted at trial that they had not pleaded and did not rely on novation, but relied on a power to nominate who should hold Karratha's rights and interests.
[76] Defence [6B].
The defendants contended that, by no later than 17 July 2019, Karratha nominated MMPL.[77] In that plea, the defendants relied 'on the Heads of Agreement and the Deed of Variation for the full terms and their true meaning and effect'. The defendants did not, however, identify what terms of those instruments have that effect.
[77] Defence [6E].
The apparent intention of cl 2.6(e) of the Heads of Agreement is that Platina and Karratha would be co-owners of the Tenements. Although it is a common characteristic of a joint venture that a party holds a proprietary interest in the joint venture assets, there is no reason why a joint venture party's interests in some or all of the joint venture property cannot be held by a related body corporate. From the date of the Deed of Variation, Karratha's interest in the Tenements could be held by Karratha or a Related Body Corporate.
But more was required if the Related Body Corporate ‑ not being a party to the Heads of Agreement or Deed of Variation, or even identified in the Deed of Variation ‑ was to assume the position of a joint venture party.
Further, even if one accepts that Karratha could nominate a Related Body Corporate to not only hold its interest in the Tenements but assume its role as the joint venture party, none of the correspondence refers to MMPL (or any other body) becoming a party to the Heads of Agreement, or a party to the joint venture. The correspondence said to effect the nomination[78] has been described earlier. The terms of the correspondence ‑ read objectively ‑ are limited to MMPL being nominated to hold Karratha's interest in the Tenements.
[78] Exhibits 1.20, 1.21, 1.22, 1.24, 1.26, 1.29, 1.30, 1.32, 1.35, 1.36 and 1.46.
The Deed of Assignment, Assumption and Consent, on which the defendants also rely, provides for Karratha to assign to MMPL the 70% interest in the Tenements earned by Karratha upon satisfaction of the farm-in conditions, and for MMPL to assume the obligations of Karratha under the Franco-Nevada mortgage from the Effective Date. That is not sufficient to make MMPL a party to the Joint Venture. Platina has not executed that instrument, and it has not taken effect.
The documents do not disclose any consent by Platina beyond its agreement - evidenced by signing the transfers ‑ that MMPL hold Karratha's interest in the Tenements. That, in itself, is significant under the Heads of Agreement as Karratha could have its interest in the Tenements held by MMPL, as a Related Body Corporate, without triggering the first right of refusal under cl 2.8(k). But the parties' agreement that a Related Body Corporate might hold the Tenements, or Karratha's interest in them, does not require that Related Body Corporate to be a party to the joint venture.
In summary, the 'nomination' of MMPL as the body to take the transfer of the mining leases and hold the tenements did not result in any agreement between Platina and MMPL (or between Platina and Artemis or Karratha) that MMPL would be substituted for Karratha as or otherwise become a party to, the joint venture. There is nothing in the Heads of Agreement or the documents said to constitute a 'nomination' to show, objectively, any intention to create a contract between Platina and MMPL.
I am satisfied that the intention of the parties was that Karratha remained bound by the obligations in the Heads of Agreement.
Were the parties to make a formal agreement, as provided in cl 2.8(b), they could enter into a formal joint venture with different parties. The obligations under cl 2.8(b) remaining unperformed, the reference to parties may be construed as a reference to Platina and Karratha or a Related Body Corporate. The requirement that the parties enter such an agreement so 'on customary terms' may raise an interesting issue whether change of control provisions are customary terms in a joint venture. But the parties have not agreed formal Transaction Documents or a formal joint venture agreement, and Karratha remains the joint venture party.
I am satisfied that Platina is entitled to the declaration it seeks that MMPL is not a party to the Heads of Agreement or Joint Venture. The joint venture parties remain Platina and Karratha.

Are the agreements with Almeera and Empire Metals a material breach of the Heads of Agreement, or the disposal of an interest in the joint venture agreement

The second issue is whether, by entering into the agreements with Almeera and Empire, Artemis or Karratha has disposed of an interest in the joint venture to a body which is not a related body corporate. It is not in dispute that the Almeera Agreement did not proceed. I will consider the issue by reference to the agreement with Empire Metals.
By cl 8.3 of the Heads of Agreement, 'a party must not assign, transfer or novate all or any part of its rights or obligations under or relating to this agreement or grant, declare, create or dispose of any right or interest in it, without the prior written consent of each other party'.
Platina pleads that the effect of the agreement with Empire Metals and Almeera, if Completion occurs is that:
(a)Karratha will cease to perform its obligations under the Heads of Agreement, cease to be a party to the Heads of Agreement and the Joint Venture, and will transfer its rights and obligations under the Heads of Agreement to MMPL;
(b)MMPL will be a New Joint Venture Manager in the place of Karratha;
(d)MMPL will cease to be a Related Body Corporate of both Artemis and Karratha; and
(e)MMPL will cease to be an entity falling within the definition of 'Karratha' under the Heads of Agreement.[79]
[79] Statement of claim [9A].

Platina contends that Karratha commits a material breach of the Heads of Agreement if it transfers, or seeks to transfer, the whole or part of its rights or obligations under the Heads of Agreement to a New Joint Venture Manager that is not a Related Body Corporate; or if it otherwise 'ceases to perform, or evinces an intention to no longer perform, its obligations under the Heads of Agreement'.[80]
[80] Statement of claim [6B(e)].
It contends that by reason of the agreement with Empire Metals, Karratha materially breached the Heads of Agreement.
Platina further contends that Artemis is in breach of the Heads of Agreement by causing MMPL, on Completion of the Empire Metals agreement, to cease to be a Related Body Corporate; and that the agreement to transfer 72.9% of its interest in the issued share capital of MMPL constitutes the grant, declaration, creation or disposal of a right or interest in the Heads of Agreement.
I will first consider the position of Karratha. On the basis of my earlier findings, the position of Karratha must be considered on the basis that it is the joint venture party under the Heads of Agreement.
Item 2 of the Empire Term Sheet provided for the grant of an option to each of Empire Metals and Almeera to acquire (collectively) 72.9% equity interest in MMPL. By Item 15, Completion of the acquisition will occur five days after the satisfaction or waiver of all conditions, or such other time as agreed by the parties.
It is not in dispute that, should there be Completion, MMPL will no longer be a Related Body Corporate of Karratha.
Platina contends that the existence of the material breach does not depend on Completion. It is a material breach if Karratha enters into a binding agreement, the express purpose of which is to effect a transfer of its interest in breach of the Heads of Agreement.[81]
[81] Plaintiff's submissions [89].
The first difficulty with that position is that Karratha is not a party to the agreement with Empire Metals. Karratha has no interest in MMPL. It has not entered into any agreement and does not, by the Completion of the agreement in the Empire Term Sheet, transfer or seek to transfer any right or interest to MMPL. Nor does Karratha do anything that results in MMPL ceasing to be its Related Body Corporate.
The second difficulty, is that the agreement with Empire Metals is conditional on the Conditions Precedent in Item 3, including execution of a formal joint venture agreement between MMPL and Platina, or waiver of that condition. Platina and MMPL have not entered a formal joint venture agreement. It is not alleged that there has been waiver. Platina does not assert any present failure by Karratha to perform its obligations.
Platina seeks, in the alternative, damages for the loss it has suffered by being denied the opportunity to purchase the Karratha Interest.[82] The trial of issues was not concerned with the assessment of damages. It should be noted, however, that the Heads of Agreement remains on foot. Platina has not sought to terminate it, and any right to damages on termination has not arisen.[83]
[82] Statement of claim [13].
[83] See, for example, Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; (1988) 166 CLR 245, 260 ‑ 261; Mann v Paterson Constructions Pty Ltd [2019] HCA 32 [196].
Platina also pleads a material breach of the Heads of Agreement by MMPL by reason of Artemis' conduct in causing MMPL, on Completion of the agreement with Empire Metals, to cease to be a Related Body Corporate.[84] That claim must fail. First, MMPL is not a party to the Heads of Agreement. Second, Platina identifies no substantive term in the Heads of Agreement by which MMPL was under any obligation to continue to be a Related Body Corporate of Karratha, breach of which may be a material breach.
[84] Statement of claim [9B(b)].
Finally, there is no express term of the Heads of Agreement regarding change of control of any of the joint venture parties, and Platina does not allege any implied term to that effect. The 'No assignment' provision in cl 8.3 of the Heads of Agreement provides:
A party must not assign, transfer or novate all or any part of its rights or obligations under or relating to this agreement or grant, declare, create or dispose of any right or interest in it, without the prior written consent of each other party.
Artemis' rights and obligations under the Heads of Agreement are limited. It has obligations under cl 2.5 and cl 2.6, both of which have been completed. Its guarantee under cl 2.12 continues. The grant of an option to acquire a majority shareholding in MMPL, MMPL not being a party to the Heads of Agreement, is not an assignment or transfer of its (that is, Artemis') rights or obligations 'under or relating to' the Heads of Agreement.
It is not necessary to consider the position should MMPL become a party to the joint venture agreement, something which requires the consent of Platina. While MMPL is not a party to the joint venture, the transfer of shares in MMPL is not the grant, creation or disposal of any right or interest in the Heads of Agreement.
Platina is entitled to the declaration that MMPL is not a party to the Heads of Agreement or the joint venture, but is not otherwise entitled to the relief it seeks.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MG
Associate to the Honourable Justice Allanson
23 FEBRUARY 2021