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PORTER -v- SUNDANCE RESOURCES LTD [No 2] [2015] WASC 493

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2015] WASC 493
Case No:	CIV:1632/2013	Heard:	7 - 9 SEPTEMBER 2015
Coram:	KENNETH MARTIN J	Delivered:	23/12/15
No of pages:	110	Judgment Part:	1 of 3
Result:	Judgment for plaintiff
Category:	B	Other Parts:	Pages 51 to 100 Pages 101 to 110
PDF Version

Parties:	DAVID JAMES PORTER SUNDANCE RESOURCES LTD
Catchwords:	Contract Breach Damages Failure to provide promised options upon meeting of promised performance Terms of contract Inferred terms alleged Foreign corporate subsidiary Overseas mineral exploration licence Repudiation of promise to provide options Alleged abandonment of contract Alleged inference of abandonment Contract not abandoned Damages awarded Turns on own facts
Legislation:	Nil
Case References:	Absolute Analogue Inc v Sundance Resources Ltd [2015] WASCA 168 Absolute Analogue Inc v Sundance Resources Ltd [No 3] [2014] WASC 283 Adnunat Pty Ltd v ITW Construction Systems Australia Pty Ltd [2009] FCA 499 Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) FCR 424 Brogden v Metropolitan Railway Co (1877) 2 App Cas 666 CGM Investments Pty Ltd v Chelliah [2003] FCA 79; (2003) 196 ALR 548 Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 De Soysa v De Pless Pol [1912] AC 194 Diploma Construction (WA) Pty Ltd v Best Bar Pty Ltd [No 2] [2015] WASC 230 DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423 Fazio v Fazio [2012] WASCA 72 Fitzgerald v Masters (1956) 95 CLR 420 Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 Hoyts Pty Ltd v Burns [2003] HCA 61; (2003) 201 ALR 470 JR Marine Systems Pte Ltd v Wavemaster International Pty Ltd (in liq) [2011] WASCA 16 Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44 Marminta Pty Ltd v French [2003] QCA 541 Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal [1983] 1 AC 854; [1983] 1 All ER 34 Porter v Sundance Resources Ltd [2015] WASC 327 Summers v Commonwealth [1918] HCA 33; (1918) 25 CLR 144 Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 Wallera Pty Ltd v CGM Investments Pty Ltd [2003] FCAFC 279

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION : PORTER -v- SUNDANCE RESOURCES LTD [No 2] [2015] WASC 493 CORAM : KENNETH MARTIN J HEARD : 7 - 9 SEPTEMBER 2015 DELIVERED : 23 DECEMBER 2015 FILE NO/S : CIV 1632 of 2013 BETWEEN : DAVID JAMES PORTER

Plaintiff

AND

SUNDANCE RESOURCES LTD

Defendant

Catchwords:

Contract - Breach - Damages - Failure to provide promised options upon meeting of promised performance - Terms of contract - Inferred terms alleged - Foreign corporate subsidiary - Overseas mineral exploration licence - Repudiation of promise to provide options - Alleged abandonment of contract - Alleged inference of abandonment - Contract not abandoned - Damages awarded - Turns on own facts

Legislation:

Nil

Result:

Judgment for plaintiff

Category: B

Representation:

Counsel:

Plaintiff : Mr D Ryan SC & Mr M Feutrill

Defendant : Mr G R Donaldson SC & Ms S E Russell

Solicitors:

Plaintiff : Tottle Partners

Defendant : Clyde & Co (Perth Office)

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

Absolute Analogue Inc v Sundance Resources Ltd [2015] WASCA 168
Absolute Analogue Inc v Sundance Resources Ltd [No 3] [2014] WASC 283
Adnunat Pty Ltd v ITW Construction Systems Australia Pty Ltd [2009] FCA 499
Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) FCR 424
Brogden v Metropolitan Railway Co (1877) 2 App Cas 666
CGM Investments Pty Ltd v Chelliah [2003] FCA 79; (2003) 196 ALR 548
Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337
De Soysa v De Pless Pol [1912] AC 194
Diploma Construction (WA) Pty Ltd v Best Bar Pty Ltd [No 2] [2015] WASC 230
DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423
Fazio v Fazio [2012] WASCA 72
Fitzgerald v Masters (1956) 95 CLR 420
Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539
Hoyts Pty Ltd v Burns [2003] HCA 61; (2003) 201 ALR 470
JR Marine Systems Pte Ltd v Wavemaster International Pty Ltd (in liq) [2011] WASCA 16
Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44
Marminta Pty Ltd v French [2003] QCA 541
Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal [1983] 1 AC 854; [1983] 1 All ER 34
Porter v Sundance Resources Ltd [2015] WASC 327
Summers v Commonwealth [1918] HCA 33; (1918) 25 CLR 144
Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106
Wallera Pty Ltd v CGM Investments Pty Ltd [2003] FCAFC 279

KENNETH MARTIN J

Introduction

1 The tentacles of Western Australian mining companies have extended worldwide, including into Africa. The trial of this action, which related to mining tenements in the Republic of the Congo, took place between 7 to 9 September 2015. Essentially, the plaintiff, Mr Porter, sues the defendant, Sundance Resources Ltd (Sundance) for damages for alleged breach of contract.

2 Background to the dispute is contained in my earlier interlocutory reasons: see Porter v Sundance Resources Ltd [2015] WASC 327, published 18 August 2015.

3 The pleadings then evolved in some significant aspects after those reasons were given (in a fashion I will shortly explain). Nonetheless, I will repeat [32] - [36] of those reasons, which provide a commencing summary of the underlying dispute:

Fundamentally … the plaintiff and the defendant, … both accept a perfection of a legally binding and enforceable June 2006 agreement involving Mr Porter and Mr Corr (for the defendant) that was negotiated at 8 June 2006, concerning a procuring of prospection permits and then exploration licences, in the northern border areas of the Republic of Congo (located to the south of the defendant's interest in a Mbalam iron ore interest it then held, in the south of the Republic of Cameroon). No issues of alleged contractual uncertainty, or the absence of a perfected contractual relationship, are thus far apparent from the pleadings.

The critical area of apparent difference, at least on the face of the pleadings, looks to be over the existence or otherwise of a contractual term of the June 2006 agreement(s) - concerning the actual geographical area(s) to be secured in the Republic of Congo for the defendant for an iron ore operation that could be run proximate to the Mbalam prospect in Cameroon.

The defendant pleads that its version of an 8 June 2006 agreement essentially came to an end by substantive non-performance and was terminated. This was because the defendant did not ever acquire the agreed upon mineral exploration licences over tenements located in the Avima or Elogo areas of the Republic of Congo, which it had approved and expected to receive.

On the other hand, the plaintiff's position is that he fully met and satisfied the terms of the parties' 8 June 2006 agreement - by procuring for the defendants the eventually held iron ore geographical licences as interests held by a subsidiary corporation of the defendant that was incorporated in the Republic of Congo. That corporation came, ultimately, to hold two mineral exploration licences in the Republic of Congo areas of Ibanga and Nabeba-Bamegod (see par 7.11 of the amended statement of claim). This was all he needed to have done, on Mr Porter's case, to meet the terms of the 'Agreement' negotiated in June 2006.

A clash over the contractual term issue concerning the true scope of the terms of the parties' 8 June 2006 agreement as to the required and approved exploration areas to be secured for the defendant in the Republic of Congo - is at the heart of what divides the parties in this dispute - at least as assessed from their current respective pleadings.

4 In the fortnight prior to the commencement of trial, there were some further adjustments circulated as minutes by the parties, as proposed amendments to their pleadings. The late emerging adjustments are collected in the final iterations of the proposed pleadings, more specifically, under the plaintiff's minute of proposed re-amended statement of claim ('new' version of 4 September 2015) and the defendant's minute of proposed further re-amended defence, filed 7 September 2015.

5 By the time the trial commenced the parties, between themselves, showing commendable maturity, essentially agreed to accept and deal with all the late changes and proceed with a trial. Leave to amend the pleadings in respect of the most recent minutes was not opposed on either side. Accordingly, my leave to amend in accord with those last circulated minutes of pleadings was granted at the commencement of the trial.

6 Beyond those changes there also needed to be further typographical corrections (allowed at the commencement of day two of the trial) to par 7(h)(ii) of the defence, in order to fix an incorrect paragraph reference, correcting the reference to read 'par 7(e)(iii)' and further, there was a clarifying correction to par 7(i) of the defence, to change the word 'the' in the last line to 'that'.

7 I also note here that I ultimately accepted the trial bundle (TB) into evidence as exhibit 9, with a further reference to the volume in the trial bundle and the specific file tab (eg, TB 9.2.4) to enable reference to a specific document. I determined what documents should be excised from the trial bundle on the basis of respective aide memoires (being exhibits 6A and 6B) provided by the parties at the end of the trial. References are also given to specific pages in the trial bundle (eg, TB page 123).

Fundamental Commencing Platform: Binding Agreement Accepted

8 Lying at the heart of the parties' contractual dispute is the binding agreement both sides accept was perfected, on 8 June 2006, at the Yaounde Hilton, in the Republic of Cameroon.

9 The accepted agreement was reached between Mr Porter and the defendant. Acting for the defendant on that occasion was its then executive chairman, Mr John Corr.

10 Mr Corr was to be a witness for the plaintiff at the trial, as my interlocutory reasons had foreshadowed. In the end, however, he was not called by the plaintiff. Consequently, the only direct witness evidence received at the trial came from the plaintiff, Mr Porter.

11 Mr Porter's trial evidence began with his evidence-in-chief, adduced through two witness statements. They became, respectively, exhibits 1 and 2. This was followed by Mr Porter's viva voce evidence, given under cross-examination, and in a brief re-examination.

12 Mr Porter's primary witness statement of 13 July 2015 was confirmed by him at trial as being true and correct. Exhibit 2 is his shorter supplementary witness statement published closer to the trial, addressing some supplementary issues, mostly said to arise by reason of the late amendments to the respective pleadings.

13 Paragraphs 85 to 89 of the primary witness statement of Mr Porter (exhibit 1) deal with the issue of the levels of his shareholdings in Sundance, in a context directed at facilitating his claim for damages. Likewise, pars 9 to 15 of his supplementary statement were directed at addressing damages issues, as regards Mr Porter's promised further options and shares in Sundance hypothetically being acquired by him and then sold off at a profit.

14 This area of Mr Porter's evidence, as to his asserted breach damages, was subjected to an intensive level of cross-examination at trial. But towards other issues at the trial, large components of Mr Porter's statements were hardly challenged.

15 The forensic consequence of all that is that Mr Porter's version of events concerning the dialogue he says passed between himself and Mr Corr (for Sundance) whilst at the Hilton Hotel in Yaounde, Cameroon, on 8 June 2006, stands as effectively unchallenged.

16 I discuss more of the content of Mr Porter's trial evidence later in the reasons.

Key Areas of Disputation

17 At the outset, it is helpful to try to identify and isolate how the parties differ, concerning their rival respective formulations of the accepted contractual agreement, concluded between Mr Porter and the defendant, at the Yaounde Hilton, in Cameroon, on 8 June 2006.

18 Essentially, the exercise distils to an evaluation of close, but ultimately distinct, key terms respectively contended for, in the otherwise concluded versions of their agreement, as they emerge under the respective paragraphs of the final iterations of the pleaded statement of claim and pleaded defence.

19 In the earlier Porter v Sundance reasons mentioned, I had set out some paragraphs from the pleadings, as they then were, in conducting that interlocutory exercise: see those reasons at [16] addressing Mr Porter's pleading, as regards his contended 'agreement' and then, in juxtaposition, [29](b), evaluating the defendant's rival plea.

20 But as I have said, the pleaded position, particularly by the defendant, has altered significantly since then. Consequently, it is necessary to undertake a fresh comparison exercise. I will undertake this in the helpfully assisted context of the parties' agreed chronology and their agreed dramatis personae, submitted for the trial, and which, for convenience, I have added as schedules 1 and 2 to these reasons (being exhibits 7 and 8 from the trial).

21 Mr Porter's contended (wholly oral) terms of the agreement are found pleaded under par 5 of his re-amended statement of claim (consistently with what he has said in his primary witness statement at pars 20 - 24), in the following terms (for context, I also need to set out par 6):

5. Following discussions in May 2006 between the plaintiff and Corr, on or about 8 June 2006, by an oral agreement made between the plaintiff and the defendant (the 'Agreement') it was agreed, in effect, that:

5.1 the plaintiff would identify new prospective areas for iron ore south of the Mbalam Deposits, prepare the technical parts of applications for prospection permits to be submitted to the Mines Department in Brazzaville [the capital of the Republic of Congo], select areas within the prospection permit areas for mineral exploration licences, prepare the technical parts of applications for mineral exploration licences and coordinate the application process;

5.2 Mr Roger Bogne ('Bogne') and Mr Serge Asso'o ('Asso'o') would travel to Brazzaville, arrange to incorporate a new company in the Republic of Congo controlled by the defendant, select local partners and negotiate satisfactory terms with them, prepare and lodge with the Mines Department applications for prospection permits in the name of the new company, and following the grant of prospection permits, prepare and lodge applications for mineral exploration licences in the name of the new company; and

5.3 in consideration for the procurement of the issue of mineral exploration licences in the name of the new company, over areas approved by the defendant, the defendant would on the grant of mineral exploration licences grant to each of the plaintiff, Bogne and Asso'o, 10 million options to acquire an ordinary share in the capital of the defendant, exercisable at any time within three years from the date of issue at an exercise price of 10 cents per option ('Options').

6. The Agreement was made orally on or about 8 June 2006 between the plaintiff and Corr, on behalf of the defendant.

22 Responding to those pleas, Sundance, under the most recent iteration of its pleaded defence of 7 September 2015, counter-contends (by its pars 5 and 6):

As to paragraph 5 of the Statement of Claim, the Defendant:

(a) says that on or about 8 June 2006 the Plaintiff, Roger Bogne ('Bogne') and Serge Asso'o ('Asso'o) (of the first part) (together the 'Promoters') and John Corr on behalf of the Defendant entered into an agreement, the terms of which were oral and inferred, to the effect:

(i) pleaded at paragraphs 5.1 and 5.2 of the Statement of Claim, except that:

A. the Promoters would identify to the Defendant areas in the Republic of Congo south of the Mbalam Deposits that were prospective for iron ore exploration;

B. the areas of such prospection permit and mineral exploration licence applications would be submitted by the Promoters to the Defendant and approved by the Defendant prior to the making of any such applications;

C. arrange for the incorporation of a new company in the Republic of Congo ('Congo Iron');

D. identify a person or persons in the Congo to become a shareholder or shareholders of Congo Iron, on terms as to the number of shares and the rights and obligations attaching to such shares, that were agreed to by the Defendant;

(ii) …

(iii) that if the Promoters did the matters pleaded in paragraph 5(a)(i)A-D above, the Defendant would grant to each of the Promoters 10 million options to acquire shares in the Defendant exercisable at 10 cents per option within three years from the date of issue;

(iv) that each of the terms pleaded at paragraph 5(a)(i) and 5(a)(iii) above and the agreement comprising them were subject to approval by the board of directors of the Defendant, such that if the board of directors did not approve such agreement and terms within a reasonable time of 8 June 2006 no agreement would come into effect.

('the Defendants Pleaded Agreement'); and

(b) otherwise denies the allegations in the paragraph.

As to paragraph 6 of the Statement of Claim the Defendant repeats paragraph 5 above.

Evaluation of rival versions of disputed agreement terms under pars 5 and 6 of the parties respective pleadings

23 Before moving to assess more of the trial evidence, it is convenient to attempt to separate the uncontentious from the more controversial issues arising out of the parties' respective stances, evaluated from their pleadings, surrounding their mutual acceptance of a Porter/Sundance 8 June 2006 agreement, perfected at Yaounde, Cameroon, as between Mr Porter and Mr Corr (acting for Sundance).

24 Two uncontroversial, but key, matters to immediately note, are that:

(a) the parties accept for the purposes of this litigation that their respective versions of their agreement (and indeed all other agreements which they subsequently identify in their respective pleadings) are all agreements in respect of which I am to proceed upon a basis of applying Western Australian law (see ts 181); and

(b) there is no challenge raised from the defendant to the scope of the authority of Mr Corr, acting on the part of Sundance at the time (as its then executive chairman), to bring about a perfecting of a binding agreement, committing Sundance to an agreement, either in terms as are contended for by the defendant (the Defendant's Pleaded Agreement) or to the agreement terms as are distinctly contended by Mr Porter ('the Agreement'). In other words, no issue as to Mr Corr's authority from Sundance to validly bind and conclude any such agreement with Mr Porter, is live in the litigation.

25 Dealing with uncontroversial matters, it is perhaps also important to recall, as I noted in the earlier interlocutory reasons, that as regards a perfected agreement made on 8 June 2006 as between Mr Porter and Sundance, neither party contends that there was any failure to conclude a binding agreement immediately at that time. Hence, no argument as to any subsequent need for ratification or board approval from Sundance, in order to perfect a binding agreement, is suggested.

26 Hence, the scope of the essential controversy between the parties, from an issues perspective, is relatively narrow. It is directed at ascertaining the true terms of the parties' concluded agreement, as perfected on 8 June 2006, at Yaounde.

27 Likewise, it has not ever been contended that the 8 June 2006 Porter/Sundance agreement was so devoid of substantive content, concerning its essential terms as to, at the end, be possibly assessed as void, by reason of uncertainty as to its essential underlying subject matter and bargain.

28 Nor is there a contention from either side as to a derivation of an ad hoc implied term or terms in the parties' agreement.

29 From Sundance's perspective, it, unlike Mr Porter, does seek to rely upon the inference of terms, as to certain matters relating to the derivation of contractual terms, rather than upon ad hoc implied term derivation, as I will explain.

30 Mr Porter does not rely upon any aspect of term implication or inference, so as to derive the terms of the agreement of 8 June 2006 for which he contends. His case is that his agreement with Sundance and its terms were completely oral, and fully concluded, as between himself and Mr Corr on 8 June 2006, at Yaounde.

31 Hence, the amplitude of the present dispute concerning the mutually acknowledged and binding (at least at the time) Porter/Sundance agreement of 8 June 2006, is really focussed at the disputed contents of that agreement's terms, at that date.

32 That narrow arena of contractual term disputation then leads into a subsequently related further dispute, raising rival arguments as to the argued performance, or the non-performance, of the true terms of this agreement, by Mr Porter. He contends for the subsequent full and proper contractual performance of the true terms of the parties' agreement. Sundance disputes this.

33 Advancing then to identifying, more specifically, the key aspects of controversy under the parties' respectively pleaded formulations of the terms of a then binding June 2006 agreement, it can be observed that the parties' different formulations about the terms of their concluded agreement seem, at least from an evaluation in the respect of pleas under par 5, to distil the following areas, namely:

(a) from Mr Porter's perspective, his pleaded contention is that the 8 June 2006 agreement was wholly oral and was comprised, effectively, only from the verbal exchanges of that day, passing as between himself, with Mr John Corr, with the two men being then in the same room at the Yaounde Hilton and, whilst present there, effectively conversing face to face. That wholly verbal term formulation is to be contrasted to the agreement terms as contended for by Sundance, via subpar 5(a) of the defence. Sundance says that the nature of the terms of the parties' agreement is twofold: namely, both 'oral', and then, '

inferred

' (my emphasis). The defendant's additional invocation of inference, as regards terms of the 8 June 2006 agreement, is a pivotal structural aspect in its overall defence. Reliance upon inference as to extra terms, carries with it a need to consider a body of case law (discussed later) concerning how the inference process would work, in the context of ascertaining precise terms in an otherwise wholly verbal contract;

(b) arising from subpar 5(a)(i)D of the pleaded defence is seen the defendant's recently introduced contention concerning a need, it is put, in effect, for Sundance to approve of the persons in the Republic of the Congo to become shareholders of Congo Iron, as well as approving the number of shares they would receive, as well as rights and obligations attaching to such shares (contrasting that plea to Sundance's distinct, but longer standing, residual plea found under subpar 5(a)(iv), as to each of the defendant's terms and the agreement comprising them, being subject to approval of the board of directors of Sundance within a reasonable time of 8 June 2006).

Sundance's Congo shareholders terms plea may be contrasted to the contended terms of Mr Porter's version of the 8 June 2006 agreement which, under his formulation seen at subpar 5.3, fully accepts that there was a need to obtain the approval of Sundance to the specific 'areas' in the Republic of the Congo, and which were to be the subject of the issue of mineral exploration licences to be issued in the name of a new company to be incorporated in the Republic of the Congo, that was controlled by Sundance. However, Mr Porter, in effect, then says that there was no other aspect of the parties' 8 June 2006 agreement requiring Sundance's assent.

Unacceptable Congo Exploration Areas Obtained: Eventual non-issue at trial

34 For a long time, right up until just before the trial began, it had appeared that the substantively disputed issue raised by Sundance, as to alleged non-performance by Mr Porter, and so the fundamental disagreement as between the parties, was about unacceptable (to Sundance) Congo exploration areas - arising because mineral exploration licences in the Republic of the Congo, as had been ultimately procured for Sundance's subsidiary company, Congo Iron, at 2 August 2007, were over exploration areas in the Congo identified as Ibanga and Nabeba-Bamegod. That all presented in circumstances where it appeared to be contended by Sundance that different Congo areas which Sundance initially approved, and had accepted, were not actually ever obtained.

35 Sundance had contended by its defence that it had approved and was expecting its local Congo subsidiary corporation to receive what were two distinctly different Congo exploration areas, namely, the Congo mineral exploration areas known as Avima and Elogo, under defence pleas seen under subpars 7C(iii), 7G(i), 7H(i) and 7(i).

36 But as the trial developed, and as I discuss by reference to the evidence below, that looming unapproved received exploration areas dispute, over which Congo locations actually became the subject of mineral exploration licences ultimately issued to Sundance's Congo Iron subsidiary corporation, was not even mentioned by Sundance. The examination of the evidence will show why the point was not pressed. From an evidentiary perspective it was an untenable argument for Sundance to raise, let alone run, at trial.

37 A new focus to the parties' dispute now emerged, emanating from Sundance. This late change of direction for the trial by Sundance was to introduce a shift in defensive position, to a stance concerning the contended existence (or non-existence, as Mr Porter would contend) of an inferred contractual term in the 8 June 2006 agreement, that effectively would afford to Sundance the unilateral right of veto over the identity of all local Congo Iron (minority) shareholder persons and a like contended veto of all terms (they all needing to be, in effect, assessed as being satisfactory to and by Sundance) as were negotiated with the local Congo Iron shareholders. An analogy was attempted to be drawn by counsel for Sundance in argument, to the granting of an option by Mr Porter to Sundance, to take up an interest in the Congo expansion project, in effect, if Sundance chose to exercise the 'option', as Sundance saw fit.

38 That shift in focus emerged in the context of evidence as to fluctuating levels of enthusiasm over time for the Congo expansion project, subsequent to 8 June 2006, in the position of the Sundance Board and, as part of that, over the acceptable levels of a permissible local Congo level of shareholding in the new subsidiary company incorporated in the Republic of the Congo, and which would be holding the Congo mineral exploration licences, once they were obtained and issued.

39 In that newly emerging context, senior counsel for the defendant, Mr Donaldson SC, highlighted the phrase 'negotiate satisfactory terms with them', seen within Mr Porter's framing of his contended term, under his subpar 5.2 - and effectively contending that this formulation supported, or was at least congruent with, the more explicit rival term, as was now being contended by Sundance, under its subpar 5(a)(i)D - and particularly to the need for all rights attaching to shares held by local shareholders in Congo Iron to be 'agreed to by the Defendant': see ts 183 and 272 - 274.

40 Consequently, there finally emerged rather late, and somewhat painfully over time, a significant conceptual degree of new difference between the parties, over the existence and/or scope of such a term, as regards the need to settle upon the terms of permitted participation by local Congo shareholders.

41 Particular attention, therefore, needs to be directed at this newish controversial term issue, first in the context of assessing the (only) direct witness evidence about the pivotal Yaounde Hilton conversation, between Mr Porter and Mr Corr, founding the 8 June 2006 agreement, and second, by reference to the residual, mainly documentary evidence at the trial.

42 To identify the substantive oral content of what passed between Mr Porter and Mr Corr, essentially, the exercise can be safely undertaken by reference to Mr Porter's witness statements, dealing with that meeting, where he effectively stands uncontradicted.

43 There appear to be no contemporaneous documents bearing upon recording the terms of the 8 June 2006 agreement.

44 But there are, as will become apparent later in these reasons, numerous documents prepared and exchanged between the parties after that date. They may all be legitimately assessed and weighed for the purpose of ascertaining the existence or otherwise of a term, within the parties' 8 June 2006 agreement in contradistinction to the position in a process of construing terms in an agreement once found. After the event evidence may not be accessed and used in the process of construction of an agreement: see Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 [35] (Gummow, Hayne & Kiefel JJ).

45 It also needs to be remembered, before turning to examine Mr Porter's evidence, that Sundance's version of its contended terms within the parties' June 2006 agreement, is only advanced on a basis that such terms are to be inferred. Hence, it would appear to be argued by Sundance that, albeit the passing words that were exchanged between Mr Porter and Mr Corr on 8 June 2006 may not have explicitly addressed contractual terms as are now contended for by the defendant, nevertheless, the process of inference, not implication, is still open to achieve that end. That is particularly the case concerning the contended inferring of what I would class as Sundance's veto term, as to it needing to approve all of Congo Iron's local shareholders and also all their rights and obligations as local shareholders.

46 Sundance also argues that dictates of commercial common sense support such a term being inferred, if necessary.

47 I now turn back to assess more of Mr Porter's primary witness statement, as regards the 8 June 2006 Yaounde agreement, which is accepted as having been perfected and made binding by both parties although, as seen, they now heavily differ, over the composition of some of its key terms.

Mr Porter's witness statements (exhibits 1 and 2)

48 I need to mention that during the course of my dialogue with senior counsel at around the conclusion of the defendant's opening submissions, I indicated that it would be helpful if the surrounding circumstances for the parties' agreement could be identified. That exercise would be particularly relevant if a process of construction and interpretation of a term, once ascertained, had needed to be engaged upon. In the end, that has not been necessary.

49 To that possibly necessary end, I tried to identify at the time, as something of a work in progress, some relatively neutral surrounding circumstances. These were discussed at ts 227 - 229, where some are identified. Arising out of that discourse, the following facts were identified as being known and essentially uncontroversial as between the parties:

A. Mr Porter is an Australian geologist.

B. The defendant, Sundance, is an Australian corporation.

C. Sundance was a listed Australian corporation on the Australian Stock Exchange at and after June 2006.

D. Mr Porter and Mr Corr were together in a hotel room at the Hilton Hotel in Yaounde, the capital of Cameroon, on 8 June 2006.

E. The meeting between the two men at the Yaounde Hilton had occurred in circumstances where a board meeting of the directors of the Cameroon corporation, Cam Iron SA, was taking place at that location.

F. At 8 June 2006, Sundance held or controlled 90% of the shares in Cam Iron SA and it had had a director appointed to the board of Cam Iron SA at the meeting in Yaounde (Mr Corr).

G. Mr Adam Rankine-Wilson, an Australian citizen, at 8 June 2006, was a major shareholder in Sundance. He was also present in the relevant hotel room at the Yaounde Hilton on 8 June 2006.

H. Mr Corr was present in his capacity of then being Sundance's executive chairman. There is no challenge to Mr Corr's authority in terms of his ability to perfect a binding contract on behalf of Sundance with Mr Porter (or for that matter with Messrs Asso'o or Bogne).

I. Cam Iron SA, at the time, held the Mbalam iron ore deposit which was located on the northern side of the border between Cameroon, and the Republic of the Congo.

J. Mr Porter and Mr Corr were both sophisticated commercial persons (ts 229).

50 Before there is any attempt at construing an agreement, or to ascertain whether the agreement has been performed or breached, it is necessary to identify its terms.

51 The identification and ascertainment of contractual terms exercise begins here, with an examination of the passing words between Mr Porter and Mr Corr on 8 June 2006 at Yaounde.

52 What I now set out below is from pars 19 and 20 of Mr Porter's primary witness statement, exhibit 1:

19. On 3 June 2006, I travelled from Johannesburg to Yaounde in Cameroon and met with Corr and Rankine-Wilson. Over the next five days up to 8 June 2006 we had numerous discussions. The main focus was on the steps required to progress the Mbalam project, but we also discussed the Congo opportunity.

20. On 8 June 2006, I attended a meeting of directors of Cam Iron at the Hilton Hotel in Yaounde, Cameroon. Also present at the meeting were Bogne, Asso'o, Corr and Rankine-Wilson. I kept minutes of the meeting which I later typed up [TB 9.1]. The minutes incorrectly record the date as being 7 June 2006 and should read 8 June 2006. The minutes located at TB 8 [ie, 9.1.8] are the original minutes with later additions made around 20 July 2006 in red type by Alec Pismiris ('Pismiris'), who was appointed as a director of Sundance around this time, and blue type by me.

53 It is necessary to divert for the moment to TB 9.1.8, being draft minutes of the 8 June 2006 Cam Iron SA board meeting, prepared by Mr Porter and showing subsequent comments which he added (in blue). I note the date error (7 June should be 8 June, as is accepted) concerning the holding of the board meeting of Cam Iron SA. The board meeting is recorded as taking place on the 10th floor of the Hilton Hotel (in Yaounde). The persons recorded as being present for the Cam Iron SA board meeting are Mr Porter as chairman; Mr Bogne, director; Mr Asso'o, director; Mr Corr (chairman of Sundance); and, by invitation, Mr Adam Rankine-Wilson.

54 Item of business number two (2) records:

Mr John Corr was appointed a director and chairman of Cam Iron, following Sundance Resources Ltd purchase of 100% of the shares in Cam Iron SA. Mr Corr gave his consent to be confirmed in writing.

Comments added in blue by Mr Porter to the draft minutes at around 20 July 2006 say towards this item:

Mr Corr continued as chairman of the meeting and Mr Porter acted as Secretary. It was agreed by the Meeting to appoint a second Director to the Cam Iron SA board from Sundance Resources Ltd to reflect their 100% ownership of the Company and Mr Corr was to discuss a candidate with the Sundance board of directors.

Concerning this aspect of the draft minute, Mr Alex Pismiris, who was then a director and secretary of Sundance, had noted (in red):

The Secretary was instructed to update the share register and note Sundance as the sole shareholder of Cam Iron?

Mr Porter then responded (in blue):

Add this, I think it has been done by Gilbert Rodgers.

55 As would be expected, much of this draft minute addresses the work of Cam Iron SA in relation to the Mbalam Iron Ore project in Cameroon. However, towards the topic of expanded iron ore exploration into the Congo, item (5)(f) of the original draft minute had said:

The meeting proposed acquiring new areas for iron ore, south of Mbalam in the Republic of Congo (Brazzaville). Approval was given from Messrs Bogne and Asso'o to visit Brazzaville and investigate the process and cost of applying for Exploration Permits.

A notation in red to the original minute by Mr Pismiris, added at around 20 July 2006, said the following:

(A success fee of 10M three year options exercisable at 10 cents was approved for each of Messrs Porter, Bogne and Asso'o, subject to the satisfaction of the Sundance Board of Directors).

By way of his further input, Mr Pismiris also added in red (TB page 28) to the draft minutes a question:

How can the directors of Cam Iron approve an issue of options by Sundance?

Mr Porter's responsive notation (in blue) to that question is then seen:

This is what was agreed by John Corr (with Adam's knowledge) at the Meeting and is the basis that Roger and Serge are now in Congo acquiring the licences with my input. I suggest you give them a ring and tell them of changed circumstances before they get too far. Roger's Congo number is +242 633 6801. He is there until Monday.

Mr Pismiris' further note is:

The strike price should be determined at the date of grant with reference to the share price.

Mr Porter's responsive note (in blue) is:

The share price was five cents when it was discussed.

56 Returning to the body of Mr Porter's witness statement, exhibit 1 continues at pars 21 - 24:

The meeting held on 8 June 2006 lasted most of the day and near the end of the business day, I had a discussion with Corr about acquiring new iron ore exploration areas in Congo. Rankine-Wilson was within earshot of Corr and me. I asked Corr words to the effect of whether Sundance would still be interested in acquiring new areas to increase the iron ore resource at Mbalam. Corr said to me words to the effect that Sundance was very interested and he asked how far the areas were from Mbalam. I told Corr words to the effect that they were within approximately 100 kilometres of Mbalam.

I also said to Corr words to the effect that if Sundance was interested, Bogne, Asso'o and I would identify new prospective areas for iron ore in Congo, prepare the technical parts of applications for prospection permits to be submitted to the Mines Department in Congo, select areas within the prospection permit areas for mineral exploration licences, prepare the technical parts of applications for mineral exploration licences and coordinate the application process.

Corr asked me words to the effect of what Bogne, Asso'o and I wanted for the exploration licences. He said words to the effect that Sundance would not pay us cash but would give us options to acquire shares in Sundance. I said that the three of us wanted 10 million options each. Corr said words to the effect that if we procured mineral exploration licences in Congo for Sundance, we would get 10 million options excisable at 10 cents each within three years from the issue of the options. I told Corr that that was acceptable to me, Bogne and Asso'o.

I then said to Corr words to the effect that Bogne and Asso'o would travel to Congo, arrange to incorporate a new company in Congo controlled by Sundance, select local partners and negotiate satisfactory terms with them, prepare and lodge with the Mines Department applications for prospection permits in the name of the new company, and following the grant of prospection permits, prepare and lodge applications for mineral exploration licences in the name of the new company. Corr said words to the effect that that was fine.

57 This important component of Mr Porter's evidence was essentially left unchallenged by any cross-examination. That is not a criticism. There may be the soundest of ethical and forensic reasons for that and to which I am not privy. This evidence from Mr Porter presents as credible and it will be accepted.

58 Under exhibit 2, Mr Porter's more recent supplemental witness statement, he offers (at between pars 1 and 5) some further evidence, which may bear (negatively) against any derivation of the (inferred and disputed) term in Sundance's version of its pleaded agreement (seen under subpar 5(a)(i)D of the further re-amended defence).

59 Mr Porter's pre-8 June 2006 event evidence was this:

1. Between 3 and 8 June 2006 whilst in Yaounde, in discussing a probable expansion in the south I had a conversation with Corr and Rankine-Wilson about a possible expansion of the areas of interest for iron ore into Congo, to the South of the Mbalam project. I said words to the effect that it would be highly desirable to have local shareholders with good connections involved in any Congo project.

2. Corr said words to the effect 'I know for projects in Africa that we will need a strong local partner to help with the local politics'. I said something like Rodger and I know a person who works for the Standard Bank, Olivier Fabrice-Sil (Sil), who went to university with the son of the President of Congo and who has good local connections in the Congo. I said words to the effect that the potential local partners would be the son of the President and other relatives or close associates of the President and that they would be looking at a 30% equity interest.

3. I also said words to the effect that Sil had already sounded out his local contacts and that they were likely to be prepared to do a deal in similar terms to other deals that had been done on oil exploration in Congo with the Chinese. I said words to the effect that if that was agreed then there was a good chance of getting exploration licences quickly.

4. Corr said words to the effect that that sounded fine.

5. On 8 June 2006 I had the conversation with Corr about Congo which I have deposed to in my first statement.

60 Mr Porter again was not seriously challenged about any of this evidence. Similarly, it will be accepted.

61 The evidence bears upon the question of ascertaining or otherwise the local shareholder Sundance veto term, as is identified and contended for, in the defendant's pleaded agreement at subpar 5(a)(i)D, concerning the need, in effect, for Sundance to approve the basis of participation by all local Congo shareholders.

62 Mr Porter's evidence concerning his pre-8 June 2006 Yaounde discussions around the topic of local Congo minority shareholder participation, conducted between Mr Corr, Mr Rankine-Wilson and he, is significant. What is put by Mr Porter, essentially, is Mr Corr's expressed acquiescence at the time for Sundance in a proposed course of local minority Congo shareholder participation which had 'sounded fine'. This expressed stance by Mr Corr is argued to bear against me finding, as a matter of inference, any inconsistently formulated local shareholder plenary veto term in the parties' subsequently perfected 8 June 2006 agreement, as is now contended by Sundance.

Another distinction as regards terms of the 8 June 2006 Agreement

63 Analysis of the pleadings leads to my identification of a further conceptual area of difference between the parties over their different versions (terms wise) of the 8 June 2006 Porter/Sundance (via Corr) agreement. In the end, little turns upon this, but I have not overlooked the distinction in positions and must note it nonetheless for completeness. No submission was put to me by Sundance concerning any significance of this extra point of term differentiation.

64 It seems clear Mr Porter contends for an existence of an agreement made between himself with Sundance, under which not only he, but also Messrs Bogne and Asso'o, would enjoy rights to receive contractual benefits (on terms) from Sundance, in the event of the agreement being fully performed.

65 As framed by Mr Porter, his par 5 (of the Re-Amended Statement of Claim) contends for what looks like an agreement perfected just as between himself and Sundance - albeit with Messrs Bogne and Asso'o to receive under that agreement, when performed, the same amounts of options in Sundance as Mr Porter.

66 On the other hand, the defendant's formulation of the 8 June 2006 agreement, by its par 5, effectively contends for a multi-party agreement, reached as between Sundance, but with all of Messrs Porter, Bogne and Asso'o as parties – who are referred to together jointly as the 'Promoters', and albeit the promoters' remuneration on completion was to be several, to be received by 'each' of them: see subpar 5(a)(iii), as regards the 10 million Sundance options, exercised at 10 cents per option within three years from the date of issue.

67 No submission was put by Sundance at the trial contending that contractual entitlements for Messrs Porter, Bogne and Asso'o against Sundance were joint rights, such that all jointly entitled beneficiaries together needed to be joint parties to Mr Porter's present action claiming damages (only for him).

68 I render that observation concerning what is only a slight distinction in the parties' formulations of the rival versions of their contended terms in the 8 June 2006 agreement. In the end, the distinction relevantly presents as essentially immaterial, by reason of there being no suggestion at all emanating from Sundance, that Mr Porter's claim must fail for a want of his joining Mr Bogne and Mr Asso'o as co-parties, if Mr Porter could otherwise make good his claim in its primary respects.

69 In any event, if it matters at all, I would assess the option receipt entitlements under the agreement of 8 June 2006, if otherwise performed, as being promised severally by Sundance to each of Messrs Porter, Bogne and Asso'o, and so entitling them to individually pursue redress for any failure to meet that promise, if it is otherwise required to be met by Sundance.

Some factual events immediately subsequent to 8 June 2006

70 Mr Porter relates (and again this was wholly unchallenged) that he learned on 5 July 2006, from a telephone conversation with Mr Rankine-Wilson, that Mr Corr was suffering serious heart problems and had undergone a major operation around 30 June 2006 (exhibit 1, par 29).

71 Mr Porter was now told that Mr Corr, as a result, would be sidelined as executive chairman of Sundance, for at least three months. He was also told that a Mr Ian Whiteley had been appointed as project manager of the (Cameroon) project for Sundance and that Mr Alex Pismiris (formerly the secretary of Sundance) had been, or would soon be, appointed as an extra director of Sundance.

72 That change in the structure of the Sundance board, particularly a sidelining of Mr Corr due to illness for some months, appears to have generated some carryover communication issues in terms of Sundance's board of management and its dialogue with Mr Porter over Congo expansion issues.

73 As already seen, Mr Porter had forwarded his draft minutes of the Cam Iron meeting of 8 June 2006 to Mr Pismiris - resulting in the suggested questions, changes and alternations, as were reflected by the red inserts seen on document TB 9.1.8, as I earlier discussed.

Disputed Contractual Performance Issues: Distillation of issues

74 My interlocutory reasons, delivered 18 August 2015, summarised the parties' then pleadings and the state of their respective cases at that time. Although this requires updating, some observations then made are again a convenient starting point.

75 As regards Mr Porter's case, I repeat this observation at [22]:

So essentially, the heart of Mr Porter's currently pleaded contractual damages claim against the defendant, is that his version of the terms of an oral 8 June 2006 Agreement with the defendant, were fully performed by him. Consequently, and in breach of the terms of that 'Agreement', Mr Porter pleads that Sundance Resources Ltd failed and refused to grant to him 10 million options (exercisable at 10 cents per option) in the defendant - as he (as well as Mr Bogne and Mr Asso'o) were effectively promised by Mr Corr. Mr Porter pleads that he has consequently sustained damages as a result of that breach by the defendant. That is a very simply put breach of a 2006 contract …

76 Concerning what was then the substance of the issues raised by that defence, I summarised the position at that time in the interlocutory reasons at [31]:

Relevantly to what is a close but, nevertheless, very different agreement plea by the defendant towards an 8 June 2006 agreement containing different terms, Sundance Resources Ltd contends, under its par 7(g), (h) and (i) of the defence, that:

(g) … pursuant to the Defendant's Pleaded Agreement, on 27 October 2006, the Defendant's board of directors:

(i) approved the making of applications for prospection permits and mineral exploration licences over the Avima Area and the Elogo Area; and

(ii) resolved that if mineral exploration licences over the Avima Area and the Elogo Area were granted to a company controlled by the Defendant to be established in the Republic of Congo, it would issue to each of the Promoters [namely, Messrs Porter, Bogne and Asso'o] 10 million options to acquire shares in the Defendant exercisable at 10 cents per option within three years from the date of issue;

(h) says that none of the Promoters nor a company controlled by the Defendant acquired the grant of mineral exploration licences over the Avima Area and the Elogo Area as approved by the Defendant;

(i) as a result of the matters pleaded in sub-paragraph 7(h) above, the Promoters failed to comply with the terms and conditions of the Defendant's Pleaded Agreement and the agreement terminated and was at an end.

77 There followed the structurally significant amendments to subpars 7(g)(ii) and 7(h) of the Further Re-Amended Defence, under the last tranche of amendments made to the defence. Presently, however, I am seeking to identify key issues in dispute between the parties, prior to the last series of amendments.

78 I summarised that position at [32]:

Fundamentally then, the plaintiff and the defendant, by their current pleadings, both accept a perfection of a legally binding and enforceable June 2006 agreement involving Mr Porter and Mr Corr (for the defendant) that was negotiated at 8 June 2006, concerning a procuring of prospection permits and then exploration licences, in the northern border areas of the Republic of Congo (located to the south of the defendant's interest in a Mbalam iron ore interest it then held, in the south of the Republic of Cameroon). No issues of alleged contractual uncertainty, or the absence of a perfected contractual relationship, are thus far apparent from the pleadings.

79 I interpolate that my reference at [32] in those interlocutory reasons to Sundance holding an interest in the Mbalam iron ore location was to the Cameroon holding, then held by Sundance through a local Cameroon subsidiary corporation – in which Sundance then controlled at least 90% of the shares. Mr Porter was then the chairman of that Cameroon incorporated entity, Cam Iron SA.

80 Cam Iron SA was the corporate entity whose meeting of directors was being held on the 10th floor of the Yaounde Hilton on 8 June 2006, and was being attended, as the draft minutes show, not only by Messrs Porter, Asso'o and Bogne (as then directors of Cam Iron SA), but also by Mr Corr of Sundance, with Mr Corr then being appointed a director of Cam Iron SA at that meeting, along with the attendance by invitation of a significant shareholder of Sundance at the meeting, Mr Adam Rankine-Wilson.

81 The interlocutory reasons summarised what then appeared to be the major area of dispute between the parties over Congo areas not obtained: see [33] - [36]:

82 As the trial proceeded, however, it became demonstrably clear that an unacceptable/not approved by Sundance wrong Congo areas clash issue was, in reality, a dead-issue.

83 On the trial evidence it became crystal clear that Sundance, as at 2 August 2007, was fully content with a receipt of, via the efforts of Messrs Porter, Bogne and Asso, the two exclusive mineral exploration licences, issued over the Congo areas of Ibanga and Nabeba-Bamegod areas to Sundance's locally incorporated subsidiary corporation, Congo Iron SA. In effect, the same local holding of ownership modus operandii as was earlier used by Sundance for its Mbalam iron ore exploration tenement in Cameroon was replicated again in the Congo, by a use of Congo Iron SA to hold the licences.

84 No questions were asked of Mr Porter under cross-examination about a 'different Congo areas issue' - and which he had dealt with very extensively under pars 41, 42, 43, 44, 46 (that part not excised pursuant to the defendant's objection), 47, 48, 49, 50 and 51 of his witness statement (exhibit 1). See also pars 64, 65 and 66. See also par 70 (noting the excision of the second sentence). All that evidence is accepted.

85 Likewise, there was no cross-examination of Mr Porter concerning pars 72 to 75 of his witness statement, culminating at his par 75, in terms:

The Nabeba-Bamegod and Ibanga prospection permits covered most, if not all, of the iron formations that were intended to be covered by the Elogo application and one of the two known iron occurrences that were intended to be covered by the Avima application. The Nabeba-Bamegod and Ibanga prospection permits also included ground that were [sic] not covered by the Avima and Elogo applications.

86 So two prospection permits were approved by the Ministry of Mines in the Congo over the Ibanga and Nabeba-Bamegod areas (see TB 9.1.57), as Mr Porter related at par 72:

… The Ibanga Prospection Permit, number 288, covered an area of 1,845 square kilometres over the southern part of Elogo plus some additional peripheral areas surrounding Elogo; the Nabeba-Bamegod Prospection Permit, number 292, covered an area of 2,486 square kilometres over the eastern part of the Avima application, the northern part of Elogo and some peripheral areas.

87 From the parties' respective pleadings and from the parties' statement of agreed chronology of events (exhibit 7), it is accepted Congo Iron SA was granted non-exclusive prospection permits approved by the Ministry of Mines in the Congo for the Ibanga and Nabeba-Bamegod areas, at 30 November 2006. See also the statement of claim par 7.8, which is admitted, under subpar 7(j)(iv) of the defence.

88 Mr Porter then related how it followed that two mineral exploration licences were thereafter obtained over the Ibanga and Nabeba-Bamegod areas by Congo Iron SA: see pars 82 to 84 of his statement. Again there was no challenge by cross-examination to any of this evidence which, once again, will be accepted. Mr Porter said in those paragraphs:

Both Bogne and Sil were keen to mobilise Dr Emmanuel Suh ('Suh') to Congo to undertake a reconnaissance mission on the Nabeba-Bamegod and Ibanga prospection permits because a report on these activities had to be lodged with the Mines Department in Congo before we could take the next step and lodge applications for any exclusive mineral exploration licences. Suh was a consulting geologist who was an associate of Bogne. Suh was subsequently engaged to carry out the fieldwork and prepare the prospection activities report.

In about late July or early August 2007, I had a conversation with Sil. In that conversation Sil said to me words to the effect that mineral exploration licences for Nabeba-Bamegod and Ibanga were going to be granted by the Congolese Government. Sil said, as chairman of Congo Iron, I was invited to go to Brazzaville to accept from the President of Congo the mineral exploration licences. At that time, I was still the chairman of Congo Iron. I did not accept the invitation. [The balance of this sentence was objected to and removed as inadmissible.]

89 On 2 August 2007, the exclusive 'Permis de Recherches', or mineral exploration licences, for the Ibanga and Nabeba-Bamegod areas were awarded to Congo Iron SA, by the making of two Decrets issued by the Government of the Republic of the Congo, being Decret Nos 2007-362 [TB 9.2.90] and 2007-363 [TB 9.2.91]. [See also the statement of claim par 7.11, admitted by subpar 7(j)(v) of the defence.]

90 Moreover, there was not the slightest suggestion in any of the documentary material tendered at the trial that the Sundance board had ever raised any problematic concerns over the areas the subject of the Ibanga and Nabeba-Bamegod mineral exploration licences which came to be held by its subsidiary, Congo Iron SA, from 2 August 2007. That is the key date at which Mr Porter argues that all his performance obligations under the 8 June 2006 Yaounde agreement were fully completed by him, thereby entitling him from that point to his 10 million Sundance options.

91 Board papers prepared and circulated for a meeting of the Sundance board to be held on Friday 3 August 2007 included draft minutes proposed for approval of the previous board meeting (in line with what is orthodox corporate meeting procedure concerning the formal approval and confirmation of minutes of previous meetings).

92 Draft minutes circulated with the 3 August 2007 Sundance board meeting papers were for the previous 21 June 2007 board meeting, which was attended by Messrs George Jones (chairman), Don Lewis, and Alex Pismiris (secretary). They refer, under proposed item 7, to a Congo iron ore opportunity, noting that a Congo iron ore opportunity report was tabled and noted (TB 9.2.92).

93 It is also recorded that DL (Mr Lewis) discussed the current status of negotiations and was awaiting advice from the vendor. GJ (Mr Jones) noted the terms of the offer did not reflect the current market value of Sundance securities.

94 As regards action items (see TB 9.2.92, page 391) under a heading 'Congo Iron Opportunity' is the notation in italics 'Awaiting advice from the vendor', and a reference to the responsible person as DL (ie, to Mr Lewis) with the status notation 'in progress'.

95 The Sundance board agenda for the 3 August 2007 meeting at item 7 (page 392), under a heading 'Congo Iron Ore Opportunity', simply carries the word 'Update' and reference to Mr Lewis as the anticipated speaker.

96 Under the agenda papers topic heading 'Corporate Objectives' there is seen (page 395):

• secure prospective hematite iron ore permits in Congo - target minimum resource of 300 million tonnes.

Against that entry is the action notation in bold '

initial field work completed, applications pending. Purchase strategy under review

97 From page 397 another document was obviously then circulating with the Sundance board papers: see 'Congo Iron Ore Opportunity'. This said, under the heading 'Summary':

• The Congo opportunity comprises two reconnaissance permits adjacent to and immediately south of the Mbalam exploration Permit 92 held by CamIron in Congo.

• The typography identified on EP 92 appears to continue into the Congo permit area.

• The permit area is said to contain significant iron ore mineralization at the Elogo and Nabeba prospects. This has yet to be supported by surface surveys.

• The adjacent Avema [sic] permit area, which was offered to SDL in July 2006, has since been acquired by a third party. This prospect is estimated to contain 300 MT of hematite mineralization.

• Previous reports suggest that the Congo prospects referred to above (particularly Avema [sic]) may contain high grade iron ore mineralisation equivalent to the Belinga deposits (approximate size 550 million tonnes).

• Others are currently assessing the iron ore opportunities in Congo with a view to developing an integrated iron ore development between Gabon, Congo and Cameroon. Two Australian exploration companies were encountered on a recent visit to Elogo.

Terms

The in-principle terms put to the vendors are no longer acceptable given the appreciation in SDL share values. An alternate structure is required to develop this opportunity. One model would be to set up a new entity with Congolese and SDL shareholding and agreed funding for SDL for a Pre-feasibility Study (ie no SDL stock).

98 Minutes for the 3 August 2007 Sundance board meeting record (see TB 9.2.92.1) that then chairman, Mr George Jones, and fellow directors Mr Lewis and John Saunders, were present - so also was the secretary, Mr Pismiris. The minutes record (page 397.2 under the heading 'Congo Iron Ore'):

DL [obviously Mr Lewis] confirmed the proposed structure of the Congo Iron Ore Opportunity required renegotiation given the appreciation in the Sundance share price.

99 It is not clear whether news as to the issuing on 3 August 2007 of the two mineral exploration licences in respect of the Ibanga and Nabeba-Bamegod areas in the Congo to Congo Iron SA had reached Perth, for the purposes of the Sundance board's discussions at that day's board meeting. In all likelihood, given time differences, I think not.

100 What is even more significant, however, is that there is absolutely nothing in the minutes of the 3 August 2007 meeting of the Sundance board to suggest any concerns at all, over acquiring those particular two Congo areas. There is certainly no suggestion that those two areas should be rejected, such as on a basis that there had been a failure by Messrs Porter, Bogne and Asso'o to secure some other earlier board approved and preferred Congo exploration areas, such as Avima and Elogo.

101 On 3 September 2007, Mr Bogne sent the chairman of Sundance, Mr Jones (copying Mr Pismiris and Mr Lewis) a long email (TB 9.2.93), dealing with a number of issues. Confirming Congo SA's acquisition of the two mineral exploration licences, he wrote (see page 398):

The battle was hard and sometimes trash (sic), but with the help and continuous support of our relations and network in Congo, we finally won 2 licences of a total perimeter of 2,000 Square km, signed on 25 July 2007 by the President of the Republic of Congo himself.

In terms of potential, the two prospects of Nabeba-Bamegod and Ibanga are of the same geological continuity as Mbalam/Mbarga …

(All the documentation confirming this information will be forwarded to you next week.) (399)

102 There followed a subsequent board meeting of the directors of Sundance on 20 September 2007 (see TB 9.2.93.1).

103 Board papers include the minutes of the previous board meeting (3 August 2007) for approval. The board papers under corporate objectives (see the section marked 'A. strategic development - corporate') note:

• Secure prospective hematite iron ore permits in Congo - target minimum resource of 300 million tonnes.

Adjacent to this is a notation, in bold:

Initial field work completed, applications approved. Purchase terms under review.

Below that entry is a further notation:

• Identify and secure second major project opportunity by December 2007 - target regional and/or commodity diversification.

Against that objective and noted in bold is:

Other iron ore opportunities in Cameroon and Congo being evaluated. Potential synergies with other steel commodity opportunities being assessed (eg Geovic).

104 There was a further one-page document, under the heading 'Corporate Iron Ore Opportunity', circulated with the board papers (within TB 9.2.93, page 421.17).

105 Its content may be contrasted to the previous document I referred to earlier under the same heading (both being undated). Introductory summary star bullet points (six together) remain unaltered. However, by contrast to the earlier document (at page 397) the later document contains different information, under the headings 'Terms' and 'Purchase Terms'. It reads:

TERMS

The in-principle terms put to vendors are no longer acceptable given the appreciation in SDL share value.

[That sentence was found in the previous opportunity document so also was the following sentence.]

Alternate structures have been presented to develop this opportunity.

[What follows however is new for these agenda papers and board meeting in September 2007.]

We have proposed that SDL be granted an option to acquire the tenements by April 2008 subject to satisfactory due diligence and preliminary geological evaluation.

PURCHASE TERMS (To acquire 85% of project)

• Issue of SDL shares to Congo parties equivalent to 15M.

• Issue of SDL options to original Cameroon parties to be determined.

106 The approved minutes of the 20 September 2007 Sundance board meeting record as being present the chairman, Mr Jones, and Messrs Lewis, Saunders and Mr Denis Wood (as alternate for Mr Ken Talbot), and with Mr Pismiris present, as secretary. Under item 5 of those minutes, under a heading 'Corporate Iron Ore Opportunity' (page 426) it is noted:

DL [obviously Mr Lewis] confirmed that Sundance's Cameroon partners had secured two reconnaissance permits located in the Congo which were adjacent to the Mbalam project. DL confirmed the terms originally put to the Cameroon partners for the Congo transaction were not acceptable. DL would seek the grant of an exclusive option to acquire the tenements to undertake a preliminary assessment of the potential of the permit areas.

DL discussed the potential to acquire further projects in Cameroon.

107 The significance of that record, as regards obtaining Nabeba and Ibanga mineral exploration licences, again lies in a wholesale absence of any hint that the two Congo areas that were obtained, were unacceptable, or might be rejected, as incompatible with the board's expectations concerning it obtaining other or better Congo areas.

108 Clearly, however, as these minutes betray, the Sundance board was at this time seeking to renegotiate the terms of the Congo transaction.

109 The significance of that relates to other issues arising out of the late amendments to the pleadings just before trial. In a context however of what once appeared to be the major issue in dispute between the parties as at 18 August 2015, an unacceptable Congo areas issue dispute was never pursued by Sundance, at the trial.

110 I would reject it as misconceived and meritless, in any event, on the basis of the state of the trial evidence as a whole overwhelmingly going the other way.

111 It poses no obstacle to Mr Porter's satisfaction of performance terms in the 8 June 2006 agreement, concerning a procurement of Congo mineral exploration licences for Sundance's local Congo subsidiary corporation, Congo Iron SA. I find that had happened at 2 August 2007.

Second significant issue on the pleadings as regards the agreement of 8 June 2006 - prior to the last tranche of pre-trial amendments

112 Both parties accept that the 8 June 2006 agreement, as regards exploration areas in the Congo, permitted Sundance to reject the areas of mineral exploration licences obtained in the Congo, if Sundance had chosen to take that decision. I have found that Sundance did not reject the two Congo areas.

113 But Sundance contends on its version of the terms of the 8 June 2006 agreement for its holding of a more extensive plenary right of approval within a reasonable time of June 2006 and, absent that approval, the absence of any agreement.

114 This argument is seen to emerge under former subpar 5(a)(iv) of the defence of 12 June 2015, which averred that there were terms of the 8 June 2006 agreement (pleaded to be oral and inferred) to the effect:

(iv) that each of the terms pleaded at paragraph 5(a)(i) - (iii) above and the agreement comprising them were subject to approval by the board of directors of the Defendant, such that if the board of directors did not approve such agreement and terms within a reasonable time of 8 June 2006 no agreement would come into effect;

115 The terms referred to under subpars 5(a)(i) and (ii) concern the identification of areas south of the Mbalam deposits, plus the approval of such areas by Sundance prior to the making of applications for prospection permits and mineral exploration licences (see the former pleas under subpars 5(a)(i) and (ii)).

116 The plea under subpar 5(a)(iii) as regards a term (oral and inferred) makes reference to the entitlement of each of the Promoters (as defined) receiving 10 million options in Sundance exercisable at 10 cents per option within three years from the date of issue, if the Promotors obtained the exploration licences for Sundance 'either directly or through a company controlled by (Sundance)'.

117 That once asserted conditional term (now excised and no longer contended for by Sundance) addressed the issue of acceptable areas for the Congo mineral exploration licences. As formulated (before deletion) the term internally recognised that an African ownership holding for Sundance for mineral exploration licence areas could be either direct or indirect, and through a company 'controlled by Sundance'.

118 The former contention betrays a commercially sophisticated level of knowledge and understanding in Sundance about the strategy of using a foreign company to indirectly control overseas exploration assets. This level of insight and sophistication is no real surprise. It presents as being already used by Sundance, as regards the Mbalam ore holding in Cameroon, and is no surprise for a corporation doing significant mining exploration business in parts of Africa. This level of insight in Sundance is significant.

119 For present purposes, the issue emerging out of the plea under the standing defence of 6 September 2015, par 5(a)(iv) as it subsists, is that Sundance asserts that its board needed to approve all the terms of the 8 June 2006 agreement and that, if that event did not happen within a reasonable time of 8 June 2006, then no agreement would come into effect.

120 Albeit such a plea still formally remains alive, on the face of the most recent iteration of the defendant's defence, no substantive temporal submissions were put to me at the trial by Sundance, concerning an asserted non-engagement within a reasonable time of any suggested approval time frame – or at any particular time, or at all.

121 Sundance's expiry of reasonable time plea, as I assess the materials emanating from the defendant's trial submissions, both written and oral, is also a non-event.

122 No temporal expiry of time to get Sundance's board approval submission was raised in Sundance's written closing submissions, or verbally via senior counsel in closing, or at all.

123 Moreover, for reasons which will emerge, such a contention factually would, in any event, be an untenable argument.

Redundant defences and new defences

124 In summary then, two longstanding arguments still formally pleaded in the defence about unacceptable areas and the absence of an approval to terms from Sundance within a reasonable time (put against the damages claim of Mr Porter, as regards his case of an asserted breach by Sundance of the 8 June 2006 agreement - an agreement Sundance cross-contends for, albeit on distinct terms) moved into an effective state of redundancy at the trial.

125 In their place emerged, in effect, two replacement arguments, under Sundance's last tranche of pleaded defence amendments of 6 September 2015.

New defences

First: Congo Shareholders: Sundance alleged veto on participation rights

126 First is the argument that the 8 June 2006 agreement contained further terms (essentially to be inferred - not implied) distinct to, or going beyond, those terms of the agreement contended by Mr Porter - seen as the last amendments introducing subpars 5(a)(i)C and D of the defence.

127 These pleas essentially contend that the identities of the persons selected to be the local minority shareholders in Congo Iron SA needed to be agreed to by Sundance, along with its required approval to the terms of their shareholding and to their rights and obligations attaching to their minority holdings of shares in Congo Iron SA.

128 That plea is advanced in the context of the new plea under subpar 5(a)(i)C as to the incorporation of the new company which would be arranged in the Republic of the Congo, referred to as 'Congo Iron'.

129 The plea must be read with new subpar 7(e)(iii) in the defence, contending that as at the time of incorporation of Congo Iron SA (on 20 November 2006) and then at the time of the grant of mineral exploration licences to Congo Iron SA (on or about 2 August 2007), Messrs Porter, Bogne and Asso'o (referred to as the Promoters) had not then identified to Sundance the persons in the Congo to become (minority) shareholders in Congo Iron SA, on terms as to the number of shares and the rights and obligations attaching to such shares agreed to by Sundance.

130 Amendments to subpar 7(g)(ii) are to the same effect, with subpars 7(h)(ii) and 7(i) contending that there had been a failure (by Mr Porter) to comply with the terms of the defendant's version of the 8 June 2006 as pleaded agreement, with a critical consequence, as put, that the 8 June 2006 agreement was terminated by Sundance and (then) was at an end (particulars of this 'termination' are provided under the response by the defendant to the plaintiff's request for further and better particulars of 3 July 2015, and asserting that the termination arose as a 'matter of law', by reason of the matters in subpars 5(a), 7(g) and 7(h) of the further re-amended defence.)

131 Hence, there emerged from Sundance just before trial its contention as to this alleged key term of the 8 June 2006 agreement, referred to as being oral and inferred.

132 It is clear from the trial evidence already considered that this alleged Sundance term cannot be an express term arising out of any passing verbal dialogue as between Messrs Porter and Corr whilst they were present at the Yaounde Hilton, on 8 June 2006.

133 Accordingly, if such contended term is to be established by Sundance, it can only be as an inferred term.

134 Senior counsel for Sundance effectively accepted that position during closing submissions: see ts 274.

135 This contended inferred term is described by counsel for Sundance , as being something like an option scenario granted to Sundance, which it held but which it might or might not ever exercise, as it chose. I would reject that analogy as inapt to fairly explain the 8 June 2006 Yaounde agreement. The option entitlement rights of Mr Porter and others under that agreement were not left to the whim of Sundance to issue as it pleased. Bad as the analogy is then, I need to evaluate the existence of the contended inferred term, as pleaded.

Second new defence: abandonment of the 8 June 2006 pleaded agreement

136 The second major new issue which emerged out of the 6 September 2015 Sundance amendments is more easily summarised.

137 This is the contention by a newly introduced par 13 of the defence, that in or about March 2007 there was an abandonment by the parties of the 8 June 2006 pleaded agreement. Paragraph 13(a) of the defence provides some particulars of this new contractual abandonment allegation. The abandonment is pleaded to be 'inferred'.

138 Reference is seen in the particulars to four identified categories of documents from which this agreement abandonment inference is contended.

139 By par 13(b) is seen a plea concerning a further agreement said to be reached by Sundance with Messrs Bogne and Asso'o (but not with Mr Porter) upon different option and acquisition terms (namely, 5 million options to acquire shares in Sundance at 10 cents per share within three years from the date of issue).

140 That par 13(b) Bogne/Asso'o/Sundance further agreement is said to have been reached by Mr Don Lewis on behalf of Sundance with Messrs Bogne and Asso'o, in or about March 2007. It is said to be 'inferred' from the same par 13(a) particularised documents, plus a further document of 8 March 2007 (email from Mr Lewis to Mr Bogne of 8 March 2007).

141 A less conceptually significant area of dispute, also presented, concerning the quantification of any award of breach damages for Mr Porter, in the event he otherwise succeeded at trial.

142 This damages issue generated what was the significant component of questions put to Mr Porter in cross-examination.

143 Even that exercise, however, came to be truncated under the parties' helpful agreement concerning the possible levels of breach damages, under a statement of agreed facts (concerning damages) of 9 September 2015. This document became exhibit 5. Essentially, the document reflects the parties' agreement as to arithmetic damages calculations, made on alternate hypotheses, and depending on the ascertainment of Mr Porter's entitlement to his receipt of 10 million options in Sundance, should he succeed at trial.

144 Two alternate calculation dates and amounts are given. The first is at 2 August 2007, with a postulated sale of Sundance shares arising after an exercise of the options by Mr Porter, in the period 1 September to 30 November 2007, which is agreed at $5,037,407.23.

145 The second alternative hypothesis is on a basis of Mr Porter being assumed as receiving the 10 million options at 10 October 2008, then his converting those options to shares, and then his selling off the 10 million Sundance shares as acquired in the later period 15 December 2010 to 15 March 2011. On that hypothesis, the ultimate calculated amount agreed between the parties is $3,910,011.14.

A few observations about underlying legal principles

146 To resolve the two significant live defences on breach liability issues, it is helpful to begin with a view as to the state of Australian law concerning the finding of inferred (not implied terms) terms in a private contract. Then I shall look at the law in the area of contractual abandonment.

147 To that end, I have already observed that neither party to this action contends for the existence of a governing regime of applicable laws, other than Australian law, in the task of assessing the existence, interpretation or breach of the 8 June 2006 contract, and then the required determination as to an alleged abandonment of such contract.

148 In the absence of any expert evidence adduced at the trial about the applicability of some other applicable regime of foreign laws governing contractual and corporations law issues (such as, for instance, the law of Cameroon or the law of the Republic of the Congo), the resulting position must be that the parties' positions, including the proper law of the contract, is assumed to be governed by Western Australian law: see Davies et al, Conflicts of Laws in Australia (9th ed, 2014) ch 17.3 and 17.4.

149 I proceed then to an examination of the local law concerning the basis for inferring of a term into a contract (as opposed to the implication of a term ad hoc into a contract - which is not contended for under the parties' pleadings or arguments made in this trial).

150 After that, I will examine the state of Australian law concerning an abandonment of a contract by parties, in particular, the objective nature of the process applied to such an evaluation.

151 In this State there are two leading authorities concerning the issue of a contractual abandonment: see JR Marine Systems Pte Ltd v Wavemaster International Pty Ltd (in liq) [2011] WASCA 16; Fazio v Fazio [2012] WASCA 72 (Murphy JA).

152 After the examination of the law concerning those areas of contract law, I will return to the process of rendering chronological findings as to relevant underlying facts, particularly in periods after the consummation of the parties' agreement of 8 June 2006 at Yaounde.

153 In potentially inferring a term or terms as part of an otherwise orally consummated contract, I will proceed on the evidentiary basis that it is permissible for the court to look at post 8 June 2006 conduct by the parties, as one part of what is an overall objective analysis towards the ascertainment of a contended term or terms which are argued by Sundance to be inferred.

154 Conceptually, I distinguish that process from the distinct process of contractual interpretation. In that latter arena, on the current state of Australian law, it is impermissible to look at post contractual conduct of the contracting parties as an aid to the construction or the interpretation of the contract.

155 Once the contract and its terms have otherwise been ascertained and identified, an objective process of contractual construction proceeds without regard to post contractual events.

Inferred terms

156 The core principles of Australian contract law governing inferred contracts and terms are reasonably well established. They are summarised by Murphy JA in Fazio [188] - [195] as follows:

As to the latter, it is well established that strict adherence to the classical theory of contract formation is not necessary; a contract may be inferred in the absence of an identifiable offer and acceptance:

Brambles Holdings Ltd v Bathurst

City Council

[2001] NSWCA 61; (2001) 53 NSWLR 153 at [1] Mason P; [74] Heydon JA (as his Honour then was);

Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Pty Ltd

(1988) 5 BPR 11,110, at 11,117, McHugh JA;

Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) and (No 10)

[2008] WASC 239; [2009] WASC 107; (2008) 39 WAR 1, [2653];

Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd

[2008] WASCA 23; (2008) 35 WAR 520 [90], [204] - [205];

Branir Pty Ltd v Owston Nominees (No 2)

[369];

Marist Brothers Community Inc v Shire of Harvey

(1994) 14 WAR 69, 74 - 75;

Vroon BV v Foster's Brewing Group Ltd

[1994] 2 VR 32, 79 - 80. For example, an agreement by a creditor of the firm to release a retiring partner (who stands, as between himself or herself and the 'continuing partners' as a surety for the debt), may be inferred from conduct: s 24(3) of the

Partnership Act

and see

ALH Group Property Holdings Pty Ltd v Chief Commissioner of State Revenue

[2012] HCA 6 [32] and Morison C B,

Rescission of Contracts

(1916) at 26 - 27.

A contract may be inferred from the acts and conduct of parties, as well as or in the absence of their words: Integrated Computer Services v Digital Equipment Corporation (11,117); Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523, Lighting by Design v Cannington [21], [90], [204]. The parties' dealings with each other are relevant both 'for what was said and not said': Branir Pty Ltd v Owston Nominees (No 2) [369].

The question is whether the parties' conduct, viewed objectively, reveals a tacit understanding or agreement, or a manifestation of mutual assent, which evinces an intention to create legal relations: Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) and (No 10) [2659]; Lighting by Design v Cannington [204]; Branir Pty Ltd v Owston Nominees (No 2) [369].

In Brambles Holdings v Bathurst City Council [81], Heydon JA (in observations adopted by Le Miere AJA in Lighting by Design v Cannington [205]) posed the following question for determination:

In the light of the above cases, it is relevant to ask: in all the circumstances can an agreement be inferred? Has mutual assent been manifested? What would a reasonable person in the position of [one party] and a reasonable person in the position of the [other party] think as to whether there was a concluded bargain?

In relation to the admissibility of subsequent conduct, the general principle is that subsequent conduct is not to be used as an aid in the construction of an instrument or written agreement:

The Administration of the Territory of Papua and New Guinea v Daera Guba

[1973] HCA 59; (1973) 130 CLR 353, 446 per Gibbs J, citing

James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd

[1970] AC 583, 603;

Agricultural & Rural Finance Pty Ltd v Gardiner

[2008] HCA 57; (2008) 238 CLR 570 [35].

Where, however, an informal agreement (oral or inferred) is alleged to have been made on or by a certain date, the conduct of the parties, including conduct subsequent to the postulated date, may be considered in deciding whether a contract has been concluded: Allen v Carbone [1975] HCA 14; (1975) 132 CLR 528, 532 - 533; Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647, 669; Brambles v Bathurst [25]. Such conduct may be considered for the purpose of inferring not only whether a binding agreement had been reached, but also its subject matter and the identification of its necessary terms: Bell Group [2665] - [2672]; County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 [7] - [27], [45] (Spigelman CJ); Australian Estates Ltd v Palmer (Unreported, NSWCA, 22 December 1989). In the last-mentioned case, Samuels JA (with whom Kirby P and Meagher JA agreed) said:

'While it is true that a court cannot have regard to the subsequent conduct of the parties as an aid in the interpretation of a term in a written contract (see

James Miller and Partners Ltd v Whitworth Street Estates (Manchester) Ltd

[1970] AC 583,

Wickman Machine Tool Sales Ltd v L Schuler AG

[1974] AC 235), this is merely an application of the parol evidence rule. Thus, as Stephenson LJ (with whom O'Connor LJ and Sir Stanley Rees agreed) said in

Meares v Safecar Security Ltd

[1983] QB 54 at 77, dealing with an oral contract:

"There is nothing in those authorities which prevents the court from looking at the way the parties acted for the purpose of ascertaining what that term was. Commonsense suggests that their subsequent conduct is the best evidence of what they had agreed orally but not reduced to writing, though it is not evidence of what any written terms mean;"'

The above passage was cited with approval by Moore J in

Intelmail Explorenet Pty Ltd v Vardanian (No 2)

(2009) FCA 1018; (2009) 82 IPR 281 [53].

The quote from Meares v Safecar Security Ltd [1983] QB 54 referred to in Australian Estates Ltd v Palmer was also cited with evident approval in Bell Group at [2668] and [2672]. See also in this context the discussion by Heydon J in Cross on Evidence [39,290] and the cases cited at footnotes 307 - 311.

157 I respectfully apply all those observations here.

158 As seen, however, they appear to be focused at the broader issue of inferring the existence of the contract itself. That is not quite this case. Here, there is no doubt about the perfecting of a binding contract arising from the oral discussions of 8 June 2006 at Yaounde.

159 The deeper issue here is as to an argued inferring of terms into what is otherwise a verbally concluded agreement. Nevertheless, the approach of the court to the inferring of contended terms in what is otherwise an oral agreement is the same. The process remains at the end an objective assessment of the evidentiary materials.

160 I would add two further observations. First, there should be a reasonably high bar set before contractual terms can be inferred: see generally the discussion in Adnunat Pty Ltd v ITW Construction Systems Australia Pty Ltd [2009] FCA 499 [40] (Sundberg J); Laidlaw v Hillier Hewitt Elsley Pty Ltd[2009] NSWCA 44 [5] (Macfarlan JA) (discussing Brogden v Metropolitan Railway Co(1877) 2 App Cas 666 (special leave refused); and Diploma Construction (WA) Pty Ltd v Best Bar Pty Ltd[No 2] [2015] WASC 230 [146] (Allanson J).

161 The learned authors of Anson's Law of Contract (29th ed, 2010) have observed, in relation to inferences from conduct, that (page 31):

An agreement may also be inferred from conduct alone; the intention of the parties is a matter of inference from their conduct, and the inference is more or less easily drawn according to the circumstances of the case.

162 It should be possible to state with confidence from observing the parties' conduct that at some particular point, the parties mutually assented to a sufficiently clear regime that was intended to be binding: Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) FCR 424 [369] (Allsop J). A focus upon the need for confidence in the inferred outcome (rather than speculation), as I would see it, is an important evaluative consideration in any such exercise.

163 Second, as a matter of policy, what are now the well established, understood and routinely applied threshold criteria necessary to be met under Australian contract law, upon the task of finding an ad hoc implied term in a contractual agreement (see Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337, 347 (Mason J), applying BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266), should not be permitted to be forensically weakened, undermined or circumvented by a 'back-door' resort to 'inference' as regards the proving of a contended extra controversial term in an otherwise completed contract. The inference of contractual terms in this sense, at least for otherwise entire contracts, should demand more than what would be needed in implying the term: see Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd[1994] 2 VR 106, 178 (Tadgell J). Inference (as to finding the contended contract, including its terms) is a separate question from any constructional exercise towards the ad hoc implication of terms that satisfy the Westernportcriteria. An identification of the contract and its express terms task must logically be addressed first, in a sense of objectively determining the intention of the parties (under principles set out by Murphy JA in the passage from Fazio quoted above) prior to identifying any additional terms implied as a matter of presumed or imputed intention: see Hawkins v Clayton[1988] HCA 15; (1988) 164 CLR 539, 570 (Deane J).

164 However, where a contract is oral or partly oral and not reduced to a complete written form, the strict application of the above principles (as to both inferred and implied terms) may not always be appropriate: again see Hawkins v Clayton(571) (Deane J). Hence, a certain amount of flexibility or fluidity in the implication or inference task must be conceptually tolerated, for such circumstances.

Australian law - consensual abandonment by parties of their completed contract

Abandonment

165 The leading case authorities addressing the inferred abandonment of a contract have been recently canvassed by Murphy JA in JR Marine Systems Pte Ltd v Wavemaster [42] and by his Honour once again, in Fazio [70] - [74]. Again I respectfully adopt those observations and the references to decisions there cited.

166 In particular, I note the following propositions from the decisions discussed by Murphy JA, and other sources:

(a) The conduct of parties may amount to a mutual abandonment of their contract:

Summers v Commonwealth

[1918] HCA 33; (1918) 25 CLR 144, 151 (Isaacs J);

DTR Nominees Pty Ltd v Mona Homes Pty Ltd

[1978] HCA 12; (1978) 138 CLR 423, 434 (Stephen, Mason & Jacobs JJ).

(b) A contract on foot may be discharged by the inferred later agreement of the parties, such later agreement being inferred from the parties' conduct.

(c) Abandonment describes this situation of inferred later agreement: Fazio [70] (Murphy JA). It should be noted that the discharge of a contract by abandonment in this sense is rare: see Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal[1983] 1 AC 854; [1983] 1 All ER 34.

(d) The abandonment inferred may be either of unperformed obligations, or both future performance and existing rights: Fazio [71] - [72], and Summers v Commonwealth (153).

(e) The key question is whether the parties have objectively manifested an implied intention to extinguish their first contract: CGM Investments Pty Ltd v Chelliah[2003] FCA 79; (2003) 196 ALR 548 [18] (Finkelstein J), on appeal see Wallera Pty Ltd v CGM Investments Pty Ltd [2003] FCAFC 279 [2] (Ryan J).

(f) Abandonment requires that the inference is clear: CGM Investments Pty Ltd v Chelliah[22] (Finkelstein J); Marminta Pty Ltd v French[2003] QCA 541 [22] (Jerrard JA). The question may also be expressed as being whether a later inferred contract is substantially inconsistent with the first because, in such circumstances, the appropriate conclusion is the abandonment of the first contract: see Carter on Contract (online version) [32-080] - [32-090].

(g) The subjective intention of the parties is not relevant: Fazio [74] (Murphy JA).

(h) The implied intention may be manifested through silence and delay: Fitzgerald v Masters(1956) 95 CLR 420, 432 (Dixon CJ & Fullagar J); Summers v Commonwealth(151 - 152) (Isaacs J) citing De Soysa v De Pless Pol[1912] AC 194, 202.

(i) Parties may be estopped from denying that a contract has been abandoned: see Carter on Contract [32-080], Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal(914) (Lord Brandon). Silence and delay may be relevant in showing such an estoppel: Carter on Contract [32-080]. (It is not necessary to explore such an estoppel in the present action since it is not Sundance's pleaded case. Rather, it argues that the parties by their conduct in fact discharged all their future and further required performance of obligations under the 8 June 2006 agreement by their, to be inferred, further agreement).

More underlying facts

167 I now return to examine and find facts potentially applicable to Sundance's inferred term or contractual abandonment contentions, as raised by Sundance to rebuff Mr Porter's contractual breach and damages claim.

168 I embark upon this exercise proceeding again, essentially, by reference to the parties' agreed chronology (exhibit 7), looking mainly at events subsequent to 8 June 2006.

169 Before 8 June 2006, it is important to recall, in the context of my evaluation of Sundance's inferred term argument concerning the Congo shareholders' participation terms, Mr Porter's unchallenged evidence under his supplementary witness statement (exhibit 2) addressing events prior to the 8 June 2006 meeting at Yaounde. I set out those paragraphs earlier and accepted that evidence.

170 In short, the evaluation of Sundance's inferred term argument about all terms of participation for Congo Iron SA's shareholders needing to be approved by Sundance is to be conducted in the context of the factual recognition that there had been a prior high level Yaounde conversation between Sundance's then executive chairman, Mr Corr, and Sundance's significant shareholder, Mr Adam Rankine-Wilson, with Mr Porter, addressing the topic of the desirability of having local Congo minority shareholders involved in that holding corporation with good connections for a Congo project.

171 In the course of such conversations prior to 8 June 2006 at Yaounde, Mr Porter had mentioned to Mr Corr knowing Mr Olivier Fabrice-Sil, as someone who worked for Standard Bank, and who had good local connections in the Congo, he having gone to university with the son of the current President of the Republic of the Congo.

172 In that discussion, Mr Porter foreshadowed as potential Congo partners (ie, meaning as shareholders) as including the President's son and other relatives or close associates of the President - on a basis that they would be 'looking at a 30% equity interest' (exhibit 2, par 2).

173 There was then also discussion about local Congo participant persons being likely to do a deal on terms similar to recent deals done on oil exploration in the Congo with 'the Chinese'.

174 Mr Porter explained in his primary statement, exhibit 1, that Sundance was already engaged in a mining exploration project in Cameroon, the Mbalam iron ore project. That project in Cameroon was being conducted by Sundance through a locally incorporated Cameroon subsidiary corporation, Cam Iron SA, of which Mr Porter was then the chairman of directors - see the draft Cam Iron minutes for the Cam Iron SA meeting, held at Yaounde on 8 June 2006 (exhibit 9.1.8).

175 Sundance, in fact, had, according to Mr Porter, purchased all the issued shares in Cam Iron SA from him. That was in the early part of 2006, under a transaction approved by Sundance shareholders on 19 May 2006 (exhibit 2, par 9).

176 I recount those uncontroversial pre-8 June 2006 facts on the basis that the methodology of an Australian mining corporation such as Sundance conducting an overseas mining operation in an African country using the medium of a local African subsidiary company in which the majority of shares was owned or controlled is hardly surprising or novel. For Sundance, using that mode of offshore exploration project vehicle methodology already had a strong precedent, well established and obviously very well known to the parties in Cameroon, as regards Cam Iron SA for the Mbalam deposit.

177 Those uncontroversial facts set down a starting canvass for my further evaluations, required by reference to events arising subsequent to the conversations between Mr Corr and Mr Porter at Yaounde on 8 June 2006, that both sides accept resulted in the establishment of binding contractual relations - albeit they differ over the precise terms of that contractual relationship.

Subsequent to 8 June 2006

178 By the parties' agreed chronology, exhibit 7, there are two notations for 5 July 2006. First is:

Corr is diagnosed with heart problems and has to have surgery. He is unable to continue to carry out his duties as a director of Sundance for a period.

179 For the same day it is agreed Mr Pismiris became a director of Sundance (noting from the agreed dramatis personae that Mr Alex Pismiris filled the position as secretary of Sundance in the period 22 December 2006 until 15 July 2008. I note Mr Pismiris remained a director of Sundance until 28 November 2008).

180 In Mr Porter's witness statement, exhibit 1, the situation I touched on earlier concerning Mr Corr's ill health is elaborated upon. He says at par 29, and I find (again, Mr Porter was not cross-examined about any of this):

On 5 July 2006, I had a telephone conversation with Rankine-Wilson who said to me words to the effect that Corr had serious heart problems, had undergone a major operation around 30 June 2006, and would be sidelined as executive chairman of Sundance for at least three months. Rankine-Wilson also told me words to the effect that as a result of Corr's illness, he had appointed Ian Whiteley ('Whiteley') as Operations Manager of the project for Sundance and that Pismiris had been or would be appointed a director.

181 A temporary quarantining of Mr Corr due to his heart problems at this point is significant to events which unfolded thereafter.

182 Mr Corr, of course, had enjoyed, as executive chair of the Sundance board, the very direct and immediate knowledge of what had occurred at Yaounde on 8 June 2006. Mr Corr's temporary removal from the Sundance governance picture due to his ill health for a period of some ensuing months led to a change in the board of Sundance in his absence.

183 In the period after 8 June 2006 and prior to 5 July 2006 Mr Corr had obviously been well aware of a forthcoming trip to the Congo by Messrs Bogne and Asso'o. Indeed, Sundance was outlaying all the funds in order for that trip to happen. To that end, Mr Corr had been in email contact with Mr Porter: see TB 9.1.3, pages 9 and 10.

184 Mr Corr received Mr Bogne's draft budget for the Congo trip: see his item 6 (page 12) re $10,000 and the 'Congo budget'. The tone of the email rather suggests Mr Porter and Mr Corr then enjoyed an effective working relationship as regards the Cameroon project and both men then supported Sundance's potential exploration ore expansion from there across the border, south into adjacent prospective areas in the Congo.

185 Following upon Mr Corr's sudden ill health issues, Mr Porter's communications by email were then directed to Mr Pismiris who, as seen, was the secretary and became now newly appointed as a director of Sundance.

186 A need for Mr Porter to inform and educate Mr Pismiris about the nature of the Congo iron ore exploration expansion plans for Sundance is apparent from TB 9.1.8, in relation to comments and responses by Mr Pismiris with Mr Porter in the settling of the draft board minutes for the Cam Iron SA meetings of 7(sic, 8) June 2006. I note the exchange under item (5). In a context of Sundance's then established mode of doing business in Cameroon through a local African subsidiary corporation, it is interesting to note Mr Pismiris' comments in relation to item (2) of this meeting, where it was initially noted Mr John Corr was appointed a director and chairman of Cam Iron, following Sundance's purchase of 100% of the shares in Cam Iron SA. Mr Corr gave his consent to be confirmed in writing. Following that entry, Mr Pismiris suggested the draft minutes add:

Mr Corr continued as Chairman of the Meeting and Mr Porter acted as Secretary. It was agreed by the Meeting to appoint a second director to the Cam Iron SA board from Sundance Resources Ltd to reflect their 100% ownership of the Company and Mr Corr was to discuss a candidate with the Sundance Board of Directors.

Mr Porter's response to this suggestion was his comment:

The secretary was instructed to update the share register and note Sundance as the sole shareholder of Cam Iron? [Mr Pismiris then added] Add this, I think it has been done by Gilbert Rodger. [See also item 3 regarding transfers of accounts and secretarial files.]

187 As regards Sundance's exploration expansion into the Congo, it is significant to note the Cam Iron SA minutes, under item 5(f) as constructed in draft form, read:

The meeting proposed acquiring new areas for iron ore, south of Mbalam in the Republic of Congo (Brazzaville). Approval was given for Messrs Bogne and Asso'o to visit Brazzaville and investigate the process and cost of applying for Exploration Permits.

188 By another exchange in the iterations of circulating draft minutes, Mr Pismiris added his note in brackets after that entry in red on the original (page 27):

A success fee of 10M three year options exercisable at 10 cents was approved for each of Messrs Porter, Bogne and Asso'o, subject to the satisfaction of the Sundance Board of Directors.

Mr Pismiris also added this question:

How can the directors of Cam Iron approve an issue of options by Sundance?

The responsive insertion to that question in the draft from Mr Porter was:

Mr Pismiris added a further comment:

The strike price should be determined at the date of grant with reference to the share price.

189 Mr Porter's responsive comment was the share price was five cents when it was discussed.

190 The Porter/Pismiris exchange demonstrates, at that point, the acquired knowledge in Mr Pismiris as a Sundance director of the 10 million three-year Sundance options at 10 cents, promised as remuneration in the arrangements negotiated at 8 June 2006 by Mr Corr with Mr Porter, and benefitting as well Messrs Bogne and Asso'o. Mr Pismiris' lack of direct knowledge about what happened at Yaounde is highlighted by the comments of Mr Porter concerning what was agreed by Mr Corr.

191 By reference to the agreed chronology, on 28 July 2006 Mr Bogne produced a report concerning 'potential Congo exploration licences'. The report itself is seen at TB 9.1.9. The report was sent by Mr Bogne on Friday, 28 July 2006, to Mr Porter, Mr Rankine-Wilson and to Mr Corr by email. Receipt was acknowledged by Mr Rankine-Wilson (see TB 9.1.11). Mr Bogne deals at some length in that report (page 31) with discussions held with local Congo officials at the Department of Mines on that trip.

192 Mr Bogne concluded that report (page 32):

Our strategy and action plan is as follows:

• We need to register a company (the Congolese structure) as soon as possible. According to information obtained locally, it takes about five days, but we would conservatively say eight days.

• Apply to the mines department for a recognition permit on the sites we have an interest for. Once the recognition permit [is] obtained, we will apply for the research permit. Therefore we need David Porter to prepare technical documents that will be submitted to apply for the research permit at his earliest convenience.

…

It is understood that the company will be registered in Congo but most of the operations will be led from Cameroon as it is the most practical.

193 Clearly, Mr Bogne's report about that trip to the Congo reached Sundance, which was, in turn, then made fully cognisant, if it were not already, of a need for a 'Congolese structure'.

Agreed Fact 9: Chronology

194 On 10 August 2006, Mr Porter sent Mr Pismiris a facsimile concerning events around his pursuit of the Congo exploration licences. The communication is TB 9.1.13.

195 Mr Porter was based at this time in Newlands, South Africa. As part of that communication, Mr Porter related:

Dear Alec,

I've reviewed Roger Bogne's report on his recent trip to the Republic of Congo (Brazzaville) and his proposed follow up budget. I have also discussed his proposed strategy in detail. [The proposed budget can be seen at TB 9.1.12 under the heading 'Congo Iron Budget' culminating in the total amount of 20 million CFCA francs].

The facsimile to Mr Pismiris continues:

The proposed follow up to the recent trip is, as follows:

(1) Register a local company in the Republic of Congo. Roger is proposing a 70% shareholding for Cam Iron SA and 30% local investors, consisting of Denis and Rodrigue Nguesso who are related to the President. The latter individuals have been doing 50:50 with foreign oil companies. I presume that Cam Iron SA will fund the company by loans. It is proposed that Olivier Fabrice-Sil will travel to Congo for 21 days to carry out the work on behalf of Cam Iron SA. He is a competent person and should be able to manage. The Company registration costs are about 5,000,000 CFCA (US$9,600).

(2) Apply for two x 2,000 square kilometre Recognition (Reconnaissance) Permits. These are non-exclusive but must be taken out prior to the issuing of exclusive Research (Exploration) Permits. The cost of application fees and first year rent is 2,600,000 CFCA plus application preparation fees of 1,500,000 CFCA.

(4) The total cost of the exercise is about 20,000,000 CFCA (US$38,461) which includes consultancy fees for Olivier Fabrice-Sil, travel costs, application preparation fees and legal fees.

196 There was a scheduled Sundance board meeting for 10.00 am on Thursday, 24 August 2006. The circulated agenda identified the Sundance (see TB 9.1.14) directors as Messrs Corr, Dobson, Pismiris and Toby. Item 4 of the agenda indicates the topic 'Congo acquisitions' and displays a notation 'J Corr discussions'. No minutes have been provided for a board meeting of that date. Given Mr Corr's serious ill health due to heart problems around this time, I doubt whether that foreshadowed board meeting ever took place.

197 The next TB document, TB 9.1.15, identifies itself as meeting notes of Promet Engineers for a meeting as at 29 and 30 August 2006 of Sundance/Cam Iron at the Hilton Hotel in Johannesburg. Nominated attendees at these meetings (seen in the notes prepared by Mr Ed Heyting) identify attendees as Mr Pismiris, Mr Whiteley and Mr Porter on behalf of Sundance. Mr Bogne and Mr Asso'o are noted as present on behalf of Cam Iron. Also attending are Mr Heyting on behalf of Promet, Mr Rob Bennett on behalf of Promet Africa, and a Mr Varndell of A L Maynard & Associates.

198 Much of the meeting notes concern the Mbalam project in Cameroon. But item 4 (page 49) displays a series of notes concerning the Congo expansion and exploration plans at that time. Identified items under 'procedure' include a reference to the cost of company registration. Under a heading 'Commercial Terms' there is a series of dot points including:

• Requested 30% participation by private vendors of local company.

• Free carry until US 5 M spent otherwise dilute back to 10%.

• Concern is China becoming involved.

• Can a foreign company own the asset? SA [presumably a reference to Mr Serge Asso'o] to advise legal arrangements.

• Terms Sheet to be discussed in Perth next week and agreed before returning [referring to AP, Mr Pismiris, and IW, Mr Whiteley].

Under the heading 'Timing' (with a reference to action by All) is a third dot point, recording:

• Agreed deal before we submit to reconnaissance permit

199 followed by a concluding dot point:

• Register company takes approx one week and also write up reconnaissance submission then submit recon permit two weeks for approval.

200 What emerges from all this is a methodical and fully consensual progression in the Congo exploration acquisition plan dialogues, as between Mr Porter, Mr Bogne and Mr Asso'o with a director representative of Sundance (Pismiris) and Mr Whiteley.

201 There is discussion of a progression of the Congo expansion towards the acquisition and obtaining of prospecting, then exploration tenements. As would be expected, the timing and costing of those advancing steps in the Congo is being carefully scrutinised by all concerned, including by Sundance's representative directors at the time.

202 Clearly, one integral part of these discussions concerned the use of a local Republic of the Congo corporation as the vehicle for the expansion into a new African country. All this is openly discussed, timed and costed. Likewise, the issue of a potential local Congo minority shareholder participation at 30% in the corporate holding vehicle is explicitly identified. There was nothing new for Sundance in any of that. It had been earlier discussed, as I have accepted from Mr Porter's evidence, prior to the 8 June 2006 meeting with Mr Corr at Yaounde.

203 By his supplementary statement (exhibit 2), about which he was again not challenged, Mr Porter at par 7 refers to a facsimile to Mr Pismiris of 10 August 2006 (TB 9.1.13). He says:

After I sent that facsimile I received no communication from any one at Sundance, including Corr and Pismiris, taking issue with anything in that fax. And the project continued on the basis set out in that fax.

204 Both the facsimile, then the Johannesburg August 2006 meeting were weighing the prospect of a 70% (ie, an indirect) holding by Sundance in Cam Iron SA, with a correlative 30% participation by local shareholders in the Congo, as had the pre-8 June 2006 discussion with Mr Corr.

205 Bearing in mind the Mbalam project in Cameroon was, essentially, then being conducted and funded by Sundance through a local subsidiary corporation, Cam Iron SA, the use in the Congo of a local corporate owning structure, allowing some minority degree of local shareholder participation by Congolese individuals, presented as an entirely routine and familiar methodology at this time for Sundance.

206 At TB 9.1.16 (pages 55 - 57) are found the minutes of a management meeting of Cam Iron SA, recorded as being held at the offices of Sundance Resources Ltd, Exchange Plaza, Perth, on Monday, 11 September 2006. Recorded attendees in these Cam Iron minutes are

Other Parts:

Pages 51 to 100 Pages 101 to 110

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Porter v Sundance Resources Ltd (No 2)

[2015] WASC 493

23 DECEMBER 2015

Supreme Court of Western Australia

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PORTER -v- SUNDANCE RESOURCES LTD [No 2] [2015] WASC 493