Premium Gold Recovery Services Pty Ltd v Premium Gold Recovery Pty Ltd
[2022] WADC 103
•30 NOVEMBER 2022
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: PREMIUM GOLD RECOVERY SERVICES PTY LTD -v- PREMIUM GOLD RECOVERY PTY LTD [2022] WADC 103
CORAM: BOWDEN DCJ
HEARD: 24 OCTOBER 2022
DELIVERED : 30 NOVEMBER 2022
FILE NO/S: APP 85 of 2021
BETWEEN: PREMIUM GOLD RECOVERY SERVICES PTY LTD
Appellant
AND
PREMIUM GOLD RECOVERY PTY LTD
First Respondent
LESLIE ALAN PANTING
Second Respondent
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram: MAGISTRATE M CRAWFORD
File Number : PER/GCLM/11219/2019
Catchwords:
Appeal from Magistrates Court - Contractual interpretation - Condition precedents - Waiver - Variation of contract - Turns on its own facts
Legislation:
Magistrates Court (Civil Proceedings) Act 2004 (WA)
Result:
Appeal dismissed
Representation:
Counsel:
| Appellant | : | Mr A P Rumsley |
| First Respondent | : | Mr M N Blandford |
| Second Respondent | : | Mr M N Blandford |
Solicitors:
| Appellant | : | Western Legal |
| First Respondent | : | Murcia Pestell Hillard |
| Second Respondent | : | Murcia Pestell Hillard |
Case(s) referred to in decision(s):
Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168
Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39
Dodds v Kennedy [No 2] [2011] WASCA 131; (2011) 42 WAR 16
Electricity Generation and Retail Corporation t/as Synergy v EIT Kwinana Partner Pty Ltd [2022] WASCA 3
Expectation Pty Ltd v Pinnacle VRB Ltd [2002] WASCA 160
George 218 Pty Ltd v Bank of Queensland Ltd [No 2] [2016] WASCA 182
George v Roach (1942) HCA 22; (1942) CLR 253
Morrison v Town of Victoria Park [2007] WASCA 164
Mulcahy v Hoyne [1925] HCA 17; (1925) 36CLR 41
Ogle v Comboyuro Investments Ptd Ltd (1976) 136 CLR 444
Perri v Coolangatta Investments Pty Ltd [1982] HCA 29; (1982) 149 CLR 537
Sargent v ASL Developments Ltd (1974) 131 CLR 634
Sumampow v Mercantor Property Consultants Pty Ltd [2005] WASCA 64
Tropical Traders v Goonan [1964] HCA 20; (1964) 111 CLR 41
United Australia Limited v Barclays Bank Ltd [1941] AC 1
Westgyp Pty Ltd v Northline Ceilings Pty Ltd [No 2] [2019] WASCA 145
BOWDEN DCJ:
This appeal has some unusual aspect in that although there is no dispute about the sale price ($158,600) what was sold is hotly disputed.
The second appellant was not a party to the appeal and accordingly the first appellant is referred to as the appellant in this judgment.
Central to the appeal is a document headed " 'Heads of Agreement' offer half share of the Yalgoo Battery Tenement (M59/266), treatment plant, associated equipment and business entity (Premium Gold Recovery Pty Ltd)" (the Agreement) signed on the 8 December 2016.
It is not in dispute that pursuant to the agreement the appellant paid the first respondent $30,000 in October 2017, $40,000 in January 2018, and $30,000 on 30 June 2018 but has refused or neglected to pay the balance of $58,600.
The appellant's defence, and the basis of their counterclaim for a refund of the $100,000 they had paid on account of the purchase price, as refined at the appeal was that the unfettered access condition (condition 2) and environmental conditions (condition 3) were condition precedents and there was no binding agreement for sale unless and until the condition precedents were satisfied, and if they were not satisfied, the agreement did not become operative, so that essentially, no contract of sale came into existence and the agreement was discharged by reason of non-fulfilment of a condition precedents.
The appellant's counterclaim was not referred to in their defence lodged in September 2019, the counterclaim being lodged on 21 January 2021: Reasons [15] - [16].
Following a two‑day trial before his Honour Magistrate Mr Crawford on 24 and 25 August 2021, judgment was delivered on 5 November 2021, in favour of the first respondent in the sum of $58,600 plus pre‑judgment interest of $8,891.15 on 5 November 2021. The appellant's counterclaim was dismissed.
His Honour delivered written reasons for his decision (Reasons). His Honour referred to the signed document of 8 December 2016 as the first agreement. I refer to it in this judgment as the agreement.
His Honour made a factual finding that on 5 December 2017 the appellant sought an extension to pay the balance and agreed to a new deadline for the payment as 30 January 2018. In this judgment I refer to that finding as the December 2017 extension.
His Honour referred in the Reasons [75] to his factual finding based on the email from the first respondent of 22 June 2018 and the appellant's response of the same date (attachment 37 and 38) as the variation agreement of 22 February 2018. I am satisfied this is a typographical error, the correct description being the variation of 22 June 2018. I refer to that finding in this judgment as the June 2018 variation.
His Honour referred to his factual finding based on the appellant's letter of 8 March 2019 (attachment 47) whereby the appellant agreed to pay the final instalment of $58,600 in full by 26 April 2019 as the second agreement.
A reference in this judgment to an 'attachment' is a reference to the attachments to Mr Panting's statement.
The grounds of appeal
The appellant appeals on the following grounds:
1.The learned Magistrate erred in law and in fact finding that on a proper construction of the contract there was no arrangement to sell the shares in the Claimant [106]
2.The learned Magistrate erred in law and in fact in finding that the names of the directors of the First Respondent were only in the agreement to provide contact details [51] and failing to find the agreement was executed so as to bind the directors personally [107]
3.The learned Magistrate erred in law and in fact in finding that the breach of environmental conditions was not a basis to cancel the agreement [93], [75]
4.The learned Magistrate erred in law and in fact in finding that the first appellant could not terminate the contract on the basis that conditions of the contract were not satisfied [94], [100]
5.The learned Magistrate erred in law and in fact in finding that the Appellant waived compliance with the conditions under the Agreement [84], [95], [108]
6.The Learned Magistrate erred in law and in fact in finding that the Appellant had reached an agreement with Arabian Gold [82] [84]
[7.abandoned]
The appeal
The appeal is bought pursuant to the Magistrates Court (Civil Proceedings) Act 2004 (WA) (MCCPA). The appeal must be decided on the material and evidence before the Magistrates Court.
The appeal is by way of a reconsideration of the evidence before the Magistrates Court.
The appeal court is not to retry a case or substitute its own view of the facts for that of the magistrate. An appeal is by way of a rehearing. The appellant must demonstrate that there has been an error of law or fact: MCCPA s 40(3), s 40(4) and s 40(5); District Court Rules 2005 (WA) (DCR) r 50(1).
The appeal court may confirm, vary or set aside all or in part the lower court's judgment or order a new hearing or trial before the Magistrates Court: MCCPA s 43(7).
There is some overlap in relation to the grounds of appeal and submissions in support of those grounds. In relation to the various grounds of appeals, submissions in support and his Honour's Reasons there are on occasions lack of particularisation as to whether a particular condition or conditions in general were being referred to. At the appeal the appellant affirmed that the condition precedents they were arguing were not fulfilled were conditions 2 and 3.
Some matters not in dispute
Whilst the agreement refers to AMG Gold Recovery Pty Ltd as the purchaser it is not disputed by either party that the appellant is the relevant party to the action as it ratified the pre-incorporation agreement.
The law
The question of construction of an agreement is a question of law and the task of the court is to determine for itself the proper construction of the instrument.
The principles of law applicable to construction of terms in commercial contracts is to determine what a reasonable business person would understand those terms to mean viewed objectively by reference to the contract's text, context and purpose: Westgyp Pty Ltd v Northline Ceilings Pty Ltd [No 2] [2019] WASCA 145 [8] - [9].
The subjective intention of the parties is not relevant: Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168.
The applicable principles to the construction of the contract where referred to in Electricity Generation and Retail Corporation t/as Synergy v EIT Kwinana Partner Pty Ltd [2022] WASCA 3 [229] - [230] and include:
(a)the construction of contract involves a determination of the meaning of the words of the contract by reference to its text, context and purpose. The starting point for the proper construction of a clause is the language used in the clause. In particular, one starts by identifying the possible meanings that the words chosen by the parties can bear;
(b)The process of construction is objective. Ascertaining the meaning of terms in an instrument requires a determination of what a reasonable person would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract, and the commercial purpose or objects to be secured by the contract.
(c)The commercial purpose or objects sought to be secured by the contract will often be apparent from a consideration of the provisions of the contract read as a whole. Extrinsic evidence may nevertheless assist in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding of the genesis of the transaction, its background, the context and the market in which the parties are operating.
(d)The instrument must be read as a whole. A construction that makes the various parts of an instrument harmonious is preferable. If possible, each part of an instrument should be construed to have some operation.
(e)The general principle applicable to the construction of commercial contracts is that they should be given a business‑like interpretation. Absent a contrary intention, the court approaches such contracts on the basis that the parties intended to produce a result which makes commercial sense. This requires that the construction placed on the term or terms in question is consistent with the commercial object of the agreement. However, it must be borne in mind that business common sense may be a topic on which minds may differ.
An instrument should be read as a whole, giving weight to all its of clauses where possible and a court will strain against interpreting so a particular clause is rendered nugatory or ineffective: George 218 Pty Ltd v Bank of Queensland Ltd [No 2] [2016] WASCA 182.
The agreement
Ground 1 and 2
It is convenient to deal with grounds 1 and 2 together.
Ground -
The learned magistrate erred in law and in fact finding that on a proper construction of the contract there was no arrangement to sell the shares in the Claimant [106]
The learned magistrate erred in law and in fact in finding that the names of the directors of the First Respondent were only in the agreement to provide contact details [51] and failing to find the agreement was executed so as to bind the directors personally [107]
In relation to ground 1, his Honour concluded at Reasons [106] that on a proper construction of the agreement it provided for the sale of the appellant's business as a going concern, rather than a sale of the appellant itself.
In relation to ground 2, at Reasons [51], his Honour found that Mr Panting's details were handwritten on the first page of the first agreement purely to provide his contact details and he signed the agreement on behalf of the first respondent. His Honour found that Mr Panting's and Mr Stewart's names were only on the document to provide their contact details.
At Reasons [107], his Honour concluded that in the alternative, if the agreement properly construed did entail a sale of the first respondent itself, then the first respondent's shareholders had to be a party to the agreement that Mr Panting would have had to execute the agreement on behalf of the first respondent, personally as a shareholder and on behalf of his fellow shareholder, Mr Stewart, because if that were not the case, then the parties to the agreement could not have bound the shareholders to the sale of the shares in the first respondent.
Appeal ground 1 essentially deals with the issue of whether the agreement provided for the purchase of the shares in the first respondent (share purchase) or the purchase of the first respondent's business (ie its assets and business as a going concern) (the Business as a going concern).
His Honour considered the post‑contractual conduct in the context of whether an agreement was reached as to the sale of shares in the first respondent (Reasons [106(i)] - [106(vi)]) finding that conduct supported the interpretation that he had already reached that the agreement was a sale of the business as a going concern. His Honour found that even disregarding post‑contractual conduct, there never was any agreement to sell shares in the first respondent on the proper construction of the agreement.
His Honour stated that to the extent the contract was ambiguous the contra proferentem rule applied and the ambiguous part should be read against the appellant because it was their document: Morrison v Town of Victoria Park [2007] WASCA 164. His Honour however did not make any finding as to if there was any ambiguity and if so the nature of the ambiguity. The appellant does not dispute that his Honour correctly understood that rule, they say there was no ambiguity and therefore no reason to resort to that rule.
It is not necessary to examine his Honour's Reasons in more detail because the task for the court is to determine for itself the proper construction of the agreement, which is a question of law, there being only one true construction of the agreement. It is not necessary to address each criticism of his Honour's Reasons but rather for the court to reach its own construction of the agreement.
The appellant's submissions
The appellant's primary submission is that the agreement refers to 'an offer for the business entity (Premium Gold Recovery Pty Ltd)' and the substantive clause expressly states the 'offer is to purchase Premium Gold Recovery (the company) including plant and equipment'.
The appellant says that these express words are clear and the only meaning the words can bear is that what was being purchased was the company, ie including the shares of the company.
The appellant says that conditions 9 and 10 could only have any meaning if it was the company that was being purchased as tax obligations can only belong to the company and any construction of the agreement that did not construe it as purchasing the shares in the company would result in conditions 9 and 10 becoming nugatory or ineffective.
The appellant accepts that the sale of the company would require a transfer of the shares in the company which the company cannot do itself under s 259(a) of the Corporations Act 2001 (Cth). It says all this means is that in effect that there is an implied term in the agreement to the effect that the parties are to do what is reasonably necessary to achieve transfer of the shares in the company.
The appellant says the contra proferentem rule applies where there is doubt or ambiguity and there is no doubt or ambiguity in this case as the meaning of the words business entity (Premium Gold Recovery Pty Ltd) and 'the offer is to purchase Premium Gold Recovery (the company)' mean that what was sold included the shares in the first respondent.
The first respondent's submissions
The first respondent enthusiastically adopts his Honour's reasonings at [106(a)] - [106(g)] as to why the agreement provided for a sale of the first respondent's business as a going concern rather than as a sale of the first respondent itself.
The first respondent submits that his Honour was not saying there was any ambiguity in the agreement but saying if there was the contra proferentem rule would apply and correctly applied the law relating to post‑contract conduct in determining whether the agreement related to the sale of the shares as opposed to the sale of the business as a going concern. That conduct included but was not limited to:
(a)the emails of 29 September 2017 (attachments 18 and 20) from the appellant authorising the release of the $30,000 deposit to the first respondent which referred only to the purchase of the equipment and the transfer of the tenement and made no mention of any transfer of shares in the first respondent;
(b)the appellant's request (attachment 26) to extend the time to settle by email of 5 December 2017 which refers to the purchase of the Yalgoo tenement and makes no reference to purchase of shares in the appellant;
(c)the appellant paying a further $40,000 on or about 29 January 2018 (attachments 27, 28, 29, 30) and the appellant's director describing the payment as a second instalment for the purchase of Premium Gold Recovery without any reference to shares or a proprietary limited company (attachment 28);
(d)the appellant paying a further amount of $30,000 without any reference to any shares being transfer by the time specified in the first respondent's email of 22 June 2018 (attachment 37) whereby the first respondent agreed to amend the agreement to allow the appellant extra time to pay outstanding monies;
(e)the appellant's email of 29 December 2018 (attachment 41) advising that all further payments were on hold because of a dispute with Arabian Gold Pty Ltd (the other co‑owner of the tenement), which made no mention of any unsatisfied conditions such as the failure to transfer shares in the first respondent to the appellant; and
(f)The appellant's email of 8 March 2019 (attachment 47) stating that the appellant would pay the first respondent the outstanding $58,600 by 26 April 2018, which made no reference to the shares not having been transferred or being required to be transferred before that final payment was made.
The first respondent says that corporate searches relating to Mr Panting shows that he is not a shareholder of the first respondent and only a director and there was nothing in the agreement to indicate that any of the first respondent's shareholders were a party to that agreement which is what would be required for there to be a sale of the shares.
The first respondent says that condition 8 being a restraint of trade clause and condition 11 relating to consideration to be paid for referrals, are inconsistent with there being a sale of the shares in the first respondent because if it was a sale of the shares there would be no need for such conditions.
Findings
I find that on a proper construction of the agreement it is for the sale of the business as a going concern including the assets being the plant and equipment and the 50% unencumbered share of the tenement.
I reached that conclusion on the following basis.
There is no reference in the agreement anywhere to the purchase of shares in the first respondent. There are references to purchasing plant and equipment and a 50% unencumbered share in the tenement.
There is no provision in the agreement for the signatures of any of the shareholders to be affixed. If the shares were being sold shares, the shareholders would need to be a party to the document.
There is no provision in the agreement relating to the transfer of the shares or any warranties relating to the shares or any mechanism for the transfer of the shares.
The law prohibits the first respondent from selling shares in itself: Corporations Act s 259(a). Both the appellant and first respondent are presumed to know the law.
The agreement throughout refers to the items actually being sold, that is, the plant and equipment and the tenement and there is absolutely no reference to shares throughout the document.
The chapeau states:
RE: 'Heads of Agreement' Offer ½ share of The Yalgoo Battery Tenement (M59/266), Treatment Plant, Associated Equipment and business entity (Premium Gold Recovery Pty Ltd).
Consistent with the text of the document the words 'business entity' means the business entity of Premium Gold Recovery Pty Ltd that is, the business as an ongoing concern. The use of the words business entity (Premium Gold Recovery Pty Ltd) does not compel a conclusion that shares in the entity are being sold. The phrase business entity (Premium Gold Recovery Pty Ltd) is properly constructed as the sale of the ongoing business of Premium Gold Recovery Pty Ltd.
The reference in the agreement is to an offer 'to purchase Premium Gold Recovery (the company including plant and equipment (PGR) as viewed and located at the tenement (M59/266), plus a 50% encumbered share of the tenement known as (M59/266). Notably the reference is to Premium Gold Recovery and not to Premium Gold Recovery Pty Ltd. This supports the conclusion that it is the business as a going concern that is being sold.
Condition 3 provides that certain warranties are given by the first respondent including warranties relating to the environmental licences. Condition 13 provides a warranty by the first respondent that the plant is in good working order and fit for purpose.
The fact that a warranty is being provided by the first respondent to the appellant supports in a commercial sense a view that what is being sold is the business as a going concern, otherwise in effect all the purchaser has obtained is a warranty from themselves, ie a warranty from company in which they own all the shares.
To enforce such a warranty would result in the appellant in effect suing themselves (ie suing a company in which they own all the shares). This supports the conclusion that it was not the shares but rather the business as a going concern that was being sold with a warranty being provided by the first respondent, who at the end of the transaction remains independent of the appellant.
Condition 7 provides that 'the vendor to provide a full database of clients and jobs completed over the last 10 years and introductions when requested'. If the sale including the shares in the first respondent, such a clause would be rendered nugatory and ineffectual because the appellant would own the full database of clients and jobs completed over the last 10 years. The existence of condition 7 clearly envisages that at the conclusion of this transaction the first respondent will have an existence independent to that of the appellant. That is, it would not be in effect owned by the appellant.
Condition 8 provides that the vendor agrees to a restraint of trade. If the agreement involved the sale of the shares in the first respondent such a condition would not be required.
Condition 9 provides a warranty from the first respondent that there is no outstanding tax obligations, formal or informal debts owing, or any registered or unregistered liens against any plant, equipment or assets included in the sale. Condition 10 provides a warranty relating to outstanding tax debts, formal or informal debts owning, or liens against plant or equipment or assets included in the sale.
These are not warranties as to the first respondent's tax obligations as a whole but are confined to its tax obligations against any plant, equipment or assets which are included in the sale.
Condition 9 and 10 supports the conclusion that it is not the shares that are being sold because if that was, then the appellant would in effect be obtaining a warranty from themselves.
Condition 11 provides that the purchaser will pay a referral fee to the first respondent in certain circumstances. That clause is inconsistent with the appellant having purchased the shareholding of the first respondent.
Condition 12 provides a warranty from the first respondent that they will in essence do what is reasonably necessary in the smooth transfer of the ownership of their share of the tenement and sign all appropriate documents. Significantly, there is no such warranty relating to the transfer of shares in the first respondent. If the agreement related to the sale of the shares in the first respondent, those shares would have to be transferred and a similar clause could reasonably be expected to be included in the agreement.
I have found that there is no ambiguity in any of the words of the agreement but if I be wrong in this regard and there is any ambiguity the only ambiguity can be in the use of the words 'business entity' or 'company' in those circumstances the contra proferentem rule would apply and the document would be construed against the appellant as his Honour's finding that the document was drafted by the appellant is not challenged. The contra proferentem rule only applies where there is doubt or ambiguity and only as a measure of last resort. The rule does not afford an alternate to proper legal analysis: Dodds v Kennedy [No 2] [2011] WASCA 131; (2011) 42 WAR 16.
However, I do not rely on the contra proferentem rule because I find that on a true construction of the agreement what is being conveyed is the plant and equipment, the 50% unencumbered share in the tenement, and the business as an ongoing concern but not the shares in the first respondent.
In my view it is not necessary to rely on any post-contract conduct in determining the construction issue and all that needs to be said in relation to the post-contract conduct, is that the facts found by his Honour support the conclusions as to the appellant's conduct referred to in [41(a)] - [41(f)] of this judgement and supports the construction that I have refereed to.
Mr Stewart's and Mr Panting's name appears on the agreement. Mr Stewart's name is typed. Mr Panting's name and phone number are handwritten.
Mr Panting's evidence in respect of the execution of the agreement was that he executed it on behalf of the first respondent at Mr Moffatt's real estate office and his signature was witnessed by the wife of Mr Moffatt. Mr Sweet was present. Mr Panting said he executed the document on behalf of the first respondent and in case his details were needed, he wrote his name and mobile phone number on the first page so that Mr Moffatt and Mr Sweet had not only Mr Murray Stewart's contact details but his as well, should they be needed for any reason.
Mr Moffatt's evidence was to the effect that he prepared the letter (which once signed, became the agreement) addressed to Murray Stewart, Premium Gold Recovery Pty Ltd, 14 St Georges Close, Bluff Point, WA, 6530. He sent it to Mr Stewart on the date he signed it, being 2 December 2016. On or about 8 December 2016, Mr Stewart returned a signed copy of that letter which he presumed (incorrectly) was signed by Mr Stewart and he noted that Mr Panting's name and telephone number had been added to the document in handwriting and that was the first he had heard of Mr Panting.
In relation to any questions of credibility, the learned magistrate dealt with these at Reasons [26]. His Honour found that Mr Panting was an honest witness who made concessions where appropriate, answered questions in a relaxed, affable and balanced manner and was not materially damaged in cross‑examination whereas Mr Moffatt was found to be vague and confused as to some matters, and vague as to the other signatures on the agreement and prone to making assumptions. His Honour found Mr Moffatt's evidence to be at times, contradicted by documents, vague and evasive even as to the contents of his own letters. His Honour noted that Mr Moffatt professed not to recall things that should have been clear and obvious and was generally argumentative. His answers being characterised by attempts to explain or qualify matters which should have been simple, and his evidence was contradicted by independent evidence which accepted by his Honour. His Honour preferred the evidence of the first respondent's witnesses over that of Mr Moffatt.
Mr Stewart's name appears on the agreement because that is who the letter is addressed to. Mr Panting's name and phone number appear straight opposite Mr Stewart's. Mr Panting's evidence was that he put that information there, simply so he could be contacted at any time in addition to Mr Stewart.
His Honour was entitled to accept Mr Panting's evidence to the circumstances in which his signature came to be attached to the agreement. His Honour's findings on this issue and on Mr Panting's credibility have not been shown to be unreasonable or unsupported by the evidence or in error in law or fact.
The appellant says that his Honour should have found that the agreement was executed so as to bind the directors personally. There is absolutely nothing to indicate that the signature of Mr Panting which appears on the agreement is anything other than an execution by him of the agreement on behalf of the first respondent. The document was drawn by the appellant (apparently by Mr Moffatt). An execution clause is provided for the director of the first respondent. There is no provision within the document for it to be executed in any other capacity than as a director. The only execution clauses provided are for the director of the appellant and director of the first respondent. There is no execution clause for a shareholder and there is absolutely no basis upon which, in law or in fact, it could be found that Mr Panting's signature was attached to the document in any other capacity as a director.
No error in law or fact has been demonstrated in his Honour failing to find the agreement was executed so as to bind the directors personally. On the contrary the only reasonable conclusion was that the agreement was designed to be executed by the first respondent director in his capacity as director.
There is no merit in appeal grounds 1 or 2.
Ground 3
The learned magistrate erred in law and in fact in finding that the breach of environmental conditions was not a basis to cancel the agreement [93], [75]
His Honour found at Reasons [75]:
On 10 May 2019, an environmental compliance inspection notice was sent out to the (first respondent) and Arabian Gold. None of the three matters raised in that were issues for the complainant
(a) All matters related to Arabian Gold, not the first respondent as Arabian Gold owned the machine (VAT leach machine - machine which extracts gold from tailings), which had oil leaking out of it.
(b) Under the variation agreement reached on 22 February 2018 ((sic) 22 June 2018) if the appellant did have some responsibility, that now fell to the first respondent.
At Reasons [93], his Honour said:
The defendant's reference to a breach of environmental conditions as somehow being a basis to cancel the agreement is also rejected.
(a)The alleged breach occurred with respect to equipment owned by Arabian God.
(b)The issue arose well after the agreement was entered into.
(c)In any event, the first defendant (appellant) had agreed to be responsible for such matters.
(d)On 30 May 2019, Mr Sweet of the first defendant (appellant) sought urgent permission to communicate with DMIRS with respect to DMIRS compliance, showing acceptance of the responsibilities of the first defendant.
The appellant's submissions
The appellant argues that the environmental conditions (condition 3) is a condition precedent which was not met.
The appellant says that the department's inspection of 13 March 2019 and their report of 10 May 2019 (attachments 49) identified breaches relating to the mining lease. The breaches included that the Annual Environmental Report (AER) had not been lodged since 2016 and had not been lodged over the last three reporting periods. The failure to lodge an AER can render the mining tenement liable for forfeiture. Other issues identified in the report were the disposal of scrap, plant, equipment and rubbish, the capping or filling of exploration surface holes, backfilling of costeans and other disturbances, and a hydrocarbon leak from the loader.
The appellant submits that his Honour's finding that some of the breaches related to equipment owned by the joint holder of the mining tenement and not the first respondent and were therefore not breaches by the first respondent was wrong as a breach of the environmental conditions by either tenement co‑owner could result in the tenements becoming liable for forfeiture. What was relevant, the appellant argues, is that the condition had been breached.
The appellant says that Mr Sweet's 30 May 2019 request for a letter authorising him to act on behalf of the two parties relating to the environmental compliance (attachment 54) did not relieve the first respondent from responsibility for the warranty for the environmental conditions.
The appellant says that the first respondent's letter of 6 March 2019 (attachment 46) which endeavoured to shift responsibility unilaterally for rehabilitation of the tenement was rejected by the appellant's letter of 8 March 2019 (attachment 47).
The first respondent's submissions
The first respondent says that his Honour correctly held that that none of the matters raised in the 10 May 2019 environmental compliance and inspection notice (ECIN, attachment 49) were issues for the first respondent.
The first respondent says that his Honour correctly found that under the variation agreement of 22 February 2018 (a mistaken reference to 22 June 2018, attachment 37) if the first respondent did have some responsibility for environmental conditions, that now fell on the appellant. At [75] his Honour in effect found that the first respondent offered to amend the agreement by an email of 22 June 2018 (attachment 37) to extend the time for payment by the appellant on the condition that all the reports to the Mines Department were the responsibility of the appellant. In response, the appellant sent an email to the first respondent (attachment 38) confirming payment of the amount of $30,000 and referred to the 'recently revised sale agreement' and by such conduct, his Honour found, accepted the offer contained in attachment 37 and in effect accepted responsibility for all reports to the Mines Department.
The first respondent says the learned magistrate correctly found that when the appellant's director, Mr Sweet, sought permission to communicate with the Department over DMIRS compliance (attachment 54) on 30 May 2019 this showed the appellant was accepting the first respondent's responsibility for environmental conditions. The authority was granted on behalf of the first respondent to allow Mr Sweet to communicate with the Department (attachment 55): Reasons [93(d)].
The first respondent says that condition 3 was not a condition precedent and, in any event, if the condition was breached the appellant by their conduct waived any right to terminate the agreement and affirmed the agreement by their conduct.
Findings
I agree with the appellant's submission that as the first respondent was the co‑owner of the tenement, they are jointly and severally responsible for the environmental conditions as a failure by one co‑owner to comply could result in the tenement being forfeited and in that regard agree with the appellant's submission that his Honour erred in concluding that none of the matters raised in the ECIN were issues for the first respondent as they related to matters relating to Arabian Gold.
However, his Honour found that none of the matters raised in the ECIN were issues for the first respondent because his Honour concluded that under the June 2018 variation, if the first respondent previously had some responsibility for environmental conditions that now fell on the appellant. No error with his Honour's findings in fact or his conclusion in law has been demonstrated. The June 2018 variation referred to it being a condition that all reports to the Mines Department would be the responsibility of the buyer (attachment 37). The appellant's response (attachment 38) by paying an instalment of the purchase price as per the 'recently revised sale agreement' accepted the revised sale agreement including the variations and conditions including responsibility for all reports to the Mines Department which in the context of this case can only refer to the environmental reports.
Mr Sweet seeking urgent permission to communicate with DMIRS (30 May 2019, attachment 54) over environmental compliance reinforces that the appellant was accepting responsibility for the environmental conditions.
His Honour's conclusion that the alleged breach of the environmental conditions was not a basis to cancel the agreement, is correct.
The distinction between a condition precedent to the formation of a contract and the condition precedent to the performance of a contract or part of a contract was dealt with by Mason J (as he then was) in Perri v Coolangatta Investments Pty Ltd [1982] HCA 29; (1982) 149 CLR 537, 551 - 552 (Perri):
There is an obvious difference between the condition which is precedent to the formation or existence of the contract, and the condition which is precedent to the obligation of a party to perform his part of the contract and is subsequent in the sense that it entitled the party to terminate the contract on non‑fulfilment.
In the first category, the transaction creates no rights enforceable by the parties, unless and until the condition is fulfilled. In the second category, there is a binding contract, which creates rights capable of enforcement, although the obligation of the party or perhaps, of both parties, depends on fulfilment of the condition and non‑fulfilment entitles them to terminate. Condition precedents within the first category may produce different consequences in most cases but perhaps not in all, a party may be able to withdraw from the transaction before fulfilment of the condition. But in each class of case, the transaction creates no enforceable rights in respect of the subject matter of the transaction, unless the condition is fulfilled, because until the occurrence of that offence, there can be no binding contract.
Perri is also authority for the proposition that generally speaking, a court will tend to favour a construction which leads to the conclusion that a particular stipulation is a condition precedent to the performance rather than a condition precedent to the formation or existence of a contract.
'The condition will not be construed as a condition precedent to the formation of a contract, unless the contract reads as a whole plainly compels this conclusion': Mason J in Perri (552).
As the texts make clear (Carter, Contract law in Australia (7th ed, 2018)) whatever the position in the past, it is now clearly established that unless the parties have expressly agreed to the contrary, a breach of a condition to the performance of the contract does not automatically terminate the obligation of the parties to perform and termination is a matter of election to be made, in this case, by the appellant (Carter, 31 ‑ 01). Each agreement is different however the failure to comply with a condition precedent in this agreement rendered the agreement voidable not void. The appellant could have repudiated the contract, or kept the contract on foot or waived the condition: Expectation Pty Ltd v Pinnacle VRB Ltd [2002] WASCA 160 (19 June 2002), Sumampow v Mercantor Property Consultants Pty Ltd [2005] WASCA 64.
In my view, condition 3 is not a condition precedent to the formation of the contract, at the very highest for the appellant, it is a condition precedent to the performance of the contract.
Taking it to the very highest for the appellant that it was a condition precedent to the performance of the agreement, it is clear that the appellant's right to rely on the non‑fulfilment of that condition precedent was lost by its conduct.
The appellant, by their conduct, elected to waive the benefit of that condition. There is no doubt in law that a party to a contract can waive performance of a condition, which has been inserted for that party's benefit, provided the election which affirms the contract is clear and unequivocal and capable of one construction only, namely that the appellant has chosen to forgo their right to terminate. This is to be determined objectively: Mulcahy v Hoyne [1925] HCA 17; (1925) 36CLR 41; George v Roach (1942) HCA 22; (1942) CLR 253; Perri; Tropical Traders v Goonan [1964] HCA 20; (1964) 111 CLR 41; Sumampow v Mercantor Property Consultants Pty Ltd, in Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39.
In this agreement there is no right to terminate explicitly stated in the terms of the agreement. The right to terminate if conferred must be that given by the common law.
If the appellant had the right to terminate then the appellant must elect to terminate the performance of the contract which requires unequivocal words or conduct evincing an election to terminate the performance of the agreement. The acts or the words must unequivocally evidence an intent to terminate the agreement and that intent must be communicated by words or the doing of an act that can be objectively regarded as unequivocal.
Where a party's unequivocal acts show that he has chosen to continue performance of the contract he can no longer exercise his right to terminate: United Australia Limited v Barclays Bank Ltd [1941] AC 1 [30]. Whether the appellant's conduct or words amount to an election to continue performing the agreement is a question of fact. The point is that his word or conduct must be inconsistent with exercising the right to terminate. There is ample authority for the proposition that an election by the appellant to continue to perform the contract is final and such an election can be a permanent restriction on the right to terminate: Ogle v Comboyuro Investments Ptd Ltd (1976) 136 CLR 444, 451; Sargent v ASL Developments Ltd (1974) 131 CLR 634, 655 - 656.
The election to continue performance is a permanent restriction on the right to terminate. The election in respect of one breach to continue the agreement does not preclude reliance on another breach provided that that breach gives the right to terminate.
His Honour found that in essence there had been no failure to comply with the environmental conditions however his Honour also found that by the June 2018 variation responsibility for environmental conditions fell on the appellant (attachment 37 and 38) such that any breach in 2019 was not the responsibility of the first respondent. Mr Sweet seeking permission to communicate with DMIRS (30 May 2019, attachment 54) over environmental compliance reinforces that the appellant was accepting responsibility for the environmental conditions so to that extent there had been a waiver of that condition and the appellant had elected to continue to perform the agreement under new conditions including their acceptance of responsibility for environmental compliance they had lost their right to terminate the agreement for non‑compliance. His Honour was correct in law and fact in reaching that conclusion.
His Honour in effect found that the appellant had lost the right to terminate as a result of the June 2018 variation by electing to continue to perform the agreement in its varied form. It is not so much a waiver of that condition but rather the condition ceasing to exist as a result of the June 2018 variation.
The appellant by their conduct did not just elect to continue the agreement but accepted the terms of the revised agreement. The first respondent specifically referred in their email to amending the payment conditions on conditions which included all reports of the Mines Department, being the responsibility of the buyer (attachment 37). His Honour rightly found that the appellants have clearly accepted the variation, because they paid an instalment of the purchase price in accordance with that variation and specifically referred to the 'recently revised sale agreement' when they paid that instalment and thereby accepted the terms of the revised sale agreement, including responsibility for all reports to the Mines Department (attachment 38). Therefore, issues raised in the subsequent report in 2019 were not the responsibility of the first respondent and they were not in breach of the terms of the agreement.
No error in law or fact has been demonstrated in his Honour's Reasons.
There is no merit in ground 3.
Ground 4
The learned magistrate erred in law and in fact in finding that the first appellant could not terminate the contract on the basis that conditions of the contract were not satisfied [94], [100]
His Honour's Reasons [94] were:
In relation to the conditions of the contract I note the following:
(a)The conditions of the contract were actually satisfied as mentioned.
(b)In the alternate it was accepted and agreed those conditions had been satisfied by the fact that the appellant proceeded with the contract as mentioned
(i)the appellants occupied the site.
(ii)the appellants removed the equipment.
(iii)the appellants agreed to release the deposit of $30,000.
(iv)the appellants made further payments.
(v)a transfer was signed by the parties;
(vi)the defendants made promises to pay the balance but never did.
His Honour also went on in Reasons [95] to say that in the alternate the appellants waived compliance with those conditions by what his Honour referred to as the second agreement being the letter from the appellant of 8 March 2019 when the appellant agreed to pay the balance owing of $58,600 in full by 26 April 2019 (attachment 47). His Honour also referred to the other request by the appellant to be granted six months to settle the purchase with the proposed settlement date being on or before 30 June 2018 (attachment 26) and noted that there was no suggestion in either correspondence of any outstanding unsatisfied condition or any mention of any reason why the concluded agreement could not be honoured.
In Reasons [100] his Honour specifically dealt with condition 4 stating that the appellant submits that condition 4 was not satisfied. His Honour said:
That condition provides for the balance of the purchase price after payment of the deposit of $30,000 to be paid through the use of the plant and or recovered from any minerals treated in Australia within 12 months. Such a contention is not a proper basis to refuse the relief sought by the claimant. In that regard I accept the submissions of the first respondent paraphrased below:
101.The appellant's submissions about condition 4 ignore the following
(a)following the payment of the deposit of $30,000 the instalments totalling $70,000 were paid on behalf of the appellants towards the purchase price emphasising there was no outstanding pre-conditions.
(b)a director on behalf of the appellants caused all of the plant and equipment to be removed from the site. The appellants cannot rely on the failure of their own to recover gold from the tenement when they removed the plant approximately two years after the December 2016 heads of agreement was executed. It is a well‑established maximum that a party cannot rely on their own wrong.
In respect to this ground of appeal obviously there is overlap in respect of condition 3 which is dealt with in appeal ground 3 and condition 2 which is dealt with in appeal ground 6.
The appellant's submissions
The appellant says the agreement cannot be construed as providing an unqualified obligation to pay the purchase price when it expressly provided for conditions that were required to be satisfied.
The appellant says the time for payment of the purchase price under the agreement was specified as 12 months (cl 4). The agreement, the appellant submits, was subject to conditions precedent 2 and 3 which were not satisfied. The appellant says those conditions precedents were required to be satisfied before the obligation to pay crystalised and the date (12 months) was also the date agreed upon by which the conditions had to be satisfied other than condition 2 which provided a time for 60 days.
The appellant argues that the extension of the date to settle the purchase to 30 June 2018 (attachment 26) which was accepted by the first respondent on the undisputed evidence of Mr Panting was not an agreement to do anything beyond extending the date for settlement and that the obligations under the agreement, being the satisfaction of the condition precedents, was still required to be met.
Similarly, the appellant argues that the correspondence of March 2019 (attachment 46 and 47) simply provided another extension of time for completion under the agreement until 26 April 2019 and did not make the obligation to pay the balance of the purchase price unqualified.
The appellant says that the first respondent sought to rely on a new agreement constituted by an exchange of correspondence dated 6 March 2019 (attachment 46) and 8 March 2019 (attachment 47) and point out that the 8 March 2019 correspondence from the appellant rejected any assumption of responsibility in relation to the rehabilitation conditions so that the correspondence cannot support the agreement contended and all that was agreed was the extension of the payment date.
The first respondent's submissions
The first respondent says his Honour correctly found that the appellant chose to proceed with the agreement, showing that it was satisfied that the conditions were met or alternatively they were waved.
The first respondent says his Honour correctly relied upon the following evidence to support that conclusion:
(i)the 60‑day period referred to in condition 2 had lapsed before mid‑February 2017 as the agreement was executed on 8 December 2016;
(ii)the appellant communicated with Arabian, in effect, treating the contract as unconditional;
(iii)the appellant conduct as outlined in Reasons 84.
Findings
There is ample evidence to support his Honours conclusion that by occupying the site (shortly after December 2016), releasing money and part paying the purchase price (October 2017, January 2018, June 2018), paying a fine (April 2018, attachment 35) and rent on the tenement (October 2018, attachment 36), negotiating to on sell the tenement and equipment (March 2018 to June 2018, attachments 32 - 34), removing equipment from the site (about December 2018), signing the transfer (about March 2019), promising to pay the balance of the purchase price (8 March 2019, attachment 47), obtaining authorisation to deal with the Mines Department (May 2019, attachments 54 and 55), making the statements made by the appellant's director that he was the co‑owner of the tenement (which are capable of supporting the inference that he was speaking on behalf of the appellant (Mr Cathro, May 2019 - January 2019)) and negotiating prices to cap the dam (May 2019, attachment 52), the appellant had in clear and unequivocal terms, objectively viewed, elected to affirmed the agreement such that the right to terminate for non‑fulfilment of any conditions had been lost.
Each alleged breach of condition must be examined separately. The fact that there has been a waiver for a prior breach of condition, or a breach of a different condition does not mean that a subsequent breach or a breach of another condition has been waived. However, when considering any subsequent breach of condition or breach of a different condition the conduct of the appellant subsequent to that alleged breach can form the basis of a waiver of that condition or depending on the circumstances a variation of the condition. An election by the appellant to continue to perform the agreement in relation to a particular breach can be a permanent restriction on the right to terminate. His Honour was alert to this.
His Honour was entitled, both in assessing credibility and in reaching his conclusions of fact, to take into account that in the numerous pieces of correspondence between the appellant and the first respondent whereby extensions of time to pay were either sought or granted or other issues raised there was no mention by the appellant that there was any unsatisfied condition precedent of the agreement.
His Honour was alert to the need to consider whether the right to terminate for non‑fulfilment of any condition had been waived or lost at the time of the breach of that condition or whether was no breach because the agreement had been varied.
The appellant's director's email of 13 May 2019 (attachment 50) advises the first respondent that 'we won't be needing the lease in Yalgoo' and indicates they have agreed to pay $4,000 towards the VAT Leach Rehabilitation to finalise their involvement made no reference to any unsatisfied condition precedent.
This email seems to have been contemporaneous with Mr Panting's discussion on or about that date whereby Mr Moffat said they were no longer interested in purchasing the tenement to which Mr Panting replied that he did not care what he did with the tenement, but he wanted to be paid the agreed purchase price.
The appellant's actions in relation to obtaining costings to cap the dam (attachment 52) on 23 May 2019 and Mr Sweet's urgent request for a letter authorising him to act on behalf of the two parties relating to the environmental compliance (attachment 54, 30 May 2019) support his Honour's alternative finding that that if the conditions were not satisfied the appellant had evidencing a clear intent to perform the agreement and had lost any right to terminate it in respect of a breach of any of the conditions or the contract had been varied such that the conditions no longer applied.
Attachment 47 whereby the appellant states on 8 March 2019 they will pay the final instalment in full on 26 April 2019 clearly objectively establishes that the appellant had chosen to forego their right to terminate the agreement for noncompliance with the conditions. It is not necessary to make specific findings on whether each condition was fulfilled in light of that finding. The appellant's submissions on appeal were directed to the non-fulfilment of conditions 2 and 3.
The appellant submits that by attachment 47 they reject the first respondent's contentions in their letter of the 6 March (attachment 46) in relation to item 3 and thereby had not agreed to vary or waive the environmental conditions. This submission is misconceived.
Attachments 37 and 38 are the June 2018 correspondence between the parties which constituted the June 2018 variation of the original agreement whereby the first respondent accepted responsibility for the environmental conditions.
Attachment 46 is a demand by the first respondent for payments pursuant to that varied agreement. The appellant's response whereby they agreed to pay the final instalment of the $58,600 in full by 26 April 2019 is an affirmation of the June 2018 variation and their references to item 3 and their willingness to further discuss that matter is an attempt by the appellants to vary the June 2018 variation. The first respondent did not agree to do this, and the June 2018 variation was still in existence. His Honour was right to treat the appellants written promise to pay the balance of the purchase price (attachment 47) as affirming the June 2018 variation.
The evidence, with respect, points only in one direction and compels the factual finding made by his Honour. His Honour has not been shown to have erred in fact. His Honour's findings on credibility were clearly open and based on the evidence and not directly challenged at the appeal. The legal conclusions drawn from those facts found by his Honour in respect to the conduct amounting to a waiver of conditions have not been demonstrated to be in error. His Honour's conclusions in relation to the variation of the contract similarly have not been shown to be in error. Where a condition precedent of a conditional agreement is unfulfilled, a party needs to elect whether to affirm the contract or to terminate the agreement. His Honour's conclusion that if any condition was unfilled, it was either waived or rendered non‑operable by variation of the agreement was correct.
The appellants efforts to claim a breach of the condition's is an effort to revive those conditions in circumstances where compliance with them had been waived or the agreement varied such that those conditions no longer applied. It is clear by the first respondent's subsequent actions (attachment 56, 57, 58) that they accepted the appellant's act of non-payment of the balance of the purchase price as repudiation of the agreement and pursued their claim for damages.
His Honour has not been demonstrated to be in error in law or fact in relation to ground 4.
Appeal ground 5
The learned magistrate erred in law and in fact in finding that the first appellant waived compliance with the conditions under the Agreement [84], [95], [108]
Appeal grounds 4 and 5 are to some extent interwoven.
His Honour found at Reasons [84] in relation to condition 2 that the appellant chose to proceed with the agreement showing that it was satisfied that the requirements were met, were amended by subsequent agreement, or were waived. I deal with this issue when discussing appeal ground 6.
In Reasons [95] his Honour speaking generally as to the conditions of the contract found first of all at [94] the conditions of the agreement were actually satisfied but at Reasons [95] alternatively found that the appellant waived compliance by entering into what his Honour referred to as the second agreement, being the letters of 8 March 2019 whereby the appellant agreed to pay the balance owing of $58,600 in full by 26 April 2019.
His Honour found in Reasons [108] that even if he was wrong and that the contract entailed a sale of the shares in the first respondent such a conclusion would not change the fact that the balance of the purchase price should be paid by the appellant to the first respondent.
As I understand his Honour's Reasons, the purchase price needed to be paid to the first respondent before any share transfer was to take place because:
a)if the shares were transferred at the same time as payment of the purchase price the money would be paid to the first respondent which was then controlled by the appellant.
b)the first respondent was obliged to provide advisory services until the full purchase price had been paid in full, pursuant to condition 6, and the plant would be transferred to the appellant once the balance of the purchase price was paid pursuant to condition 14;
c)if the purchase price was paid after the share transfer the assets of the first respondent would have already been relayed to the appellant (bearing in mind the appellant already had the signed transfer for the tenement and it had already removed the plant and equipment).
His Honour also repeated his alternative conclusion that the agreement had been varied by subsequent communications and the sale of shares in the claimant was waived or rendered pointless.
The appellant's submissions
The appellant argues that the agreement is expressly drafted so that condition 2 and condition 3 are condition precedents and unless those conditions are satisfied, a waiver cannot be effective.
My findings in relation to condition 2 are dealt with at appeal ground 6 and in relation to condition 3 at appeal ground 3.
The appellant points out that the issue of waiver was not raised until the oral opening, the issue having been not pleaded or raised previously. In opening the first respondent suggested that there was a waiver of the conditions which had not been satisfied.
The appellant say that the purpose of pleadings is to provide procedural fairness and the failure by the first respondent to plead waiver is a matter that cannot be dealt with on the basis that the Magistrates Court is not a court of strict pleadings, in essence, because they say they are required to have sufficient opportunity to present their respective case.
The appellant says his Honour's finding of a waiver is contrary to the contemporaneous documents and cannot be sustained.
The appellant says that Mr Panting's letter dated 6 March 2019 (attachment 46) sought variations of some of the unsatisfied obligations, but the appellant never agreed to those variations and the first respondent's waiver submissions lacked foundation. I have dealt with those submissions at [125] - [128].
The first respondent's submissions
The first respondent says that his Honour correctly referred to the law relating to waiver at Reasons [84(a)].
In relation to his Honour's alternative findings, Reasons [95], that if there was a breach of conditions the first respondent says his Honour was correct in finding that the appellant waived compliance with the conditions.
The first respondent says that at Reasons [96] his Honour correctly held that there was no suggestion that there were any outstanding, unsatisfied conditions or any reason at all why the concluded agreement could not be honoured in circumstances where the email from the appellant stated:
We formally and respectfully request that Premium Gold Services Pty Ltd be granted an extension of six months to settle the purchase of the Yalgoo tenement
The proposed settlement date will be on or before 30/06/2018.
We look forward to hearing from you in the positive at your first opportunity. (attachment 26).
The first respondent also says that his Honour was correct in his Reasons [108] in holding that even if he was in error and the agreement was for the sale of the first respondent itself, ie, the shares, that would not change the fact that the balance of the purchase price needed to be paid by the appellant to the first respondent.
Findings
The appellant pointed out that 'waiver' was not used in the pleadings. I reject the submission that as waiver was not pleaded it cannot be relied upon. His Honour correctly observed that the Magistrates Court is not a court of strict pleadings, and the proposition of waiver ran through the trial and Mr Moffatt was specifically cross‑examined over the conduct constituting the waiver (ts 185, ts 204).
The issue of waiver was raised in opening and in cross‑examination of Mr Moffatt. The appellant was on notice that it was a live issue and I reject the submission that the appellant was denied natural justice in this regard.
I disagree with the appellant's submissions in relation to the appellant's reply of 8 March 2019 (attachment 47). That reply objectively construed is an undertaking by them to pay the final instalment of $58,600 in full by 26 April 2019. It clearly evidences an objective intent to fulfil the terms of the agreement. Otherwise, why pay the final instalment by that date?
A significant feature of the correspondence from the appellant is that it never refers to any unfulfilled condition precedent.
The appellant says that Mr Sweet's request for a letter authorising him to act on behalf of the two parties and not on behalf of the appellant in relation to DMIRS' compliance, is evidence that the environmental issue still remains the responsibility of the first respondent. The request to act on behalf of the existing co‑owners of the tenement in relation to the environmental issues made in May 2019 (attachment 54) is not to be looked at in isolation but to be looked at in circumstances of attachment 37 and 38.
The first respondent had amended the payment contract on conditions, one of the conditions being that all reports to the Mines Department were the responsibility of the appellant (attachment 37) and that had been accepted by the appellants paying the instalment on the purchase price referred to in attachment 37 and acknowledging the 'recently revised sale agreement' (attachment 38). The actions of Mr Sweet have to be construed in light of that acceptance by the appellant of responsibility for reports to the Mines Department.
That objectively is not an effort or indication that the agreement is going to be terminated on the contrary, it is an indication that the agreement is on foot and that the appellant is doing what he can to try and resolve the environment conditions.
His Honour was correct in finding that attachment 26, the email of 5 December 2017 and attachment 47, the email of 8 March 2019 establish that the appellant had chosen to forego any rights of termination. Certainly, by those emails the appellant was in essence requesting an extension of time for settlement but objectively construed the emails do not indicate that there is any issue or any unfulfilled condition, any rights of termination. Attachment 47 whereby the appellant agrees to pay the final instalment in full on 26 April 2019 clearly objectively establishes that they have chosen to forego their right to terminate the agreement for noncompliance with conditions.
Attachment 47 states as follows:
Thank you for your patience with your agreement regarding the settlement of payment by PGRS for the amount outstanding for the purchase of PGRS' processing plant. Please see a response to the items in your letter dated 6 March 2019 below
Item 1
PGRS agrees to pay the final instalment of $58,600 in full by 26 April 2019.
No error of fact or law has been demonstrated in respect of his Honour's finding. On the contrary, the evidence is all one way and supports that finding. In view of that finding it is not necessary to deal with the other submissions in respect of his ground. The appellants submissions, with the exception of matters overlapping grounds 3 and 6 were primary addressed to the pleading point.
Appeal ground 6
The learned magistrate erred in law and in fact in finding that the Appellant had reached an agreement with Arabian Gold [82] [84]
His Honour found at Reasons [82] that the first respondent had struck deals with the 50% co‑owner Arabian Gold. His Honour did not detail the facts he relied upon to reach that conclusion or the process by which he drew that inference.
At Reasons [84] his Honour rejected the appellant's assertion that it was entitled to avoid responsibility on the basis of an allegedly unsatisfied condition 2 of the agreement. His Honour found that the appellant chose to proceed with the agreement showing that it was satisfied that the requirements were met, were amended by subsequent agreement or were waived.
His Honour relied on the fact that the 60‑day period specified in condition 2 of the agreement had lapsed, the appellant had entered into communications with Arabian Gold, had taken possession of the site and put locks on the access to the premises, arranged for the first respondent's plant and equipment to be dismantled and removed from the tenement, agreed to carry out works, in particular capping the dam, caused payments to be made to the claimant, paid rent and a fine on the tenement, made numerous promises of further payment, tried to on‑sell the tenement and equipment for roughly double the original purchase price, executed the transfer and obtained execution of the transfer by the first respondent, undertaken to pay the balance of $58,600 and conducted itself as if it were in complete control of the tenement and other assets the subject of the sale including the appellant's director telling Mr Cathro that he was the owner of the other half share in the tenement.
His Honour found that condition 2 required a suitable arrangement being negotiated within 60 days of the offer being accepted. His Honour found that condition had been waived by the conduct referred to in Reasons [84] which clearly envisaged an intent not to terminate the agreement but rather to continue with the agreement.
His Honour also included the conduct of the appellants in dealing with the Department of Mines on behalf of the first respondent following the variation of the 22 June 2018, agreeing to pay $4,000 towards the VAT rehabilitation works and displaying a photo of the plant on the appellant's website in this category.
The appellant's submissions
The appellant argued that condition 2 (the unfettered access condition) is, in effect, either a condition precedent or a condition that the noncompliance with, entitled it, in effect, to terminate the contract and recover any monies it had paid and relieve it from liability to make any unpaid amounts under the agreement.
The appellant says that the agreement cannot be construed such that a suitable agreement with Arabian was not required and his Honour's findings at Reasons [84] rejecting that construction is not supported.
The appellant says that the Reasons [89(d)] stating that the appellant did not seek to cancel the agreement does not deal with the point that there is no need to cancel the agreement when the condition precedent has not been satisfied. With respect, this misreads Reasons [89]. His Honour was saying that the appellant's argument that the first respondent failed to provide technical assistance was rejected because no request for technical assistance were made and, in that regard, there is no challenge to the factual basis of his Honour's finding. Insofar as the requirement to provide technical assistance is concerned (condition 6) the condition must be treated as waived when the unchallenged finding of his Honour is that there was no request for technical assistance.
His Honour's comment in relation to the equipment was nothing other than a passing comment.
The appellant says his Honour's Reasons [84(a)] for finding that there was a waiver of compliance with the condition is subject to the same attack on procedural grounds as is referred to in ground 5 and the finding that a condition is waived requires an acceptance that the condition has not been satisfied.
The appellant says that his Honour's Reasons [84] referring to the first respondent entering into communications with Arabian is not sufficient to reach a conclusion that a suitable agreement had been entered into with Arabian and the two Warden Court complaints of 17 July 2018 are inconsistent with the existence of any such agreements (attachment 41).
The appellant says the reliance on the evidence of Mr Cathro at Reasons [84(k)] does not deal with whether there is any agreement between Arabian and the appellant and to the extent such a finding purports to deal with the ownership of the tenement Mr Cathro's evidence is contrary to the contemporaneous communications of 30 May where Mr Sweet requested a letter 'authorising him to act on behalf of the two parties relating to the DMIRS compliance' something which is inconsistent with Mr Moffat's claim to be the co‑owner of the tenement.
In this regard his Honour did not make any specific findings of fact that Mr Cathro's statements, which he accepted were made, that he was the owner of the tenement, were in fact implicitly statements made by Mr Moffat that the appellant was in fact the co‑owner of the tenement however this is implicit in his Honour's Reasons.
The first respondent's submissions
The first respondent says it is to be inferred that the appellant entered into communications with Arabian from the fact that the appellant treated the contract as unconditional as if the appellant had not struck such deals it would not have been able to mine the tenement and would not have treated condition 2 as having been satisfied and the evidence showed that the appellants were assisting Arabian with compliance in 2019 (ts 220).
The first respondent says his Honour correctly found that the appellant proceeded with the agreement and that its conduct showed that it was satisfied that the requirements were met or were amended by subsequent agreement or were waivered.
Findings
His Honour essentially found that after the 60‑day period specified had elapsed the appellant elected to continue performance of the agreement and conducted itself as if it was already in control of the tenement and other assets the subject of the sale. His Honour relied on the appellant's conduct detailed in Reasons [84].
His Honour's findings essentially were that any right to terminate the agreement for any breach of condition that was established by the appellant was lost as by conduct the appellant electing to pursue to perform the agreement is a finding well based on the facts.
In relation to those findings, his Honour may have been in error in relying on displaying a photo of the plant on the appellant's website. The act of offering to pay $4,000 towards the rehabilitation work may not have been an unequivocal act as opposed to an act of compromise, however even at the most favourable for the appellant, taking those matters out of the equation, his Honour's finding that any right to terminate the agreement for any breach of condition 2 was lost was clearly correct. The appellant's conduct unequivocally showed an election to perform the agreement. The evidence, with respect, in that regard points only in one direction. The conduct of the appellants post the 60‑day period referred to in condition 2 in affirming that the agreement was on foot by paying instalments on the purchase price, agreeing to the revised sale agreement (June 2018 variation ) making promises to pay the last instalment whilst at the same time never indicating that any condition had not been complied with compels the finding made by his Honour which in essence was the appellants had evidencing a clear intent to perform the agreement and had lost any right to terminate it in respect of condition 2 even if that condition had not been complied with.
His Honour detailed at Reasons [84] why condition 2 was either met, amended or subsequently agreed or waivered without specifically stating which of the three positions applied. Taking the position at its highest for the appellant that the condition was not met, his Honour's conclusion was the 60‑day period specified in condition 2 of the agreement had elapsed. His Honour detailed the actions taken after that period by the appellant which are referred to in [159] of this judgment and they provide an ample factual and legal basis for his Honour's conclusion that if the condition was not met the conduct of the appellant amounted to a waiver of that condition.
The law in this regard is quite clear that if the appellant has unequivocally elected to perform the agreement, he loses his right to terminate the contract for breach of that condition (unfettered access).
The appellant argues that the agreement was subject to condition 2 which was a condition precedent so unless the condition precedent was satisfied waiver could not be effective. In my view that is not a correct statement of the law as the condition precedent inserted for the benefit of one party can be waived.
With respect to the appellant's submissions that the two plaintiffs filed in the Warden's Court by Arabian Gold in July 2018 (attachment 41) show that there had not been a suitable agreement with Arabian Gold, his Honour accepted the evidence of Mr Panting that the first complaint was discontinued on 17 January 2019 and the second on 18 July 2019.
Although his Honour did not seem to specifically engage in great detail with this issue, Plaint 537223 was against Mr Stewart and Mr Panting and related to taking gold from the tenement. It does not establish any breach of condition 2 which relates to access to the tenement between the appellant and Arabian. Plaint 537224 was a claim by Arabian in relation to the transfer of the 50% share of the tenement to the first respondent by the previous co‑owner which occurred between June 2014 and September 2014 and sought that the share transferred, and all rights attached to it, be returned to Arabian.
The appellant's argument as I understand them are that the time for fulfilling the condition precedents, with the exception of condition 2 which was 60 days, was 12 months. The submission is that the extension of the time to settle the payment of the purchase price, in effect granted an extension of the time within which to fulfill the condition precedents. Even if that time limit was subsequently extended compliance with the condition was clearly waived by the appellant's conduct and having waived that requirement, they cannot insist that it be complied with some 18 months later. The submission overlooks the 22 June 2018 variation and attachment 47.
Attachment 47 (8 March 2019) whereby the appellant agreed to pay the outstanding balance in full by 26 April 2019 objectively establish that the appellant had chosen to forego any rights of termination. It was an election to affirm the varied agreement in March 2019 well after the appellant was aware the plaints were lodged and, assuming at the most favourable for the appellant that condition 2 was a condition precedent and had been breached, the right to terminate for non‑fulfilment of condition 2 was lost, objectively viewed and the appellant had waived the benefit of any of the conditions not being complied with.
The appellant's submissions overlook that his Honour's factual finding that compliance with condition 2 was waived not that the condition never existed. There is ample evidence to support the factual basis and legal basis of that conclusion.
Insofar as the appellant says they were denied natural justice in relation to the waiver or pleading point that argument is rejected for reasons previously expressed.
In relation to the submission that his Honour was in error in finding that an arrangement had been made with Arabian I agree that his Honour's findings in this regard are not explicit. A fair reading of the reasons leads to the conclusion that this was an inference his Honour drew from the conduct of the appellants however even if there was no arrangement his Honour's conclusion that this condition had been waived is not in error. There has been no error demonstrated in relation to his Honour's factual findings or the legal conclusion that followed from those findings.
I dismiss appeal ground 6.
Accordingly, I order:
1.The appellant's appeal be dismissed.
2.The appellant pay the first respondent's costs of the appeal to be taxed, if not agreed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
KH
Associate
30 NOVEMBER 2022
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