Prospect Resources Ltd v Molyneux

Prospect Resources Ltd (Prospect) appealed to the Court of Appeal of New South Wales against orders made by the primary judge concerning a share subscription agreement and a separate prospecting agreement. The dispute centred on whether certain conditions precedent to the prospecting agreement had been satisfied or waived, and whether Prospect had reasonably satisfied the other parties to the subscription agreement of this fact.

The Court of Appeal was required to determine two primary legal issues. First, it had to consider the proper interpretation of the term "waived" in the context of the prospecting agreement and whether the conduct of the parties amounted to a waiver of the conditions precedent. Second, the Court had to assess whether Prospect had acted reasonably in satisfying the other parties that these conditions had been waived, as required by the share subscription agreement. The Court also considered an appeal against an order for indemnity costs, which had been awarded following a Calderbank offer made by the respondent.

On the issue of waiver, the Court of Appeal held that an expression of understanding that conditions were satisfied did not necessarily constitute a waiver of those conditions. The Court analysed the terms of the prospecting agreement and the conduct of the parties, concluding that the conditions precedent had not been waived. Consequently, Prospect had not satisfied the requirement under the share subscription agreement that it reasonably satisfy the other parties that the conditions precedent to the prospecting agreement had been waived. Regarding costs, the Court found no error in the primary judge's exercise of discretion in awarding indemnity costs, despite the appellant's characterisation of the Calderbank offer.

The appeal was dismissed with costs.