Scott v Neocleous - [2009] SAWC 9

Wardens Court of South Australia
(District Court Administrative and Disciplinary Division)
SCOTT v NEOCLEOUS
[2009] SAWC 9
Judgment of Warden Sprod
6 September 2005
MINING LAW
Prescious Stones Claim - Partnership Dispute

SCOTT v NEOCLEOUS
[2009] SAWC 9

In this matter by Plaint note dated 8 July 2005 the applicant, Stafford Scott, sought an injunction against the respondent, Arthur Neocleous, in relation to Precious Stones Claim 61377, which was supported by an affidavit of the applicant bearing the same date.
On 12 July Warden Kleinig granted an injunction restraining Arthur Neocleous, or any third party on his behalf, from continuing mining operations and removing opal from the claim. The matter was then listed for hearing in the Marla court on 29 August, 2005. The hearing was for the purposes of determining whether the injunction should remain and to consider further orders or to make an order discharging the injunction.
At the hearing before me at Marla on 29 August Mr Stafford Scott appeared in person and Mr C. Ryan appeared for Mr Neocleous.
The first witness to give evidence was the applicant, Stafford William Scott. Mr Scott told me that in September 1998 John Dunstan, himself and Mr Neocleous entered into an agreement to mine the respondent’s claim No.61377 on the Lambina Diggings. He told me that Mr Neocleous had drilled up opal on the claim, and having seen the opal they agreed on a 50/50 deal whereby Scott and Dunstan would supply the machinery to open-cut the claim and all expenses, and would rehabilitate the claim, and that Mr Neocleous would undertake the prospect drilling and the manual labour to work the claim. The claim was mined on that basis, as was another claim situated about two kilometres away. I was told that opal worth more than one million dollars was found and divided in accordance with the agreement. After some time Dunstan decided to leave Lambina to go to Coober Pedy and so a further agreement was reached between the applicant, Paul Wahlstead and Mr Neocleous to continue to mine the claim. That agreement was reached on 1 November 2001 and was reduced to writing and signed by the parties. A copy of that agreement was tendered and because Exhibit P1.
Mr Scott next referred me to a letter from Mr Ryan, of Ryans Lawyers, to Mr Bill Moody of Moody Rossi and Co dated 24 August 2005. That letter and the annexure to it became Exhibit P2. Several paragraphs of the letter had been marked by Mr Scott. With respect to the paragraph marked ‘3’ Mr Scott told me that he did not make any such statement to Mr Neocleous and that he would call Mr Phil Newton as a witness to any discussions that took place on the field in late 2004, which was about when the backfilling commenced. Mr Scott told me that he had been working the claim for something in the order of five years with a bulldozer and excavator. He said that more than 50% of the claim was buried by the dump material from the cut being worked, and that the remainder of the claim beneath the dump material was virgin ground which he believed the contracting parties would then mine, subject to prospect drilling indicating opal. Mr Scott next referred me to paragraph 4 of Mr Ryan’s letter, which he said was untrue and indicated that he would seek to tender an affidavit from Richard to that effect. It is to be noted at this point, that is, late in the year 2004, that Paul Wahlstead had departed the arrangement and his place had been taken by Richard Henry Pawlaczyk, who is the ‘Richard’ referred to in evidence by Mr Scott. Mr Scott told me that he knew nothing about Mr Neocleous drilling up further opal, either from any direct communication by Mr Neocleous, or through Richard.
Mr Scott told me that he attended Lambina in June of this year to find that a Mr John Delaney had been contracted by Mr Neocleous to further cut the claim.
In relation to the paragraph marked ‘5’ in Mr Ryan’s letter, relating to the advertisement in the Coober Times, Mr Scott said that it did not represent the truth of the matter in that he was currently mining at Mintabie, and intended to update his machines and replace them with newer machines. Mr Scott asserted that in about April or May of 2004 he had gone to Lambina to find that Mr Neocleous was out on the field with his 40 tonne excavator and using it without permission in an attempt to recover a drill auger that had been lost about 30 feet below ground. He believed that Mr Neocleous had been using his equipment without permission for some three days and he stopped him immediately. It was this event that he believed resulted in Mr Neocleous failing to advise him that he had found further opal.
Under cross-examination with respect to the advertisement attached to the letter P2, Mr Scott described the suggestion that he was selling his machinery and concentrating on opal buying as a ploy to attract more business, and not an indication that he was going to cease mining. That advertisement was placed on 16 June. His attention was then directed to another advertisement placed on 5 May, which became Exhibit D1. He acknowledged placing the advertisement, although it did not refer to him personally, unlike the June advertisement. The earlier advertisement only mentioned the sale of equipment, there being no mention in that advertisement of concentrating on buying opal. Mr Scott informed the court that he had placed further advertisements in July, offering to buy opal valued at between one and two million dollars. He denied that a combination of those advertisements might lead a reader to conclude that he intended to cease mining. When cross-examined about the 2001 agreement he agreed that the agreement provided for backfilling the cut and agreed that backfilling commenced in November 2004 and finished on 11 April 2005. When cross-examined as to why in those circumstances the agreement was not concluded he repeated that by backfilling the cut they could then open up the rest of the claim. He said that was a matter discussed with Mr Neocleous in November of 2004, namely to further prospect drill and continue to mine. He was then questioned about extensive machinery breakdowns, and he agreed that there had been some breakdowns, and it was suggested to him that those delays resulted in Wahlstead pulling out of the agreement in 2002. The witness responded by saying that Wahlstead left the partnership as he had a female partner in Adelaide, who had put a lot of pressure upon him to return to Adelaide. That resulted in a replacement operator, namely Richard Pawlaczyk, who the witness thought may have become part of the partnership in 2003. He denied the suggestion that for about eight months there was no operator on the claim due to a bulldozer breakdown. He responded by saying that he had two bulldozers, and if that had occurred the second would have replaced the first. He denied telling Mr Neocleous that he was waiting for parts from Singapore and/or America. He denied that there was any discussion about prospecting the balance of the claim using his drill, and in response stated that the drilling was not his responsibility. If he were to drill he agreed he would want an extra 20%. He claimed that the precedent had been set by the Dunstan agreement that it was the responsibility of the claim holder to arrange for the prospect drilling. He denied any discussions with Mr Neocleous with respect to forming a new agreement if Mr Neocleous drilled up opal over the Christmas period using his own drill, and claimed that he considered the old 2001 agreement to be still in place. He denied telling Mr Neocleous in November of 2004 that if he wanted to continue to drill after the backfill he could join another company and do it himself. His response was to repeat what he had earlier claimed, namely that half of the claim still remained uncut. He agreed that Mr Neocleous owned his own drill in November of 2004, and he agreed that he could then personally prospect the claim. He confirmed that he did not contact Mr Neocleous after backfilling the claim to indicate his preparedness to further mine the claim and said that he did not think it necessary to do so as he understood that they were backfilling for the purposes of opening up that virgin area of the claim.
The next witness to give evidence was Phillip Newton, who described himself as a pilot and miner. Mr Newton told the court that in November of 2004 he flew Mr Scott to the field and that it was their last visit of the year. He said that he and Mr Scott went around the field, went to the cut in question, and saw Mr Neocleous drilling there. He said that a conversation took place, when Mr Scott told Mr Neocleous that he was going to get Richard to rehabilitate the cut over the Christmas break, and said that Mr Scott said to Mr Neocleous to the effect ‘You keep drilling and if you drill anything up, give me a call and we will come back and cut it’. Under cross-examination he told the court that he would fly Mr Scott up to the field in Mr Scott’s aircraft and work as a driller, that in 2004 they would either make a trip a week or a trip every two to three weeks, depending on need, but that in 2005 they made no trips before June. It was put to this witness that he was not present during any such discussions, which he denied.
At the conclusion of this witness’s evidence I received into evidence, with the consent of Mr Ryan, a copy of an affidavit of John Dunstan and a copy of the affidavit of Richard Pawlaczyk as amended by deleting, as marked on the exhibit, a sentence appearing on page 2. Those affidavits were respectively marked P3 and P4. The receipt of these documents concluded the case for the applicant.
I then heard evidence from the respondent, Arthur Neocleous, whose English was limited, but who gave evidence in English as a Greek interpreter was unavailable. He confirmed that he had been mining on the Lambina field for six years, since his claim No.61377 was pegged on 1 June, 1998. He confirmed the partnership between himself, Mr Scott and Mr Dunstan that was entered into in August 1998, and confirmed that a new partnership was entered into in November of 2001, when he then worked with Mr Scott and Mr Wahlstead. He confirmed that in 2003 Mr Wahlstead left, and another driver named Richard commenced work. He said that they did find opal, but not much, but what they did find was split 50/50 between himself and Mr Scott. He described bulldozer breakdowns in the year 2004, and no work was done for seven to eight months as Mr Scott was apparently waiting for parts from America and Singapore. With respect to the discussions in November 2004 he said that he spoke to Mr Scott, that Richard was also present, that the conversation took place at the water pump at about 4 p.m. one afternoon situated about two kilometres from his claim and within the township of Lambina, when he said that because they had found no more opal Mr Scott was going to backfill the claim and would not be undertaking any further mining activity. He regarded the backfill as bringing their agreement to an end. He told the court that whilst the backfilling operation was taking place that he drilled up further opal, which he showed to Richard in February or March which he says he invited Richard to show Mr Scott to see if he was interested to enter into a new partnership, and as he had heard nothing from Mr Scott assumed that he did not. He confirmed that the contents of the advertisements had been brought to his attention, although he himself had difficulty in reading English. He said that the June advertisement led him to believe that Mr Scott was no longer mining and that is when he formed a new partnership with John Delaney, and that that partnership was formed in June. He said that Mr Newton was not present during the November discussions.
Under cross-examination he agreed that the original contract was between he and Mr Scott and was questioned as to why he did not contact his cross-examiner when the further opal was drilled up in early 2005 so that the partnership could continue to mine. His response was that he had told Richard and assumed that Richard had passed on this information.
No further evidence was called by the respondent.
I reserved my decision and undertook to the parties that I would publish my reasons by posting a copy to each of them.
In all the circumstances I find that there were three partnerships that worked this claim between August 1998 and April 2005. The parties to the first partnership were Scott, Dunstan and Neocleous, for the approximate period from August 1998 to November 2001. The second partnership was between Scott, Wahlstead and Neocleous for the period from 1 November 2001 to some time in 2003, as evidenced by Exhibit P1 and that the parties to the third partnership were Scott, Richard Pawlaczyk and Mr Neocleous from some time in 2003 (after the departure of Wahlstead to Adelaide) until the claim was rehabilitated in April 2005. There is no evidence before me as to the specific terms of the first partnership agreement, other than the evidence of the applicant and the respondent. The terms of the second partnership agreement are contained in Exhibit P1 and as there was no written agreement in relation to the third partnership the court must determine, on the available evidence, the terms of that third partnership. I am prepared to conclude that the evidence establishes that there were some common terms in relation to each agreement and they are as follows:
1.That each agreement related to work to be carried out on the claim of Mr Neocleous No.61377 situated at the Lambina Diggings.
2.That with respect to each agreement Mr Scott or his company would supply the mining machinery and meet associated expenses.
3.That the claim holder, Mr Neocleous, would provide labour to assist in the mining of the claim.
4.That the other party to the agreement (other than Scott and Neocleous) would operate the mining equipment.
5.That the proceeds of recovered opal would be split 50/50 as between Mr Neocleous, the claim holder, on the one hand, and the remaining 50% to the other parties.
6.That the agreement would cease upon rehabilitation of the claim by backfilling the cuts.
It is generally well known by those familiar with the opal mining industry that frequently claims are mined by syndicates or partnerships. Only a few miners would have all of the necessary equipment to mine a claim from beginning to end. The Lambina diggings are mined subject to a number of agreements both concerning Native Title and the Pastoral Lease Holder that requires rehabilitation of the land after mining ceases. Often partners to a partnership will bring to it different types of machinery and each may perform a different task or tasks. Often on virgin pegged ground investigator holes are sunk to determine the presence of opal. Often that is done for a particular percentage and often as part of the partnership. Depending upon ground stability and the depth at which opal is found access is gained either by open-cut mining using bulldozers, back-hoes and the like, or shafts are put down and access is gained to the opal via underground mining techniques. Before miners commit themselves and their machinery to partnerships it is common for an assessment of likely returns to be made by examination of the materials drilled up at the investigation stage. It is at that point that partnerships are often entered into to mine an area prospected, which has indicated the presence of opal. All sorts of variations can and often will apply to this general description of the arrangements that are often entered into to mine a claim.
I refer here to the affidavit of Richard Henry Pawlaczyk. It seems that Mr Pawlaczyk may have considered himself as an employee of the applicant, but if he stood in the same position as Messrs Dunstan and Wallstead, he was clearly entitled to a percentage of the opal found. That is the basis upon which the Precious Stones Claim Fields operate.
His affidavit states
‘I Richard Henry Pawlaczyk of Lambina worked for Stafford as an operator after doing two cuts I commenced rehabilitating the claim and finished on April 11^th 2005. I then rang Stafford and told him I have finished. I said then to Stafford that I had another job offer to go to. I wasn’t certain where I stood at the present time with any more work with Stafford and Arthur. As things were not too clear with Arthur and Stafford on drilling of the claim. So I went to start my new job.’
It is clear at that point, namely 11 April, 2005, that this partnership was brought to an end by Mr Pawlaczyk leaving it. It is also clear from the same passage that the claim had been rehabilitated, and I therefore conclude that as a result of those two events, namely the dissolution of the partnership and rehabilitating the claim, brought that partnership to an end.
There are vast differences in the evidence on the one hand of the applicant, and on the other of the respondent, to various aspects of this dispute, and in relation to some aspects of the applicant’s evidence I am prepared to accept what he has said. On other aspects I would reject his claims. The same situation applies to the evidence of the respondent, and to a lesser degree to the evidence of Mr Newton. Parties may well have had different views about whether there was an ongoing agreement or not. It is my finding, for the reasons mentioned, that whatever contractual arrangement existed between the parties, it was brought to an end by their conduct on 11 April, 2005. Thereafter, in the event that it was contemplated to further mine this claim, or any other, parties were free to further contract with each other or not as they wished. Quite clearly Mr Pawlaczyk did not feel entitled to further mine the claim, and he did not seek to be heard in that regard with respect to this application.
For these reasons it is appropriate to discharge the injunction granted by Warden Kleinig on 12 July, 2005. I direct the applicant to pay the respondent’s costs associated with these proceedings, which, if they cannot be agreed between the parties and their representatives, then this matter can be relisted before me for argument. I suspend the operation of this order for the usual 28 day appeal period, in the event that either party wishes to appeal this decision to the Environmental Resources and Development Court.