Smith v Great Boulder Perseverance Gold Mining Company Limited (In Liquidation)

This case involved an appeal from the Supreme Court of Western Australia concerning a dispute between tributors (the appellants, Smith and others) and a gold mining company in liquidation (the respondent). The core of the disagreement lay in the accounting for gold extracted from ore won by the tributors from the company's mine under a tribute agreement. The tributors sought an account of all gold received by the company and its agent, and payment of any moneys found due. The company contended that a subsequent arrangement constituted a purchase of the ore, which settled their obligations.

The legal issues before the High Court were whether the parties' subsequent arrangement constituted a lawful variation of the original tribute agreement or an independent, enforceable contract, and consequently, whether the tributors were entitled to an account of the gold proceeds under the original agreement. A key consideration was the effect of section 205 of the *Mining Act 1904* (W.A.), which prohibited the sale or purchase of gold by unlicensed persons, and whether the arrangement between the parties fell foul of this prohibition.

The High Court was divided. Knox C.J. and Gavan Duffy J. held that the parties had departed from the original agreement's method of proceeding and that the tributors had received all they were entitled to under the new arrangement. They reasoned that if this arrangement amounted to an illegal sale, it could not form the basis of a legal claim. Isaacs and Rich JJ., however, found that the company's direction to treat the ore at its own works was within the framework of the tribute agreement. They concluded that the subsequent arrangement, whether viewed as a variation or an independent agreement, was either an unregistered variation or an illegal contract for the sale of gold under section 205 of the *Mining Act 1904*. Consequently, they held that the tributors were entitled to an account under the original tribute agreement.

As the High Court was equally divided, the decision of the Supreme Court of Western Australia was affirmed, meaning the appeal was dismissed. There were no orders as to the costs of the appeal.