Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd & Anor

[2015] HCATrans 67

[2015] HCATrans 067

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P38 of 2014

B e t w e e n -

TECHNOMIN AUSTRALIA PTY LTD ACN 010 216 332

Applicant

and

XSTRATA NICKEL AUSTRALASIA OPERATIONS PTY LTD ABN 60 886 957 423

First Respondent

XSTRATA NICKEL AUSTRALASIA PTY LTD ACN 009 219 809

Second Respondent

Application for special leave to appeal

BELL J
GAGELER J

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO PERTH

ON FRIDAY, 13 MARCH 2015, AT 11.39 AM

Copyright in the High Court of Australia

____________________

MR J.M. IRELAND, QC:   If the Court pleases, in that matter I appear for the applicant.  (instructed by McGirr Lawyers)

MR C.G. COLVIN, SC:  If the Court pleases, I appear with MR C.P.K. RUSSELL for the respondents.  (instructed by King & Wood Mallesons)

BELL J:   Yes.

MR IRELAND:   Your Honours, this is an application for special leave to appeal from a unanimous decision of the Court of Appeal of Western Australia which upheld the decision of a trial judge to dismiss the applicant’s claim for an entitlement to payment of royalties of a mining production royalty.  The proceedings, at their heart, involve the construction of a royalty deed executed in 1994 and in particular the interpretation of a definition in that deed of the word “tenements” which appeared in clause 1.  That definition appears in the judgement of the President of the Court of Appeal at page 62 of the application book at about line 14 and following.

Your Honours, we submit that this case presents as a candidate for special leave because it provides the Court with an opportunity to clarify the uncertainty which the learned President of the Court of Appeal at application book 66 identified as currently existing in this country.  As to the problem ‑ ‑ ‑

BELL J:   Mr Ireland, can I inquire how it presents a suitable occasion to consider that issue when the Court of Appeal was unanimous in concluding that Justice Allanson was right to hold that the definition is ambiguous?

MR IRELAND:   The case is one where the debate that is thrown up, apparently, by contrasting approaches to Justice Mason’s gateway principle in Codelfa and more recent observations in the EGC or Verve case is the first matter.  One has to decide – and this Court is yet to clarify – whether there is a wider approach to the application ‑ ‑ ‑

BELL J:   Regardless of how wide or narrow, here is an instance where the Court of Appeal was unanimous in concluding that the definition is ambiguous, when the primary judge so concluded when, as I understand it, your client acknowledged before the primary judge that it was necessary to read a word into the definition on the construction for which your side contended.

MR IRELAND:   Yes, your Honour, that should not be construed as a concession below.  There was a debate about whether the absence of an implication in the definition in clause 1 of the deed led to an outcome which required an assumption about the rule – the word “area” to be taken on board.  But certainly in the eyes of the Court of Appeal, that was rejected as a basis for some sort of concession.  So, there was still a blank page as to whether or not the words were ambiguous.  I submit, indeed, that our side has never conceded that there was ambiguity.  If that were the case, I would be on a more difficult road because of the point your Honour has just identified, but ‑ ‑ ‑

BELL J:   You still face the concurrent ‑ ‑ ‑

MR IRELAND:   Findings.

BELL J:   ‑ ‑ ‑ conclusions below that the definition is ambiguous, and prominent in that is a consideration of whether the words in parentheses are of limitation or amplification.

MR IRELAND:   Yes.  The Court of Appeal took the view that they were words of exclusion or extension, which is an odd way of perhaps putting two different concepts.  In our submission, the words in the definition extend the royalty obligation to tenements which are not in existence at the time the deed is executed.  That must be anticipated by the parties because the tenement in question which was replaced - to use a word not in the deed - by a mining lease had to come about before mining production could eventuate.  You cannot mine from a prospecting licence.

So, the parties commercially foresaw that tenements which existed at the date of the deed itself would likely not be there for the duration of the mining adventures of the parties.  So, the question then becomes, well, are the words in parentheses which are – I have referred to them, your Honours at page 62 if that is convenient:

(whether or not also affecting other tenements or land outside the Area).

work in one of two ways.  Now, if I could concentrate on the President’s approach ‑ ‑ ‑

GAGELER J:   Mr Ireland, to work out how the words in a particular definition in a one‑off contract work is really not the stuff that this Court is ordinarily involved in.  Your special leave point, if you have one, is the Codelfa point.

MR IRELAND:   There is another one as well, if I may, which we – well, there are two points here.  One is the Codelfa one, and I am faced with the argument that if there is ambiguity all round I am not debating a problem of a Codelfa test.  I understand the work of that.  But our point is really a stronger one, if I may say so, and that is that you cannot abandon the grammatical exercise in favour of some atmospheric approach.

If you are looking around for some surrounding circumstances which trigger an analysis of the words, one starts with the words - that is what Sir Garfield Barwick said in ABC v APRA - and the fact that the words produce a result that the Court might not think is commercially sound is not a reason for abandoning the proper exercise of construction, which you start with the words, you find open meanings with the words and, if they are in the alternative, then this gateway to ambiguity may be opened.  But if you look at the words and they present a plain meaning, one goes no further.

BELL J:   That is your difficulty.  All four judges below were not persuaded that there was a plain grammatical meaning.  There was a consideration of Justice Murphy of the weight to be given to the word “also” in the parentheses, and so on.  Go on, Mr Ireland.

MR IRELAND:   My point here, which I need to convince your Honours of this morning, otherwise this case ends today, is that the view that was taken, in the Full Court at least – and Justice Allanson, the trial judge, took a different view – but the view that was taken by the majority in the Full Court, that is to say, the President and Justice Newnes who agreed with her without further elaboration goes like this, that the word “also”, where it appears in the parentheses of the definition, has no work to do, effectively, if the contention of the applicants is accepted.  In my respectful submission, that is a complete misreading of the clause.  The word “also” modifies the word “affecting”.  The phrase is “whether or not also affecting”.

The word “affecting” is looking backwards to the consequences of a variation or addition or replacement.  So, the assumption is – and the fundamental is – that when you have something that qualifies as an addition or a replacement or a substitution or any of those, it will affect the tenement.  The word “also” is simply saying that this will be taken account of whether or not, accepting that it affects the tenement is there to start with, it also affects a tenement or land outside that – the word “footprint” has been used in the judgment to described the original area with which the deed was concerned.

GAGELER J:   You are arguing the special leave application.

MR IRELAND:   Yes.

GAGELER J:   What is the special leave point that you are seeking to make?

MR IRELAND:   The special leave point on this is that that construction is so plainly correct that it involves an abandonment of the exercise that Sir Garfield Barwick mandates, which is, you start with the words and give them a meaning, and it is only if there are two contending meanings of the words that one comes to the next process of embarking upon surrounding circumstances.

GAGELER J:   So, this is another way of saying that there can be no ambiguity?

MR IRELAND:   Yes.

GAGELER J:   The four judges who have said this is ambiguous are plainly wrong?

MR IRELAND:   Yes, we say they are plainly wrong in this case, your Honour, and that is because they have been seduced by the commercial result here and they have misunderstood the effect of the word “also” in the second case where, as the President Justice McLure has said, one looks to see whether it is affecting an outcome not just in relation to the existing tenement but in relation to the successor or replacement or substitute tenement or whatever eventuates after the date of the deed.

GAGELER J:   You cavil with the characterisation of the result for which you contend as commercially unreasonable?

MR IRELAND:   Yes, we do, and that is because the result was wholly controlled by the other side.  It was in the hands of the royalty‑paying party to select a mining lease which restricted itself to the footprint of the original tenement.  That was something we did not have to participate in.  They were applying for mining rights.  They were selecting the area of the lease.  If they had taken account of what we say was their correct contractual obligation here, and if we are correct in the end in the construction put forward, there was no basis upon which they could not have avoided what they now characterise as a commercial consequence which flows, in my submission at least, inexorably from the words used.

BELL J:   There is of course the further difficulty that the primary judge indicated that he would have been disposed to grant rectification had the construction issue not been resolved in favour of your opponent.

MR IRELAND:   That might in the end be an answer, but it is not the answer on the record at the moment.  I can only appeal against orders; I cannot appeal against alternative contentions.  What has happened in this case is that the Full Court has ruled that on the construction of the instrument, rectification forgotten, this is what is means and that is what engaged at the moment between the parties.

BELL J:   Indeed.

MR IRELAND:   Really, we have put in the written submissions – I will not rehearse them now because time is limited – but we have put in the written submissions reasons why ‑ ‑ ‑

BELL J:   About the significance of Mr Thompson’s evidence.

MR IRELAND:   Yes.

BELL J:   But that was not the basis upon which Justice Allanson indicated he was disposed to conclude that rectification would be available.

MR IRELAND:   Well, both Justice Allanson and later the Court of Appeal when they turned to, as an alternative matter, to attribute that, said that the inquiry was as to common intention, that Mr Thompson was, in effect, the mind on the other side, on one side of the transaction, and that they were not satisfied that – they were satisfied that his clear evidence about intention was capable of rejection, because there had not been a real attack on those statements.  But, as I say, that would be something that would be dealt with on the contention if it arose.  To succeed to this morning, I have to convince your Honours, as I recognise, that what appears to have been a construction uniformly taken below is plainly wrong because the courts have misunderstood the role of the word “also” in the parentheses.  Those are my respectful submissions.

BELL J:   We do not need to trouble you, Mr Colvin.

The conclusion of the Court of Appeal upholding the primary judge that the definition of “tenements” in the deed is ambiguous is one that is plainly open.  In the circumstances, this is not a suitable vehicle in which to consider the special leave questions upon which the applicant relies.  Special leave is refused.  Can you resist costs?

MR IRELAND:   No, except there should be a costs order against the applicants.

BELL J:   Yes, with costs.

MR COLVIN:   Can I make a submission, your Honour, in relation to costs?

BELL J:   Yes, I am sorry, Mr Colvin.

MR COLVIN:   At paragraph 40, page 135 of the application book we draw the Court’s attention to two matters.  One, that the applicant is the subject of a deed of company arrangement, although that is not expressed in the title, and we seek an order in addition that there be liberty to apply for a costs order against Drem, D‑r‑e‑m Pty Ltd for the reasons we have noted at paragraph 40.

BELL J:   Yes.

GAGELER J:   You are not seeking the costs order now, are you?  You are seeking liberty to apply?

MR COLVIN:   No, we cannot.  Yes.

BELL J:   Anything you wish to say, Mr Ireland?

MR IRELAND:   Well, only this, that if this application was going to be made it really ought to have been formulated and notice given today.

BELL J:   Well, is not paragraph 40 ‑ ‑ ‑

MR IRELAND:   Presumably, there would need to be a summons and further proceedings if that liberty were reserved now, and the question is whether that is justified in the circumstances.  Drem is a third party, it was not a party below, there would have to be special circumstances demonstrated.  One would have thought that if that was going to be advanced there was time to do it before now.

BELL J:   Notwithstanding those submissions, Mr Ireland, we propose to allow liberty to apply.

AT 11.55 AM THE MATTER WAS CONCLUDED