Terrex Resources N.L. v Magnet Petroleum Pty Ltd

Terrex Resources N.L. sought special leave to appeal to the High Court of Australia from a decision of the Full Court. The dispute concerned the enforceability of an oral agreement relating to petroleum permits, specifically whether such an agreement could found a claim in damages for breach despite the provisions of sections 80 and 81 of the *Petroleum (Submerged Lands) Act* (Commonwealth and Western Australian versions).

The central legal issue before the High Court was the proper construction of sections 80 and 81 of the *Petroleum (Submerged Lands) Act*. Specifically, the court had to determine whether these sections, which stipulated that legal or equitable interests in petroleum permits could only be created, assigned, affected, or dealt with by a written instrument, rendered an oral agreement concerning such permits entirely void and of no force or effect between the parties, or whether such an agreement could still give rise to personal contractual rights, including a claim for damages for breach.

The Full Court had held that while an oral agreement might be ineffective to create a legal or equitable interest in a permit, it could nevertheless found a claim in damages for breach. The applicant argued that this interpretation was incorrect and that the effect of sections 80 and 81, read together, was to render any oral agreement concerning petroleum permits of no force or effect whatsoever. The applicant contended that to hold otherwise would grant oral agreements a higher status than written agreements, which, if not properly executed, might have no force or effect. The court questioned why section 80 would prevent the creation of contractual rights as distinct from legal or equitable interests.