Uranium Equities Ltd v Fewster - [2008] WASCA 33

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: URANIUM EQUITIES LTD v FEWSTER [2008] WASCA 33

CORAM: STEYTLER P
McLURE JA
BUSS JA

HEARD: 18 & 19 OCTOBER 2007

DELIVERED : 22 FEBRUARY 2008

FILE NO/S: CACV 96 of 2007

BETWEEN: URANIUM EQUITIES LTD formerly known as BULLION MINERALS LTD (ACN 009 799 553)
First Appellant
GE RESOURCES PTY LTD (ACN 096 473 737)
Second Appellant
AND
MICHAEL EDWARD FEWSTER
First Respondent
SUZANNE THERESA FEWSTER
Second Respondent
EAGLEFIELD HOLDINGS PTY LTD (ACN 009 327 093)
Third Respondent
NARNOO MINING PTY LTD (ACN 084 713 100)
Fourth Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :LE MIERE J
Citation  :BULLION MINERALS LTD -v- FEWSTER [2007] WASC 100
File No  :CIV 2041 of 2005

Catchwords:

Contracts - General contractual principles - Whether oral agreement amounted to legally binding contract - Whether parties intended to be legally bound - Whether agreement so uncertain as to be void

Procedure - Application to amend pleadings after trial - Introduction of an alternative cause of action on appeal - No opportunity for parties to lead evidence - Complex evidential and legal matters - Leave to amend pleadings refused

Equity - Remedies - Specific performance - Lack of certainty

Legislation:

Mining Act 1978 (WA), s 119(2)

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

First Appellant              :     Mr K J Martin QC & Mr M L Bennett & Mr T O Coyle
Second Appellant          :     Mr K J Martin QC & Mr M L Bennett & Mr T O Coyle
First Respondent           :     Mr D R Williams QC & Mr S Ellis
Second Respondent       :     Mr D R Williams QC & Mr S Ellis
Third Respondent         :     Mr D R Williams QC & Mr S Ellis
Fourth Respondent        :     Mr D R Williams QC & Mr S Ellis

Solicitors:

First Appellant              :     Lavan Legal
Second Appellant          :     Lavan Legal
First Respondent           :     Tottle Partners
Second Respondent       :     Tottle Partners
Third Respondent         :     Tottle Partners
Fourth Respondent        :     Tottle Partners

Case(s) referred to in judgment(s):

Aiton Australia Pty Ltd v Transfield Pty Ltd [1999] NSWSC 996; (1999) 153 FLR 236
Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104
Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622
Bullion Minerals Ltd v Fewster [2007] WASC 100
Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1
Con Kallergis Pty Ltd v Calshonie Pty Ltd (1998) 14 BCL 201
Coulton v Holcombe (1986) 162 CLR 1
Elizabeth Bay Developments Pty Ltd v Boral Building Services Pty Ltd (1995) 36 NSWLR 709
G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631
Geebung Investments Pty Ltd v Varga Group Investments No 8 Pty Ltd (1995) 7 BPR 14,551
Godecke v Kirwan (1973) 129 CLR 629
Hooper Bailie Associated Ltd v Natcon Group Pty Ltd (1992) 28 NSWLR 194
Introvigne v Commonwealth (1980) 48 FLR 161
Jobern Pty Ltd v BreakFree Resorts (Victoria) Pty Ltd [2007] FCA 1066
Laing O'Rourke v Transport Infrastructure [2007] NSWSC 723
Masters v Cameron (1954) 91 CLR 353
Mostert v Durban Roodepoort Deep Ltd [2004] WASCA 309
Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd's Rep 601
Sinclair, Scott & Co Ltd v Naughton (1929) 43 CLR 310
Thorby v Goldberg (1964) 112 CLR 597
Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106
Walford v Miles [1992] 2 AC 128
Water Board v Moustakas (1988) 180 CLR 491
Wellington City Council v Body Corporate 51702 [2002] 3 NZLR 486

Table of Contents

The parties
The facts found by the trial judge

Negotiations between 22 March and 20 June 2005
The confidentiality agreement
The 22 June memorandum
Events during July 2005
Saturday 6 August
Sunday 7 August
Monday 8 August
Tuesday 9 August
Events on and after 10 August

The contentions of the parties at trial
Conclusions arrived at by the trial judge

No intention to be bound

Uncertainty
Specific performance
The counter‑claim

Grounds of appeal, notice of contention and issues arising
Did the parties intend to make a legally binding agreement on 6 or 8 August 2005?

Relevant legal principles
What was and was not agreed?
Were the matters still to be agreed such as to make it unlikely that the parties intended to be bound by what they had agreed upon?

Narnoo Joint Venture Agreement
Scandium
Reserved minerals
Pre‑feasibility study

What can be determined from the communications between the parties concerning the need for writing?
Subsequent conduct
Number, description and characterisation of CPPSs
Magnitude and complexity of the contemplated transaction
Section 119(2) of the Mining Act
Conclusions as regards contractual intention

The proposed amendments

Grounds of appeal
The proposed amendment to the statement of claim

Breach of the confidentiality agreement
Remaining issues

Uncertainty
Conditional on satisfactory tax advice?
Specific performance
Section 119 of the Mining Act

Conclusions

JUDGMENT OF THE COURT: This appeal raises issues of contractual intention and certainty. There are other subsidiary issues.

The parties

The first appellant is a public company. In 2005, it held mining tenements entitling it to explore for gold, uranium, nickel and base metals in various parts of Australia.
In May 2006 there was a reorganisation of the first appellant. It changed its name from Bullion Minerals Ltd to Uranium Equities Ltd. Because the parties continue to refer to it as 'Bullion', we will, for the sake of consistency, do the same.
The managing director of Bullion during 2005 was Mr Andrew Bantock, a chartered accountant. Its chairman was then Mr Timothy Goyder, who had over 30 years' experience in the exploration and resources industry. Mr Anthony Kiernan, a solicitor, and Mr Douglas Stewart, a geologist, were non‑executive directors of Bullion. Another geologist, Mr John McIntyre, was employed by Bullion as its exploration manager.
During 2005, the first and second respondents, Mr and Mrs Fewster, were the directors of, and sole shareholders in, the third respondent, Eaglefield Holdings Pty Ltd (Eaglefield). Mr Fewster is a geologist who, prior to 2005, had acquired a number of mining tenements. He also had considerable experience in forming joint venture arrangements with mining companies. Mr Fewster was the sole director of the fourth respondent, Narnoo Mining Pty Ltd (Narnoo Mining). He held the only share issued in that company on trust for a family trust of which his family were the sole beneficiaries.

The facts found by the trial judge

Eaglefield was the owner of what was described as the Narnoo Project. This was a multi‑commodity resource project located in the Eastern Goldfields, some 240 kms from Kalgoorlie. It consisted essentially of two exploration licences and three applications for exploration licences (tenements) covering, in aggregate, some 900 square kms of land. The tenements spanned a sedimentary basin known as the Narnoo Basin. The Narnoo Basin contained a rock deposit described as the Mulga Rock Deposit or MRD. This contained lignite/sandstone-hosted uranium, scandium, nickel and cobalt deposits. The MRD was divided up into three areas identified respectively as Ambassador, Emperor and Shogun. The Narnoo Basin also contained lignite, an oily young coal used primarily for electric power generation.
Bullion learned of the Narnoo Project. On about 2 March 2005, Mr Bantock telephoned Mr Fewster. He told Mr Fewster that Bullion might be interested in acquiring the project. Mr Fewster responded by saying that he was not interested in selling his interest in the project. However, he said that he was considering whether to go into a joint venture with a company needing a secure supply of uranium. He agreed to send, and subsequently sent, an email to Mr Bantock attaching an overview of the project.

Negotiations between 22 March and 20 June 2005

On 22 March 2005, Mr Bantock and Mr Fewster met at Bullion's offices. On the following day, Mr Bantock sent a letter to Mr Fewster by email. In it, he said that Bullion and Eaglefield shared the objective of establishing a Western Australia owned and operated minerals company to develop the Narnoo polymetallic deposit. He said that Bullion was flexible concerning the structure of the project. He made a number of suggestions in that respect.
The trial judge found (Bullion Minerals Ltd v Fewster [2007] WASC 100 [43]) that Mr Bantock's proposal contained four key points. The first was that 'Fewster/Eaglefield' was to establish a new unlisted public company, perhaps to be known as West Australian Resources and Energy (WARE). The second was that WARE would acquire all of the assets of the Narnoo Project. The third was that Bullion would pay to 'Fewster/Eaglefield' $2.5 million and subscribe $10 million to WARE in return for a 50% interest in that company. The fourth was that the board of WARE would comprise Mr Fewster, his nominee, Mr Bantock and Mr Goyder.
Mr Bantock also suggested that a suitable shareholders' agreement would be put in place, with Bullion as manager. The agreement 'would feature common protective clauses and pre‑emptive right terms and would be subject to 50-50 decision‑making in all areas'. The sum of $10 million, to be invested by Bullion through subscription for shares in WARE, would be used to complete the first phase of feasibility work on the project. Bullion was to fund the next stage (anticipated to require up to a further $10 million) entirely, subject to the achievement of agreed progress in the first phase. Mr Bantock anticipated that, on completion of the second phase, the project would have progressed to bankable or near bankable standard. He said that further capital requirements for development of the project would be discussed and the best value option adopted. He went on to say that the parties 'might also have provided within our shareholders agreement for optional exit of either party, pursuant to agreed benchmarks and buy‑out mechanisms, in anticipation of this plan'.
Mr Fewster responded to this letter by a letter dated 29 March 2005. In it, he said that he found the 'funding format' proposed by Bullion unattractive. He set out a number of what he regarded as key parameters. One of these was that the $25 million value put upon the project was too low.
On 9 May 2005, Mr Fewster sent an email to Mr Bantock in which he said that he was moving towards a decision on how to progress the Narnoo Project. The more material part of the email reads as follows:
The ball‑park terms that we are looking at for equity in the Narnoo Project are something along the lines of (all amounts A$:)
For an initial 25% equity in the unlisted public company (let's call it Newco for now) that will hold all aspects of the project excluding scandium (ie U, Ni, Co, Au, oil etc are in; ownership of all Sc would remain with the vendor):
1.Payment of $250,000 cash non‑refundable deposit for a 2 months due diligence period, then
2.Payment of a further $1,000,000 cash to the vendor and subscribe for $15,000,000 shares in Newco (funding for 2-3 years to do FS [feasibility study] on Ambassador, plus progress the Au and oil projects),
3.You have the option to subscribe for 50% of subsequent issues, up to a maximum of 35% of Newco (I suspect only one additional raising will be required to get into production, whereupon we would still like to be holding >50%). The second raising would most likely be an IPO [initial public offering] on the ASX. I would expect a market cap of >$300 M at listing (by comparison with Paladin and Summit).
4.You appointment [sic] of one non exec director (board to be non exec chair, your non exec and two executives),
5.You to hold a first right of refusal over any farm‑out of U exploration prospects.
These terms are without prejudice and subject to execution of a formal Heads of Agreement and payment of the deposit.
Mr Fewster had, by then, consulted with Mr Phillip Golding, a chartered accountant. He had sought advice from Mr Golding concerning taxation aspects of a possible deal of the kind that he had identified. He received some preliminary advice on 13 May 2005. Subsequently, on 16 May 2005, Mr Bantock and Mr Fewster discussed the proposal that had been put up by the latter on 9 May.
On the following day, Mr Bantock sent Mr Fewster an email which attached a letter dated 17 May 2005. This set out the structure of a potential agreement for the development of the mineral deposits. In the letter, Mr Bantock set out the key objectives that had been identified and possible means of achieving them. These involved a number of variations to the initial proposal, including variations to the amount and structure of the consideration to be provided by Bullion.
On 20 May 2005, Mr Fewster emailed Mr Bantock a revised summary of the Narnoo Project. In his response, also by email dated 20 May, Mr Bantock suggested that Mr Fewster might retain the oily lignite rights, to the extent that these were clearly separable from the other polymetallic resources. He said that this might help bridge the gap between the parties on the issue of pricing. Mr Fewster responded to this email on the same day. He said that he was still not happy with the revised deal that had been proposed, but that he had been thinking about a structure 'where the different commodities that can be separated either by way of conversion to [mining leases] or other methods be placed in separate company structures, with differing levels of ownership'.
On 20 June Mr Fewster emailed Mr Bantock a final version of the Narnoo Project summary. On the following day the two men met. Mr McIntyre was also present for part of the meeting, which lasted for about four hours. Mr Fewster showed Mr Bantock a document which suggested that Eaglefield would convey the tenements to Narnoo Mining, save that a subsidiary of Eaglefield would retain all scandium rights. A second subsidiary, to be called Lignite Co, would have the right to acquire the interest in the lignite by payment of an amount equal to twice past exploration expenditure. A company described as Newco would own 80% of Narnoo Mining. Bullion would hold a 50% interest in Newco. Mr Fewster would have a 50% interest in Newco and also a 20% interest in Narnoo Mining. Mr Bantock told Mr Fewster that he would consider the proposed structure before reverting to him.

The confidentiality agreement

On the following day Mr Fewster forwarded a draft confidentiality agreement to Mr Bantock. This was designed to ensure the confidentiality of information concerning the project to be provided to Bullion by Eaglefield. Mr Bantock executed it on behalf of Bullion on that day.
The confidentiality agreement covered all information, common knowledge and know‑how not in the public domain relating to the tenements. Bullion was required to keep the information confidential. It was not to cause or permit the disclosure of any of it to any person other than its employees and consultants, or employees and consultants of its associates. Clause 6 of the agreement provided that Bullion was not, at any time during the term of the agreement, to make use of the information in any manner whatsoever, or to derive any personal benefit from its use or application except as otherwise agreed by Eaglefield. The agreement also provided that Bullion, and any associate, agreed not to obtain, or seek to obtain, any interest or right in ground contained within the tenement area during a two‑year period while Eaglefield held the tenements, except with the written permission of Eaglefield.
Confidential information was supplied by Eaglefield to Bullion some two days later.

The 22 June memorandum

On 22 June, Mr Bantock emailed a letter to Mr Fewster. He also sent a memorandum entitled 'Establishment of Energy and Minerals Australia Ltd (EMA) to develop the Narnoo Polymetallic Resource; A partnership between Bullion … and Eaglefield … ; Outline of Principal Terms of Co‑investment'. The covering email summarised the effect of Bullion's proposal as follows (where 'BLN' is referred to in any emails or other documents this is a reference to Bullion):
[A] progressive earn‑in rather than 50% up front;
$100,000 cash to yourself on signing Heads of Agreement;
$400,000 cash + 4,000,000 BLN shares to yourself on signing the Shareholders/Subscription Agreements (ie. total of approx $1.0M value at that point). (You participate in BLN uplift through the shares);
$15M for 50% of the Narnoo deposit (ex Lignite/Scandium) including a further $1.5M cash/shares to you;
Eaglefield reverts to 60% interest in Narnoo on +45,000t U JORC Measured/Indicated; and
Joint management and control within a complementary team.
The outline of principal terms runs to four pages. The first of the suggested terms reads as follows:
A co-investment structure will be agreed up‑front between the parties and documented in a Heads of Agreement or similar document that sets out the principal terms, subject to relevant due diligence and a jointly developed, professionally structured and compiled business plan.
The last page of the outline consisted of a diagram setting out the final ownership structure. This was said, in the body of the outline, to be 'subject to tax advice with a prime objective being to achieve the best outcome for Eaglefield'. The last term outlined in the memorandum read as follows:
It is agreed that whilst the Scandium and Lignite Rights (clawed back on basis suggested in diagram and to the extent readily separable from the uranium rights) are held by Eaglefield, Eaglefield and EMA will share information arising from their respective exploration and development activities.

Events during July 2005

On 13 July 2005, Mr Fewster received a memorandum of preliminary advice from Mr Golding. In his memorandum, Mr Golding said that his advice should not be relied upon to affirm the tax consequences of the overall proposed structure for the project that had been identified to him. He also said that, once Mr Fewster had resolved the commercial parameters of the proposed deal, tax issues should be reviewed cohesively and comprehensively.
On 22 July 2005, Mr Fewster and Mr Chris Davis (a business associate of his) met with Messrs Bantock and Goyder at Bullion's offices. During the meeting Mr Fewster put forward a further proposal. This was that the consideration to be provided by Bullion should comprise 4 million fully paid ordinary shares in that company, $500,000 in cash and 4 million options to acquire shares in Bullion at a price of 15 cents to 20 cents per share. He proposed that there should be two further tranches of options. The first tranche would comprise 5 million options. These would only be capable of exercise at a price of 20 cents per share upon Bullion's market capitalisation exceeding $50 million. The second tranche of 10 million options would be capable of exercise at a price of 20 cents per share upon the making of a decision to mine, in circumstances in which the resource at the Ambassador deposit exceeded an in‑ground value of $1 billion. Mr Fewster proposed that there should be a new company in the structure. This would have an optional right to earn 50% of the interest in the project. He said that these arrangements would be tax effective from his perspective. Messrs Goyder and Bantock suggested to Mr Fewster that he might want to talk to Bullion's tax advisers in order to help him finalise the structure. He declined that offer and said that his proposal had been looked over by his tax advisers.
During the meeting Messrs Goyder and Bantock proposed to Mr Fewster that they should prepare a heads of agreement that embodied the concepts discussed at the meeting. Mr Fewster agreed that this should be done.

On 25 July, Mr Bantock prepared an annotated diagram and bullet point description of the deal proposed by Mr Fewster. He did so, in part, in order to provide drafting instructions for Mr Kiernan so that Mr Kiernan might prepare written heads of agreement. Mr Bantock's notes recorded, diagrammatically, that Eaglefield would retain ownership of all scandium, lignite and sedimentary exhalative gold (sedex) prospects.
At around this time, Mr McIntyre advised Mr Fewster to peg a number of gaps between the tenements. The need to do so arose because, in 2000, the Australian government had changed the way that latitude and longitude were measured. That had the consequence that the latitudinal/longitudinal coordinates, prior to the change, were some 150 metres different from those after the change. That, in turn, meant that some tenements either overlapped slightly or had a gap between them. The gaps between the tenements were referred to as graticular gaps. The information concerning these gaps had been supplied by Eaglefield to Bullion as part of the confidential information.
On 27 July 2005, Mr Kiernan drafted the heads of agreement. This identified the parties to that document as Bullion, Mr Fewster, Narnoo Mining, Eaglefield and 'Newco Pty Ltd'. The recitals to the draft heads of agreement recorded, amongst other things, that Narnoo Mining was, or was entitled to be, the legal and beneficial owner of the tenements; that Newco and Narnoo Mining had agreed to enter into a joint venture for the exploration, development and mining of the tenements on the terms and conditions set out; that Mr Fewster was the legal and beneficial owner of the Newco shares; and that Mr Fewster had agreed to sell them to Bullion on the terms and conditions set out in the draft agreement. The draft runs to around 10 pages. It is unnecessary, for present purposes, to recite its contents.
On 29 July 2005, Mr Fewster met with Messrs Bantock and Goyder at Bullion's offices. By then a further version of the draft heads of agreement had been prepared (29 July draft). This time, the parties were identified as Bullion, GE Resources Pty Ltd (GER), Narnoo Mining, Eaglefield, Mulga Rock Mining Pty Ltd and Mr and Mrs Fewster. GER was wholly owned by Bullion. Mulga Rock Mining Pty Ltd was a company to be formed or acquired. The recitals read as follows:
A.Narnoo Mining is or is entitled to be the legal and beneficial owner of the Tenements.
B.The Tenements were at one stage held upon trust for Narnoo Mining by Eaglefield.
C.Mulga Rock Mining and Narnoo Mining are parties to the Option Agreement which includes as a provision the agreement of Mulga Rock Mining and Narnoo Mining to enter into a joint venture for the exploration, development and mining of the Tenements on the terms and conditions herein set out ('Joint Venture').
D.Mr Fewster is the legal and beneficial owner of the Mulga Rock Mining Shares.
E.Mr Fewster has agreed to sell and GER has agreed to purchase the Mulga Rock Mining Shares on the terms and conditions herein set out.
F.In consideration of all parties agreeing to enter into this Agreement:
(i)BLN has agreed to guarantee all obligations of GER hereunder; and
(ii)Mr Fewster and Mrs Fewster have agreed to guarantee all obligations of Narnoo Mining and Eaglefield hereunder.
The definition section of the 29 July draft contained, amongst others, definitions of 'Definitive Feasibility Study', 'Reserved Minerals' and 'Other Minerals'.
The term 'Other Minerals' was defined as meaning 'all minerals, ores and concentrates other than uranium and the Reserved Minerals'.
The words 'Definitive Feasibility Study' were defined to mean a report of the commercial and technical feasibility of mining and producing uranium in significant quantities. That definition went on to provide that the report was to include, in reasonable detail:
(i)an estimate of reserves;
(ii)a description of the suggested methods of extraction;
(iii)a description of proposed processing and waste disposal;
(iv)an economic evaluation including an estimate of the capital expenditure requirements and operating costs and a comparative analysis of the effect of various assumptions, financing costs, operating costs and taxation; and
(v)an estimate of operating levels, environmental costs, shut down and reclamation and rehabilitation costs.
The term 'Reserved Minerals' was defined as meaning:
[s]candium, lignite and sedimentary exhalative gold in those areas marked by cross-hatching in Annexure 'A' hereto to the extent that these Reserved Minerals are clearly separable in a geological, exploration and development sense, from the underlying uranium resource.
There was, in fact, no annexure A to the 29 July draft.
Clauses 2, 3 and 4.1 of the draft read as follows:
2.0NATURE OF THIS AGREEMENT
2.1Nature
The Parties acknowledge that this Agreement contains only the essential commercial elements of the transaction contemplated hereunder and that more formal and comprehensive legal agreements will be prepared evidencing the matters herein no later than the shareholder's meeting of BLN as referred to in clause 3.1. These more formal legal agreements shall comprise a sale and purchase of shares (for the Mulga Rock Mining Shares) and a mining and exploration joint venture (for the Joint Venture) and contain such provisions including representations and warranties as may be found in formal legal agreements for the type of transactions contemplated herein.
2.2Binding Nature of this Agreement
(a)Until such time as the more formal legal agreements referred to in clause 2.1 are executed this Agreement (being titled Heads of Agreement) is binding on all parties hereto and supersedes and replaces all previous agreements, arrangements and understandings in relation to the subject matter thereof.
(b)Until such time as the conditions in clause 3.1 are satisfied (or the Agreement is terminated through lack of satisfaction):
(i)none of Mr Fewster, Narnoo Mining or Eaglefield will discuss with any external parties any transaction in relation to the Mulga Rocks (Narnoo) Uranium Project without the prior consent of GER; and
(ii)Mulga Rock Mining and Narnoo Mining agree there will be no variation made to the terms of the Option Agreement and the Joint Venture as expressed herein.
3.0CONDITIONS PRECEDENT
3.1Conditions
This Agreement is conditional upon:
(i)such consents and approvals as may be necessary being obtained on terms and conditions satisfactory to GER to give full force and effect thereto including but not being limited to the approval of the shareholders of BLN under ASX Listing Rules and as may be required under the Mining Act; and
(ii)Mulga Rock Mining and Narnoo Mining not varying the terms of the Joint Venture and with GER approving the terms and conditions of the formal Joint Venture agreement to be prepared pursuant to clause 2.1.
3.2(a) If the conditions in clause 3.1 are not satisfied within 90 days (of such later date as may be agreed as between GER and Mr Fewster) then either party may terminate this Agreement.
(b)Each Party shall use its best endeavours to have the conditions in clause 3.1 satisfied insofar as carriage of the same can be undertaken by them.
4.0SALE AND PURCHASE OF MULGA ROCK MINING SHARES
4.1Sale and Purchase
Mr Fewster agrees to sell and GER agrees to purchase free of all encumbrances and third party interests the Mulga Rock Mining Shares for the Purchase Price and on the terms and conditions herein set out.
Clause 5 of the draft agreement read as follows:
5.0JOINT VENTURE ESTABLISHED UNDER THE OPTION AGREEMENT
5.1Establishment of Joint Venture
Narnoo Mining and Mulga Rock Mining confirm they have agreed to establish the Joint Venture immediately upon exercise by Mulga Rock Mining of the option granted to it pursuant to the Option Agreement and to avoid any doubt the principal terms of that Joint Venture are set out in this clause 5.
5.2Joint Venture
The Joint Venture will be established and commenced as and from the date Mulga Rock Mining exercises the Option Agreement and as and from commencement the respective Joint Venture Interests will be:

Mulga Rock Mining

50%

Narnoo Mining

50%

5.3Mulga Rock Mining to Sole Fund Joint Venture Expenditure
(a)Mulga Rock Mining shall sole fund all Joint Venture Expenditure up to completion of a Definitive Feasibility Study.
(b)Whilst Mulga Rock Mining remains sole contributor to Joint Venture Exploration expenditure it shall expend such sums as are necessary to maintain the Tenements in good standing pursuant to the Mining Act or any other appropriate legislation or laws.
(c)If following completion of a Definitive Feasibility Study the parties to the Joint Venture do not make a Decision to Mine for Uranium, Mulga Rock Mining will continue to meet such Joint Venture Expenditure as is necessary to maintain the Tenements in good standing up to an amount equal to 10% of its Joint Venture Expenditure up until completion of the Feasibility Study. Following Mulga Rock Mining funding the further Joint Venture Expenditure as set out in this sub clause (c), the parties to the Joint Venture shall contribute to Joint Venture Expenditure in accordance with their then respective Joint Venture Interests.
(d)The expenditure by Mulga Rock Mining as referred to in clause 5.3(c) above which is in addition to what would have been its obligation based on its then Joint Venture Interest shall be a debt due and owing to it by the other parties to the Joint Venture and recoupable by it from income received by the Joint Venture or from any party thereto in dealing with its Joint Venture Interests.

5.4Reserved Minerals
The Joint Venture excludes the Reserved Minerals and unless Mulga Rock Mining and Narnoo Mining agree otherwise Mulga Rock Mining shall acquire no rights in relation to the Reserved Minerals irrespective of any expenditure undertaken in relation to the Tenements by Mulga Rock Mining.
5.5Mulga Rock Mining to be Manager
Mulga Rock Mining shall be the Manager of the Joint Venture and shall have such rights and obligations of a Manager of a Joint Venture of this type including but not being limited to:
•during the period it is the sole contributor to Joint Venture Expenditure, the right to conduct all activities in its discretion provided it conducts these activities in a prudent and responsible manner
•prior to establishing the Management Committee referred to in clause 5.6 the obligation to consult with and provide details to Narnoo Mining on at least a monthly basis details of all proposed exploration and development programs
•be entitled to a charge for recovery of administrative and overhead expenses of 12.5% of expenditure

5.6Other Terms of the Joint Venture
Mulga Rock Mining and Narnoo Mining agree that the more formal Joint Venture Agreement referred to in clause 2.1 will be entered into containing the usual terms and conditions including warranties as to title and the like however to avoid any doubt that more formal agreement must contain the following further provisions:
•establishment of a Management Committee following completion of the Definitive Feasibility Study with votes in that Committee in accordance with the respective Joint Venturers' Interest
•pre‑emptive rights and to avoid any doubt a change of control of any party to the Joint Venture shall be a deemed disposal
•dilution provisions
•that after a Definitive Feasibility Study is completed the participants in the Joint Venture will contribute to Joint Venture Expenditure in accordance with their then applying Joint Venture Interest subject to the funding arrangements in clause 5.3(c) and also subject to the right to have their respective Joint Venture Interest diluted in accordance with the usual formula found in such joint ventures and for the purpose of the dilution provisions the deemed expenditure of each of the parties shall be an amount equal to all sums expended by Mulga Rock Mining prior to the Definitive Feasibility Study
•an area of influence and also provisions requiring a party that acquires an interest in any mining tenement falling within that area of influence to offer the interest acquired to the Joint Venture at cost.

5.7Decision to Mine for Uranium
The Joint Venture Agreement shall contain provisions enabling the Joint Venture to make a Decision to Mine for Uranium following completion of a Definitive Feasibility Study and also allowing a participant in the Joint Venture to sole risk Mining on any Production Area if the other members of the Joint Venture do not wish to participate. Usual terms and conditions that would apply to a Joint Venture of this type given the scenario in relation to sole risking of Mining shall be included.
A participant in a Decision to Mine for Uranium shall contribute to all relevant capital and operating expenditure in accordance with its Joint Venture Interest.
5.8Withdrawal
At any time prior to the completion of a Definitive Feasibility Study Mulga Rock Mining may withdraw from the Joint Venture by written notice to Narnoo Mining but subject to it having met, on a pro rata basis, expenditure requirements to maintain the Tenements in good standing. Upon such withdrawal Mulga Rock Mining shall retain no interest whatsoever in the Tenements or the Joint Venture.
5.9Minerals other than Uranium and Reserve Minerals
Mulga Rock Mining is entitled to make a Decision to Mine for Other Minerals at any time prior to it earning its Joint Venture Interest herein and if doing so the following shall apply:
(i)Mulga Rock Mining shall meet all costs and expenses in relation thereto but not being limited to capital and operating expenses;
(ii)after reimbursement to Mulga Rock Mining of all expenses incurred by it in relation to the Mining and exploration of these Other Minerals the net proceeds shall be divided equally as between Mulga Rock Mining and Narnoo Mining.

Such decision shall be made in consultation with Narnoo Mining and shall not harm the value of the uranium resource or unreasonably interfere with the exploration, development and Mining thereof.
5.10Put and Call on Joint Venture Interests
(a)Upon Mulga Rock Mining completing a Definitive Feasibility Study for uranium then Narnoo Mining has the right but not the obligation to put an offer to Mulga Rock Mining for Mulga Rock Mining to acquire Narnoo Mining's Joint Venture Interest at a specified price, satisfied by shares in BLN (based on the preceding 5 days volume weighted average price on ASX) ('the Price').
(b)If Narnoo Mining does this then Mulga Rock Mining may accept or reject this offer within 30 Business Days of receiving the same.
(c)If Mulga Rock Mining does not accept the offer to sell made by Narnoo Mining then, Narnoo Mining will purchase Mulga Rock Mining's Joint Venture Interest at the Price within 30 Business Days of Mulga Rock Mining's non acceptance and for this purpose the Price will be the cash equivalent of 95% of value of the shares in BLN comprising the Price in sub clause 5.10(a).
(d)Settlement of any accepted offer referred to in this clause 5.10 shall take place within 45 Business Days of such offer having been accepted.

At the trial, there was a dispute as regards the date upon which Mr Fewster was first given a copy of the 29 July draft. The trial judge accepted the evidence of Messrs Bantock and Goyder in that respect. He found that the draft was given to Mr Fewster during the meeting on 29 July 2005.
On 2 August 2005, Mr Fewster and Mr Davis met with Mr Michael Bowen and Mr Grant Paterson. Both were solicitors. Mr Bowen was a partner of the firm Hardy Bowen. Mr Paterson was employed by that firm. The two solicitors represented a company known as KTL Technologies Ltd (KTL). Mr Bowen outlined to Messrs Fewster and Davis a proposal that KTL wished to put to Mr Fewster for the acquisition of the Narnoo tenements. In the course of the meeting, Mr Bowen suggested to Mr Fewster that convertible preference performance shares (CPPSs) might be a tax effective means of structuring a transaction between KTL and Mr Fewster's companies.
On 4 August Mr Fewster met with Messrs Bantock and Goyder at Bullion's offices. Mr Fewster said that the current proposal, as reflected in the 29 July draft, would not be effective for tax purposes and he consequently proposed an alternative structure involving the issue to him of CPPSs. He suggested that a number of his entities would receive various elements of the consideration payable. Messrs Bantock and Goyder told him that it was a matter for him who should be the recipients of the consideration and that, so long as Bullion acquired 50% of the project, the nomination of recipients was of no concern to them. Mr Fewster explained that the appropriate structure was being driven by his need to manage his tax position. He suggested that the CPPSs be issued by way of three tranches. The third of these would be subject to Bullion retaining the sedex and lignite rights. He also proposed that a 'rights and usage agreement' be entered into by a subsidiary of Narnoo Mining, which would hold the lignite and sedex assets.
During the meeting, Mr Fewster made a number of handwritten changes to the wording of the 29 July draft. After the meeting, Mr Bantock prepared a document entitled 'Discussion with M Fewster: Changes to HOA'. This was prepared for Mr Kiernan so that he would know what changes were required to be made to the heads of agreement to reflect the discussion between the parties. This document, which was handwritten, encompassed some 3 1/2 pages. It recorded, amongst other things, that Mulga Rock Mining was no longer involved, that Bullion would instead acquire a 50% interest in the tenements and that 50% of the lignite/sedex rights on the tenements might be held by another subsidiary of Narnoo Mining. It said, in this last respect:
[I]f [Bullion] does not elect to keep those rights after Dec[ember] 2007, those rights might pass across to Narnoo (not sure how this works in practice ‑ he is getting advice on this). He favours the concept of a 'Rights and Usage Agreement'.
The memorandum also informed Mr Kiernan of the changes to the consideration. The consideration now comprised $500,000 in cash, 1.5 million options, 1 million fully paid ordinary shares, three annual payments of $600,000 and 9 million CPPSs, which would automatically convert to fully paid ordinary shares in Bullion on a one‑to‑one basis upon Bullion's market capitalisation exceeding $20 million. A further 10 million CPPSs were automatically to convert to fully paid ordinary shares in Bullion on a one‑to‑one basis upon the happening of any feasibility study establishing a 'JORC [Joint Ore Reserves Committee] standard resource'. Another 25 million CPPSs would automatically convert on 31 December 2007 if Bullion elected to keep the 50% interest in the lignite and sedex.
The memorandum introduced, for the first time, the concept of a pre‑feasibility study. This was to be a study, executed to an appropriate professional standard by Bullion (subject to checking by an external professional in respect of key resource aspects), 'to determine resources to measured, indicated, inferred status under JORC'.
Finally, so far as is presently relevant, the note recorded that Bullion was to fund the whole of the project through to a decision to mine.
At the same time as he was negotiating with Bullion, Mr Fewster had also been negotiating with other parties in respect of the Narnoo Project. His negotiations with KTL had reached the stage at which he had sent an email to KTL, on 3 August 2005, attaching what he described as an outline of a heads of agreement. He invited KTL to give him 'a yes or no or maybe on the proposal' by 2 pm on Thursday 4 August 2005.

On 5 August 2005, Mr Fewster telephoned Mr Bantock and told him that he had received offers from other companies. Later that day, Mr Bantock and Mr Goyder had a discussion with Mr Fewster over the telephone. The trial judge found that they told Mr Fewster, in effect, that the deal that had been put to him was based on the structure that he had wanted and that they could vary the proposal according to his wishes. Mr Fewster responded by saying that he was unsure what he wanted to do. He said that he would 'sleep on it'.

Saturday 6 August

On 6 August 2005 Mr Bantock drafted a letter to Mr Fewster. In it, he set out the key components of what he described as 'an outstanding model for corporatisation'. One of these key components was that the other components had been structured in a tax effective way, subject to further professional advice to be obtained by Mr Fewster. He concluded by saying that Bullion had booked a spot at a forthcoming uranium conference. He suggested that it would be fun for him and Mr Fewster to take the podium together and present their development agenda. This letter was never sent. It was overtaken by a series of telephone conversations.
The first of these took place when Mr Fewster telephoned Mr Bantock at about 11.30 am on that day. In his evidence at the trial, Mr Bantock said that, during the telephone conversation, Mr Fewster said words to the effect that he wanted to do a deal that day and that, if Bullion accepted, on that day, the terms proposed by him, he would stop negotiating with other parties and the deal would be done. Mr Fewster outlined the principal terms of his proposal.
When commenting on this telephone call, the trial judge said that he accepted that the broad effect of the discussion was as Mr Bantock described it. However, he added that Mr Bantock (whose evidence he generally, but not always, preferred over that of Mr Fewster) had merely stated the effect of what had been said. The trial judge went on to mention [303] that, during the course of cross‑examination, Mr Bantock's evidence had been that he clarified with Mr Fewster that what Mr Fewster was proposing was that 'this is the deal and if we accept it, then the deal is done'. He said that Mr Fewster responded by saying, 'Yes. I will stop talking to other parties. You can go ahead and get your trading halt. We're done'. The trial judge said, of this response, that it was 'consistent with [Mr] Fewster making a commitment to cease discussions with the other parties with whom he had been negotiating and negotiate exclusively with Bullion to conclude an agreement in relation to the tenements and the project'.
After this telephone conversation, Mr Bantock convened an urgent meeting of Bullion's board. The trial judge found that the most reliable guide to the contents of the telephone conversation between Mr Bantock and Mr Fewster was the minutes of that meeting. Physically present at the meeting were Mr Goyder, Mr Bantock and Mr Kiernan. Mr Stewart was present by telephone, but only for part of the meeting. Because the minutes are of critical importance, we will set them out in full. We will do so in two parts. The first part of the minutes reads as follows:
Mr Bantock briefed the Board on recent discussions concerning the potential acquisition of a 50% interest in the Mulga Rock Uranium‑Polymetallic Project.
Messrs Bantock and Goyder had discussed with the vendor, Mr Mike Fewster, a potential investment over the preceding few days, concluding on the previous afternoon. These discussions had outlined a number of transaction structures and arrangements, including the invitation for Mr Fewster and another nominee to join the Board of Bullion, should a deal be concluded.
Earlier this morning, Mr Fewster had telephoned Mr Bantock and advised of the deal structure which, if agreed to by Bullion, Mr Fewster would commit to, today.
Mr Bantock outlined the principal terms of that structure as follows:
•Cash payment of $1.1 million, up front (to be characterised as for purchase of intellectual property relating to the project, including Mr Fewster's master's thesis);
•1 million Bullion f.p.o. shares, up front;
•1.6 million $0.20 5‑year Bullion options, up front;
•25 million Convertible Preference Performance Shares (CPPS), which convert to 25 million Bullion f.p.o. shares upon Bullion's market capitalisation exceeding A$30 million;
•20 million CPPS, which convert to 20 million f.p.o. Bullion shares upon Bullion electing to retain lignite/sedex minerals rights beyond 31 December 2007;
•each tranche of CPPS will be subject to a 2‑year voluntary escrow period;
•Mr Mike Fewster and Mr Chris Davis are to join Bullion's Board;
•Bullion is to fund all project expenditure through to Decision to Mine;
•The minimum expenditure requirement of $2 million per annum would apply in the period prior to Bullion producing a PFS;
•two further cash payments are to be made to Mr Fewster or his nominee of $600,000 each on 1 July 2006 and 1 July 2007.
Mr Bantock outlined the reasons for development of the deal in the above principal structure, as explained to him by Mr Fewster, and concluded by reiterating that, whilst Bullion may seek a slightly different structure in a number of the elements, it was time to make a decision as to whether to commit or not, given Mr Fewster's undertaking that if Bullion agreed to deal today, then the deal would be done. Mr Bantock commented that Mr Fewster was waiting for his call.
The Board then discussed the merits of investing in the Mulga Rock Project. Mr Stewart outlined his view from the technical review undertaken by the Company's Exploration Manager Mr John McIntyre. Messrs Goyder and Bantock outlined their commercial view developed over the preceding months of involvement with Mr Fewster and the project.
Mr Stewart left the meeting owing to a pressing commitment, on the undertaking that he would be briefed on the outcome of the meeting, prior to Bullion committing to the deal.
Mr McIntyre joined the meeting by teleconference and was asked for his view of the project. Mr McIntyre outlined his endorsement of the decision to invest, providing a summary of due diligence by Bullion's technical personnel. The Board thanked Mr McIntyre for his input and Mr McIntyre left the teleconference.
The Board further discussed the investment opportunity and IT WAS RESOLVED that, subject to the final agreement of Mr Stewart, the Company would commit to the proposal put by Mr Fewster.
The second part of the minutes reflects the contents of a further telephone call with Mr Fewster which took place during the course of the board meeting. That part of the minutes reads as follows:
Mr Fewster then joined the meeting by teleconference.
Mr Bantock outlined that, as he had explained to Mr Fewster in their previous telephone discussion earlier in the morning, the Board of Bullion had met to consider the deal put by Mr Fewster. He then summarised the deal put by Mr Fewster this morning, as outlined above.
Mr Bantock stated each principal point to the deal and sought and received for each point Mr Fewster's understanding and agreement of the point. He also confirmed that the above comprised the principal points of the deal. It was then clarified that the basis of future dealing was that if Mr Bantock telephoned Mr Fewster later in the day saying that Bullion accepted his deal, then the deal outlined above would be done.
The Board explained to Mr Fewster that it awaited a further conversation with Mr Stewart before this confirmation would be made. Mr Fewster agreed and the Board assured Mr Fewster that Bullion looked forward to working as his partner to optimise the project and develop an outstanding uranium business.
Mr Bantock then summarised the process from here, being that subject to Mr Bantock confirming Bullion's acceptance of the deal, Bullion would request a trading halt on the ASX from Monday 8 August 2005, which under the Listing Rules could last for two days. It was expected that the agreed deal would be summarised in a bulletpoint list, which Messrs Bantock and Fewster would review by Monday lunchtime, after which the Heads of Agreement embodying the agreed deal would be prepared, concurrent with the relevant stock exchange announcement, over the course of Monday afternoon and Tuesday. On this basis, it was hoped that Bullion's ASX trading halt would cease on Tuesday, with the public announcement of the deal being released on the Wednesday morning. Mr Bantock stated that he would work on the bullet points over the weekend, and Mr Kiernan stated he would update the previous draft Heads of Agreement to incorporate today's changes pursuant to the agreed deal.
Each party wished the other well and Mr Fewster left the teleconference.
Mr Bantock undertook to the meeting that he would update Mr Stewart with the further outcome of the meeting and, upon receiving his confirmation of agreement to the deal, would contact Mr Fewster to advise of Bullion's commitment.
The trial judge found that the minutes were also the most reliable guide to the contents of the second telephone conversation with Mr Fewster [105]. He added later that, during the meeting, the board was made aware that the proposed transactions excluded scandium [227].
In his evidence at the trial (seemingly accepted by the trial judge: [24], [296]), Mr Kiernan recalled that, during the conversation with Mr Fewster that took place during the course of the board meeting, someone said words to the effect that they should aim to execute the heads of agreement by the following Tuesday evening in order to allow the trading halt to be lifted by Wednesday morning.
At about 5 pm, Mr Bantock telephoned Mr Fewster and told him that he expected to speak with Mr Stewart shortly and (as the trial judge put it) 'to confirm with Fewster his agreement with Bullion' [115]. Mr Fewster said that he was going to a soccer match, but that Mr Bantock could contact him on his mobile telephone in order to confirm their agreement. During the conversation, Mr Fewster asked Mr Bantock to confirm an aspect of the deal that had previously been raised but had not yet been included in the draft heads of agreement or discussed in the telephone conversation earlier that day. This was Mr Fewster's request that Bullion commit to a minimum expenditure requirement of $750,000 in relation to the lignite/sedex minerals area of the tenements by 31 December 2007. Mr Bantock said that this had previously been discussed and that it should consequently be included in the draft heads of agreement.
After this conversation, Messrs Goyder and Bantock telephoned Mr Stewart. Mr Stewart had, by then, spoken to Mr McIntyre. Mr Stewart said that he 'agreed the agreement should proceed' (trial judge's reasons [118]).
Mr Bantock then telephoned Mr Fewster, who was at the soccer match (soccer telephone conversation). He used a speaker phone, in the presence of Mr Goyder. There was some dispute at the trial concerning what was said during this conversation. However, the trial judge found that Messrs Bantock and Goyder conveyed to Mr Fewster that Bullion 'accepted the deal that Fewster had proposed earlier in the day and that Bullion would proceed with that deal' [120]. The trial judge also accepted Mr Bantock's evidence that, during this conversation, Mr Fewster said words to the effect that Messrs Bantock and Goyder should be delighted, but that he was also delighted and that they should crack open a bottle of champagne to celebrate the deal. Mr Bantock concluded the telephone conversation by arranging for the three of them to meet at Bullion's offices on the Monday morning at 9.30 am.

Sunday 7 August

On the following day Mr Bantock prepared a handwritten bullet point list headed 'Agreement for the Development of the Mulga Rocks Uranium‑Polymetallic Project'. While drafting the list, Mr Bantock telephoned Mr Fewster to clarify a point. He ended the telephone call by confirming to Mr Fewster that, on the basis of their agreement, Bullion would be placed in a trading halt on the following morning.
The bullet point list prepared by Mr Bantock includes the following:
•HOA to be followed by a full agreement ASAP.
•Agreement is subject to necessary consents per the ASX rules and Mining Act. All parties to use best endeavours to get these.

Monday 8 August

On the morning of 8 August, Mr Bantock wrote to the Stock Exchange requesting a trading halt in respect of Bullion's shares. He said, in his evidence at the trial, that, by the time that Bullion halted trading in its shares, a process had been put in place by which the deal that had been done would be concisely summarised in the bullet points; the heads of agreement would be prepared; and then, once the heads of agreement had been signed, Bullion would be in a position to make an announcement prior to the opening of trading on the Wednesday.
On the same morning, Mr Fewster sent an email to KTL in which he said:
Events have moved fast down here, and I regret to inform you that I have agreed to basic terms with a Perth‑based company, with the intention of executing a Heads in a few days. An announcement should be out on Wednesday.
However, if for some reason the deal is not concluded, I will contact you again, and we can pick up discussions again.
Mr Fewster arrived at Bullion's offices at about 9 am that day. He had discussions with Mr McIntyre and Mr Stewart. Mr Davis met with Mr Bantock at about the same time. Mr Bantock told Mr Davis that Bullion had done a deal with Mr Fewster and that it was in a trading halt. He discussed with Mr Davis a number of matters relating to the heads of agreement. The two men also discussed Mr Davis' future employment with Bullion.
At about 10.30 that morning, Mr Bantock asked Mr Fewster to join him in the boardroom for the purpose of working through the bullet point list with himself and Mr Goyder. He gave each of them a copy of that list (first bullet point list). The three men worked through the list. A number of changes were made, resulting in the preparation of a second draft (second bullet point list).
There was a good deal of dispute concerning what was said during the process of working through the first bullet point list. The trial judge said, in this respect [141] ‑ [143]:
I accept the evidence of Fewster to the extent that on that Monday the parties discussed some items on the first bullet point list, some items were changed and others were left without Fewster saying that he was finally satisfied with the terms in which it was stated. I am not satisfied that Fewster said words to the effect that the second list of bullet points accurately reflected the agreement they had made.
I do not place any weight on the statement in Bantock's original witness statement … that he asked Fewster in respect of each point on the bullet point list words to the effect: 'did the words used in that bullet point reflect Fewster's understanding of our agreement?' Nor do I accept Bantock's evidence that: 'Where he [Fewster] felt that the point had not represented the agreement, he advised of this and amendments were made'. Bantock's evidence in his responsive statement shows that Bantock asked whether Fewster agreed with the point on the bullet point list not whether Fewster agreed that the point represented the agreement.
The parties were engaged in a process of discussing terms to be incorporated into a heads of agreement. They were not engaged in a discussion about what had been agreed on 6 August or at an earlier time.
It is necessary to set out the more material elements of the second bullet point list. These were as follows:
•Bullion will acquire a 50% interest in all mineral rights except Scandium at the Mulga Rocks uranium‑polymetallic project from commencement. This will comprise a direct interest in the subject tenements other than the Lignite/Sedex rights that may be in a purpose specific company (see below).
…
•Bullion will operate the joint venture and fund all tenement costs (including minimum expenditure commitment and do all required to keep in good standing), exploration, evaluation and development work through to a decision to mine. (This point also triggers the 'gelignite clause' ‑ see below.)
•Bullion and Mike Fewster will work in partnership to optimise the project and develop a significant uranium‑polymetallic business, founded on applying the right resources, the right people and appropriate capital funding.
•Consideration:
•1M f.p.o. BLN shares (to Mike and Suzanne Fewster, for intellectual property including thesis, maps, plans, other assets)
•1.6M $0.20 BLN options ‑ 5 year term (1M to M & S Fewster, 0.6M to Chris Davis) (to Mike and Suzanne Fewster, for intellectual property including thesis, maps, plans, other assets).
•$1.1M (GST exclusive) cash up front, payable:

-

-

$0.15M (non-refundable deposit) on signing Heads of Agreement (paid to M Fewster)

$0.95M within 2 business days after BLN shareholders meeting that approves the deal (and 5 business days prior to the requirement to provide application monies pursuant to the placement)

]

]

]

]

]

For purchase of M Fewster Intellectual Property, including thesis, maps, plans, other assets

•25M unlisted Convertible Preference Shares, which convert to f.p.o. BLN shares on a 1:1 basis upon BLN's market capitalisation exceeding $30M (based on listed issued capital prior to the conversion and the last 5 days ASX volume weighted average price).
(Professional advice may change the number, description or characterisation of these, but the end result will be 25M f.p.o. BLN shares.)
•20M unlisted Convertible Preference Performance Shares, which convert to f.p.o. BLN shares on a 1:1 basis where:
-BLN elects on or before 31 December 2007 to exercise its right to keep the Lignite/Sedex rights (ie: its 50% interest in these 'Reserved Minerals').
(Professional advice may change the number, description or characterisation of these, but the end result will be 20M f.p.o. BLN shares.)

…
•Approval of the deal is expected by BLN shareholders at a General Meeting required to be called pursuant to ASX rules and the Corporations Act. This meeting will be expedited, but is expected to require 45-60 days from date of signing of the HOA.
•Two further cash payments of $600K (GST exclusive) each on 1/7/06 and 1/7/07, to be paid for M Fewster I.P. or to Eaglefield for administration of the project. Payable even if BLN has withdrawn from the JV.

•Placement
•By separate agreement a placement will be made to Mike Fewster, his family and others of 8M BLN f.p.o. shares at $0.125 per share. This is subject to approval of the deal at the above General Meeting. (M & S Fewster will subscribe directly or indirectly for 5M of these shares.)
•An additional 2M shares at $0.125 per share will be placed to parties nominated by BLN.

•Board
•Mike Fewster and Chris Davis will be invited to join the BLN board immediately after the General Meeting that approves the deal.

•Sedex/Lignite
•Mike Fewster will provide a map showing the previously explained geographical position of the subject Sedex/Lignite rights. Whilst BLN will have Uranium rights in all tenements, it must declare its decision by 31 December 2007 on whether it wishes to keep the Sedex/Lignite rights. Keeping them triggers the 20M CPPS (see above).

•Bullion to fund the project 100% through to Decision to Mine.
•Decision to Mine to be a unanimous decision.
•Both parties will make reasonable good faith endeavours to arrange cost effective and appropriate project financing for development of the project.

•Unanimous decision relief clause will work on the basis that if Eaglefield/Fewster do not agree, BLN can arrange the finance, adding a 1.5% margin to the cost of finance. Narnoo Mining will contribute up to a maximum of 60% of its share of net cash return to servicing the debt arranged and put in place for the project (including the margin). This ratio of cash distribution will determine the maximum extent of debt that may be taken on and therefore the equity requirement. (Dilution applies where either party does not contribute its share of the equity requirement determined per the above, but the 'gelignite clause' applies prior to the equity contribution requirement applying.)
•Following the Decision to Mine, if the 'gelignite clause' (see below) has not been exercised, or has been exercised without ownership changing hands, the JV will move to a mining JV phase.
•Either (a) Government prohibition on Uranium mining, or (b) Native title issues, will be 'force majeure' events that preclude a Decision to Mine to be declared. If that happens, BLN can drop its expenditure requirement to the things required to keep the tenements in good standing.

•A minimum expenditure requirement of $2.0M per annum will apply for the period until BLN has delivered a PFS. The $2.0M requirement will have an anniversary date, being the date we sign the Heads of Agreement. (Hence $2.0M per annum spend to PFS before BLN can withdraw with no interest.)
•A minimum expenditure requirement of $750K applies for the Sedex/Lignite areas prior to the 31 December 2007 decision date (ie in addition to the above).

Other Concepts
•'Death Trigger': If BLN goes into insolvency then Eaglefield/Fewster/Narnoo get the right to buy back the 50% interest for $1.
-Only for a period prior to Decision to Mine.
-Liquidation triggers this immediately.
-Voluntary administration/receivership only triggers this if they continue for more than 6 months.
-Only hold off death trigger in voluntary administration/receivership if voluntary administrators/receivers keep the tenements in good standing.

…
•PFS: Defined as a study executed to an appropriate professional standard by BLN, to determine resources to measured, indicated, inferred status under JORC. External competent professional sign‑off on key resource aspects.
(ie Chris Davis to manage from within BLN ‑ does not have to carry the expense of wholly external production.)

•Contribution to costs from Scandium revenue: Scandium rights always remain 'outside the deal'.
(a)Based on the non‑Scandium revenue pit optimisation, Mike Fewster will agree to pay recovery costs through the mill + 10% ‑ to a maximum of $10 per kg of Scandium recovered in concentrate (or higher ‑ if proved by an independent expert).
(b)Beyond the above, Mike Fewster may nominate a Scandium Value to be included in a mine optimisation. When mining occurs pursuant to this optimisation, Mike will pay that amount on delivery of the subject concentrate.
(c)Mike Fewster may also further nominate if additional mining is required to access Scandium ‑ rich area not 'carried' by the 'all minerals' optimisation, in which case Fewster/Eaglefield will pay this cost plus ... 10%.

…
•Heads of Agreement to be followed by a full agreement as soon as possible, but no later than the General Shareholders Meeting, comprising:
(1)        Sale Agreement;
(2)        Narnoo Joint Venture; and
(3)        Reserved Minerals Joint Venture
•Agreement is subject to necessary consents per the ASX rules and Mining Act. All parties to use best endeavours to get these.
•Pre‑emptive rights shall apply to sale by either party of their rights per the agreement, throughout.
•The 'gelignite clause' is triggered after a Decision to Mine is made and obliges Narnoo to put an offer to BLN. See attached mark‑up from the previous draft Heads of Agreement.
…
•Standard representations and warranties will be made by Mike Fewster in relation to the project and interests being acquired by BLN.
•For the duration of the JV, each party shall jointly own the I.P. and minerals data.
•If BLN does not elect to keep the Sedex/Lignite assets after 31 December 2007, it shall hand over all relevant data to Mike Fewster. If subsequent to this Mike Fewster wants to sell those rights to third party, BLN shall have a right to match any offer (provided that is not a related party).
•Clause 5.9 per the first draft Heads of Agreement previously circulated will apply re mining other minerals (ie other than Ambassador, Emperor or a $1B JORC resource). However, only the costs of that resource are to be recovered prior to profit distribution.
•The decision to mine trigger needs to be either (a) for mining of Ambassador or Emperor polymetallic resource or (b) another resource valued at over A$1B in‑situ value of at least JORC Standard Inferred Resources.
…
•If BLN withdraws from the JV it remains liable for rehabilitation requirements imposed to that point.

During his discussions at Bullion's offices, Mr Fewster was asked by Mr McIntyre in whose name the graticular gap block tenements should be pegged. It was agreed that they should be pegged in the joint names of GER and Narnoo Mining. Mr McIntyre said that he would issue instructions accordingly. Those applications were lodged at the Department of Industry and Resources later that day.
After meeting with Bullion's representatives, Mr Fewster went to the offices of Hardy Bowen. He had retained that firm earlier that day. He discussed the second bullet point list with Mr Paterson. During this discussion, Mr Paterson received an email from Mr Kiernan attaching a redraft of the heads of agreement (8 August draft). Until that time the only draft of the heads of agreement that had been seen by Mr Fewster was the 29 July draft. The email from Mr Kiernan mentioned that the 8 August draft had not yet been reviewed by Bullion.
Later that evening, Mr Bantock spoke to Mr Fewster on the telephone. Mr Fewster told him that Mr Paterson had raised three major points concerning the second bullet point list and the 8 August draft. The first major point related to a requirement that Bullion should obtain an independent expert's report to accompany the notice of meeting for its shareholder's meeting that would have to be called in order to approve the deal. The second related to the need for a prospectus. Mr Fewster could not remember what the third point had been. However, the importance of this conversation rests in the fact that, having identified these points to Mr Bantock, Mr Fewster asked him to ask Mr McIntyre to 'pull' the tenement applications in respect of the graticular gap blocks. Mr Bantock said that he would ask Mr McIntyre to do so but that he doubted whether it was possible. It turned out that it was not possible to do this.

Tuesday 9 August

On the morning of 9 August, Mr Fewster met with Mr Paterson. He told Mr Paterson that the draft heads of agreement was very brief and did not properly reflect his understanding of the transaction in four respects. The first was that the transaction was to be a farm‑in and not a sale. The second was that the purchase price to be paid in the short term was for intellectual property. The third was that Bullion would have a right to farm‑in to the exploration licences but would not acquire an interest unless and until it completed its funding obligations. The fourth was that the interest would be transferred by way of security, with a charge back to Mr Fewster.
Later that morning, Messrs Paterson, Davis, Bantock, Kiernan and Goyder met at Bullion's offices. Mr Fewster joined the meeting shortly after it began. Mr Paterson said that, while he did not propose to comment on each clause of the draft heads of agreement, there were several high level issues that had to be resolved before the parties could move forward. Some discussion followed.
That afternoon, Mr Kiernan emailed to Mr Paterson a redraft of the heads of agreement (9 August draft). In the email by which he sent the draft, addressed to Mr Paterson and Mr Fewster, Mr Kiernan said:
Enclosed is Draft 2 (marked up) of the HOA following our meeting this morning) and my further review with BLN.
Andrew Bantock and Tim Goyder haven't seen this draft as yet so there may be some minor changes but for current purposes please work on this one.
Annexure A (the Reserved Minerals map) needs to be added. This will require John McIntyre (of BLN) and Mike F [Fewster] to discuss the map Mike sent to John. I have added Annexure B being the option terms.
I understand Mike is seeing Phil Golding tomorrow and that he has requested Grant [Paterson] to forward a copy of this draft to Golding for review prior to that meeting … so could you do that please.
It may help Golding if Grant gave him a run through on the structure via phone as well.
I look forward to your comments.
The 9 August draft runs to some 20 pages. It marked up the changes that had been made from the 8 August draft that had been sent to Mr Paterson on the previous day. Clauses 2 and 3 of the draft read as follows:
2.0NATURE OF THIS AGREEMENT
2.1Nature
The Parties acknowledge that this Agreement contains only the essential commercial elements of the transaction contemplated hereunder and that more formal and comprehensive legal agreements will be prepared evidencing the matters herein as expeditiously as possible but in any event no later than the shareholder's meeting of BLN as referred to in clause 3.1. These more formal legal agreements shall comprise:
(i)a sale and purchase agreement for the Tenement Interest and for the Information; and
(ii)mining and exploration joint ventures for the Narnoo Joint Venture and the Reserved Minerals Joint Venture
and shall contain such provisions including representations and warranties as would usually be found in formal legal agreements for the type of transactions contemplated herein.
2.2Binding Nature of this Agreement
(a)Until such time as the more formal legal agreements referred to in clause 2.1 are executed this Agreement (being titled Heads of Agreement) is binding on all parties hereto and supersedes and replaces all previous agreements, arrangements and understandings in relation to the subject matter thereof.
(b)Until such time as the conditions in clause 3.1 are satisfied (or the Agreement is terminated through lack of satisfaction of the said conditions):
(i)none of Mr Fewster, Narnoo Mining or Eaglefield will discuss with any external parties any transaction in relation to the Mulga Rocks ~~(Narnoo)~~ Uranium and Polymetalic Project without the prior consent of GER; and
(ii)Narnoo Mining and Newco agree there will be no variation made to the terms of the Reserved Minerals Agreement.
3.0CONDITIONS PRECEDENT
3.1Conditions
This Agreement is conditional upon such consents and approvals as may be necessary being obtained to give full force and effect thereto including but not being limited to the approval of the shareholders of BLN under ASX Listing Rules, Section 611 of the Corporations Act and as may be required under the Mining Act.
3.2(a) If the conditions in clause 3.1 are not satisfied within 120 days (or such later date as may be agreed as between GER and Mr Fewster) then either of GER or Mr Fewster may terminate this Agreement.
(b)Each Party shall use its best endeavours to have the condition in clause 3.1 satisfied insofar as carriage of the same can be undertaken by them.
On the afternoon of 9 August, Mr Paterson emailed a copy of the 9 August draft to Mr Golding. At about 6.15 that evening, Mr Golding telephoned Mr Paterson while Mr Fewster was still in his office. Mr Golding said that he had serious concerns with respect to the proposed structure of the transaction. He said that it would not result in the recipient of the CPPSs obtaining tax relief. As a result of what he had been told by Mr Golding, Mr Fewster estimated that the tax liability resulting from the deal would be in the order of $3 million, as opposed to an anticipated tax liability of $300,000.

Events on and after 10 August

Early on the following morning Mr Fewster telephoned Mr Bantock. He told him that there was a fatal flaw in the transaction contained in the 9 August draft. This was that it would not entitle the recipient of the CPPSs to tax relief. He said that he, Mr Paterson and Mr Golding were meeting that morning to consider other options.
After meeting with Mr Golding, Messrs Fewster and Paterson met with Messrs Bantock and Goyder at Bullion's offices. Mr Paterson said that there were problems with the current proposal. He suggested means by which Mr Fewster's tax difficulties might be overcome. He said that Mr Fewster had always understood that the proposed transaction was subject to legal and tax advice and that his preliminary tax advice was that the proposed transaction could not be done due to adverse tax consequences. Messrs Goyder and Bantock said that they were willing to consider variations to the agreement, but that they considered that there was already a binding agreement in place.
Later that afternoon Mr Kiernan prepared and emailed to Mr Paterson a further amended draft of the heads of agreement (10 August draft).
On the morning of the following day, 11 August, Messrs Fewster and Paterson met with Messrs Bantock, Goyder and Kiernan. Mr Paterson put forward new proposals that were materially different from those that had previously been discussed. Mr Kiernan said that there was already an agreement in place. Mr Paterson responded by saying that that was not Mr Fewster's position. It was agreed that Mr Fewster would develop a further proposal in writing for consideration by Bullion on a without prejudice basis.
On Friday 12 August Mr Paterson emailed to Mr Kiernan a new proposal. Bullion declined to countenance it on the grounds that it was uncommercial.
On the next day, Mr Bantock sent a without prejudice email to Mr Fewster. In it, Mr Bantock reiterated that there was an agreed deal in place. However, he indicated a willingness to look for a mutually acceptable solution to the problems that had been raised by Mr Fewster.
Mr Fewster replied by email on Sunday 14 August. His email read, in part, as follows:
I entered into negotiations with you with the full intent of concluding a deal, but that deal was simply unobtainable.
Our discussions last weekend only set a starting point from which to commence negotiations (ie the consideration and some other broad issues). To suggest that it represented a binding agreement is nonsense. We both knew that a deal was going to be subject to working through the maze of taxation and regulatory issues that would emerge as we proceeded. There was also a great deal of mechanical detail that had to be resolved for such a complex deal to work; recovery of the reserve minerals and scandium etc. I still don't fully understand how the mythical Newco was to fit into the deal!
This last comment related to the introduction, in the 8 August draft, of the entity described as Newco Pty Ltd. We have said that this company was to have entered into an agreement with Narnoo Mining concerning the lignite and sedex, defined in the draft as 'Reserved Minerals'. The 8 August draft contemplated that Narnoo Mining and Newco would enter into an agreement by which Newco obtained the exclusive right to explore, mine and treat the reserved minerals. It also contemplated that a joint venture would be established between Newco and GER for the exploration, development and mining of the reserved minerals. The draft defined the expression 'Reserved Minerals Agreement' as meaning:
the Agreement dated ** as between Narnoo Mining and Newco pursuant to which Narnoo Mining granted to Newco the exclusive right to explore, mine and treat the Reserved Minerals.
In fact, no such agreement was ever entered into.
On 15 August 2005 Bullion lodged caveats over the tenements. These were supported by a statutory declaration in which Mr Bantock said that Bullion claimed a 50% interest in the tenements pursuant to an oral agreement made between it and Mr Fewster, on behalf of Eaglefield and Narnoo Mining, on 6 August and an oral agreement between it and Mr Fewster (presumably acting in the same capacities) at a meeting on 8 August.
On or about 16 August 2005 Bullion and GER lodged additional applications for prospecting licences in the name of GER. These related to the graticular gap block tenements. For the purpose of lodging these applications, the two companies used confidential information that had been supplied by Eaglefield to Bullion.
On 19 August 2005 Mr Bantock wrote to Mr Fewster asserting that a binding agreement had been reached in the terms reflected in the bullet point list 'agreed and retained' by each of them in the meeting on Monday 8 August.
On 29 August 2005 Bullion commenced the proceedings which have culminated in this appeal.

The contentions of the parties at trial

The primary case advanced on behalf of Bullion at the trial was that an enforceable agreement was made upon its acceptance, in the last of the telephone conversations on Saturday 6 August 2005, of the offer that had earlier been made by Mr Fewster on behalf of himself and the other defendants. This was the offer that was said to have been made during his telephone conversation with Mr Bantock at about 11.30 that morning. Bullion contended that the terms of the agreement were essentially those set out in the first bullet point list. It contended, in the alternative, that the agreement was made on the afternoon of 8 August 2005, upon the terms recorded in the second bullet point list.
In either case the agreement was said to have been one that falls within the first of the categories described in Masters v Cameron (1954) 91 CLR 353, 360 (Dixon CJ, McTiernan and Kitto JJ). This is the category in which the parties have finally agreed upon their bargain and intend to be immediately bound by it but propose to restate it in a fuller and more precise form in a later document. Bullion contended, in the alternative, that the agreement was one falling into the so‑called fourth category of immediately binding contracts, being one in which the parties intend to be bound immediately by the terms upon which they have agreed, but expect to make a further contract in substitution for the first containing, by consent, additional terms: Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622, 628. Bullion sought declarations accordingly. It also sought orders for specific performance of the agreement and payment of equitable damages for delay or, alternatively, damages.
The respondents disputed that any binding contract was made. They raised four principal contentions. The first was that finality in negotiations had never been achieved. The second was that, in any event, negotiations had been conducted on the basis that the parties would not be bound until such time as the respondents had obtained favourable taxation advice, which did not happen. The third was that the parties had not intended to be bound until the heads of agreement had been executed. The fourth was that, in any event, the agreement was uncertain because essential terms of the arrangement between the parties had not been agreed as at 6 August or 8 August 2005.
In arguing that essential terms had not been agreed between the parties, the respondents relied primarily upon four contentions. These were as follows.
The first concerned the reserved minerals in respect of which, they said, final agreement had not been reached on or before 6 August or on or before 8 August 2005.

Counsel for the appellants suggested that what was said by the trial judge in these last two paragraphs should be taken to mean only that the parties did not intend to be immediately legally bound by the pleaded substantive agreement (as opposed to the ENA). He said that this consequently does not detract from the finding which, he asserted, was made by the trial judge in [288], [306] and [314] of his reasons. We are unable to accept this contention. We doubt that the trial judge turned his mind, at all, to the question whether the parties had intended to bind themselves to an agreement in the form of the ENA, or any similar agreement. There was no reason why he should have done so, given that no one had suggested that such an agreement existed. We do not read the trial judge as having used the word 'agreed' (or any similar word or words) in any of the paragraphs to which we have been referred in the sense of a legally binding agreement. All that seems to us to have been intended by that word or similar words was that the parties had arrived at a shared understanding on what they then saw as the most fundamental issue (being the consideration). They also reached an understanding that Mr Fewster would consequently cease negotiating with third parties in the expectation that the parties would, by the following Wednesday, have agreed upon all of the outstanding terms of the heads of agreement and that that document would, by then, have been executed.
Counsel for the appellants placed particular reliance upon the second sentence of [314]. However, when that sentence is read in its context, it should not be read as a positive finding that the parties intended to enter into a legally binding agreement with respect to further negotiation. Rather, it seems to us that the trial judge was intending only to emphasise a negative proposition, being that what had occurred on 6 August 2005 was not intended by Mr Fewster, and would not have led a person in the position of Mr Bantock reasonably to believe, that Mr Fewster agreed immediately to enter into a binding contract by which Bullion would acquire an interest in the tenements and project in return for the agreed consideration.
Similarly, although what was said by the trial judge in [318] and [319] is capable of being read as being a finding that the parties did not intend, and should not be taken to have intended, that they were immediately legally bound on 6 August to any form of agreement, this, too, was said in a context in which the trial judge did not turn his attention to any other form of agreement than that which had been contended for.
In any event, an agreement of the kind contended for by the appellants in the proposed amendment is not without its difficulties.
Essentially, the ENA is said to have been a form of hybrid agreement. The contention is that final agreement had been reached on some matters (primarily the consideration) and that the parties agreed to negotiate the remaining matters upon which agreement was required in order to finalise a heads of agreement. Counsel for the appellants contended that, under this hybrid agreement, the parties were not entitled (in the absence of further agreement permitting this) to revisit the substantive terms that had been agreed, although, if negotiations on the remaining matters failed, the agreed substantive terms would no longer be binding.
The appellants also contend that the following terms were implied by law into the hybrid agreement:
(1)Mr Fewster would 'cooperate in negotiations for finalisation of the remaining content of a Heads of Agreement document based around the Consideration Package, with [Mr Fewster] doing all things necessary on his part to enable [Bullion] to have the benefit of promises made under the ENA' (par 14.1 of the proposed amended statement of claim); and
(2)Mr Fewster 'would negotiate reasonably with [Bullion], alternatively reasonably and in good faith, in those negotiations, to conclude a Heads of Agreement document based around the Consideration Package' (par 14.2 of the proposed amended statement of claim).
Both implied terms were said by counsel for the appellants to have been breached by Mr Fewster's conduct in discontinuing negotiations on Wednesday 10 August 2005 on the basis that, as a result of the unfavourable tax advice that had been received by him, he no longer agreed to the previously agreed consideration package.
Agreements to negotiate in good faith have been the subject of considerable discussion in the United Kingdom, Australia and New Zealand: see, in the United Kingdom, Walford v Miles [1992] 2 AC 128; in New Zealand, Wellington City Council v Body Corporate 51702 [2002] 3 NZLR 486 and, in Australia, Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1; Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104; Con Kallergis Pty Ltd v Calshonie Pty Ltd (1998) 14 BCL 201 and Jobern Pty Ltd v BreakFree Resorts (Victoria) Pty Ltd [2007] FCA 1066. Also relevant, in Australia, are Hooper Bailie Associated Ltd v Natcon Group Pty Ltd (1992) 28 NSWLR 194; Elizabeth Bay Developments Pty Ltd v Boral Building Services Pty Ltd (1995) 36 NSWLR 709; Aiton Australia Pty Ltd v Transfield Pty Ltd [1999] NSWSC 996; (1999) 153 FLR 236 and Laing O'Rourke v Transport Infrastructure [2007] NSWSC 723, all of which deal with agreements to negotiate in good faith with a view to resolving a dispute. These cases raise complex issues, none of which was mentioned, let alone debated, in the proceedings before the trial judge. For example, it has been questioned whether an agreement in the terms contended for is sufficiently certain to be enforceable (see, in this respect, Australis Media Holdings (126 ‑ 129)). Also, it is questionable whether an agreement of that kind is capable of supporting an implied obligation to cooperate of the kind contended for (see Australis Media Holdings (124)).
More importantly perhaps, the answer to the question whether an agreement to negotiate is enforceable might vary according to the precise terms of the agreement and, as Hayne JA (Charles JA agreeing) pointed out in Con Kallergis (212), 'it is only when all the circumstances are known that it can be seen whether the obligations of the parties (described as "to negotiate") can be identified with certainty'. In that case, the Victorian Court of Appeal would not countenance the raising of a contention, not raised at the trial, that an agreement involving an obligation to negotiate was uncertain or incomplete. This was because the party seeking to uphold the agreement had been deprived of the opportunity to lead evidence about the circumstances said to give rise to the agreement.
Similarly, in this case, it seems to us that it is now too late to assert the existence of an agreement in the form of the ENA. The respondents have had no opportunity to lead any evidence bearing upon the terms of the alleged agreement, and hence on the question of certainty. For example, while there was evidence that the parties hoped and expected that they would reach agreement by Wednesday 10 August 2005, the evidence that was led does not seem to us to have gone so far as to establish whether or not there was any agreement concerning the time when the obligation to negotiate would cease to operate: see, in this respect, Walford (139 ‑ 140) (Lord Ackner). Had the point been raised at the trial, evidence might have been led on behalf of the respondents in this respect. Nor have they had the opportunity to lead any evidence that might have been admissible in support of the proposition that there was no intention to be legally bound to continue to negotiate (although it seems unlikely that anything could have been added to the already extensive evidence of what was said and done at the material time). Finally, counsel for the respondents also asserted (without providing any particulars ‑ not surprisingly, perhaps, as he had had very little time to consider the position) that, had an agreement of that kind been pleaded, the respondents might have wished to adduce evidence concerning the question whether or not the appellants negotiated in good faith.
In circumstances in which the respondents have never had the opportunity to lead any evidence concerning a contract of the kind now asserted, or as regards the circumstances of the alleged breach of that contract, and in which none of the considerable difficulties raised by the cases to which we have referred were debated, or could be debated in the absence of a full opportunity to lead evidence concerning them, it is inappropriate to allow the appellants to advance a contention of this kind for the first time on appeal.
We consequently refuse leave to make the proposed amendment to the statement of claim. That has the consequence that grounds 8, 9 and 10 of the grounds of appeal fail.

Breach of the confidentiality agreement

The only basis upon which the appellants challenge the finding of breach of the confidentiality agreement made by the trial judge is that set out in ground 7. This is to the effect that, because the pegging of the graticular gaps was done in accordance with the terms of the agreement reached on 6 or 8 August 2005, it could not have been done in breach of the confidentiality agreement. Our conclusion that no binding agreement was reached on 6 or 8 August 2005 necessarily has the consequence that ground 7 fails.

Remaining issues

The conclusions at which we have arrived make it unnecessary for us to consider the remaining issues, being the issue concerning the certainty of the alleged agreement, the question whether, if there was an agreement, it was conditional upon the obtaining of tax advice satisfactory to the respondents and the issue whether or not this was a case in which specific performance of the alleged agreement should be ordered. However, we will comment briefly on each of those issues.

Uncertainty

It is trite that, even when the requisite intention is present, a contract can fail for uncertainty. It is also trite that only the omission of an essential term will have the effect that a contract is so incomplete or uncertain as to render it invalid: Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101 [29] (Ipp J, with whom Pidgeon J agreed). We have said what is meant by the word 'essential' in this context. When dealing with the question of contractual intention, we have expressed opinions on the question whether or not terms left over for future negotiation were essential. We have concluded that, although some of the matters left over were indicative of a lack of intention to be bound, they were not such as to lead to a finding that, if the requisite intention was present, the contract failed for lack of certainty. As Lloyd LJ said in Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd's Rep 601, 619 there is no legal obstacle which stands in the way of the parties agreeing to be bound now while deferring important matters to be agreed later. He went on to say that it 'happens every day where parties enter into so‑called "heads of agreement"'. While many of the matters left over in this case were important, none seems to us to have been essential to the efficacy of the alleged agreement, in the sense that the agreement could not be enforced without it. We would consequently not have found that the agreement, if made, failed for uncertainty.

Conditional on satisfactory tax advice?

The respondents' case at trial was that it was a condition precedent to the formation or performance of a binding agreement that the respondents received tax advice to the effect that the tax implications of the proposed deal were favourable to them in one important respect. This was that the recipient of Bullion's shares would be entitled to capital gains tax rollover relief in respect of those shares and, or alternatively, would not incur a significant tax liability in respect of the issue and/or conversion of those shares (trial judge's reasons [282]). In ground 1 of their grounds of contention the respondents contend that the trial judge erred in failing to find that there was such a condition precedent to the formation of the alleged agreement (although it seems that the contention was intended to encompass, as an alternative, the proposition that the condition precedent was one to the performance of the contract).
The trial judge found [284] that, prior to 6 August 2005, Mr Fewster and Bullion, through Mr Bantock, had an understanding that any agreement they negotiated was subject to obtaining tax advice in relation to the proposed arrangement. He also found [287] that each of Mr Fewster and Mr Bantock contemplated, on 6 August 2005, that Mr Fewster would obtain tax advice in relation to at least the number, description or characterisation of the CPPSs. He concluded [289] that, on 6 August 2005, the only qualification Mr Fewster made in respect of the consideration to be paid to him or his entities related to the number, description or characterisation of the CPPSs to be provided. He said, correctly, that this was reflected in the first and second bullet point lists.
The respondents contend that the trial judge should not have concluded that on, or at any time after, 6 August there was a change in the agreement or understanding regarding the obtaining of tax advice by Mr Fewster. They point to the fact that, although Mr Bantock might not have regarded the outstanding tax issues as important, Mr Fewster did, and Mr Bantock was aware of this. They submit that, viewed objectively, tax was 'fundamental to the transaction' and that the structure of the transaction was repeatedly altered during the course of the negotiations. They point to other aspects of the evidence which, they contend, suggest that both parties remained aware that Mr Fewster intended to obtain tax advice that was not limited to the number, description or characterisation of the CPPSs.
We are not persuaded that there is anything in the evidence that is sufficient to support the proposition that the parties agreed that the obtaining of favourable tax advice by Mr Fewster would be a condition precedent to the formation, or performance, of a binding agreement. It is true that, as the trial judge found, prior to 6 August each of Mr Fewster and Mr Bantock understood that any agreement was subject to the tax advice proposed to be obtained by Mr Fewster. However, as the trial judge pointed out, the structure of the consideration, at the time that the agreement was said to have been made, was that which had been put forward by Mr Fewster. He said nothing to suggest that he still wished to obtain tax advice on anything other than the number, description or characterisation of the CPPSs to be provided and, as the trial judge pointed out, this was reflected in the bullet point lists, which, as we have said, were prepared by Mr Bantock and reflect his understanding of the position at which the negotiations had arrived. It is also noteworthy that no condition of this kind found its way into any of the drafts of the heads of agreement, notwithstanding that each had a section dealing with conditions precedent.
It accordingly seems to us that the evidence fell short of establishing an agreed condition precedent of the kind contended for if, contrary to the conclusion at which we have arrived, there was an intention to be legally bound notwithstanding the absence of an executed document. Ground 1 of the grounds of contention has consequently not been made out.

Specific performance

The trial judge considered that it was not feasible to pronounce upon the question whether or not the agreement, if binding, was sufficiently certain to be made the subject of an order for specific performance. We have mentioned that he said that that was so because it would then be necessary to consider different permutations of hypothetical findings, contrary to those that he had made. He said the same [340] concerning the question whether the terms of the agreement were such as to require constant supervision of a kind making it undesirable to order specific performance.
He reached a similar conclusion in respect of the respondents' contention (which seems not to be without its difficulties) that the hardship that would be suffered by them, arising out of the changes that Bullion has undergone, would be such as to militate against an order for specific performance (these changes encompassed the sale by Bullion of mining assets other than its uranium assets, changes to its shareholding, a reduction in capital and changes to its board). The trial judge said, in that respect [342], that consideration of that issue would require him to hypothesize about what might be the facts and circumstances, contrary to those found by him, which would call for the court to consider whether or not to refuse an order for specific performance on the grounds of hardship and that it was inappropriate for him to undertake such a hypothetical task.
During argument in the appeal, counsel for the appellants put Bullion's claim for an order for specific performance upon a limited basis. He said that the proposed amendment to ground 1 of the grounds of appeal was designed to make it plain that the only form of specific performance sought by Bullion was an order requiring the respondents to execute heads of agreement reflecting the matters that, he contended, had been orally agreed upon. As Meagher R, Heydon D and Leeming M point out in Meagher, Gummow and Lehane's Equity Doctrines & Remedies (4th ed, 2002) [20‑075]:
[I]f a contract requires the execution of a deed the performance of some provisions of which might, if the court were to compel their performance, require continual supervision, there is no objection on that ground to specific performance of the contract; all that such an order would require would be the execution of the deed; the subsequent enforcement of the deed would, of course, be another matter.
Because we have concluded that there was no binding agreement, no occasion arises for an order for specific performance. We should add, in any event, so far as the ENA is concerned, that no order was sought by the appellants for specific performance of that agreement, if it was found to exist. Senior counsel for the appellants accepted, in the course of oral submissions, that an agreement of that kind is not specifically enforceable.

Section 119 of the Mining Act

That leaves only the respondents' contention that if, contrary to the finding of the trial judge, the court was to find that the parties entered into a binding agreement, the trial judge erred in concluding that s 119(2) of the Mining Act did not preclude enforcement of it by way of specific performance. We have said that, having found that no binding agreement was made between the parties, it was not strictly necessary for the trial judge to consider the appellants' claim for specific performance. However, he went on to make the observations and findings in relation to s 119(2) that are challenged by the notice of contention.
We have concluded that the parties did not intend to be bound by anything said or done by them until such time as the heads of agreement had been executed. It is consequently unnecessary to determine the issues raised by the respondents' notice of contention in relation to s 119(2). We should add that some of the questions that seem to us to be material to those issues were not the subject of submissions at the hearing of the appeal. However, in finding it unnecessary to deal with the issues raised we should not be taken necessarily to agree with the trial judge's reasoning or conclusions in respect of them.

Conclusions

It follows from what we have said that the appellants should have leave to make the amendments sought by them in respect of par 1 of the grounds of appeal but that their application to amend Bullion's statement of claim in support of grounds 8, 9 and 10 of their grounds of appeal should be refused. It also follows from what we have said that none of grounds 1 and 3 to 10 of the grounds of appeal has been made out. It is unnecessary to reach any decision in respect of ground 2, given that we have found that the requisite contractual intention was lacking. However, for the reasons given, we doubt that, if there had been the requisite intention, the agreement would have failed for uncertainty.

Ground 1 of the respondents' notice of contention has not been made out. Ground 2 of the notice of contention, although unnecessary, has been made out. Ground 3 of the notice of contention falls away given that we have decided to allow the amendment to ground 1 of the grounds of appeal. It is unnecessary, in the circumstances, for this court to reach any decision in respect of ground 4 of the notice of contention.
The appeal should be dismissed.