Wright Prospecting Pty Limited v Mount Bruce Mining Pty Limited & Anor; Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited & Anor

[2015] HCATrans 108

[2015] HCATrans 108

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S3 of 2015

B e t w e e n -

WRIGHT PROSPECTING PTY LIMITED

Applicant

and

MOUNT BRUCE MINING PTY LIMITED

First Respondent

HANCOCK PROSPECTING PTY LTD

Second Respondent

Office of the Registry
  Sydney  No S4 of 2015

B e t w e e n -

MOUNT BRUCE MINING PTY LIMITED

Applicant

and

WRIGHT PROSPECTING PTY LIMITED

First Respondent

HANCOCK PROSPECTING PTY LTD

Second Respondent

Applications for special leave to appeal

FRENCH CJ
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 15 MAY 2015, AT 9.31 AM

Copyright in the High Court of Australia

____________________

MR A.J. MYERS, QC:   May it please the Court, I appear with MS K.A. STERN, SC and MR R.J. HARDCASTLE for Wright Prospecting Pty Limited in both applications.  (instructed by Clayton Utz Lawyers)

MR N.J. YOUNG, QC:   May it please the Court, with MR M.J. DARKE, SC, I appear for Mount Bruce Mining in each of the two matters.  (instructed by Allens)

MR N.C. HUTLEY, SC:   May it please the Court, I appear for the second respondent, Hancock Prospecting, in each matter.  (instructed by Horton Rhodes)

FRENCH CJ:   Yes, Mr Myers, are we going to proceed in an integrated way with these two matters?

MR MYERS:   I missed what your Honour said.

FRENCH CJ:   Are we proceeding in an integrated way with these two matters?

MR MYERS:   I am happy to do that.

FRENCH CJ:   Yes, all right.

MR MYERS:   The first matter, that is S3, concerns what is described as the Channar matter.

FRENCH CJ:   This is “through or under”?

MR MYERS:   “Through or under”, yes.  Now, I acknowledge at once that the application is for special leave to appeal from a decision as to the proper construction of a private agreement and there are difficulties with that perhaps.  Nonetheless, there are very good reasons for the Court to grant that leave, at least in the through and under matter. 

The 1970 agreement provided for royalties to be payable by MBM on iron ore won by MBM from the MBM area as provided in clause 3.1 of the 1970 agreement, and by reason of the incorporation of clause 24(iii) of the 1962 agreement on ore won from the MBM area by a person who derived title to the land from which the ore was won through or under MBM.  The application book at page 75 sets out clause 24(iii) of the 1962 agreement that was incorporated by reference.

The Mining Act 1904 (WA) did not and does not provide for the transfer of interests from one interest holder to another. There is no notion of a chain of title where one person claims title to an interest by reason of a transfer from a proprietor of that interest. That is adverted to in the application book at pages 91 and 92 in the reasons for decision of Justice Macfarlan, who was the only judge in the Court of Appeal who dealt with the “through or under” matter. The other two members of the court agreed with him.

FRENCH CJ:   So you say the only way in which “through or under” could work is through surrender and substitution?

MR MYERS:   Correct, there is no other way, and going directly to the point that that raises, it is this, if it can only work through substitution, that is, by one title being surrendered and another being taken up in some way or another, one has to give it a sensible meaning in that context.

FRENCH CJ:   Is this a case of constructional choice or a case where there is only one workable meaning?

MR MYERS:   We can say I think with a degree of fairness that there is only one workable meaning.  To say there is only one of anything is always a difficult proposition to sustain, but in a practical sense it is the only workable meaning.

KIEFEL J:   Was the Court of Appeal’s approach a transactional approach to title?  Their continuity of title, was it hinging on transactions or is it just chain of title as they saw it?

MR MYERS:   Well, the Court of Appeal did refer to transactions.  They said, acknowledging with difficulty that there is no such thing as a chain of title, that there has to be a transaction.

KIEFEL J:   Yes.

MR MYERS:   But even there, there are some difficulties.  First of all, there is the question of what is the nature of the transaction and why choose transaction?  “Through or under” are words - if you take them out of a conveyancing context, they are words of very general meaning and the judge at first instance so treated them, in effect.  He looked at a considerable number of circumstances that would justify the conclusion that something had occurred “through or under”.  That was his approach at application book page 36, paragraphs 126 to 130.  He said:

It is not necessary to determine where the dividing line (if there is one) lies between “through” and “under”, or to determine the outer reaches of either notion.  I consider that derivation of rights “through” another is sufficiently wide to cover the present case where there is a close practical (even causal) connection between the rights exercised by the Channar Joint Venturers and the rights which MBM obtained from Hanwright under the 1970 Agreement (or actions taken by MBM in exercise of those rights).

Then he referred to three matters:

Such a connection is sufficiently disclosed by the fact that a prerequisite for the grant on 8 May 1988 by the State to the Channar Joint Venturers of ML 265SA –

That is the Channar interest –

was the surrender by MBM of land including that which was the subject of secs 18 and 19 of –

another tenement.  Now, under the State agreement which was given the force of law by the Act that gave it effect it was a condition of the grant of the land in question that admittedly some other land, but some land was surrendered by MBM.

KIEFEL J:   This is the difference between Channar A and Channar B, is it?

MR MYERS:   Well, what the Court of Appeal described as Channar A and Channar B, yes.  Broadly speaking Channar – well, I forget which is A or B, but whichever one we are talking about ‑ ‑ ‑

FRENCH CJ:   A is the one you are interested in, I think.

MR MYERS:   A is what we are interested in, so this was Channar B.

KIEFEL J:   But you say the fact that the surrender of the lease over Channar B was the precondition does not really matter because it is the identity of the parties that is the real point?

MR MYERS:   Well, the land that the Channar Joint Venturers got, the entirety of it was only obtainable by MBM surrendering that land.  So, in a real sense, one can say that the land in question was obtained through MBM, was obtained through MBM surrendering something, and that was a strict condition of the grant.

FRENCH CJ:   That would not have been the case – you would not say that a subsequent acquirer of a title over that land, the mining title over that land, unrelated to MBM would take “through or under” MBM just because MBM had had it and previously surrendered it?

MR MYERS:   No, I would say that, with respect, your Honour.  That is the ‑ ‑ ‑

FRENCH CJ:   So it does not matter – there is no connection at all between MBM and whoever subsequently uses the – mines the land?

MR MYERS:   No connection, yes, I would say that.  That is a very clear case of something happening through MBM.  Without MBM surrendering that land, then the grant could not have been made.

KIEFEL J:   Is this where you draw the distinction between the use of successors and assigns on the one hand and “through or under”?

MR MYERS:   It is, and that is a thread that appears through the argument.

FRENCH CJ:   Do you have to go that far for your case?

MR MYERS:   No, I do not have to go that far but your Honour pinned me on that question and I am facing up to it, manfully I hope, and saying yes, that would be sufficient.  If I could just go back to what the learned trial judge said at 128:

Beyond this, however, it may safely be inferred that MBM’s surrender of secs 18 and 19 of ML 252SA and Hamersley Iron’s surrender of sec 238 of ML 4SA, both of which were necessary for the grant of ML 265SA, were by arrangement between themselves and the Channar Joint Venturers.

So, in that sense, I do not have to go as far as I just did, your Honour.  Now, that finding of fact was not challenged –

Finally, there is historical continuity between the exploration of the area done by MBM and the opportunities which that exploration created, the subsequent application by Hamersley Exploration for TRs 6663H, 6982H and 6983H, Hamersley Iron’s later application for ML 4SA and the ultimate surrenders and application which were a step in the process leading to the grant of ML 265SA.

So his Honour has taken a very broad and realistic view.  There is a grant obtained by MBM through the processes of the legislation and then it explores, its related companies explore and that is a sufficient connection.

FRENCH CJ:   Well, at this stage we are obviously in the territory of a proposition that the Court of Appeal got the construction wrong and that the primary judge’s construction is to be preferred.  What question of principle warranting the grant of special leave is engaged?

MR MYERS:   Well, it is this.  Whether you say that it is a matter of principle or not might be open to debate, but it is a matter of general importance.  These are the sort of words – and we do not have evidence about how often these words are used in agreements concerning mining royalties but one knows that they are used in at least two agreements, 1970 and 1962.  This issue is of more general importance because the provisions of the Mining Act (WA) do not allow transfers of mining tenements. So the general issue arises as to how the provisions of these private agreements are to be construed and given effect to in the context of the legislation of Western Australia.

FRENCH CJ:   If somebody specifically wanted to address that problem, words with greater clarity than “through or under” might have been used.  In other words, there may be a better solution to dealing with that problem than that which was adopted in this case.

MR MYERS:   There may have been, but the imagination of legal draftsmen is certainly limited by what others have done before them and that is a proposition which I would advance as being as true today as it was in 1962 or in 1970.  So that is the matter of general importance, and these are not small issues.  This is the largest industry in the country, from one point of view, and the royalties that are payable are a matter of great importance, not only to the parties but to the community generally.

KIEFEL J:   Is there anything to be said for this Court considering once again - I have seen some of your reasons why special leave should be granted - the question of approaches to commercial agreements?

MR MYERS:   Well, there are lot of people who are sitting behind me who would probably say yes.

KIEFEL J:   I was conscious of where we were when I said that.

MR MYERS:   The matter is still not entirely clear, if I could say so, with the utmost respect.  There is still a bit of doubt out there in the broader legal community about how one should approach ‑ ‑ ‑

FRENCH CJ:   Well, perhaps you ‑ ‑ ‑

KIEFEL J:   But then they would always say that.

MR MYERS:   I am sorry, was your Honour the Chief Justice ‑ ‑ ‑

FRENCH CJ:   I was translating Justice Kiefel’s statement – the proposition, “They would say that, wouldn’t they”, but just in terms of the approach to construction, on the current jurisprudence of this Court, how is that approach engaged for the purposes of this Act and how is any question of doubt engaged?

MR MYERS:   Well, with respect to the court below we say this, that instead of considering the words “through or under” in the broader context of the purpose and function of this agreement, the court has simply gone to the volumes in the law library and turned up those that deal with the expression “through or under” and applied the meaning by reference not to the purpose and context and objects of the legislation, but with reference to what other judges have said about those words in an entirely different context where there is a question of validity of title involved.

FRENCH CJ:   Do you say that the contextual considerations illuminate the existence of a constructional choice?

MR MYERS:   Certainly they do.  They certainly do.

FRENCH CJ:   As distinct from the next question - which construction is chosen?

MR MYERS:   We certainly say that.  Your Honours, I have advanced what I can fairly put, I think.  This is an important matter.  We say, with respect to the court below that the decision is plainly wrong in its outcome and in its reasons and it is a matter of general importance and the approach to construction that has been used is not, we say, a proper approach to construction where contextual, that is, not only the context of the agreement but also the purpose and objects of the agreement, are not adequately considered.

FRENCH CJ:   In the light of all that, would it be convenient for you to tell us why the construction of MBM area is a matter of no importance?

MR MYERS:   Well, it is of no importance – I would like to say that it is completely wrong.  The construction that the four judges below adopted is obviously correct and it is not of importance in the same way that the Channar – the “through or under” issue of construction is important for this reason.  The expression “MBM area”, idiosyncratically defined in that particular agreement, is really a matter that is simply confined in its importance to that particular agreement.  It does not have the element of general importance that the “through or under” issue does because of the connection with the operation of the Mining Act.

FRENCH CJ:   What about the approach to construction at paragraph 47 of the judgment in the Court of Appeal of which Mr Young complains?

MR MYERS:   We say that that is very sensible and sound and what Lord Hoffmann said I think, if that is the paragraph that your Honour the Chief Justice is referring to, makes perfect sense to any reader.  The other perhaps more important aspect is this though.  That is just one of many considerations that are advanced by both the judges of the Court of Appeal who examined this issue to arrive at the conclusion that they do.  It is by no means the fulcrum upon which their reasoning turns, in contrast to the “through or under” issue, and if paragraph 47 were not there one would reach exactly the same conclusion about the meaning of “MBM area”, which is just another way of saying that the conclusion is correct.  If your Honours please.

FRENCH CJ:   Is that everything you want to say on the second application?

MR MYERS:   Yes, it is, your Honour.  There are elaborate written submissions and your Honours have read them.

FRENCH CJ:   Yes, thank you.  Mr Hutley, I think you are in the same interests, are you not?

MR HUTLEY:   Yes, I can be very short, your Honours, and I will only address the “through or under” question.  The Court of Appeal in the judgment of Justice Macfarlan really dealt with the question of “through” at paragraph 55 and in essence once they dealt with “through”, “under” became superfluous because their whole reasoning, in effect, was a reasoning which turned on the concept of “through”, which is the chain of title, so “under” in effect evaporated, with respect.

What we say is that the evident purpose of this clause was a non‑avoidance provision, and evident purpose was to – and the use of the expansive language was to preclude devices - accepting the Channar; the relevant area – whereby one could, as it were, shift around interests and avoid the position where MBM was the contracting party.  The construction come to by the Court of Appeal just in a sense turned it into a charter to avoid this provision, which is really shown by what happened here, that is, MBM had the title to 1974.  There was a lacuna until 1978 and then the organisation chose to take it back through a different company within exactly the same organisation.

We say, in effect, “through or under” really is going centrally to the question of status, that is, if, in effect, the same commercial entity is drawing income from the exploitation of the area, we would say it is through or under MBM for the obvious fact that if you are part of the same integrated commercial entity where they happen to choose to place the interest is a matter totally at their discretion.

KIEFEL J:   But on your approach does the obligation to pay royalties ever come to an end?

MR HUTLEY:   It never comes to end whilst they have it in this group, not at all.  If this group is exploiting and benefiting from the area, we would say, no, it is through or under.

FRENCH CJ:   But if it is an unrelated acquisition of the same area which has been surrendered ‑ ‑ ‑

MR HUTLEY:   My learned friend has made the submission, but that is why we say, if we are right, your Honours could reject that submission, and my learned friend did not tie himself to it for that reason, but not in our situation.  Our primary argument is “through or under” is identifying centrally status, i.e. commercial relations, and we say that is what has happened here.  It is the same organisation, except in a formal important sense of the corporate entity, but it could have been picked up at the whim

of the group in MBM or one of its subsidiaries or the like, or a holding company of it.  It is just a pure question of discretion and we say that is the important question of principle. 

We say this is clearly an anti‑avoidance clause of the type which has to be put into commercial agreements dealing with complex commercial entities with the capacity to move around interests.  The approach of this Court and the courts to that context should inform critically the approach to construction, and the Court of Appeal, with all due respect, treated it as, in effect, it was just a conveyancing clause that one might expect to see in a domestic conveyance, with all due respect, not what clearly it was – a commercially important clause designed to protect very large interests and the protean complexities and confusions over time that can happen in relation to these sorts of entities. 

That is why we say it is a question of importance for this Court to express opinions about the construction, not particularly of these words, but clauses with this evident design, how they should be approached.  That is all we would wish to say in relation to that. 

I can add nothing in – just one point if I might say on the other question.  The MBM area, as my learned friend has said, is a bespoke term of no particular – of idiosyncratic drafting.  But there was one central difficulty in my learned friend, Mr Young’s construction, which is adverted to by Justice Meagher at paragraph 102 in the Court of Appeal’s judgment.  The contract picked up the 1962 contract and your Honours will see the terms of the 1962 contract at page 75, critically paragraph 19.

That was picked up into the 1997 agreement because it had to apply to the latter agreement.  It simply could not in terms do so unless “MBM area” was referring to an expansive territory.  That is why his Honour Justice Meagher said, “More significantly”.  Now, that is a construction – and Justice Barrett, as your Honours are aware, agreed with Justice Meagher’s reasoning.  Whatever the debatability of the other terms, we say that that is just the structural element of it which really makes it intractable, but one was referring to an expanse of property.  Those are our submissions.

FRENCH CJ:   Thank you, Mr Hutley.  Yes, Mr Young.

MR YOUNG:   If the Court pleases, I will start with the MBM area, for obvious reasons.  What the Court of Appeal did was to use the language of the label “MBM area” to control the body of the definition and it is quite clear that that is what the majority did.

FRENCH CJ:   I know you rely on Wacal and Shin Kobe.

MR YOUNG:   Yes.

FRENCH CJ:   Is there a difference in approach between statutory construction and construction of the contractual text?  I notice the Court of Appeal makes reference to the parties’ choice.

MR YOUNG:   No, your Honour, none of the cases that have considered the issue either in England or in New South Wales have suggested there is any difference in approach according to whether it is a statutory or a contractual definition, but there is no logical reason to draw the distinction.  In New South Wales it has been applied to both.

FRENCH CJ:   It is a settled question as far as you are concerned?

MR YOUNG:   It is a separate question?

FRENCH CJ:   A settled question?

MR YOUNG:   Well, it has been considered in now seven Court of Appeal decisions in New South Wales.  Those decisions have preferred the Chartbrook approach.  One of the most recent decisions is the Court of Appeal in Tovir.  The Court does not have it, but the effect was that to recognise that in at least some circumstances it is impermissible to use the defined term in giving meaning to the definition, but there is no clear identification of where the signposts are or the boundaries are between a permissible use and an impermissible use.

So that whole question is left unclear by the course of decisions in New South Wales, quite aside from the departure from what appeared to be the settled principle of Shin Kobe as applied by the Full Federal Court in the Esso Case.  So there is a clear point of principle.  It was decisive in the reasoning, not ancillary, as the respondents would have it.

Can I illustrate that to your Honours by reference to Justice Macfarlan’s reasons commencing at page 86 of the application book?  The relevant principles of law that his Honour set out at the outset included the passage from Chartbrook and its application in a number of Court of Appeal decisions in New South Wales.  Then the clauses of the 1970 agreement are turned to - firstly clause 1.1 at paragraph 42, his Honour acknowledges that the reference to reserves is directed to rights of occupancy.

His Honour then notices 1.4 that says that all references include present and future rights.  His Honour then turns to clause 2.2 towards the end of that page.  At the top of page 89 his Honour says that the function of the clause is to divide the rights of occupation between the two parties.  Towards the end of that paragraph his Honour says:

It does not matter that, by reason of Clause 1.4, “MBM area” included a reference to rights.

So the total effect of the clauses is that “MBM area” includes rights, any reference to blocks or reserves includes rights, but then that is disregarded when one comes to applying the meaning of “MBM area” to clause 3.  Why - because of the application of the Chartbrook Case, as made clear by paragraph 47.  That is the decisive reasoning adopted by Justice Meagher and Justice Barrett.  So, far from being ancillary, it was crucial.

All of the submissions that the Court has received recognise the conflict between the Chartbrook approach and the Shin Kobe approach and there is no shade of grey about the decisions in Wacal of Sir Harry Gibbs and the decision in Shin Kobe.  The reasoning is described as impermissible because it is circular and it is described as a settled principle.

Now, that has been departed from.  This Court in the Cunneen decision, the recent decision, noticed this argument.  It was not the subject of direct debate, but the Court referred to the kind of circularity identified in Shin Kobe as a mistake at paragraphs 33 and 60 of Cunneen.  So there is no doubt there is an important question of principle.  It is now repeatedly arising in a series of intermediate Court of Appeal decisions.  It is equally applicable to statutory and contractual definitions.

FRENCH CJ:   Well, that might be the question of principle.

MR YOUNG:   Well, it may, your Honour.  That has not been directly grappled with.  It has perhaps been assumed by the course of decision in New South Wales.

FRENCH CJ:   That is what I am saying, because both Wacal and Shin Kobe are talking about statutory construction and the question is does that carry over either as a matter of the logic of textual construction and the question of circularity, or is there something to do with parties’ choice that somehow casts a different view?

MR YOUNG:   Makes a difference?

FRENCH CJ:   Yes.

MR YOUNG:   Well, the two categories have been assumed to be the same in most of the decided cases that have considered the point ‑ ‑ ‑

FRENCH CJ:   Yes.

MR YOUNG:   ‑ ‑ ‑ and if there is an issue in that respect, it does require this Court to resolve it, otherwise it is going to go on arising time after time.  We also submit that there could hardly be a better vehicle.  The issue is thrown up by a couple of simple clauses.  There are no facts in dispute.  There is a clear conflict of authority, a clear conflict between the approach of intermediate courts, being the Full Federal Court versus the New South Wales Court of Appeal, so there could hardly be a better vehicle.

I should mention Justice Meagher’s reasoning if I may.  His Honour recognised the difficulties created by clause 1.4 for the construction that he preferred, and that appears in several places, firstly at paragraphs 95 and 96 at page 103.

FRENCH CJ:   We might stop you on that and hear you on the other application.

MR YOUNG:   Yes, if your Honours please.  Turning to deriving title “through or under”, the only point of principle identified in the written submissions at least, was that no account was taken of the alleged purpose of the agreement.  That does not withstand analysis.  Their Honours started with the Woodside principle that directs one to purpose.  They then considered the background and the context.  They applied a commercial construction to the word “title”, because of course mining tenements are only personalty, but they read it in a commercial fashion to include mining tenements, even though titles perhaps spoke to more of a proprietary interest, and they applied the concept of deriving to transactions that were equivalent to a transfer.

Now, my learned friends started with a factual matter that is simply wrong.  It is the proposition that the Mining Act has no concept of transfers and that no concept of transfer of title was relevant to the context here.  This case concerned the rights arising under a State agreement that was in place from 1967 that modified the rights available in respect of rights of occupancy under the Mining Act. 

That is made clear by clause 2.3 of the 1970 agreement itself which refers specifically to the stage when the rights of occupancy were reduced to a mineral lease pursuant to clause 8(1)(a) of the Iron Ore (Hanwright) Agreement of 1967.  We have three copies – could I hand the Court three copies just of clause 8(1)(a) from the two State agreements?

FRENCH CJ:   Are the relevant provisions given statutory effect?

MR YOUNG:   Yes, it is the traditional approach in Western Australia that your Honour is no doubt familiar with.

FRENCH CJ:   Well, if it is an approval it does not give statutory effect.

MR YOUNG:   No, but it means that the rights in issue under the 1970 agreement were the rights conferred by a right of occupancy as supplemented by the rights available to Hanwright under the State agreement.  It does not have statutory force.  I accept ‑ ‑ ‑

FRENCH CJ:   Yes, the State would do certain things administratively.

MR YOUNG:   Yes, but the rights under the 1904 agreement for the purposes of the State agreement and these particular tenements are modified.  Section 4 is the operative provision of the 1967 State agreement, or sections 3 and 4.

FRENCH CJ:   Well, 3 just approves it.

MR YOUNG:   Approves it.

FRENCH CJ:   It does not do anything else.

MR YOUNG:   And 4 modifies the rights conferred by the right to enter Crown lands.

FRENCH CJ:   Actually, sorry, so far as 3 is concerned, normally that is a condition precedent to the agreement coming into effect.

MR YOUNG: Normally it is, yes, your Honour. But can I do this very briefly, if I may, your Honour? Clause 2(a) deals with the State’s obligation to cause to be granted rights of occupancy and the clause goes on to provide over and above the effect of the Mining Act that it has successive rights of renewal, about point 3 or 4 on the page:

the last of which renewals notwithstanding its currency shall expire—

. . . 

(i)On the date of application for a mineral lease . . . under clause 8(1)(a) –

Then clause 8(1)(a), which we have copied on the next page, provides - the very last line of the page – that the State:

shall cause to be granted to the Joint Venturers a mineral lease . . . of the land so applied –

and dropping down about 12 lines –

with rights to successive renewals –

So the Hanwright tenements carried with them the rights conferred by the State agreement which included a right to successive renewals of the rights of occupancy and a right to progress to a mineral lease for a confined area not exceeding 300 square miles, but on condition that the balance of the TRs expired on that application.  So the rights in question here were of that nature.  Under clause 14 of the State agreement they were also capable of transfer.  We have copied clause 14 on the next page.  Clause 14(1)(a) makes it clear that the rights were capable of transfer.

So the proposition that the concept of chain of title is irrelevant to the ordinary meaning of the expression “deriving title” is based on a misconception about what rights we were concerned with.  The natural meaning of the words “deriving title” is that you can trace title back to someone else’s title.  That is the natural and ordinary meaning of the words.

KIEFEL J:   These are questions of law, not fact.

MR YOUNG:   Yes, they are questions of law.

KIEFEL J:   Are there any questions of fact that would stand in the way of the Court coming directly to the point of construction, either within or without the context of the ‑ ‑ ‑

MR YOUNG:   There are none that are relevant – no issues of fact go to “MBM area”.  In relation to “deriving title” in the way in which the application is put, confining the issue to the application of the words “deriving title”, we would say there are no issues of fact.  My learned friend referred to the passage in the trial judge’s reasons that referred to continuity of exploration.  There was an issue of fact in that regard and there is a difference of view expressed between the Court of Appeal and the trial judge, but that is not the central focus of their application, as I understand it, your Honour.  The central focus of their application is that the prerequisite of surrender of and by itself was sufficient to satisfy the words “deriving title”.

In our submission, there is no point of principle concerning any departure from the necessity of examining the commercial purpose of the agreement.  That was done by the Court of Appeal.  What the Court of Appeal did was to construe the words “deriving title” according to their normal and ordinary meaning in context. 

When my learned friend, Mr Myers, was asked what is the point of principle his first recourse was to say that these are common words, as if to say that they should be given an invariable meaning.  But as we understand it, the whole thrust of his argument was that the words require a contextual meaning.  So there is nothing in that proposition that there is a question of general importance because the words “deriving title” are found frequently in different pieces of legislation.

Now, their purpose argument is again founded on a false notion.  Can I ask the Court to go to page 134 of the application book?  At paragraph 31, Mr Myers’ client identifies the alleged purpose that they say should drive the construction.  They say:

A purpose or object of the 1970 Agreement was to oblige MBM to pay Hanwright a royalty if the Hamersley group mined the areas –

Now, that is to identify a purpose that is not supported by the language of clause 3.1 or the language of “deriving title” from MBM’s title, but that false purpose is then used to drive the construction.  For the same reasons, Mr Hutley’s points are unsound.

Your Honour Justice Kiefel asked a question about the Court of Appeal’s reference to transaction.  Can I go to that for a moment?  It is at page 94 of the application book.  The point made in paragraph 63 by Justice Macfarlan is that there was no basis for suggesting that Hamersley Exploration’s exploration of new occupancy rights in 1978 derived in any way from the MBM rights that expired in 1974.  That is the thrust of the paragraph. 

MBM’s rights expired in 1974.  That left the land open to all comers.  Hamersley came along and made an application years later in 1978 for exploration rights.  Paragraph 63 is to be read with paragraph 70.  His Honour makes the same point in the last paragraph:

there were no mining rights subsisting . . . when Hamersley Exploration acquired its rights . . . that company is properly regarded as having acquired its rights from the Government -

The observation about a transaction in the last sentence of paragraph 63 was merely making an additional point that there was no evidence of any transaction.  It is not the basic point that his Honour was making.

KIEFEL J:   To identify that there was nothing occurring in that period?

MR YOUNG:   That is so.  His Honour was not saying that every time you apply the words “deriving title” you have to find a transaction.  He was simply making a subsidiary point about the absence of evidence of any other transaction.  But his main point was that Hamersley acquired its rights from the government after a long gap when the land was open to all comers to apply for mining tenements.

As to Mr Hutley’s point that clause 24(iii) is to be seen as an anti‑avoidance provision, in our submission, that is a mischaracterisation.  What it does is to expand the reference to won by MBM.  In circumstances where MBM acquired the rights as purchaser, 24(iii) simply says that you read the reference to MBM in its capacity as purchaser of the rights as including parties who derive title through or under MBM’s rights.  In other words, they can trace their mining rights back to the mining rights that MBM acquired under clause 2.2.  It is not anti‑avoidance; it is extending the provision to capture those who acquire their title “through or under” and therefore can trace their title to MBM’s title that it acquired under clause 2.2.

So, in our submission, that is an unsound characterisation.  An example of that is under this clause, if MBM transferred its titles to a third party, MBM remains liable.  It can be an unrelated third party; it remains liable.  So it really is an expansion of MBM’s obligations under 3.1 rather than an anti‑avoidance mechanism. 

At the end of the day, all the Court of Appeal did was to say that the surrender of different land – sections 18 and 19 which are attracting royalty – provided no basis for tracing the title to the balance of the land back to MBM.  It was a straightforward application of the words “deriving title” as requiring a tracing title back to MBM’s title.

So, for those reasons, in our submission, on the second point there is no point of principle, there is no issue of general importance and there is no reason to doubt the correctness of the construction arrived at by the Court of Appeal.  Thank you.

FRENCH CJ:   Thank you, Mr Young.  There will be a grant of special leave in both matters.  Mr Young, looking at 165 of the application book, I think your application paragraph - ground 5, is that anything more than argumentative?

MR YOUNG:   Pardon me for a moment while I find it, your Honour.  Ground 5, yes, it is the argument that supports the ground in paragraph 4.

FRENCH CJ:   So I think we can probably ‑ ‑ ‑

MR YOUNG:   Yes, your Honour.

FRENCH CJ:   Will one day be sufficient to deal with this?

MR YOUNG:   It should be, your Honour.  My only hesitation is that there is some complexity in explaining the background of the tenements, but most of that can probably be accomplished through the written submissions, so yes, I think so, your Honour, but ‑ ‑ ‑

FRENCH CJ:   I wonder whether the parties might give thought to a joint agreement as to the salient facts and sequences which would help us, rather than having to, as it were, comb through to see how they interact.

MR YOUNG:   Yes, that can certainly be done, your Honour.

FRENCH CJ:   Which would be good for both applications.

KIEFEL J:   A commercial approach to litigation.

MR YOUNG:   Yes, I think we can achieve that, your Honours.

FRENCH CJ:   It is probably likely to be listed in August, I think.  There is a timetable which is available to the parties. 

MR YOUNG:   Yes, thank you, your Honour.

AT 10.20 AM THE MATTER WAS CONCLUDED