Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 9]

[2010] WASC 44

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   WRIGHT PROSPECTING PTY LIMITED -v- HANCOCK PROSPECTING PTY LIMITED [No 9] [2010] WASC 44

CORAM:   MURRAY J

HEARD:   6­9 MARCH, 12­16 MARCH, 19­23 MARCH, 27­30 MARCH, 3 & 23 APRIL, 7­11 MAY, 14­17 MAY, 21­25 MAY, 30 MAY, 7 & 8 JUNE, 12­14 JUNE, 21 & 29 JUNE, 1­3 AUGUST, 6­10 AUGUST, 13­17 AUGUST, 22­24 AUGUST, 27 & 28 AUGUST 2007

DELIVERED          :   5 MARCH 2010

FILE NO/S:   CIV 1279 of 2001

BETWEEN:   WRIGHT PROSPECTING PTY LIMITED (ACN 69 008 676 417)

Plaintiff

AND

HANCOCK PROSPECTING PTY LIMITED (ACN 69 008 676 417)
Defendant

Catchwords:

Contract - Partnership agreements - Option to require transfer of assets by one partner to the other - Principles of construction of terms of commercial agreements - Admissibility of evidence of circumstances leading up to and after the date of agreement

Contract - Implication of terms as opposed to inference of terms - The implication of a term requiring the defendant to do all reasonably necessary to secure to the plaintiff the benefit of the option - The option is properly so described - It is not unenforceable because uncertain

Contract - Discharge - Abandonment - General principles - Estoppel as an alternative doctrine - The law as to estoppel by convention

Contract - Enforceability - Legal principle in respect of illegality of contracts discussed - Whether agreement illegal in performance of option because of consents required

Contract - Exercise of option - Effect of rule against perpetuities under Property Law Act 1969 (WA), s 110 - Notice of exercise not stamped until after writ and statement of claim filed - Effect of Stamp Act 1921 (WA), s 27

Contract - Remedies for breach - Equitable remedies - Plaintiff not to be denied relief on ground of unclean hands doctrine - Availability of specific performance and form of orders discussed

Equity - Legal principles in respect of equitable estoppel discussed - On the facts found the defence is not made out

Equity - Unconscionability - Availability when contract unenforceable, or void for illegality - General principles discussed - Necessity to rely on accepted equitable principles to establish unconscionability - Cause of action not maintainable when effect would be to circumvent application of rules of law

Equity - Breach of fiduciary duty as between partners - Relationship to contractual obligations

Trade practices - Breach of Trade Practices Act 1974 (Cth), s 52 - General principles discussed - Action not time­barred

Limitation of action - Plaintiff's equitable claim against defendant as a constructive trustee - Claim for the recovery of 'land' - Claim is not for an interest in possession - Claims by defendant for breach of fiduciary duty and breach of contract - Provisions of Limitation Act 1935 (WA) construed

Damage - Equitable damages - Claim for loss of opportunity to acquire interest in land - Principles governing assessment of expectation damages discussed

Legislation:

Limitation Act 1935 (WA), s 47
Property Law Act 1969 (WA), s 110
Stamp Act 1921 (WA), s 27

Result:

Judgment for plaintiff
Counterclaim dismissed
Order for specific performance of contract

Category:    A

Representation:

Counsel:

Plaintiff:     Mr R M Smith SC with Mr R J Brender

Defendant:     Mr F M Douglas QC, Mr S J Rushton SC with Mr S K Dharmananda, Mr L P Rayney and Mr J D MacLaurin

Solicitors:

Plaintiff:     Lavan Legal

Defendant:     Cocks Macnish and from 11/6/2007 Salter Power

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

Adamson v Hayes (1973) 130 CLR 276

Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Co Ltd [2008] WASCA 119; (2008) 66 ACSR 594

Anaconda Nickel Ltd v Tarmoola Aust Pty Ltd (2000) 22 WAR 101; [2000] WASCA 27

Armitage v Nurse [1998] Ch 241

Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99

BHP Iron Ore Pty Ltd v Westraint Resources Pty Ltd [2002] WASCA 18

BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266

Breen v Williams (1996) 186 CLR 71

Brown v Heffer (1967) 116 CLR 344

Butt v M'Donald (1896) 7 QLJ 68

Butts v O'Dwyer (1952) 87 CLR 267

Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 83 ALJR 903

Canny Gabriel Castle Jackson Advertising Pty Ltd. v Volume Sales (Finance) Pty. Ltd (1974) 131 CLR 321

Chemeq Ltd v Shepherd Investments International Ltd [2007] WASCA 117

Cigna Insurance Asia Pacific Ltd v Packer (2000) 23 WAR 159

Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64

Commonwealth v Verwayen (1990) 170 CLR 394

Con‑Stan Industries Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226; [1986] HCA 14

Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234

DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423

Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431

Enzed Technology Pty Ltd v Benge (1989) 1 WAR 164

Finesky Holdings Pty Ltd v Minister for Transport (WA) (2002) 26 WAR 368; [2002] WASCA 206

Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215

Fitzgerald v Masters (1956) 95 CLR 420

Giumelli v Giumelli (1999) 196 CLR 101; [199] HCA 10

Hatt v Magro [2007] WASCA 124; (2007) 34 WAR 256

Hawkins v Clayton (1988) 164 CLR 539

Home Building Society Ltd v Pourzand [2005] WASCA 242

Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41

IATA v Ansett Aust Holdings Ltd (2008) 234 CLR 151; [2008] HCA 3

Kamleh v The Queen (2005) 79 ALJR 541 [2005] HCA 2

Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419

Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57

Lill v Merchant Capital (WA) Ltd (1996) 15 WAR 536

Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2006) 39 ACSR 444; [2006] FCAFC 144

Lloyd v Tedesco [2002] WASCA 63; (2002) 25 WAR 360

Maguire v Makaronis (1997) 188 CLR 449

Malec v J C Hutton Pty Ltd (1990) 169 CLR 638

Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749

McCann v Switzerland Insurance Aust Ltd (2000) 203 CLR 579; [2000] HCA 65

McKenna v Perecich [1973] WAR 56

Metcalf v Permanent Building Society (1992) 10 WAR 145

Minister for Resources; Ex p Cazaly Iron Pty Ltd [2007] WASCA 175

Morgan v Banning (1999) 20 WAR 474

Morrison v Town of Victoria Park [2007] WASCA 164

Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1

O'Neill v O'Connell (1946) 72 CLR 101

Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal [1983] 1 AC 854

Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35

Paragon Finance Plc v Thakerar & Co [1999] 1 All ER 400

Pateman v Daw Koh [2007] WASCA 85

Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221

Renowden v McMullin (1970) 123 CLR 584

Riches v Hogben [1985] 2 Qd R 292

Rosebride Nominees Pty ltd v Commonwealth Bank of Australia [2008] WASCA 107; (2008) 36 WAR 561

Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65

Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 597

Sellars v Adelaide Petroleum NL (1994) 179 CLR 332

Shepherd v Baster [2006] WASC 176

Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359

Sorna Pty Ltd v Flint (2002) 21 WAR 563; [2000] WASCA 22

Stone James v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233

Summers v The Commonwealth (1918) 25 CLR 144

Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315

Terrex Resources NL v Magnet Petroleum Pty Ltd (1988) 1 WAR 144

Thompson v Palmer (1933) 49 CLR 507

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52

Townsend v Roussety & Co (WA) Pty Ltd [2007] WASCA 40; (2007) 33 WAR 321

WA v Wardley Australia Ltd (1991) 30 FCR 245

Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387

Wardley Australia Ltd v WA (1992) 175 CLR 514

Weldon v Neal (1887) 19 QBD 394

Western Australia v Watson [1990] WAR 248

Willoughby v Barrett‑Lennard [1979] WAR 167

Wilson International Pty Ltd v International House Pty Ltd [No 1] [1983] WAR 243

Wilson International Pty Ltd v International House Pty Ltd [No 2] [1983] WAR 257

Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 1] [2007] WASC 78

Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 3] [2007] WASC 118

Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 6] [2007] WASC 191

Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 7] [2007] WASC 229

Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 8] [2008] WASC 20

Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410

TABLE OF CONTENTS

Introduction
Some major players
A series of agreements

The 1983 agreement
The 1984 agreement
The 1987 agreement
The 1989 agreement

The plaintiff's claim for breach of contract

Kevin's Corner

Principles of construction and relevant evidence
Relevant agreements as to, and the tenements comprising, the Rhodes Ridge interest

The Rhodes Ridge Joint Venture Agreement
The State Agreement
The mining tenements constituting the Rhodes Ridge interest

The option and questions of uncertainty
The implication of a necessary term in the 1984 agreement
The 'whole baskets' proposition
My findings as to the various relevant transactions

Hope Downs
McCamey's Monster

Marandoo
Kevin's Corner

Manganese

Limestone
Barrett-Lennards

Chromite

Wittenoom

My conclusion about the 'whole baskets' argument
The law concerning the abandonment argument
The facts relative to the abandonment argument

Dealings between Messrs Peter Wright and Lang Hancock
McCamey's and the Wittenoom Hotel
The 1987 agreement
The 1989 agreement
Capital gains tax questions and tax liability generally
The partnership agreements are stamped

My conclusion about the abandonment argument
An alternative view:  estoppel by convention

Illegality

The pleadings
Relevant legal principles

My conclusion about illegality
An alleged breach of the Joint Venture Agreement
Property Law Act 1969 (WA), s 110

The pleading
The rule against perpetuities

Estoppel

The pleadings
Relevant legal principles
The pleaded facts relied upon to support the estoppel
The evidence reviewed and facts found

My conclusion about estoppel
Stamp Act 1921 (WA), s 27
Unclean hands
Specific performance

Unconscionability

The pleadings
Relevant legal principles

My conclusion about unconscionability
A limitation defence

The pleadings and some history
The limitation defence cannot succeed

The counterclaim

Breach of s 52 of the Trade Practices Act 1974 (Cth) (TPA)
Breach of fiduciary duty
Breach of contract

Limitation defences to the counterclaim

Damages

Conclusion

MURRAY J: 

Introduction

1. This litigation has been on foot since the issue of a writ on 2 March 2001.  At that time, the indorsement of claim sought declarations as to the valid exercise of an option granted to the plaintiff by cl 4 of an agreement between the parties dated 15 February 1984.  A declaration was sought that what was described as the Rhodes Ridge Joint Venture, comprising various mining tenements and temporary reserves, was an interest of the plaintiff under the 1984 agreement, in respect of which the defendant held its interest as a partner on trust for the plaintiff.  An order was sought requiring the defendant to take all necessary steps to transfer the benefit of the Rhodes Ridge interest to the plaintiff.

2. As the years passed, the statement of claim originally filed on 4 April 2001, within the general parameters of the indorsement of the writ, was much amended.  Substantial amendments were made.  A completely new head of claim was added by leave granted on 27 September 2006.  The last occasion, I think, when the statement of claim was amended was by leave granted on 12 June 2007, well into the trial:  Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 6] [2007] WASC 191.

3. The defence and counterclaim, in its turn, sustained numerous amendments from 2002 and over the years following.  Some were made consequentially upon amendments to the statement of claim.  Others were substantively generated by the defendant.  On 27 March 2007, I refused leave to amend the defence to plead a limitation defence:  Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 1] [2007] WASC 78. I think the defence and counterclaim reached its final form, after numerous amendments, when it was amended by leave I granted on 8 March 2007.

4. The pleadings so far mentioned were subjected to various requests for further and better particulars by both parties.  The plaintiff's reply and defence to counterclaim also required amendment.  I granted an application of that kind in part, again during the course of the trial, on 30 May 2007:  Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 3] [2007] WASC 118.

5. It has been the case that amendments to the pleadings over the years on occasions followed changes in legal representation.  Fresh minds and further preparation offered a different view of the issues between the parties which required resolution.  I do not criticise that process and certainly, when the matter came under my management to trial, I took the view that as the matter had already been considerably delayed, the parties ought to have every opportunity of which they wished to avail themselves to raise issues that they wished to have litigated and which, in my view, satisfied the tests upon which leave to amend might be granted. 

6. However, there is no doubt that the process, intruding upon the trial as it did, both delayed the trial process and expanded the time required for the trial.  Further, the book of pleadings runs to 188 pages.  The pleadings are complex.  They raise a multiplicity of issues and they show the signs of contributions by a number of different pleaders.  It has not been easy to winkle out of that complex web of documents the issues which the parties actually wish to litigate.

7. At the beginning and during the course of the trial a considerable issue arose in relation to the confidentiality of primary source documents, particularly relating to the evidence of valuers and other expert witnesses.  These were documents which were both discovered by the parties and sought on subpoena, principally from Rio Tinto and other companies within the Rio Tinto group (Rio Tinto).  I gave a number of interlocutory judgments, delivered ex tempore and otherwise, on this general topic during the course of the proceedings. 

8. I need not revisit those matters except to say that I was naturally guided by the desire to preserve the confidentiality of commercially sensitive documents, given that these parties and companies in the Rio Tinto group were currently dealing commercially with each other and were likely, in various ways, to continue to do so in the future.  It was clearly desirable that obviously commercially sensitive documents should remain confidential to their owners, except to the extent necessary to serve the interests of justice in the litigation before the Court.  That involved, of necessity, exposing documents to counsel, in some cases to instructing solicitors, and to expert witnesses, either because they wished to rely upon or have regard to them in the presentation of their testimony, or to enable their evidence and opinions to be tested in cross‑examination.

9. A confidentiality regime was devised, which identified the various documents in question and restricted access to them to the Court, the party or entity whose documents they were, and nominated individuals who otherwise required access, whether it was counsel, solicitors or witnesses, who were prepared to sign confidentiality undertakings.  These were strict in their terms and designed to preserve the confidentiality of the documents for the duration of the proceedings and any appellate proceedings flowing therefrom, as well as securing their return to their owners, whether the documents were originals or copies, when ultimately there was no further need for them for the purposes of this litigation. 

10. The undertakings so devised need not be set out here.  It is sufficient to note that they went well beyond the ordinary undertaking impliedly given to the Court to use the information provided by such documents and derived from them, only for the purposes of the litigation in which they were produced, so that they could not be used for any purpose collateral to that litigation.  As might be expected, it became necessary, on occasion, to modify and somewhat relax the undertakings in relation to specific documents, although I was not always persuaded to that course, eg, in the case of an application heard on 22 November 2007, judgment in which was delivered as Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 8] [2008] WASC 20.

11. The trial in this matter commenced on 6 March 2007.  I mention generally the course the trial took because it exemplifies the difficulties that can arise in a long trial, which may unfortunately delay the disposition of the litigation and the delivery of judgment, this being litigation which proved to be incapable of settlement.  The trial was originally listed for four weeks in November 2006.  The programming orders I made on 27 September 2006, having allowed major amendments to the statement of claim, sought to program preparation to a trial to be conducted over a six week period commencing on, or as soon as practicable after, 5 March 2007.  The Court was then of the view that that would enable preparation to be completed, particularly preparation of expert evidence, not only that to be adduced by the plaintiff, but also (with much less confidence as to the capacity to comply with the timelines) responsive and other expert evidence to be adduced by the defendant. 

12. As it happens, although the trial commenced on 6 March, a version of the report of the plaintiff's expert witness, Mr Cole, was provided at the beginning of February 2007 (exhibit O) and his reports upon which the plaintiff ultimately relied, bore later dates and were provided over a period of time.  Exhibit LA, Mr Cole's principal report, was dated 30 March 2007.  A necessary part provided as confidential Appendix 10 is dated 3 May 2007 (exhibit LB) and his discounted cash flow analysis was even later.  It is pointless to attribute blame for the way that developed, and I refer to it to make it clear that I see nothing in the process described which has a bearing upon the credibility of Mr Cole as a witness. 

13. However, it is the case that the incapacity to complete the preparation process within the periods allowed by programming orders had the effect of disrupting an orderly trial process.  The trial having commenced at the beginning of March 2007, it proceeded smoothly for a time, with non expert evidence adduced by the plaintiff.  As to that, there were statements of evidence, in contradistinction to expert witnesses whose evidence‑in‑chief was ordinarily provided by way of an export report supplemented on occasions, to some degree, by oral evidence.  In accordance with the programming orders, I received the witness statements as the evidence‑in‑chief of the witnesses, with the various documentary annexures becoming exhibits.  That was subject to objections taken, but generally speaking the objections were sensibly resolved by the agreement of counsel and there were very few occasions when I was required to give a ruling. 

14. In some cases, it was found to be expedient merely to note the objection and undertake to have regard to it in the final decision to be made by the Court in relation to the facts sought to be established by the evidence of the particular witness.  On other occasions, it was possible to amend the statement to reflect the objections or for me to note that a particular portion of the statement clearly had limited evidentiary value.  There were, for example, a number of cases where the narrative or the fact of a communication was a relevant fact, but I was required because of the hearsay rules to be careful not to give the material communicated evidentiary value to establish those facts:  Kamleh v The Queen (2005) 79 ALJR 541 [2005] HCA 2. Generally, however, potential difficulties of that kind were resolved by the fact that documents tendered were produced without objection and were business records: Evidence Act 1906 (WA), s 79C.

1. In the result, the plaintiff's non‑expert witnesses concluded their evidence by the end of March, including evidence in relation to confidential documents, given in closed court as part of the process by which I preserved the confidentiality of the material by excluding from the Court all those who were not persons entitled to sign confidentiality undertakings or who had not done so.  In view of the state of preparedness of the plaintiff's expert evidence, it proved to be impossible to resume until Mr Cole commenced his evidence on 7 May.  Meanwhile, the parties brought on a small number of interlocutory applications which needed to be dealt with.

2. While I am discussing the trial process, I should observe that so far as documentary exhibits are concerned, the great bulk of them and many more documents which were not ultimately tendered in evidence were contained on electronic databases provided to the Court in a form which enabled them to be displayed in court while witnesses gave their evidence so that they could be seen by the witness, counsel, solicitors and spectators.  That process proved to be a considerable saving of time.  However, I informed the parties that although I wanted ultimately to have the tender of 'hard copy' - original documents or copies which could be received in evidence - I did not propose to take into evidence the whole of the materials on the databases, but only that material tendered by being referred to or relied upon by a witness or put to a witness in cross‑examination.

3. During the course of the giving of the evidence, I did not separately record the receipt into evidence of each document used in those ways, although I did indicate how the documents would be identified as exhibits.  I required the legal representatives of the parties, liaising with my associate, to identify within the exhibit numbering system I had indicated would be applied, those documents which had been tendered in evidence.  They would then be identified as exhibits in the database and they would be provided to the Court in paper form. 

4. That process has now been completed and although it created some difficulty from time to time in actually completing the process of tender in the way I have described, in the end it seems to me that it enabled the proceedings to be conducted much more expeditiously than if, each time a witness referred to or was referred to and cross‑examined upon a document, I had stopped the proceedings and given the document an exhibit number and a description which could be included in the transcript in the ordinary way.

5. During the course of the trial, I delivered eight interlocutory judgments which were formally published.  They run to about 110 pages in all.  The evidence given in the trial occupied 4,565 pages of transcript.  The trial occupied 61 sitting days between the beginning of March and the end of August, a period of 12 weeks, twice as long as had been estimated when the matter was listed for trial after the four‑week period in November was vacated. 

6. As I have remarked, there were breaks in the trial process which were unfortunate.  They were principally caused by delays in getting up the expert evidence tendered first by the plaintiff and then by the defendant, whose legal advisers were hampered in getting up their expert evidence, to the extent that it was responsive to that tendered by the plaintiff.  There were other causes of delay in the parties' presentation of their cases. 

7. The plaintiff's non expert evidence was given some time ago at the beginning of the trial process and it was subjected to considerable challenge.  Issues were raised as to the credibility of the plaintiff's witnesses, particularly Messrs Michael Wright and Brandli.  It would be desirable that my reasons should not be too long delayed after such a process, but in the end I have, I feel, been able to recall the evidence and, where necessary, I have been able to refresh myself, guided by the submissions of the parties, by reference to transcript and relevant documents, together with my own notes. 

8. Lest it be thought that I have overlooked the fact, I should say in passing that because the trial process was so long delayed, it went into time occupied by other commitments which I had undertaken, including a period of leave.  That was so also in September and the months following.  Before I pass from these matters, I also record that in my view, the effort and diligence and, within the limits of their instructions, the preparedness to negotiate and compromise shown by counsel and solicitors for both parties, was exemplary.  I am satisfied that whenever they could move to enable progress to be made by resolving a matter of present difficulty, that was done.

9. When the process of leading evidence concluded at the end of August 2007, each party asked for a month to prepare final submissions.  That was granted, and I advised that I would consider, when I was able to read those documents, whether and if so when and for how long, the Court would reconvene to hear oral submissions.  The plaintiff's written submissions in two parts, one dealing with material which was generally available and the other with confidential material, were substantially available to me by 7 October 2007 and available to me in final amended form by the end of October 2007.  Those submissions run to 445 pages.  The submissions are supported by a list of well over a hundred authorities and other references. 

10. The submissions lodged on behalf of the defendant, both in relation to open material and confidential material, were over 2,645 pages in length, including submissions with respect to the assessment of damages.  These submissions were supported by over 430 authorities and other references.  Both parties copied the authorities on which they relied.  My chambers were decorated with boxes of photocopied cases and other materials, entirely unsolicited.

11. No sooner had the defendant's submissions arrived, indeed on the day after they did so, than the solicitors for the plaintiff wrote seeking to have the matter listed so that they could present argument in favour of the grant of leave to lodge submissions in reply.  I refused that request and had my associate write to the solicitors for both parties to advise them that the parties were welcome to lodge submissions in reply to each others closing submissions.  I would read and have regard to whatever arrived, but I proposed to start work.  Indeed, I had little time during the balance of 2007 in view of other court commitments.

12. In fact, when the first instalment of the plaintiff's submissions in reply arrived on 14 February 2008 the document advised that there was more to come, hopefully by the end of March 2008, and apologised for the incapacity to prepare earlier those then supplied because of constraints on counsels' availability during December 2007 and January and February 2008.  In total, when the last instalment dated 3 June 2008 arrived, the plaintiff's reply ran to 646 pages.

13. In the meantime, the defendant undertook a process of written reply to the plaintiff's contributions and the process of exchange of written submissions only ended, finally, when, by consent, I made an order that it should do so, on 23 July 2008, nearly a year after the oral portion of the trial had ended.  By then the submissions of the parties ran to well over 4,000 pages.  The process has considerably extended the time taken to produce this judgment because, having permitted the process I have described, I felt honour bound to read what was provided and I found that I could not work on sections of the judgment until I received all of the submissions of both parties..

14. I abandoned all thought of re‑listing the matter so that counsel could speak to their submissions generally or on any specific aspect of the case.  The documents mentioned above are by no means outlines of submissions.  They make no attempt to distil those issues which the parties respectively consider to be worthy of presentation from those which, although they find a presence in the pleadings, are effectively makeweights.  The submissions are so constructed and in such detail that they effectively defy the capacity of a single judicial officer to read and absorb them, to analyse their worth in a timely way and to use them to assist the process, within a reasonable time, of providing a judgment which fairly and properly deals with the issues in the case. 

15. I mention those matters, not by way of complaint or apology for what follows, but because in the respects discussed above, this trial really tested the capacity of the court to conduct the litigation process in a manner calculated to deal justly with the parties.  At least in cases where litigants appear to be unconstrained by considerations of time and cost, perhaps different processes of settling disputes than those traditionally employed by the courts will have to be devised. 

16. The question may have to be asked whether any two litigants should be able to consume the scarce resources of the court in a way which must be seen as having an impact upon the interests of others who would wish to use the court in the endeavour to resolve their disputes.  I confess to having answered that question by regularly giving priority to other matters which have required my attention.  However, that is a debate for another time and place.  I merely raise these matters now so that the processes of trial and judgment in this case may be understood.

Some major players

1. Langley George (Lang) Hancock and Ernest (Peter) Wright were friends and business partners.  They had known each other most of their lives.  They went to school together.  They were of an age.  Lang Hancock was born on 10 June 1909.  Peter Wright was two years older.  Peter Wright died suddenly while on a business trip in Thailand on 13 September 1985.  Lang Hancock survived him for a considerable period.  He died, after a period of illness, on 27 March 1992.  He was then aged 82 years.

2. In 1955, Lang Hancock incorporated the defendant company ("HPPL").  In 1956, Peter Wright incorporated the plaintiff ("WPPL").  During the latter part of the 1950s the two men arranged for WPPL and HPPL to commence to carry on business as partners.  Each of the men was the life governing director of the company that he had formed.  They carried on partnership under the style and title 'Hancock and Wright'.  The partnership subsists today.  This, then, is a dispute between partners with respect to their respective interests in property the subject of an ongoing partnership. 

3. Mr Wright had three children.  His eldest son is Michael Wright.  He became a director of WPPL on 22 December 1962.  His sister is Angela Bennett.  One of her children, Grant Bennett, gave evidence before me.  Mrs Bennett was appointed a director of WPPL on 17 August 1976.  She and Michael Wright continue as directors and they hold, between them, over 99 per cent of the issued shares in WPPL.  Peter Wright's younger son is Julian Wright.  He originally had a one‑third shareholding in WPPL, but he sold it to his brother and sister on 23 February 1987, and so these proceedings do not involve his participation.

4. Lang Hancock's daughter and only child is Mrs Gina Rinehart.  She was involved with her father as a director of HPPL except for a period between 1985 and 1991 when, as I understand it, towards the end of Lang Hancock's life she was reappointed as a director, with effect from 7 November 1991.  She is currently the major shareholder in HPPL and is a director and the secretary of the company.

A series of agreements

1. This litigation concerns the plaintiff's entitlement to the defendant's interest in partnership property comprised of mining tenements which together may be referred to as Rhodes Ridge.  There are a number of contractual agreements to which it is necessary to refer.  They were drawn by a Sydney solicitor, Mr Carnegie Fieldhouse, who was known as "Carnie".  Mr Fieldhouse was employed by the partnership or the partners at the time when the agreements relevant to this litigation were made.  He was retained by the partnership after he left that employment towards the end of 1991.

2. He appears to have proffered advice to both Mr Wright and Mr Hancock, even in circumstances where, in relation to the subject matter in question, their interests may have been potentially in conflict.  It is obvious that he was very much relied upon for his legal expertise by both partners, effectively by both Mr Wright and Mr Hancock, whose corporate vehicles in the partnership, WPPL and HPPL were.

3. The partnership gained control of the tenements comprising Rhodes Ridge in 1967.  They turned their attention to its development and, as was then the ordinary process, a facilitating Act, the Iron Ore (Rhodes Ridge) Agreement Authorisation Act 1972 (WA) was passed in that year. Shortly thereafter, in October 1972, WPPL and HPPL entered into a Joint Venture Agreement and, with the State and Texas Gulf Inc, entered into the Iron Ore (Rhodes Ridge) Agreement.

4. Some years later, on 2 March 1978, WPPL and HPPL entered into a formal partnership agreement.  This appears to be the first written agreement under which the partners were to continue to carry on the business of the partnership under the firm name 'Hancock & Wright'.  The document is really of historical interest only, but I note that it contained provisions governing the relationship between the partners upon the death of either of the governing directors of the partners, ie, Peter Wright and Lang Hancock:  cl 17.  Clause 19 provided expressly for the continuation of the partnership, notwithstanding the deaths of either Peter Wright or Lang Hancock, or both men.

The 1983 agreement

1. That agreement was substituted by one dated 24 May 1983.  By cl 1, the partnership was re‑established to continue under the same firm name.  By cl 2, the assets of the partnership were dealt with in a conventional way, establishing that the partnership was an equal partnership.  Importantly, under that clause it was provided that all forms of mining tenements, other permits and licences, 'whether held by HPPL or WPPL or subsidiary companies under any Mining Act of any State of Australia at the date of this Agreement are held in trust for and comprise assets of the Partnership.'  Clause 7 was the usual provision requiring each partner to be just and faithful to the other in all transactions relating to the partnership business and requiring each 'to give a true account of the same when and so often as the same shall be reasonably required without any concealment or suppression'. 

2. There were much more detailed provisions later in the agreement securing the continuation of the partnership upon the death of either Lang Hancock or Peter Wright.  By cl 12, the partner having the surviving governing director was to become the managing partner of the partnership until the death of the surviving governing director with 'the right solely to conduct, manage, maintain, control and make all decisions in connection with the partnership business'.  Clause 13 directed the managing partner, in that event, to direct its efforts towards bringing into production as soon as reasonably possible the then mining prospects of the partnership, always seeking a royalty, but not involving the partnership in new prospecting or mine management unless specifically agreed between the partners. 

3. Clause 14 provided for the continuation of the partnership until terminated by written agreement, but the clause also provided for a notice by one partner to the other, effectively requiring the sale or division of the assets of the partnership and its winding up.  Otherwise, by cl 15, after 80 years from the date of the agreement, either partner could serve on the other a notice requiring the partnership to be dissolved.

The 1984 agreement

1. The next agreement to be referred to is a partnership variation agreement made on 15 February 1984.  Its terms, particularly the terms of cl 4, are central to this litigation.  The common seals of WPPL and HPPL were affixed in execution of the agreement by Peter Wright and Lang Hancock respectively.  The document records, by way of recital, that:

   the Partners have agreed that each Partner shall assume individual control over certain of the assets and interests of the Partnership to the exclusion of the other Partner and shall have the option to require the division of such assets between the Partners.

   The recital makes it clear that the intention was to retain the partnership property within the partnership, but to give to the individual partners sole control over the administration and development of identified assets, with each partner having an option, as the recital put it, to require the actual division of the assets between the partners.

2. It is convenient to set out here the material terms of this agreement:

   1.AS FROM 1 JANUARY 1984 and notwithstanding Clause 12 of the Second Partnership Agreement:

   (a)HPPL shall assume sole control over and responsibility for the administration, development and disposal of the assets and interests of the Partnership set out in Schedule 1 hereof other than royalties in respect thereof or premiums referred to in Clause 5 hereof (hereinafter called the 'HPPL interests').

   (b)WPPL shall assume sole control over and responsibility for the administration, development and disposal of the assets and interests of the Partnership set out in Schedule 2 hereof other than royalties in respect thereof or premiums referred to in Clause 5 hereof (hereinafter called the 'WPPL interests').

   (c)Without reference to the other Partner, HPPL in respect of the HPPL interests and WPPL in respect of the WPPL interests shall be entitled to conclude any negotiations and make any agreement having the effect of reducing or disposing completely of any of the said royalties or premiums to which the Partnership may or shall be entitled PROVIDED THAT the making of such agreement shall not be undertaken other than as a last resort to ensure that any relevant mining venture can proceed IT BEING AGREED that during the lifetimes of the present Governing Directors of HPPL and WPPL any decision to make such agreement as a last resort shall be a the sole and unfettered discretion of the relevant Governing Director.

   2.HPPL IN RESPECT OF the HPPL interests and WPPL in respect of the WPPL interests shall determine from time to time whether and to what extent the partnership shall expend partnership funds in respect of such interests and upon such determination the relevant Partner shall contribute to the Partnership an amount equal to the funds to be expended.

   3.NOTWITHSTANDING CLAUSE 2 of the Second Partnership Agreement all income or profits earned and expenses incurred by the Partnership in respect of the HPPL and WPPL interests during any year of income shall be to the account of the relevant Partner whose share in the profits or losses of the Partnership shall be adjusted accordingly PROVIDED THAT any expenses or monies which have already been paid by the Partnership and are later refunded in respect of any existing mining joint venture shall be to the account of the Partnership.

   4.EACH PARTNER SHALL HAVE the option exercisable at any time during the continuation of the Partnership to require the transfer of the HPPL interests to HPPL and the transfer of the WPPL interests to WPPL.

3. The assets and interests identified as being under the sole control of HPPL and WPPL respectively were those set out in Sch 1 and 2 as follows:

   SCHEDULE 1

   (a)The assets and interests of the Partnership in and to the McCamey and Marrandoo joint ventures, the balance of the Wittenoom Agreement and the Temporary Reserves and other mining or mineral areas more particularly set out in the map attached hereto and described as LGH Mining Tenements Sheet C, which Sheet also contains particulars of certain of the assets hereafter described in this Schedule.

   (b)Kevin's Corner and all other coal interests in Queensland.

   (c)All manganese tenements and interests in Western Australia.

   (d)The Wittenoom Settlement including offices and houses but excluding the Power House and Mill.

   SCHEDULE 2

   (a)The assets and interests of the Partnership in and to the Rhodes Ridge joint venture and the Temporary Reserves (including Giles) and other mining or mineral areas more particularly set out in the map attached hereto and described as EAW Mining Tenements Sheet B, which Sheet also contains particulars of certain of the assets hereafter described in this Schedule.

   (b)All limestone interests in Western Australia (including limestone areas) held in trust for the Partnership.

   (c)All interests in Barrett-Lennards.

   (d)Chrome and base metal interests in Western Australia.

   (e)Wittenoom Hotel and town houses

1. I find that there were maps of the respective interests of the partners as referred to in par (a) of each of Schedule 1 and Schedule 2.  It is not clear whether they were originally attached physically to the agreement, but they are readily identifiable and, in my view, properly form part of the agreement.  There are actually three of them.

2. The first is a composite map of the Pilbara region identified on the document as Sheet 'A'.  It sets out the various mining tenements referred to by the identifying numbers.  Those coloured roughly in red are identified as 'LGH Mining Tenements'.  Sheet 'C' is the relevant part of Sheet A which shows, again coloured in red and identified by number, the 'LGH Mining Tenements'.  These therefore are the tenements, the areas and the interests identified as HPPL interests in par (a) in Sch 1 of the 1984 agreement.

3. Similarly, Sheet 'B' identifies, coloured blue, the various tenements described as 'EAW Mining Tenements'.  These therefore are the tenements, assets and interests identified as WPPL interests in par (a) of Schedule 2 of the 1984 agreement.  Each of Sheets 'B' and 'C' are signed by Lang Hancock and Peter Wright.  They show identifying numbers and letters which reveal temporary reserves, exploration licences and prospecting licences.  Some of the temporary reserves are indicated as having been converted into exploration licences without changing their area or location.  A few of the tenements are actual mineral claims.

4. Of importance, as matters developed, in the implementation of this agreement are what came to be called the buy‑back provisions in cls 6 to 9.  Clause 6 provided that if, in exercising control of a particular interest identified with it, a partner was able to organise 'full scale major development and commencement of substantial mining activities' then it was to offer to the other partner a half of its share in the mining venture at a price calculated at half the cost incurred by the developing partner less any premium it had received.  Such an offer would be open to be accepted within a month.  Clauses 7 and 8 made some particular arrangements in respect of joint ventures identified as the McCamey joint venture, the Marandoo joint venture and the Rhodes Ridge joint venture.  Clause 9 made it clear that the purpose of these terms was, that on the acceptance of a buy‑back offer, although the particular interest had been identified with and managed and developed by a particular partner, the partners would be placed, as nearly as practicable, into the position they would have been in if the interests in question had been managed as partnership assets in the ordinary way.

5. I have mentioned that Hancock and Wright were both about the same age.  In 1984 the evidence establishes that they would have been in their mid seventies and it is very evident from the correspondence between them that they were concerned, in 1982 and 1983, to settle the partnership arrangements so that the assets and interests of the partnership would benefit them equally with provision for their approximately equal division into two groups of assets of roughly equal value. 

6. A memo dated 12 October 1983 (exhibit A20) to Peter Wright from Lang Hancock, with important notations in Hancock's hand and signed by both men, evidences their intent which was ultimately reflected in the 1984 agreement.  In the first paragraph of the document, Mr Hancock says:

   If I have understood your letter to Carnie [Fieldhouse] of October 2 properly, and Carnie's interpretation of your discussions, I am prepared to accept your carve‑up, that is:  Rhodes, Giles etc in Group 1 and McCameys etc as Group 2. 

7. Attached to the memo is a typed document headed 'E A Wright' with two columns listing various temporary reserves.  On the left, as Group 1, are Rhodes Ridge and Giles tenements.  On the right, as Group 2, are McCameys and Marandoo tenements.  Below that are two other groups.  That on the left under Group 1 is marked Group X.  Summarised, it collected limestone interests in WA, Barrett‑Lennards, a nominated temporary reserve which came to be known as Shovelanna, chrome base metals in WA, and the Wittenoom Hotel and townhouses.  The corresponding group of interests in the column under Group 2 was identified as Group Y.  Included here were Kevin's Corner and other coal in Queensland, Manganese in WA and the Wittenoom settlement, including offices and houses but excluding the powerhouse and mill.  If the reader refers back to the schedules of the 1984 agreement, it can be seen that Groups 2 and Y became Sch 1 and Groups 1 and X became Schedule 2.

8. It is evident that they were grouped in that way by the agreement of the men, each speaking as the guiding mind and will of the corporate vehicle which expressed their partnership interest.  The note at the foot of the memo in the hand of Lang Hancock reads:

   Agreed in principle subject to documentation with choice of list of assets to be made by E A W before end of week.

   E A W now chooses Group 1 & X, L G H to take Group 2 & Y.

   14/Oct/83

9. It is evident that the 1984 agreement was the formal documentation to record the agreed terms of the 'carve‑up' which, at the same time, was designed to preserve the association of the partners to a limited extent, including the term which became cl 10 of the 1984 agreement that new projects might be pursued and developed by each of the partners individually, but that partner, 'shall offer such interests it may determine in any venture resulting from such activity to the other Partner on a 'Best Friends' basis'. 

10. Mr Fieldhouse was instructed to prepare the document which became the 1984 agreement.  He took the advice of counsel on the best way to go about it.  His brief to counsel, dated 19 December 1983 (exhibit DD6) raises a matter of particular concern in the following manner:

    In view of the fact that the partnership is generally in the business of turning to account anything in the mining and exploration fields, it is felt that there may be some possibility of income tax arising on a transfer of partnership assets into the names of the individual partners, or on a partition of the assets.

    If Counsel agrees with this view, does he believe that the Partners would be better advised to leave such assets in the partnership with the partnership bearing all maintenance and development costs and with the annual income of each partner from the partnership being varied to take into account the expenses paid in respect of the assets which were proposed to have been allocated to each partner.

    Would Counsel please advise upon the best method of structuring the partnership to minimise any possibility of income tax arising from dealing with the assets as desribed.

11. The brief was provided to Mr N Forsyth QC.  His opinion is dated 21 December 1983 (exhibit EA68).  In par 11 he advises:

    In my opinion, the tax risks could be minimised considerably further if there were to be no transfer from the partnership at all.  Instead, as suggested by my instructing solicitor, there could be a variation of the interests of the partners in the partnership.  What is contemplated is that:

    (a)All of the relevant rights and interests that remain in the name of the partnership; the partnership would continue to be the relevant party to all contracts and arrangements; and it would be the partnership with whom the outside world (joint venturers, Governments, employees, contractors and so forth) would deal.

    (b)But as between the partners each project would be separately accounted for and the net debit or credit would accrue to the partner in whose 'basket' that project was; and furthermore that partner would have the exclusive right to make all decisions concerning that venture. 

    (c)Each partner would have the right, at any time, to require the transfer to it of all of the rights, interests, contracts, benefits etc. constituting or ancillary to the venture in question (upon giving an appropriate indemnity in relation to any outstanding or contingent liabilities) and the interest of the other partner therein would thereupon finally be extinguished.

    The advantages of this proposal are that continuity is preserved more clearly; that the appearance of continuity is preserved even more clearly; and in particular there is no transfer or disposal or other dealing with the venture in question.

12. I accept that towards the end of Mr Peter Wright's life (it will be recalled that he died on 13 September 1985), although this long partnership continued to be pursued with vigour, some tension developed between the two men and I think it is clear that after Mr Peter Wright's death, the relationship between Mr Lang Hancock and Mr Michael Wright and his sister bore a different quality.  It seems to me that it was more an 'arm's length' relationship.  There is evidence that during this period Mr Hancock found that his activities and attempts to develop mines, particularly by negotiating joint ventures, were, at least in his eyes, impeded to a degree by the buy‑back arrangements made by cls 6 ‑ 9 of the 1984 agreement.

The 1987 agreement

1. An agreement dated 12 June 1987 was made between the partners.  By then, Michael Wright and Mrs Bennett controlled WPPL, their brother Julian's interest having been acquired by the two of them.  This was a variation agreement.  It recited the first partnership agreement made on 2 March 1978 and the second partnership agreement made on 24 May 1983.  When it referred to the 1984 agreement, dated 15 February 1984, it was stated that, among other things, the partners agreed that each would assume individual control over certain of the assets and interests of the partnership to the exclusion of the other.

2. The significant points of the agreement seem to me to be as follows -

   (1)The terms of cl 1(c) of the 1984 agreement were effectively reversed. Neither party was henceforth entitled to make an agreement having the effect of reducing or disposing completely of any royalties to which the partnership would otherwise be entitled:  cl 1(a).

   (2)Hope Downs, an interest arising after, and therefore not dealt with in the 1984 agreement, was mentioned.  On certain financial terms, WPPL relinquished its interest in Hope Downs in favour of HPPL:  cl 1(b) and (d).

   (3)On the other hand, HPPL relinquished its interest in Marandoo, a HPPL interest under par (a) of Sch 1 of the 1984 agreement, in favour of WPPL:  cl 1(c).

   (4)Royalties arising from the sale of iron ore arising out of the development of the Rhodes Ridge and Hope Downs interests were to be shared equally:  cl 1(e).  There were other provisions concerning entitlements to royalties.

   (5)Importantly, by cl 1(j):

   Each of HPPL and WPPL is hereby released from the obligation to offer to the other one half of its own right to participate in any mining venture undertaken in respect of HPPL interests and WPPL interests respectively or in respect of any areas allocated to each party under this Agreement.

3. The other form of buy‑back, the 'Best Friends' provision, made by cl 10 of the 1984 agreement, was effectively removed by cl 5 of the 1987 agreement as follows:

   Each partner shall be entitled to prospect for minerals of any type and take up any type of mining or other tenement (whether or not previously owned by the Partnership) without being obliged to offer to the other Partner any opportunity to participate in such activity or tenement and in no circumstances shall one partner be liable to pay any royalty to the other in respect of iron ore or any other mineral produced from such activity or tenement.

The 1989 agreement

1. Finally in this review of pertinent agreements, I refer to an agreement made on 14 September 1989.  It is an interesting document, reflecting the attitude to the partnership of Mr Hancock.  There were four parties to it; HPPL, WPPL, Mr Lang Hancock and Mr Kevin Dalby.  Mr Dalby was an engineer, effectively employed by the partnership, but the evidence reveals that his association with Lang Hancock was very close and in his later years he spent substantial periods of time working directly with Mr Hancock or upon projects which he was endeavouring to advance.  Mr Dalby was a director of various companies, most of them Hancock related, but importantly, for present purposes, since the mid 1980s until his death on 25 October 1991, Mr Dalby was a director of both WPPL and HPPL.  Mr Dalby's death, at the age of 65, was unexpected.  He suffered a heart attack.

2. The 1989 agreement is concerned with the management of the interests of the partners, both currently and into the future.  By cl 1, Mr Hancock, during his lifetime, and on his death, Mr Dalby, was to manage the interests of the partners at Wittenoom (Marandoo) and Rhodes Ridge, including the exploration licences 47/57, 47/58, 47/59 and 47/60.  That exclusive power of management, to be exercised by either Mr Hancock or, upon his death, Mr Dalby (bearing in mind that Mr Hancock was then nearly 80) was limited to a term of 10 years or the death of the last of Hancock and Dalby to die, whichever first occurred. 

3. There was a proviso to this agreement.  According to the evidence, Mr Hancock was concerned about his health and the proviso was that if he should become so incapacitated as to be unable to discharge his management obligations, then Dalby was to exercise the powers conferred upon Mr Hancock in that regard.  Clause 2 provided a limited capacity to extend the term.  By cl 3, the management rights were exclusive and complete. 

4. As it turned out, according to the evidence, Mr Dalby never exercised management powers under this agreement because he died on 25 October 1991 and Mr Hancock survived him.  It will be recalled that, at the age of 82, Mr Hancock died on 27 March 1992.

The plaintiff's claim for breach of contract

1. The plaintiff's original and principal claim may be put relatively simply.  As I have said in other judgments, it relies entirely on the terms and enforceability of cl 4 of the 1984 agreement.  In a sense, that is so also in respect of the plaintiff's alternative 'unconscionability' claim to which I shall come in due course.

2. Having pleaded in the statement of claim what are regarded as the material terms of the 1983 and 1984 agreements, and having referred to the Rhodes Ridge interest or, 'the assets and interests of the Partnership in and to the Rhodes Ridge joint venture and the Temporary Reserves (including Giles) … ', par 18 asserts that as at 27 March 1992 (the date of Lang Hancock's death), the Rhodes Ridge interest remained a WPPL interest.

3. By par 19, it is pleaded that the plaintiff gave notice of its exercise of the option provided by cl 4 of the 1984 agreement by notices dated 11 December 1997 and 28 June 2000.  Those facts were established.  The notices are exhibit A7 and A8 respectively.  Both are directed to HPPL and are given on behalf of WPPL, the common seal being affixed under the hand of Mr Michael Wright and Mrs Bennett in the case of the first notice, and Mr Wright and Mr Brandli in the case of the second notice, which is given 'without prejudice' to the validity and effectiveness and any rights that WPPL may have under the first notice of 11 December 1997.  The second notice is materially in the same terms as the first, even down to the same typographical error:

   WPPL HEREBY GIVES NOTICE pursuant to the clause 4 of exercise by it of the option to require the transfer of the HPPL interests to HPPL and the transfer of the WPPL interests to WPPL.

   The notice having previously recited the terms of cl 4 of the 1984 agreement, its purport in each case is clear. 

4. The first notice was sent under cover of a letter signed for WPPL by a Ms Turner, who at the time was a director and the secretary of WPPL.  The letter is addressed to a Mr Newing, the General Manager, Commercial and Legal, of HPPL.  It responds to a letter written by Mr Newing on 2 October 1997.  That letter was addressed to Ms Turner and Mr Brandli, who was then and remains a director of WPPL and who has been its secretary since November 1998.  Mr Newing's letter raised various matters on behalf of HPPL, to some of which I will need to return in due course, concerning the stamping of partnership agreements, the Rhodes Ridge interest and its future, and indeed the future of the partnership, which Mr Newing recommended should be dissolved.  An offer was made to purchase WPPL's 25% interest in Rhodes Ridge.  A meeting was sought.

5. By the letter dated 11 December 1997 (exhibit EA 201), Ms Turner said that WPPL was prepared to discuss the future dissolution of the partnership and she added that, 'in the meantime' she enclosed the notice exercising the option pursuant to cl 4 of the 1984 agreement.

6. The response was a letter dated 20 January 1998, under the hand of a Mr Morhall, a director of HPPL.  He referred to a conversation he had had with Ms Turner on 15 December 1997, and he asked for confirmation that she had then said that WPPL only gave the notice, 'on the advice of your legal counsel' and that there was no intention of taking any further action at that stage.  By letter dated 3 February 1998, Ms Turner replied that WPPL intended the notice to be a formal notice exercising the option and expected that HPPL would 'sign all relevant forms and other documents and take all necessary action required as a result of the exercise of the option', but because of HPPL's wish to discuss other matters, WPPL was prepared to refrain from legal action.  It is noteworthy that it is clear that these people knew each other well.  The letters are written addressing the recipients by their first names, shortened familiarly.  When the business is done they exchange season's greetings.

7. On 24 July 1998, Mr Morhall wrote again to Ms Turner expressing the view, for HPPL, that the purported exercise of the option was ineffective and the defendant's position was that Rhodes Ridge was and would remain a partnership asset shared equally by the partners, who together had a 50% interest in the joint venture with Hamersley Iron Pty Ltd, one of the Rio Tinto group of companies.  The letter gives, as a reason for HPPL's view that the exercise of the option was ineffective, the fact that events since then had overtaken the intent of the 1984 agreement.  Reference was made to the sale of the McCamey's interest and the sale of Marandoo, together with the execution of the later partnership variations in the 1987 and 1989 agreements. 

8. Particular reliance was placed upon the management arrangements effected by the 1989 agreement in relation to Rhodes Ridge, making it clear, so the letter asserted, that Rhodes Ridge was a partnership asset.  Finally, it was noted that any transfer of the Rhodes Ridge interest from one partner to the other would require ministerial approval under the relevant State Agreement Act, which had not occurred, so that 'any purported transfer is therefore null and void'.  These arguments and the proposition that the notice was ineffective were rejected by WPPL by a letter dated 30 July 1998 under Ms Turner's hand.

9. The second notice of exercise of the option, dated 28 June 2000, was given under cover of a letter addressed to Mrs Rinehart for HPPL and signed by Messrs Wright and Brandli.  Mr Brandli notes that he signs the letter for and with the authority of Mrs Bennett.

10. There is no doubt that the exercise of the option on the second occasion was rejected by HPPL.  Paragraph 22 of the statement of claim says that it occurred by a letter from HPPL to WPPL dated 31 July 2000 (exhibit MM17).  There is also in evidence a letter dated 11 August 2000, from Mrs Rinehart to Mrs Bennett and Mr Wright (exhibit JJ7), which refers to HPPL's letter of 31 July 2000 and repeats the position said to have been stated in that letter, making the point clearly that, 'The purported Exercise of Option by you in December 1997 and recently is of no effect.  You had no right to do so then and no right to attempt to do so now.'  If it is necessary to decide the point, I think that if the exercise of the option was effective, the relevant notice is that dated 11 December 1997.

1. The essence of this part of the plaintiff's case is expressed in pars 20 and 21 of the statement of claim which assert that, upon the exercise of the option, the partners were required to transfer the HPPL interests to HPPL and the WPPL interests to WPPL, and so the Rhodes Ridge interest is presently held on trust for WPPL (I take that to be the effect of par 21), and is required to be transferred to WPPL.

2. A most important pleading is to be found in par 20(b), which is to the effect that upon the exercise of the option the partners were required to:

   do all things necessary including executing documents and joining in the seeking of the consent of any Minister or joint venture party which may be necessary to enable WPPL to have the benefit of the transfer.

   Rather enigmatically, par 20 pleads that this obligation arises as a matter of law upon the proper construction of cls 1 and 4 of the 1984 agreement. 

3. By par 23 of the statement of claim, it is asserted that the defendant's refusal to comply with the purported exercise of the option on either occasion was in breach of the 1984 agreement.  On the other hand, par 24 asserts that WPPL is ready, willing and able to transfer to HPPL any remaining HPPL interests not already transferred to it.  As I understand it, WPPL says that, so far as it is concerned, at least by the time of the second notice exercising the option, there were no such HPPL interests which were still required to be provided to WPPL under the terms of the 1984 agreement.

Kevin's Corner

1. It is material at this point to refer to asset and interest nominated in Sch 1 par (b) of the 1984 agreement as a HPPL interest.  I refer to the interest identified as Kevin's Corner and all other coal interests in Queensland.  Kevin's Corner was a mineral tenement for coal.  It was held in equal shares by the partners.  There had been an earlier dealing with the interest in 1988, to which I need not make detailed reference.  It is sufficient to say that that dealing came to nothing and Kevin's Corner remained a partnership asset.  It had originally been held as an exploration permit for coal under the terms of the Mineral Resources Act 1989 (Qld) and as from 1 May 1996 the tenement was converted to a mineral development licence issued under that Act by the Qld Minister for Mines and Energy to the partners equally.

2. Shortly thereafter, by a deed dated 1 June 1998, during the period between the two notices of exercise of the option, WPPL assigned to HPPL all of its interest in Kevin's Corner.  The deed made it clear that after the assignment took effect, HPPL would have exclusive rights to develop the licence for its own profit, despite the fact that on the licence itself it might be the case that WPPL would be shown as holding a 50% interest in the licence area.

3. Clause 2 of the deed contains a condition precedent to its operation, as follows:

   This deed is conditional upon the parties obtaining all necessary Ministerial approvals to the assignment of the Vendor's Interest, and (save for this clause 2) shall not take effect until all such approvals have been obtained.  The parties must use their best endeavours to obtain those approvals as soon as possible.

4. In similar vein, cl 9, headed 'Further Assurance' provides:

   Each party hereto shall do all such things and sign all such documents as are required in order that effect may be given to this deed promptly upon being required by any other party to do so.

5. It appears there was no difficulty in that regard.  The relevant mineral development licence is endorsed with the Minister's certificate that the assignment of a 50% interest in the licence from WPPL to HPPL was approved on 2 December 1998.  Hence, it is put for WPPL that by this effective process it transferred what it understood to be the last remaining interest identified under the 1984 agreement as a HPPL interest to that party.  Mr Brandli gave evidence that he was authorised to hold out that WPPL, at all material times, remained ready, willing and able, by such a process, to do its part to ensure that HPPL had the benefit of the transfer to it of interests identified as HPPL interests in the 1984 agreement.  I accept that that was the case.  The mineral development licence was received in evidence as exhibit A22, and the deed of assignment is exhibit A23.

6. Therefore, by pars 25 and following of the statement of claim, relative to this head of claim, WPPL seeks a declaration that it has validly exercised the option granted by cl 4 of the 1984 agreement, a declaration as to the mining tenements comprising the Rhodes Ridge interest, a declaration of trust in relation to the Rhodes Ridge interest and finally, by par 28, an order in the nature of specific performance of cl 4 of the 1984 agreement, that HPPL take all necessary steps and execute all necessary documents to transfer the benefit of the Rhodes Ridge interest to WPPL.

7. Despite the length and detail of the plaintiff's submissions, there is very little development of its case in contract.  It is perhaps encapsulated in the submission at [5]:

   WPPL's case is that cl 4 of the 1984 agreement, was always legally enforceable and effective.  Both partners knew, and acted on, that basis.  On [the] exercise of the clause 4 rights, HPPL was bound to transfer its interest in the Rhodes Ridge tenements [see para 9B(i) and (ii) and Sch 2 of WPPL's statement of claim] and join in seeking any Ministerial consents which were necessary to perfect the transfer in law.  The clause 4 rights were exercised.  HPPL has refused to transfer its interest as a partner in the 'Rhodes Ridge joint venture and the Temporary Reserves (including Giles)' referred to in Sch 2 to the 1984 agreement.

Principles of construction and relevant evidence

1. A number of the issues raised in respect of the contractual case made by WPPL require the construction of contractual terms, particularly those of the 1984 agreement. 

2. The approach I take to that task, in my respectful view, is best described in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749. In that case, after reviewing authorities, Ld Steyn, at 771, said:

   In determining the meaning of the language of a commercial contract, and unilateral contractual notices, the law therefore generally favours a commercially sensible construction.  The reason for this approach is that a commercial construction is more likely to give effect to the intention of the parties.  Words are therefore interpreted in the way in which a reasonable commercial person would construe them.  And the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language.

   I should add that in respect of the issues raised by the pleadings in this case which require the interpretation of the contractual language used, there is no evidence that the words in question bear, within the commercial environment applicable at the time, a settled technical meaning, or a meaning which would not accord with the ordinary meaning of the words used.

3. The same proposition was put succinctly by Gleeson CJ in McCann v Switzerland Insurance Aust Ltd (2000) 203 CLR 579; [2000] HCA 65, at 589 [22], when his Honour said:

   A policy of insurance, even one required by statute, is a commercial contract and should be given a businesslike interpretation.  Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure.

4. These observations direct attention to the end to be achieved by the process of interpretation of the agreement.  It is to ascertain the meaning and effect of the agreement mutually intended by the contracting parties, that intention not being determined subjectively, but objectively accordingly to what a reasonable person in the position of the contracting parties would have understood the meaning and effect of the contractual terms to be.

5. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52, at 179 [40], the High Court said (reaffirming what it had said in Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35, at 461 ‑ 462 [22]):

   This Court, in Pacific Carriers Ltd v BNP Paribas has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transactionhttp://thomsonnxt4/links/Handler.aspx?tag=67c6129782cbfee57e2ec4b0ec05ac7a&product=cl.

6. The question of the proper approach to the construction of commercial agreements was ventilated before the Court of Appeal in Home Building Society Ltd v Pourzand [2005] WASCA 242. The principal reasons were those of McLure JA, with whom Wheeler JA agreed. At [25] ‑ [33] her Honour reviewed relevant decisions of the High Court before concluding that although it was unnecessary, in her Honour's view, to resolve the question in that case, 'The implication in the above statements of principle is that surrounding circumstances can be used in the interpretation of contracts whether or not an ambiguity is found to exist.' [32]. See also Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2006) 39 ACSR 444; [2006] FCAFC 144.

7. In separate reasons (a partial dissent) I also dealt shortly with the point, upon which I needed to express a view because I thought that, in that case, the language to be interpreted involved no ambiguity.  At [62] I said:

   I should say that in my view, whether or not there was properly to be regarded as ambiguity in the terms of the deed to be construed by the Court, evidence of the surrounding circumstances known by the parties to the deed and the purpose and object of the transaction reflected in the deed was admissible and regard might be had to it as an aid to the proper construction of the deed … .

   At [64] I added:

   That is not to say, of course, that there is any special rule applicable to the construction of commercial contracts alone.  For present purposes, the point to be made is that evidence of the factual matrix in which the deed of priority was made and the nature of the relationship between the parties, the purpose they had in common for entering into the deed, are all matters which may reveal what reasonable persons in the position of the parties would have understood they meant by the words used in their agreement.

8. In this case I admitted much evidence concerned with what led up to the 1984 agreement and the 1987 and 1989 agreements and what were the relationships between the parties at the time, but also, those agreements having been made, what the parties or those who represented their guiding mind and will understood was the effect of the contracts they had made, sometimes in the light of advice they received about such matters.  I thought that evidence of the latter kind was relevant to a number of other issues arising in the case:  abandonment, discharge and estoppel are the principle issues to which such evidence would be relevant, appreciating that it would not fall within the factual matrix in which, particularly, the 1984 agreement, was made. 

9. The applicable principles were recently restated by McLure JA, Wheeler JA agreeing, at [154] and [155] of her Honour's judgment in Chemeq Ltd v Shepherd Investments International Ltd [2007] WASCA 117, and see Pateman v Daw Koh [2007] WASCA 85 [33] ‑ [37] per Buss JA, Roberts‑Smith and Pullin JJA agreeing; and by the High Court in IATA v Ansett Aust Holdings Ltd (2008) 234 CLR 151; [2008] HCA 3 per Gleeson CJ at 160 [8], the majority applying Toll at 174 [53].

10. It is not surprising, perhaps, that the conduct of the parties towards each other and the views they expressed to each other and, in this case, internally within WPPL and HPPL are not admissible in construing an agreement already made.  What the parties think they have done, even though they may be in furious agreement on the topic, can hardly provide evidence of what in fact they agreed.  However, I should say immediately that, with much greater sophistication, Wheeler JA reviews relevant authorities and states the applicable general principle in Morrison v Town of Victoria Park [2007] WASCA 164 [18].

11. Finally, in my opinion it is still useful for a trial judge to bear firmly in mind that although admissible evidence may assist in the process of the interpretation of a written agreement, the aim of the court is to construe the agreement so as to discover objectively, from the point of view of a reasonable person, the intention to which the parties making the agreement have given effect by the words they have used.  In my respectful view, the process was well‑described by Gibbs J in his dissenting judgment in Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109 ‑ 110:

    It is trite law that the primary duty of the court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course, the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must, if possible, be construed so as to render them all harmonious, one with another.  If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different.  The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust.  On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, 'even though the construction adopted is not the most obvious, or the most grammatically accurate', … .  Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid any inconsistency between that provision and the rest of the instrument.  Finally, the statement of Lord Wright in Hillas & Co Ltd v Arcos Ltd, that the court should construe commercial contracts 'fairly and broadly, without being too astute or subtle in finding defects', should not, in my opinion, be understood as limited to documents drawn by businessmen for themselves and without legal assistance. [citations omitted]

    The last observation is apposite in this case where all the contracts upon which the parties depend or which are relevant to the resolution of issues arising in the case were drawn by solicitors, albeit in the case of the 1984 agreement, there is evidence that it matched closely the outcome of a process of negotiation between Mr Peter Wright, for WPPL, and Mr Lang Hancock, for HPPL.

12. Finally, in relation to the construction of agreements, it is convenient to note that during the course of the arguments presented by the parties, from time to time, the question of the implication of a term in an agreement arises, it is said in the ordinary way as a matter of fact, because it represents something which must have been agreed.  It is sufficient to state the rules governing such a process of implication in the terms adopted by the Privy Council (Viscount Dilhorne, Ld Simon and Ld Keith) in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. The term to be implied must be reasonable and equitable. It must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it. It must be so obvious that it 'goes without saying'. It must be capable of clear expression. And finally, it must not contradict any express term of the contract.

13. While talking of evidentiary matters, I note in passing that, at a basic level, WPPL's unconscionability claim involves the proposition that if it is the case that, having regard to any of the matters pleaded by way of defence, cl 4 of the 1984 agreement is legally ineffectual or unenforceable, then there is evidence that prior to the purported exercise of the option and its refusal by HPPL, both parties operated upon the common assumption that they had made an effective agreement which would entitle either of them, within the terms of cl 4, to exercise the option and cause the parties to behave cooperatively in accordance with their duties as partners to effect the transfer of any property or interest which was the subject of the exercise of the option.  Part of the defendant's case expressed the contrary view.

14. I admitted a considerable body of evidence directed to the issue whether the common assumptions relied upon by the parties existed.  That evidence included, not only factual material concerning various transactions and agreements made between the parties in the period with which the Court was concerned, but also the terms in which they expressed their understanding of the effect and the operation of the 1984 agreement.  It will be necessary, in due course, to refer to that body of evidence in considering WPPL's unconscionability claim and HPPL's counterclaim, among other matters.

15. The purpose of referring to the matter now is to make the point that I understand, of course, that there was a considerable body of evidence relating to such matters.  I do not use it when construing and deciding upon the terms and effectiveness of the 1984 agreement.

Relevant agreements as to, and the tenements comprising, the Rhodes Ridge interest

1. It will be recalled that central to this case and the plaintiff's contractual claim in relation to Rhodes Ridge are the provisions of cl 1(b) of the 1984 agreement and par (a) of Schedule 2 to that agreement, which made a WPPL interest:

   The assets and interests of the Partnership in and to the Rhodes Ridge joint venture and the Temporary Reserves (including Giles) and other mining or mineral areas more particularly set out in the map attached hereto and described as EAW Mining Tenements Sheet B … .

2. I have touched upon the genesis of the Rhodes Ridge Joint Venture. The mining tenements in question, when WPPL and HPPL acquired their interest in them as partners, were held by them and by D F D Rhodes Pty Ltd. They were the occupants of the temporary reserves issued under the provisions of s 276 of the Mining Act 1904 (WA) which is in the following terms:

   The Minister and, pending a recommendation to the Minister, a warden may temporarily reserve any Crown land from occupation, and the Minister may at any time cancel such reservation:  Provided that if such reservation is not confirmed by the Governor within twelve months, the land shall cease to be reserved.

   The Minister may, with the approval of the Governor, authorise any person to temporarily occupy any such reserve on such terms as he may think fit, but subject to the provisions of section two hundred and seventy seven.

   Section 277 had application only to rights of occupancy granted in respect of a temporary reserve for the purpose of prospecting for gold.

1. Again in Hospital Products, at 97, Mason J said:

   That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided a foundation for the erection of a fiduciary relationship. In these situations it is the contractual foundation which is all important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction.

2. Therefore, even where, as in this case, a fiduciary relationship of a well‑recognised kind arises out of the relationship between the parties, it is necessary to examine all the circumstances defining that relationship to ascertain what are the particular obligations owed and what acts or omissions will amount to breaches of the duty:  Breen v Williams (1996) 186 CLR 71, per Brennan CJ at 82 ‑ 83; Maguire v Makaronis (1997) 188 CLR 449, 464, per Brennan CJ, Gaudron, McHugh and Gummow JJ. In such a case, it will be the contractual instrument governing the relationship between the parties which determines the scope or ambit of the fiduciary's duty.

3. A good example of the application of this principle is the decision of Bryson J in Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1, 17. His Honour held that the process required of joint venturers in a mining venture, in relation to the assignment of their interests, was provided by the relevant joint venture agreement which, in that way, should be regarded as having modified the fiduciary obligations which otherwise, it would be held, the parties had assumed, one to the other.

4. In my opinion, the same must be said of this case in which the defendant claims the remedy that, if it is obliged to comply with the exercise of the option, it should be entitled to equitable compensation for the detriment, damage and loss suffered by the defendant as a result of the alleged breach of fiduciary duty in the partnership relationship, absent an order that, upon the exercise of the option, the plaintiff should hold what had formerly been the partnership's interest in the proceeds of the sale or turning to account of Rhodes Ridge upon a constructive trust for the benefit of the plaintiff and the defendant equally.  If either remedy was to be the outcome of the defendant making good its claim for a breach of fiduciary duty on the part of the plaintiff, it can be seen that that would effectively turn upon its head the exercise of the option, which could then not have the effect of providing to the plaintiff the defendant's undivided share of the Rhodes Ridge interest. 

5. In my opinion, this claim must fail because it may not succeed without setting at nought the plaintiff's capacity to exercise the option provided by cl 4 of the 1984 agreement.  It follows that it could not be held to be a breach of the plaintiff's fiduciary obligation to give notice of the exercise of the option.  In respect of that matter, it must be held either that it is not subject to the fiduciary obligation otherwise generally imposed upon the plaintiff as the defendant's partner, or the exercise of the option cannot be regarded as a breach of that obligation.  It matters not which way the conclusion is expressed. 

6. I have already held that the representations in part relied upon by the defendant in this regard were not made.  But importantly, it was not otherwise the case that the plaintiff's conduct in exercising the option involved any breach of its fiduciary duty.  The position was unaffected by the 1989 agreement, following the termination of that agreement upon Mr Hancock's death, and there could be no breach of fiduciary duty by a failure of the plaintiff to inform the defendant (if it was the case), before the exercise of the option, that it was considering taking that course. 

7. The plaintiff was entitled to pursue its own interests in respect of the exercise of the option.  There was no conflict of interest in any relevant sense.  In any event, this was not a case where the plaintiff might resolve a conflict of interest by informing the defendant of its plans and advising it to seek independent legal advice.  The defendant's case was, effectively, that the plaintiff could not exercise the option without committing a breach of its fiduciary duty, and in that contention it may not succeed.

8. In conclusion, in respect of the contention that there has been a breach of fiduciary duty by the plaintiff, I have noted and given consideration to pars 23 ‑ 34 of the counterclaim.  It may be that these paragraphs plead an alternative view to a claim for breach of contract made by the defendant to which I have not yet come, but I think this alternative plea of breach of fiduciary duty may conveniently be dealt with now.

9. Again, the relationship of the parties as partners is pleaded, varied upon the death of Mr Hancock by what is said to be an implied undertaking on the part of the plaintiff, for a period of 10 years after the making of the 1989 agreement, that it would seek to negotiate a sale of the partnership's interest in Rhodes Ridge on behalf of both partners.  I would point out that if any such agreement was made, the remedy would seem to be that available for the breach of that contract, rather than in endeavouring to import the concept of a variation of the fiduciary duties owed by the plaintiff to the defendant as a partner. 

10. But it is said that the plaintiff failed, in breach of its fiduciary duties, to honour that agreement, and instead it purported to exercise the option under the 1984 agreement.  On the other hand, it is pleaded, during this period various transactions were entered into, which I may generally refer to as Marandoo and the agreements with respect to the Wittenoom tenements, whereby, as a result of the defendant's efforts, it is said that the plaintiff received a benefit by sharing equally in the proceeds of sale.

11. To my mind, the short answer to this pleading is that if the defendant has a remedy it arises out of the plea of a breach of contract, to which I shall shortly turn.  Otherwise, the claim of a breach of fiduciary duty in the manner of this pleading runs foul of the fact that the fiduciary duty, absent the contractual claim, is said to arise in a way which creates a fundamental conflict between it and the plaintiff's capacity to pursue its rights under cl 4 of the 1984 agreement.  The plea of breach of fiduciary duty in this context is no more valid than the plea which I have previously discussed, even assuming the agreement or undertaking which is its foundation.

Breach of contract

1. In pars 19 ‑ 22, the defendant pleads the formation of a contract to vary the 1989 agreement, by implication from correspondence between the plaintiff and the defendant, initiated by the letter dated 25 November 1991, written by the lawyer Mr Fieldhouse, and involving letters dated 28 November and 5 December 1991, said to be written on behalf of the defendant, to the plaintiff.

2. The defendant says that a proper conclusion about the effect of these documents as establishing the terms of a contract varying the 1989 agreement is informed by the fact, as the evidence establishes to be the case, that, pursuant to the 1989 agreement, between the date when it was made, on 14 September 1989, and the date when it was terminated, in my view by Mr Hancock's death on 27 March 1992, Mr Dalby having died before him, Mr Hancock had made considerable efforts, in the exercise of his exclusive management powers, to negotiate on behalf of the partners with the joint venture partner, the sale of the partnership's interest in Rhodes Ridge to Rio Tinto.  The material of this kind upon which the defendant relies is particularised extensively in par 32(s) of the defence, which is incorporated into the counterclaim by reference.

3. I have examined this material, so far as it is included in correspondence and incorporated into the evidence by way of the contemporaneous records of various meetings held.  There is no doubt that, despite his ill health, Mr Hancock's expenditure of energy on behalf of the partnership was prodigious, and, as I have previously said, there is abundant evidence for the proposition that during the life of the 1989 agreement, those who represented the management of WPPL and HPPL were content to rely upon Mr Hancock's expertise, within the context of the 1989 agreement.  However, I think there is nothing in this material to support the view that negotiations between WPPL and HPPL were being undertaken so as to vary the terms of the 1989 agreement to extend its life beyond Mr Hancock's death, for a period of up to 10 years from when that agreement was made, during which period the plaintiff would assume the obligation to negotiate a sale of the partnership's interest in Rhodes Ridge on behalf of both the plaintiff and the defendant, the proceeds of any such sale to be shared equally between them.

4. I have discussed the letter to Mr Hancock, written by Mr Fieldhouse, which is dated 25 November 1991, when reviewing the evidence upon which the defendant relies for its unsuccessful estoppel defence.  At that time, I also discussed Mr Hancock's letters of 28 November and 5 December 1991, apparently, at least to some extent, in response to the letter of 25 November.  I need not repeat that discussion here.

5. The short point, for present purposes, seems to me to be that I can see nothing in that correspondence which would cause me to resile from the view which I expressed in relation to the estoppel case, and to conclude that, for the plaintiff, Mr Fieldhouse was making an offer to vary the 1989 agreement, an offer subsequently accepted by Mr Hancock on behalf of the defendant.  That would, at least by implication, result in an agreement that until about 1999 the 1989 agreement should operate, varied in its terms, so that in place of Mr Hancock and the exclusive management powers conferred upon him, would stand the management of the plaintiff, presumably Mr Michael Wright and Mrs Bennett, together with other senior managers of the plaintiff, who would then assume the exclusive management power and obligation to negotiate a sale of the partnership's interest in Rhodes Ridge, either to Rio Tinto or someone else, on terms which the plaintiff would settle.  That would be subject only to the defendant retaining the right, under the 1989 agreement, to share equally in the proceeds of the sale. There is simply no evidence which would justify drawing an inference that the parties made a contract in those terms. 

6. I put it that way because, although in par 19 the counterclaim pleads that the contract was to be implied from the correspondence referred to, against the background of Mr Hancock's efforts to negotiate a sale of Rhodes Ridge (which does not seem to me to assist), I think what is meant is that, despite the lack of any formal process of offer and acceptance or reaching an agreement, the existence of the contract should be inferred from the way in which the parties dealt with each other:  Breen, per Dawson and Toohey JJ, at 90 ‑ 91, citing Deane J in Hawkins v Clayton (1988) 164 CLR 539, 573.

7. As I understand it, it must first be possible to infer an agreement in particular terms, before any question of the implication of additional terms, such as the term pleaded in par 20 of the counterclaim, that each party should do all reasonably within its power to secure to the other party the benefit of their agreement, can arise.  The defendant's case falls at the first hurdle.  It is unable to establish that any agreement was made in the terms it proposes. 

8. I do not, therefore, propose to discuss at all the allegation that the plaintiff breached the 1989 agreement, as varied, by failing to use its best endeavours to sell or turn to account the partnership's interest in Rhodes Ridge prior to the expiration of 10 years from the date of the 1989 agreement, so as to secure to the defendant an entitlement to 50% of the proceeds of sale. 

9. I note, however, that the evidence would tend to support a conclusion that, following the death of Mr Hancock, those acting in senior management roles for the defendant were inclined to pursue negotiations with respect to the development of Rhodes Ridge with Rio Tinto, apparently without reference to the plaintiff and without reference to any variation of the 1989 agreement.  When this came to the notice of those at senior management levels of the plaintiff, they attempted to stop this conduct by the defendant by writing to the defendant and Rio Tinto.  Again, in that correspondence, the plaintiff relies upon the assertion that Rhodes Ridge is a WPPL interest, rather than upon any variation of the management structure provided by the 1989 agreement. 

10. This claim is dismissed, as is the counterclaim in its entirety.

Limitation defences to the counterclaim

1. By par 46 of its defence to the counterclaim, the plaintiff raises various equitable defences, and a matter concerning the damages which might be awarded to the defendant were its counterclaim to succeed.  I do not propose to discuss the equitable defences, such as the alleged inordinate delay by the defendant in making the counterclaim.

2. Nor is it strictly necessary that I should discuss the limitation defences raised by the plaintiff in pars 47, 48 and 49 of its defence.  But I think I should note those matters and my views about them.

3. The defendant's TPA claim concerns representations allegedly made that the plaintiff would not exercise the option in the 1984 agreement, but any sale or turning to account of the Rhodes Ridge interest would be for the benefit equally of both partners. Reliance upon those representations is said to have caused the defendant to suffer loss or damage by acting to its detriment by refraining from selling Rhodes Ridge during Mr Hancock's lifetime, or by refraining from seeking partition of the partnership assets under cl 14(b) of the 1983 agreement.

4. At the latest, it is put that the plaintiff resiled from the representations in May 1992, when there was an exchange between Mr Salt, for the plaintiff, and Mr Schwab, for the defendant. The defendant claims damages under s 82 of the TPA, and remedial orders under s 87. As I understand the pleading, the contention is that the loss or damage suffered by the defendant had by then been sustained because it alleges it had refrained from acting in the manner to which I have referred.

5. The TPA, s 82(2), provides that an action to recover the amount of the loss or damage sustained may be commenced at any time within six years after the day upon which the cause of action accrues. The same applies when remedial relief is sought under s 87: TPA, s 87(1CA).

6. In Wardley Australia Ltd v WA (1992) 175 CLR 514, it was held that the cause of action for damages will not accrue where there is merely a potential for loss to be sustained on the fulfilment of a contingency. The statutory cause of action arises only when the damage occurs. Contravention of the Act alone is insufficient. The loss or damage must actually be suffered, and when that occurs is a question of fact. But if time begins to run, then there is no power to extend time, and a claim added by amendment, having the effect of introducing a new cause of action after the time prescribed by s 82(2) has expired, may be defeated as being statute barred.

7. The position will be a little different when relief is claimed under s 87 because an application under s 87(1A) may be made by a person, 'who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in contravention' of a provision such as s 52. This was touched on by the Full Federal Court in WA v Wardley Australia Ltd (1991) 30 FCR 245. I need not discuss the ramifications of this different expression of the law as to when such a cause of action accrues. Again it will be a question of fact, but in a case such as this was pleaded to be, the likelihood that loss or damage would be suffered as a result of a contravention of s 52 would advance the point from which time would begin to run against the defendant in respect of the counterclaim.

8. However that may be, it would seem that, at the latest, as the defendant pleaded its case under the TPA, its cause of action accrued in May 1992. The counterclaim was added when the already amended defence was further amended on 6 December 2002, over 10 years later. The TPA claim was commenced out of time.

9. The claims for breaches of fiduciary duties bear a different character.  They are said to arise out of representations as to whether the plaintiff would exercise the option under cl 4 of the 1984 agreement, or would allow the sale or turning to account of Rhodes Ridge, always to be for the mutual equal benefit of the partners or, in light of the claimed variation of the 1989 agreement, the plaintiff assumed a fiduciary obligation itself to sell or turn to account the Rhodes Ridge interest for the mutual, equal benefit of the partners.  The defendant identifies the breach of fiduciary duty claimed as occurring when, as it puts it, WPPL resiled from its representations in May 1992 and/or when it purported to exercise the option in December 1997.

10. Various remedies are sought in relation to this equitable claim by way of declaration and orders by way of constructive trust or equitable compensation for the loss of the interest in Rhodes Ridge.

11. It is difficult, I think, in the absence of a determination that there was a breach of fiduciary duty in defined circumstances and a determination as to the appropriate remedy, whether by way of a declaration of constructive trust and an order that the plaintiff account to the defendant for half of the proceeds of any sale or turning to account, or an order that the plaintiff pay compensation to the defendant, to determine when this cause of action would accrue and time would begin to run. 

12. The plaintiff pleads that this claim by the defendant is statute barred, pursuant to s 24 of the Limitation Act.  It does not develop this matter in its final submissions.  If s 24 does apply, it is on the basis that the defendant's counterclaim for breach of fiduciary duty is effectively an equitable claim for the land comprising the Rhodes Ridge interest, and in that event, the limitation period would be that applicable to an action to recover the land at law.  Section 4 would apply, and the period would be 12 years from the time when the right to bring the action accrues.  On any view of it, I would think that could not be before Mr Hancock's death on 27 March 1992.  In that event, the limitation period would expire on 27 March 2004, and this claim would be within time, had the representations upon which the content of the fiduciary obligation depends in part been made, and were it not for the effect of the alleged breach of fiduciary obligation upon the plaintiff's capacity to exercise the option conferred by cl 4 of the 1984 agreement according to its terms.

13. Finally, there is the counterclaim for an alleged breach of contract.  The contract is said to be one made by way of variation of the 1989 agreement to extend its term and to impose an obligation upon the plaintiff during the period after the death of Mr Hancock (expiring on the tenth anniversary of the making of the 1989 agreement, ie, on 14 September 1999) to use its best endeavours to sell or turn to account the Rhodes Ridge interest of the partnership for the equal benefit of the plaintiff and the defendant.  As I understand the defendant's pleading, the allegation is one of anticipatory breach, represented by a series of letters sent in early 1993 by Mr Salt for the plaintiff, to Mrs Rinehart and Mr Schwab for the defendant, asserting that the plaintiff had the power to deal with Rhodes Ridge exclusively for its own benefit, culminating in the exercise of the option by the notice dated 11 December 1997.

1. There is much wrong with the pleading, which I have found unnecessary to analyse in depth to dispose of the counterclaim.  But if it is right to suppose that the cause of action first accrued in the sense that action could be brought, sounding in an award of damages in 1993, then, under s 38 of the Limitation Act, the provision identified by the plaintiff, the action by way of counterclaim would be statute barred as an action founded on a contract, under s 38(1)(c)(v). The relevant limitation period is six years. On the other hand, if the cause of action first accrued in 1997, or later, in 1999, the defendant's claim in contract would be in time.

2. In the circumstances, I have not been inclined, without the assistance of submissions by the parties, to spend time myself upon a careful analysis of the limitation pleas, and whether they would provide the plaintiff with good defences to the causes of action raised in the counterclaim.  I have preferred to deal with the substance of those matters, and have concluded that none may succeed.

Damages

1. The question of the assessment of damages may arise in this case in two ways, but in both cases the process would involve the assessment of damages in equity, and in the different contexts in which the question may arise, I am unable to detect that if damages may be awarded, the court's approach to their assessment would be different in one case from the other.

2. I have discussed the remedies sought by the plaintiff in respect of its contractual claim, and have determined that the plaintiff should have an order in the nature of specific performance, moulded to suit the performance of its rights under cl 4 of the 1984 agreement, having regard to the way in which I have interpreted it.  I have said that I would make the declaration sought in par 25 of the statement of claim, that the option has been validly exercised.  I have not seen a need to make a declaration under par 25A of the statement of claim, although the declaration referred to in par 25A(c) would be reflected in the speaking order by way of specific performance.  I have held that it is proper to make a declaration under par 26A of the statement of claim, making clear the tenements which, in my view, comprise the Rhodes Ridge interest, if it is thought to be useful to go beyond the terms of my judgment about that, and to formalise my view in terms of a specific declaration.  The order of specific performance which I think to be appropriate is that referred to in par 28 of the statement of claim.

3. I have held that this is not a case of the kind which would lead the court to refuse a decree of specific performance on any of the discretionary grounds raised by the defendant, or otherwise arising.  But if I am wrong about that, then, under our equivalent of Lord Cairns' Act, the Supreme Court Act 1935 (WA), s 25(10), equitable damages may be awarded in lieu of specific performance. So far as is material, subsection (10) provides:

   In all cases in which the Court entertains an application … for the specific performance of any … contract or agreement, the Court may, if it thinks fit, award damages to the party injured, …

4. The plaintiff makes no claim at law for an award of damages for breach of contract.  But in a case such as this, I think the equitable remedy, the discretionary power to award damages instead of, or in addition to, specific performance, will involve the same process of assessment as in the case of an assessment at common law:  Shepherd v Baster [2006] WASC 176 [104] ‑ [109], Templeman J. There is no suggestion in this case that damages ought to be awarded to deal with any specific loss or damage not able to be remedied by an award of specific performance, no matter in what terms it is appropriate to couch that order.

5. The other way in which the question of an award of damages may arise is if I am wrong about the plaintiff's contractual claim, and wrong about the plaintiff's equitable claim based on allegations of unconscionability.  In that case, the remedy sought is particularly that described in par 25B of the statement of claim.  This would involve the court in making a declaration that the defendant holds its undivided 25% in the Rhodes Ridge interest on a constructive trust for the plaintiff.  In addition, as I understand it, orders might then be made to determine the trust, effectively by ordering the defendant to do whatever is reasonably necessary to convert the plaintiff's beneficial interest into the legal interest.

6. The plaintiff additionally, in respect of this claim, by par 25C of the statement of claim, seeks:

   Equitable damages for breach by HPPL of the obligation which it owes WPPL as a partner, to act truly and justly for WPPL.

   I should observe that although par 25C is not expressed in the alternative, reference to par 22M shows that the claim is for compensation for the loss suffered as a result of the defendant's asserted failure, in accordance with its duty, to comply with the notice of exercise of the option, invalid or unenforceable though it may be, and to do the acts which may be necessary to cause the transfer of the interest in question to the plaintiff.  In other words, the equitable damages are here sought also as an alternative to the principal relief which is claimed, and as I say, the process of assessment would, in this case, in my opinion, be indistinguishable from an assessment of damages at common law.

7. As to that, the plaintiff submits that it would be entitled to be compensated 'for the loss of the commercial chance to sell a 50% interest in the Rhodes Ridge joint venture to [Rio Tinto].'  The plaintiff calls in aid the relevant principles as set out in a series of decided cases, principally Malec v J C Hutton Pty Ltd (1990) 169 CLR 638; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; and Sellars v Adelaide Petroleum NL (1994) 179 CLR 332.

8. When a claim for damages is put in the way the plaintiff did here, the damages to be assessed will almost inevitably involve the assessment of the present value of future possibilities, what Brennan J described in Amann as expectation damages, damages assessed for the loss of the benefits which the plaintiff could expect to derive from the performance of cl 4 of the 1984 agreement.  The task of assessment may, having regard to those matters, involve much uncertainty and difficulty in ascribing value to the loss which has been sustained by the loss of the chance, the opportunity, or the expectation, as a result of the breach of the contract.  In Amann, Brennan J described the relevant principles:

   The relevant principle is that when performance of a contract by a defendant (including the permitting of the plaintiff to perform his obligations under the contract) would have resulted in the plaintiff's acquiring a particular commercial advantage but the advantage is lost by reason of the defendant's breach, the loss of the advantage is compensable and its value is to be taken into account in assessing a plaintiff's damages. If the advantage in question is a certain opportunity to secure a profitable second contract, the profits of the second contract can be recovered. Such an advantage is worth more than a merely preferential chance of securing such a contract but such a chance, like the chance in Chaplin v Hicks, has a value and the loss of the chance is a proper subject of compensatory damages.

   However, to attribute a value to such a chance the court might have to engage in a degree of speculation, speculating as to the likelihood that a profitable contract would be available, what the likely profits would be and the likelihood that the plaintiff would secure the contract against competition by others. The value of the plaintiff's lost contractual benefits are then shrouded in uncertainty (104).

9. The degree of uncertainty may ultimately be such that the plaintiff will find the onus of proof of the loss difficult to discharge.  In Sellars, a distinction was drawn between proof of the loss of the opportunity for which compensation is sought, and the assessment of the present value of that loss as at the time of judgment.  Sellars was a case under the TPA, s 52, but the rules are the same in that context and where damages are sought for tort or breach of contract. Mason CJ, Dawson, Toohey and Gaudron JJ said:

   [D]amages for deprivation of a commercial opportunity, whether the deprivation occurred by reason of breach of contract, tort or contravention of s 52(1), should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued. The principle recognized in Malec was based on a consideration of the peculiar difficulties associated with the proof and evaluation of future possibilities and past hypothetical fact situations, as contrasted with proof of historical facts. Once that is accepted, there is no secure foundation for confining the principle to cases of any particular kind.

   On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable (355).

10. There are a number of matters which appear to condition the plaintiff's approach to its case for damages.  The first is that all its evidence, and the evidence in response led by the defendant, was presented on the basis that the case being put by the plaintiff and answered by the defendant was that the opportunity lost was the chance that, WPPL might acquire HPPL's undivided 25% share in Rhodes Ridge, and might be able, at some time in the future, to negotiate, on favourable terms, the purchase of what would then be its 50% interest in the Rhodes Ridge joint venture by the joint venture partner, Rio Tinto. 

11. It puts its case in that way because, not only is Rio Tinto the other joint venturer, but, without needing to discuss the evidence at this stage, it is clear, on the evidence, that Rio Tinto would enjoy the advantage of access to relevant infrastructure which could be utilised in respect of ore produced, processed and transported from a producing mine at Rhodes Ridge, by rail, to port facilities.  There is no need, for present purposes, to discuss the extent to which it might be necessary to upgrade that infrastructure.  But it is clear that it would have to be replicated by an hypothetical purchaser other than Rio Tinto.  Nor would any depressive effect on price be occasioned by the need for Rio Tinto to make the purchase in circumstances where it would have to accommodate minority interests. 

12. Overwhelmingly, the evidence about damages, including the proof of causation, evidence directed towards establishing the nature of the compensable chance lost, if any, as well as evidence concerned with the assessment of the value of that lost chance, if any, was adduced on a confidential basis.  I need not revisit the regime which I put in place in an endeavour to ensure that the court was as fully informed as need be, by parties who had access to the evidence to be presented by each other, and also in circumstances which protected, not only the privacy of their commercial interests as against each other, but the privacy of the commercial interests of Rio Tinto.

13. As will be seen, it is unnecessary that I discuss that evidence in detail for the purposes of this judgment.  Were it necessary to do so, I would express my views in a confidential addendum to this judgment, which would only be published in the restricted circumstances of access which applied when the evidence was adduced.

14. I should say that the parties mounted their cases rather differently.  For the plaintiff, very substantial reliance was placed upon the expert evidence adduced by its primary witness, Mr Cole.  That evidence was led under challenge as to the relevant expertise of the witness, expertise which I thought was established, and under a very considerable attack upon his credibility as an independent, impartial expert witness. 

15. As it will be unnecessary to examine that evidence in any detail, I consider it to be unnecessary, and therefore, having regard to the nature of the attack upon Mr Cole, undesirable, that I should make extensive findings upon the issue of his credibility as a witness, except to say that I accept his honesty and reliability as an independent expert witness, without expressing a view about the weight which might ultimately be accorded to his expert evidence about the proper approach to the question of the assessment of value, and the proper method of valuation to be employed in a case of this kind.  In making these observations about credibility, I do not, of course, overlook the material which was the subject of my judgment in Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 7] [2007] WASC 229, to which I have had regard.

16. The evidence given for the plaintiff concerning the nature of the lost opportunity, and the question whether there would be a loss of an opportunity of value, was principally that of Mr Michael Wright.  I need not discuss his evidence on this topic in detail, but it is fair to say that, although he had had some negotiations with Rio Tinto, in the course of which offers to acquire the plaintiff's minority interest had been made, Mr Wright declined to pursue those negotiations, taking the view, I think, that the plaintiff should be prepared to hold its interest under the joint venture, or the 50% interest which might come to it, subject to the provision of ministerial consent and the consent of Rio Tinto as the joint venture partner, until the environment was such that Rio Tinto would be prepared to offer what the plaintiff would regard as a realistic price for the acquisition of the entirety of the Rhodes Ridge joint venture assets. 

17. Mr Wright, I think, accepted, and valuations were prepared on the basis, that the asset might not be sold for 10 or even 20 years.  Therefore, although the plaintiff, in the eventuality under discussion, would be kept out of the asset represented by the defendant's interest in Rhodes Ridge, it would not be kept out of the money represented by the assessment of the present value of the lost chance.  Indeed, as all the experts recognised, a quite substantial discount for the advancement of the recovery of that compensation, in an award of damages assessed as at the date of judgment or trial, would be appropriate.

18. I am aware, of course, of the debate which has occurred in relation to the appropriate time for the assessment of equitable damages.  I rather think that, in the circumstances of this case, the appropriate time would be the date of breach of the contract, or the date, which would be the same date, when the defendant's refusal to comply with an unenforceable notice was nonetheless properly to be regarded as unconscionable conduct.  However, in this case it would not seem to matter if the alternative view, that damages would be assessed as at the date of trial or judgment, was adopted.

19. What would have to be borne in mind is that the assessment of damages would measure the value of the chance lost at the time when it was lost.  The method of assessment, I would have thought, would necessarily have to look, in a speculative way, at a relatively far‑distant future.  In my view, regard would need to be had, not only to the prospects of establishing a productive mine at Rhodes Ridge, the cost implications of doing so, and the speculative costs of production and transportation, but also would require speculation about the nature of the global market for iron ore, the demand which might be anticipated from consumers, other sources of satisfying that demand, the competition which Rio Tinto or some other miner at Rhodes Ridge might face, not only from producers locally from the Pilbara region, but from other parts of the world, and changes in the relative value of money.

20. The degree of speculation which would be required, and the many substantial uncertainties inherent in the process of assessment, are considerable.  But I would be satisfied that if the occasion arose for damages to be assessed, the difficulty of the task, although daunting, would not absolve the court from making an assessment, in part dependent upon the resolution of the many substantial conflicts between the bodies of expert evidence adduced on both sides of the case.  It will be apparent, however, from what I have written, that much work would be required in this process. 

21. I have considered whether a provisional assessment should be made, and I have decided that the very considerable delay which has been occasioned in the preparation of this judgment should not be added to by such an undertaking, particularly as, in my view, the performance of the task will not be aided by judgments about the credibility of the witnesses who gave evidence bearing upon the issues, and the resolution of conflicts in the evidence will not be better performed earlier rather than later if, in the very limited circumstances to which I have referred above, an assessment of damages should be required.

Conclusion

1. I propose to publish my reasons without the need for attendance by the parties in open court.  I give judgment for the plaintiff on its contractual claim.  I will make an order in the nature of specific performance, and such ancillary declarations and orders as are necessary and as discussed in the section of these reasons concerned with the making of a decree of specific performance.  The defendant's counterclaim is dismissed.

2. I invite the parties to prepare and file an agreed minute of substantive orders to give effect to these reasons.  That minute should deal with an appropriate award of costs which should generally follow the event, but I appreciate that there may be special orders required to do justice between the parties, and if they can be agreed also, so much the better.

3. To the extent that, after a process of consultation, there may remain matters as to costs or as to the terms of any substantive order which are in dispute, I will, of course, hear the parties.  But any such debate should proceed, in the first instance, by the exchange and lodgement of written submissions to enable me to decide whether I may resolve the matters in dispute on the papers, or whether I would need to hear the parties in open court.