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Bathurst Resources Ltd v L & M Coal Holdings Ltd

Bathurst Resources Ltd v L & M Coal Holdings Ltd

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IN THE SUPREME COURT OF NEW ZEALAND

I TE KŌTI MANA NUI

SC 29/2020
[2021] NZSC 85

BETWEEN	BATHURST RESOURCES LIMITED First Appellant BULLER COAL LIMITED Second Appellant
AND	L & M COAL HOLDINGS LIMITED Respondent

Hearing:	8 and 9 October 2020
Court:	Winkelmann CJ, Glazebrook, O’Regan, Ellen France and Williams JJ
Counsel:	J E Hodder QC, R J Gordon and D P MacKenzie for Appellants A R Galbraith QC, D R Kalderimis and N K Swan for Respondent
Judgment:	14 July 2021

JUDGMENT OF THE COURT

AThe appeal is allowed. The judgments of the High Court and Court of Appeal are set aside and judgment is entered for the appellants.

BThe application to adduce further evidence is dismissed.

CThe respondent must pay the appellants costs of $30,000 plus usual disbursements. We certify for second counsel.
D Costs should be re-determined in the Courts below in light of this judgment.

____________________________________________________________________

SUMMARY OF RESULT

(Given by the Court)

This appeal concerns the proper interpretation of a contract for the sale of coal mining rights. How to interpret the words of a written contract is a perennial issue in the law, and while over time the test to be applied to find the meaning of those words has become settled, the issue of what evidence outside the words of the contract should be allowed to assist with this task continues to be debated. So too the nature of the test for implication of terms in a contract.
All members of the Court have agreed on the approach to the admissibility of extrinsic evidence in cases of contractual interpretation.[1] The Court has also agreed on the test for the implication of terms.[2]
[1]At [54]–[90] per Winkelmann CJ and Ellen France J and [232](a) per Glazebrook, O’Regan and Williams JJ.
[2]At [106]–[117] per Winkelmann CJ and Ellen France J and [232](b) per Glazebrook, O’Regan and Williams JJ.
The Court is unanimous on the interpretation of cl 3.4 of the contract between the parties.[3] Members of the Court have taken different views on the construction of cl 3.10 of the contract. The majority have found in favour of the appellants on this point, which is dispositive.[4] Accordingly, the appeal is allowed. The respondent must pay the appellants costs of $30,000 plus usual disbursements. Costs in the Courts below should be re-determined in light of this judgment. Winkelmann CJ and Ellen France J would have dismissed the appeal.[5]
[3]At [134]–[158] per Winkelmann CJ and Ellen France J and [232](c) per Glazebrook, O’Regan and Williams JJ.
[4]At [281] per Glazebrook, O’Regan and Williams JJ.
[5]At [223].
The reasons of the Court for this result are given in the separate opinions delivered by:

Para No.
Winkelmann CJ and Ellen France J	[5]
Glazebrook, O’Regan and Williams JJ	[232]

REASONS

WINKELMANN CJ AND ELLEN FRANCE J

Table of Contents

Introduction	[5]
Factual background	[11]
Summary of the parties’ submissions	[31]
Evidence available to assist in contractual interpretation

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NZSC 85
Decision Date: 14 July 2021

CaseChat Overview and Summary

Bathurst Resources Ltd and Buller Coal Ltd (the appellants) appealed against a decision of the Court of Appeal which held that Bathurst was required to pay L & M Coal Holdings Ltd (the respondent) a performance payment of USD 40 million. The appeal concerns the interpretation of the terms of an agreement for the sale of coal exploration rights and mining-related applications in the Buller Coalfield, South Island of New Zealand. The agreement (the Agreement) was between the respondent and Buller Coal Ltd, which was then owned by L & M Coal Holdings Ltd. The appellants now own Buller Coal Ltd. The Court of Appeal found that the appellants were required to pay the USD 40 million because the first performance payment had been triggered when more than 25,000 tonnes of coal had been shipped from the permit areas. The Court of Appeal also found that the appellants were not entitled to defer the payment of the first performance payment under a deed of amendment (the Third Deed) to the Agreement, because the appellants were not paying royalties at a level reflecting ongoing mining. The Court of Appeal allowed the appeal on the first issue, but dismissed it on the second issue. The appellants now appealed to the Supreme Court of New Zealand, which allowed the appeal and set aside the judgments of the High Court and Court of Appeal. The Supreme Court found that the first performance payment had not been triggered because the word “shipped” should be interpreted to mean carriage by ship, and that the appellants were entitled to defer the first performance payment under the Third Deed. The Supreme Court found that the first performance payment had not been triggered because the word “shipped” should be interpreted to mean carriage by ship, and that the appellants were entitled to defer the first performance payment under the Third Deed. The Court found that the evidence of subsequent conduct was admissible. The Court also found that the parties’ agreement should be interpreted objectively. The Court found that the implication of a term would not be necessary to give business efficacy to the contract, and that it would not be reasonable and equitable to do so.

Orders