Bathurst Resources Ltd v L&M Coal Holdings Ltd - [2021] NZCA 684

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA483/2018
[2021] NZCA 684

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

Court:	Kós P, Gilbert and Goddard JJ
Counsel:	J E Hodder QC, R J Gordon and A S Kirk for Appellants A R Galbraith QC, D R Kalderimis and N K Swan for Respondent
Judgment: (On the papers)	16 December 2021 at 11 am

JUDGMENT OF THE COURT

AThe respondent is to pay the first appellant $104,346 costs in the High Court, plus disbursements of $90,368.
BThe respondent is to pay the first appellant $43,507 costs in this Court, plus disbursements of $10,933.

____________________________________________________________________

REASONS OF THE COURT

(Given by Kós P)

Bathurst acquired coal mining rights on the West Coast of New Zealand’s South Island from L&M. Part of the purchase price was deferred. Two performance payments, each of US$40 million, were payable when 25,000 tonnes, and then one million tonnes, of coal had been shipped from the permit areas.
Although more than 50,000 tonnes of coal were mined by Bathurst from the permit areas, it said this did not trigger the first performance payment obligation. It said the coal was not “shipped” from the permit areas as required by cl 3.4 of the sale agreement.
Bathurst mothballed the mining operation. It denied any present liability for the first performance payment. It said cl 3.10 of the sale agreement enabled it to postpone that payment so long as it paid royalties at a higher 10 per cent rate on the coal it sold.
The High Court found against Bathurst on the meaning of cl 3.4.[1] So too did this Court[2] and (unanimously) the Supreme Court.[3] The High Court and this Court also found against Bathurst on the meaning of cl 3.10. But on appeal, a majority of the Supreme Court found for the Bathurst on that issue.
[1]L&M Coal Holdings Ltd v Bathurst Resources Ltd [2018] NZHC 2127, [2020] NZCCLR 11 [High Court judgment].
[2]Bathurst Resources Ltd v L&M Coal Holdings Ltd [2020] NZCA 113, [2020] NZCCLR 26 [Court of Appeal judgment].
[3]Bathurst Resources Ltd v L & M Coal Holdings Ltd [2021] NZSC 85 [Supreme Court judgment].
In the High Court, L&M also advanced an alternative cause of action alleging that cl 3.10 created a unilateral contractual discretion in favour of Bathurst which must be exercised only for the proper contractual purposes for which it was created — and which, it alleged, Bathurst used for an improper purpose.[4] The High Court found against L&M on this issue.[5] Though L&M supported the High Court judgment on different grounds before this Court, this Court did not address the issue. The Supreme Court indicated it would have agreed with the High Court.[6]
[4]High Court judgment, above n 1, at [191]–[196].
[5]At [211].
[6]Supreme Court judgment, above n 3, at [279].
The Supreme Court noted costs should follow the event, but ordered…

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.

Keep reading for free

Create a free CaseChat account to read Bathurst Resources Ltd v L&M Coal Holdings Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2021] NZCA 684
Decision Date: 16 December 2021 at 11 am

CaseChat Overview and Summary

The Court of Appeal of New Zealand heard an appeal from Bathurst Resources Ltd and Buller Coal Limited against the decision of the Supreme Court in relation to a coal mining rights dispute with L&M Coal Holdings Limited. Bathurst had acquired coal mining rights from L&M, with part of the purchase price deferred and performance payments to be made when certain quantities of coal were shipped. Bathurst argued that the first performance payment was not triggered because the coal was not shipped as required by the agreement, and that it could postpone the payment under a different clause. The lower courts had found against Bathurst on both issues. The Court of Appeal determined three issues: the appropriate categorisation of the inspection of documents step in the High Court, whether L&M's pursuit of its improper purpose argument justified increased costs, and whether Bathurst's unsuccessful argument as to the meaning of a certain clause justified reduced costs.

The Court of Appeal ruled that the inspection of documents step in the High Court should be categorised on a 3B basis rather than a 3C basis, as Bathurst did not provide a valid reason for the higher category. Regarding the improper purpose argument, the Court found that L&M's pursuit of this argument was not so unreasonable or hopeless as to warrant increased costs for Bathurst, as there was an available starting point for the argument. Lastly, the Court of Appeal held that Bathurst's unsuccessful argument concerning the meaning of a specific clause justified a reduction in costs. The Court applied a 15% reduction in costs in both the High Court and the Court of Appeal to reflect Bathurst's unsuccessful argument and the time and expense incurred by L&M in opposing it.

The final orders of the Court of Appeal were that L&M was to pay Bathurst costs in the High Court on a category 3B basis, save for preparation for the hearing which are calculated on a category 3C basis, reduced by 15% — totalling $104,346 — plus disbursements of $90,368. L&M is to pay Bathurst costs in this Court for a complex appeal on a band B basis reduced by 15% — totalling $43,507 — plus disbursements of $10,933.

Orders