Bathurst Resources Ltd v L&M Coal Holdings Ltd - [2020] NZCA 113

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IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA483/2018
[2020] NZCA 113

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

Hearing:	21–23 August 2019; further submissions 27 and 30 August 2019
Court:	Kós P, Gilbert and Goddard JJ
Counsel:	J E Hodder QC, R J Gordon and D P MacKenzie for Appellants A R Galbraith QC, D R Kalderimis and D P Neild for Respondent
Judgment:	24 April 2020 at 10 am

JUDGMENT OF THE COURT

AThe appeal is dismissed.
B The appellants must pay the respondent costs for a complex appeal on a band B basis plus usual disbursements. We certify for second counsel.

____________________________________________________________________

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 have now been mined by Bathurst from the permit areas, it says this does not trigger the first performance payment obligation. It says the coal has not been “shipped” from the permit areas.
Moreover, Bathurst has now mothballed the mining operation. It is focusing on mining opportunities elsewhere. It accepts liability to pay royalties to L&M on any coal mined and sold, although nothing now is being mined and little is being sold. But it denies any present liability for the first performance payment. It says cl 3.10 of the sale agreement enables it to postpone that payment so long as it pays royalties, at a higher 10 per cent rate, on the coal it sells.
L&M issued proceedings in December 2016. It sought a declaration that the first performance payment was due and owing, and an order that Bathurst pay US$40 million to L&M, together with interest and costs.
Dobson J held in favour of L&M.[1] Bathurst appeals.

Issues on appeal

[1]L&M Coal Holdings Ltd v Bathurst Resources Ltd [2018] NZHC 2127 [High Court judgment].

Three issues arise on appeal:
(a)What is the correct meaning of “shipped from the Permit Areas” in cl 3.4 of the sale agreement?
(b)What is the true effect of cl 3.10 of the same agreement?
(c)Should a term be implied requiring Bathurst to undertake substantive continuing levels of production?

Background

L&M is a company incorporated under Belize law. Its principal business office is in Hong Kong. It is effectively governed by its founder, Mr Geoff Loudon, a New Zealand-based geologist and investor in mineral resources. Bathurst is a company incorporated under New Zealand law. Its registered office is in Wellington. It has interests in the mining of natural resources, including coal. It is listed on the Australian stock exchange. Between September 2010 and July 2015 it was…

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: [2020] NZCA 113
Decision Date: 24 April 2020 at 10 am

CaseChat Overview and Summary

The Court of Appeal of New Zealand dismissed an appeal by Bathurst Resources Limited and Buller Coal Limited against a decision of the High Court of New Zealand. The High Court had ruled that Bathurst was liable to pay a US$40 million performance payment to L&M Coal Holdings Limited, the respondent, under a sale agreement for coal mining rights. The Court of Appeal found that Bathurst had failed to establish that the coal had to be exported before the payment was triggered. The Court of Appeal also found that a clause in an amendment to the sale agreement did not suspend the right of L&M to sue Bathurst for the payment. The appeal was dismissed and Bathurst was ordered to pay costs to L&M.

Orders