Todd Petroleum Mining Company Limited v Shell (Petroleum Mining) Company Limited CA125/05

The Court of Appeal considered an appeal in relation to a joint venture agreement for the development of the Maui gas field. The appellant, Todd Petroleum Mining Company Limited, challenged the decision of the High Court that open access to the Maui pipeline was within the purposes of the joint venture agreement and that decisions regarding open access could be made by a majority of the joint venturers, as per the decision-making procedures set out in clause 5 of the joint venture agreement. The Court of Appeal determined that the issue of open access was moot as it had been unanimously agreed to by the parties and was being implemented. The Court did however consider the issue of whether the decision-making procedures in clause 5 of the joint venture agreement applied to determining whether a proposed activity was reasonably incidental to the purposes of the joint venture. The Court held that clause 5 did not apply to determining whether a proposed activity was reasonably incidental to the purposes of the joint venture as set out in clause 2.1. The Court held that clause 2.1 required unanimity for any further purposes and that applying clause 5 to determine whether a proposed activity was reasonably incidental to an existing purpose would effectively remove the unanimity protection in respect of altered purposes. The Court accordingly declared that in determining whether a proposed purpose was reasonably incidental to a purpose in clause 2, the provisions of clause 5 did not apply. No order was made as to costs.