Queensland Judgments
Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment

Paterson Mining Pty Ltd v David Oriel Industries Pty Ltd[2021] QLC 37

Paterson Mining Pty Ltd v David Oriel Industries Pty Ltd[2021] QLC 37

LAND COURT OF QUEENSLAND

CITATION:

Paterson Mining Pty Ltd v David Oriel Industries Pty Ltd [2021] QLC 37

PARTIES:

Paterson Mining Pty Ltd ACN 133 613 797 

(applicant)

v

David Oriel Industries Pty Ltd ACN 001 571 544 (in liq)

(respondent)

FILE NO:

MRA207-18

DIVISION:

General Division

PROCEEDING:

General application

DELIVERED ON:

15 October 2021

DELIVERED AT:

Brisbane

HEARD ON:

6 September 2021

HEARD AT:

Brisbane

MEMBER:

JR McNamara

ORDERS:

  1. It is declared that the applicant has lawfully terminated the sale agreement executed on or about 1 December 2014 between the applicant and the respondent (the Sale Agreement).
  2. It is declared that the applicant is entitled to retain the $500,000 deposit forfeited under the Sale Agreement.
  1. The Court orders that the respondent pay the applicant licence fees pursuant to cl 7.4(f) of the Sale Agreement in the amount of $76,922.
  1. The Court orders that the respondent deliver up possession of the assets and equipment contained in ‘Annexure A’ to the Further Amended Statement of Claim filed 31 May 2019, being the assets and equipment set out in Annexure A to this order.
  1. The Court orders that the respondent pay the applicant interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld) on the amount described in Order 3 from 28 April 2018 up until the date of judgment.
  1. The respondent pay the applicant’s costs of the proceeding on a standard basis.

CATCHWORDS:

ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – GENERALLY – where the respondent has been placed into liquidation – where the Land Court has substantive jurisdiction – where the applicant and respondent had an agreement for the sale and purchase of mining tenements and other assets and equipment – whether the applicant is entitled to recovery of the assets and equipment – whether the applicant is entitled to licence fees and the deposit pursuant to the sale agreement – where the applicant transferred title to the mining tenements but not the assets and equipment unless or until completion of the sale agreement – where the sale agreement was not completed – where there was valid termination of the sale agreement 

Civil Proceedings Act 2011 (Qld) s 58

Land Court Act 2000 (Qld) s 7A

Mineral Resources Act 1989 (Qld) s 363

Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 25) [2020] QLC 22, cited

Goldhounds Mining and Exploration Pty Ltd v Department of Natural Resources, Mines and Energy [2019] QLC 10, applied

McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457; [1933] ALR 381, distinguished

Mitchell Ogilvie Menswear Pty Ltd v Rapid Edge Pty Ltd [2019] QSC 136, applied

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; (2015) 325 ALR 188, cited

Shevill v Builders Licencing Board (1982) 149 CLR 620; (1982) 42 ALR 305, considered

Tropical Trades Ltd v Goonan (1964) 111 CLR 41; [1964] ALR 585, cited

Westralian Farmers Ltd v Commonwealth Agricultural Services Engineers Ltd (in liq) (1936) 54 CLR 361; (1936) 9 ALJR 423, considered 

APPEARANCES:

T Jackson (instructed by James Conomos Lawyers) for the applicant

No appearance from the respondent

Introduction

  1. [1]
    In 2014, the applicant vendor (Paterson Mining) and the respondent purchaser (DOI) entered into an agreement (sale agreement) for the sale and purchase of ML 20633, EPM 18088, EPM 18180 and EA EMPML00564113 (Mining Tenements) and other assets and equipment (the Assets) used to operate the Pannikin tin mine on Wolverton Station in far North Queensland.
  2. [2]
    Proceedings were commenced in the Land Court by Paterson Mining by Originating Application filed 15 June 2018. The basis of the action was that as completion of the sale agreement had not occurred, Paterson Mining had lawfully terminated the sale agreement and sought consequential declarations and orders.
  3. [3]
    Orders were made for the filing and service of pleadings and amended pleadings. A Statement of Claim was filed 1 August 2018, followed by a Defence on 29 August 2018. A Reply to the Defence was filed on 19 September 2018; an Amended Statement of Claim was filed on 29 April 2019; an Amended Defence was filed on 13 May 2019; and a Further Amended Statement of Claim (FASOC) was filed on 31 May 2019. The last of the pleadings was a Further Amended Defence (FAD) filed on 19 June 2019. 
  1. [4]
    Court orders were also made for the nomination of experts, the production of single expert and joint expert reports, and the filing and service of lay witness evidence. Witness statements filed during this period include the affidavit of Kathryn Margaret Hughes (authorised representative of Paterson Mining) filed 15 June 2018, affidavits of Mervyn David (David) Oriel (Managing Director, DOI), and affidavits of various legal and other representatives.[1] Valuation experts were nominated by the parties but for reasons that will become apparent, expert reports were not filed.
  1. [5]
    On 9 July 2019, DOI appointed Mr Neil Cussen (insolvency practitioner) as administrator. A Deed of Company Arrangement (DOCA) was executed on 3 September 2019. The appointment of the administrator stayed the proceeding by operation of the Corporations Act 2001 (Cth). An application for leave to proceed was made and leave granted by the Supreme Court on 23 June 2020. 
  2. [6]
    The matter returned to the Land Court. Mediation was ordered, convened, and a heads of agreement signed on or about 30 October 2020. DOI was represented at that time by its agent Mr Shannon. None of the outcomes in the heads of agreement which had become due were met. 
  3. [7]
    On 18 December 2020, Mr Cussen issued a notice to creditors of DOI advising as a result of the failure to meet certain obligations under the DOCA, DOI had been automatically placed into liquidation. The effective date of liquidation appears to be 15 December 2020. 
  4. [8]
    As a result of the liquidation a further Supreme Court application for leave to proceed was necessary,[2] was made, and on 29 April 2021 Davis J ordered Paterson Mining be granted leave to proceed against the respondent in liquidation.
  5. [9]
    The relief claimed in the FASOC included an order that DOI take all necessary steps to cause the transfer of the Mining Tenements into the name of Paterson Mining. 
  6. [10]
    Of the Mining Tenements, only ML 20633 survives.[3] The Assets are particularised in Annexure A to the FASOC. There is evidence in the 15 June 2018 affidavit of Ms Hughes concerning the condition of some of the Assets as at February 2016.[4]
  7. [11]
    A hearing was conducted on 6 September 2021. The respondent did not participate in the hearing. At a review before me on 19 August 2021, Mr Grunert of Taylor David Lawyers appeared on behalf of the liquidator. Mr Grunert informed the Court that the liquidator did not intend to participate in the proceedings in its own capacity or to put on any positive defence on behalf of DOI.[5] DOI does not consent to any relief but will abide by the orders of the Court.[6] 
  8. [12]
    DOI does not seek any relief and although the FAD includes numerous complaints about the FASOC being liable to be struck out, no application for strike out was brought.[7]
  9. [13]
    The relief sought at the hearing is as follows: 

“(a)  a declaration that PM has lawfully terminated the sale agreement;

  1. (b)
    a declaration that PM is entitled to $500,000 being the deposit forfeited under the sale agreement;
  1. (c)
    an order that DOI pay the plaintiff licence fees pursuant to clause 7.4(f) of the sale agreement in the amount of $76,922;
  1. (d)
    an order that DOI deliver up possession of the Assets;
  1. (e)
    interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld); and
  1. (f)
    costs.”[8]
  1. [14]
    The pleaded case against DOI as described by Paterson Mining is rooted in alternative causes of action for breach of contract, constructive or express trust, misrepresentation or misleading or deceptive conduct under Australian Consumer Law.[9] They say that because of events that have occurred in the intervening period since commencing this proceeding, they do not presently press the actions for misrepresentation, misleading or deceptive conduct, promissory estoppel or common intention trust. 
  2. [15]
    The key differences between the relief claimed in the FASOC and the relief sought at the hearing include: the quantum of licence fees payable pursuant to cl 7.4(f) of the sale agreement; and that Paterson Mining “do not press… at this stage”[10] for an order that DOI take all necessary steps to cause the transfer of the Mining Tenements to Paterson Mining, an order for the payment of royalties pursuant to cl 7.4(g) of the sale agreement, and damages for breach of the sale agreement.
  3. [16]
    Paterson Mining say that while they reserve their rights to enforce the balance of the claim, in particular the right to seek indemnity for any loss or damage caused to the Assets, they do not press for the orders for the balance of the relief at this stage because DOI is in liquidation and Paterson Mining does not know the extent of any liabilities incurred in relation to the Mining Tenements.[11]

Jurisdiction

  1. [17]
    The originating application filed 15 June 2018 referenced s 363 of the Mineral Resources Act 1989 (Qld) (MRA) and s 7A of the Land Court Act 2000 (Qld) (LCA) as the applicable provisions.
  2. [18]
    In Goldhounds Mining and Exploration Pty Ltd v Department of Natural Resources, Mines and Energy,[12] the Court noted that s 363(1) of the MRA grants jurisdiction to the Land Court in broad and general terms. In Goldhounds, the Court considered the question of jurisdiction in depth:

“[9] The words “actions”, “suits” and “proceedings” are capable of various meanings. The MRA does not define those terms. The Acts Interpretation Act 1954 defines “proceeding” to mean a “legal or other action or proceeding”. That does no [sic] clarify the meaning of s 363(1). 

  1. [10]
    The meaning of the terms used in that section must be derived from the statutory context and the objects of the MRA.
  1. [11]
    The principal objectives of the MRA are set out in s 2…Those objectives provide little assistance in interpreting s 363(1). There are other features of the Act, however, which provide important context for interpretation.
  1. [12]
    Firstly, the Land Court is not the only court to which the MRA gives jurisdiction. The MRA gives the Supreme Court jurisdiction to hear and determine proceedings challenging the validity of a grant made pursuant to the MRA. The MRA also gives the Magistrates Court jurisdiction to hear proceedings for the offence of contravening the MRA.
  1. [13]
    Secondly, s 363(1) must be read in the context of the specific provisions that permit applications to and decisions by the Land Court.
  1. [14]
    Section 363(2) provides some assistance. It identifies a number of specific actions, suits and proceedings for which the Court has jurisdiction…
  1. [15]
    I have included that provision in full because it illustrates the nature of the actions, suits and proceedings that fall within the general grant of jurisdiction in s 363(1). Expressly, or by implication, they are disputes between persons asserting competing rights, whether as applicants for or holders of mining tenements or as persons holding interests in land that may be or have been affected by mining activities.
  1. [16]
    That indicates the actions, suits and proceedings referred to in s 363(1) are civil in nature. 
  1. [17]
    That interpretation is reinforced by s 363(3) which gives jurisdiction to the Land Court for demands for debt or damages relating to activities under mining tenements or agreements about mining tenements, but not for recovery of wages or entitlements under industrial agreements or awards.  [18] Thirdly, s 363(1) must be read in the context of other provisions of the MRA that confer specific and limited administrative review jurisdiction.

[21] …I consider s 363(1) gives the Land Court jurisdiction of a civil, not administrative nature…”[13] (citations omitted) (emphasis added)

  1. [19]
    The applicant in Goldhounds could not rely on s 363(1) of the MRA as they were seeking an administrative and not a civil determination. They sought an injunction to halt a penalty imposed by the Department of Natural Resources Mines and Energy in breach of its exploration permit conditions. As the decision in that case was a decision of the Minister, it was held that the Land Court did not have jurisdiction. In this matter it is a civil determination which is being sought.
  2. [20]
    At the hearing, Counsel for Paterson Mining was of the view that in addition to s 7A of the LCA, the most relevant of the possibly applicable provisions of s 363 of the MRA were ss 363(2)(a) and 363(2)(h), and possibly 363(2)(d), and ss 363(3)(a) and 363(3)(b). In my view, the jurisdiction to afford any or all the relief sought falls under one or more of these provisions.
  3. [21]
    The applicant summarises their case as follows:

“(a)  pursuant to the sale agreement, PM granted DOI a license to use the Assets (being the mining tenements and the equipment) until completion of the sale agreement;

  1. (b)
    PM transferred title to DOI of the mining tenements at which point DOI went into possession of the mining tenements and the equipment;
  1. (c)
    title to the equipment did not pass to DOI until completion of the sale agreement;
  1. (d)
    the sale agreement was not completed;
  1. (e)
    DOI has breached the sale agreement;
  1. (f)
    PM terminated the sale agreement;
  1. (g)
    PM are entitled to delivery up of the equipment.”[14] (citations omitted)
  1. [22]
    The applicant summarises the issues as:

“(a)  what were the terms of the sale agreement;

  1. (b)
    whether the terms of the sale agreement varied, and if so, what were the terms of that variation;
  1. (c)
    whether DOI breached:
  1. (i)
    clause 8.2 by failing to indemnify PM against loss or liability arising from DOI’s use of the Assets;
  1. (ii)
    clause 7.4(c) by failing to keep the Assets in the same condition as the Assets were received;
  1. (iii)
    clause 7.4(d) by failing to comply with the terms and conditions of the Mining Tenements;
  1. (iv)
    clauses 3.2, 7.4(f) and 7.4(g) by failing to pay PM the licence fee and the royalties;
  1. (d)
    whether PM validly terminated the sale agreement;
  1. (e)
    whether the sale agreement was completed.”[15]

The sale agreement 

  1. [23]
    The FASOC asserts that on or about 1 December 2014, Paterson Mining executed a written document with DOI for the sale of the Mining Tenements and the Assets.[16] The written “Agreement for Sale and Purchase of Assets” is exhibited to the affidavit of Kathryn Margaret Hughes filed 15 June 2018. 
  2. [24]
    The key terms of the sale agreement are those pleaded in paragraph [7] of the FASOC.

They are as follows:

“(a)  by clause 1:

DEFINITIONS AND INTERPRETATION

Definitions

1.1.5. “Authorisations” means the statutory licences, permits, consents, planning permissions and other authorisations under or pursuant to any statute or regulation held by the Vendor and which are necessary for the conduct of the Mining Tenements;

1.1.6. “Balance Purchase Price” means the sum of four hundred

thousand dollars ($400,000.00);

1.1.11. “Completion Date” means the latter of;

  1. (a)
    90 days from the execution of this Agreement; or
  1. (b)
    7 days after the Vendor gives the Purchaser a notice pursuant to clause 4.3 of this Agreement.

1.1.13. “Deposit” means the sum of five hundred thousand dollars ($500,000.00);

1.1.22. “Licence Fee” means the sum of $3,333.00 plus GST per month; 

1.1.29. “Possession Date” means the date the Purchaser pays the Deposit to the Vendor;

1.1.31. “Purchase Price” means the sum of $900,000.00 comprised of:

  1. (a)
    the Deposit; and
  1. (b)
    the Balance Purchase Price.

1.1.37 “Sunset Date” means the date which is six (6) months from the date of this Agreement.”

  1. (b)
    by clause 3:

3. CONSIDERATION

3.1 Payment of Purchase Price

The Purchaser will pay the Purchase Price to the Vendor as follows:

  1. the Deposit upon the Purchasers execution of this Agreement; and
  1. the Balance Purchase Price on the Completion Date.

3.2 Other payments

The Purchaser shall discharge any other known liabilities it may have to the

Vendor at Completion.”

  1. (c)
    by clause 5:

5 Completion

  1. Time and Place for Completion

Subject to satisfaction or waiver (as the case may be) of each of the conditions in clause 4.1 and the payments made pursuant to clause 3, Completion will take place at Cairns on the Completion Date or such other date or place as the parties may agree.

  1. Possession and transfer

Contemporaneously with and as part of Completion, the Vendor will deliver up to the Purchaser:

5.2.4 registrable forms in favour of the Purchaser (or as the Purchaser may otherwise direct) for the Vendor’s interest in the Mining Tenements duly executed by the Vendor and, all documents of title evidencing the Vendor’s interest in the Mining Tenements; …” 

  1. (d)
    by clause 7:

7 Early Possession

  1. On the Possession Date the Purchaser and Vendor shall meet on the Mine Site to inspect all of the Assets and will execute the Asset list.
  1. The Vendor shall grant the Purchaser a licence to possess and utilise the Assets and Mine Site on the Possession Date. To remove any doubt the licence shall apply to the Mine Site.
  1. The Licence shall remain in full force and effect until Completion unless the Purchaser defaults on any obligations created by this Agreement at which point the Licence may be terminated immediately by written notice from the Vendor to the Purchaser. 
  1. During the term of the Licence, the Purchaser shall:
  1. (a)
    Obtain all Authorisations necessary to facilitate the Purchaser utilising the Assets pursuant to the Licence. 
  1. (b)
    Indemnify the Vendor against any and all loss or liability in any way arising from the Purchaser’s utilisation of the Assets in accordance with the Licence. 
  1. (c)
    Maintain and keep the Assets in the same condition that they were in as at the date the Licence was granted.
  1. (d)
    Comply with all terms and conditions attached to the Mining Tenements, the Authorisations (including but not limited to any plans of operation lodged by the Vendor or the Purchaser with the Minster’s department).

  1. (f)
    Pay the Vendor the Licence Fee each month other than January, February and March each year during which this obligation is suspended.
  1. (g)
    Pay the Vendor the Royalty

…”

(e) by clause 12:

“12. Default

12.1. If the Purchaser fails to:

12.1.1. pay the Balance Purchase Price in accordance with clause 3, or

12.1.2. comply with any of the terms or conditions of this Agreement, then the Vendor may:

  1. (a)
    affirm this Agreement;
  1. (b)
    terminate this Agreement.

12.4 If the Vendor terminates this Agreement pursuant to clause 12.1, then the Vendor may elect to do any or all of the following:

12.4.1. Forfeit the Deposit (or so much of it as has been paid); and/or

12.4.3 Either:

  1. (a)
    Sue the Purchaser for damages for breach
  1. (b)
    Resell the Mining Tenements and Assets and any deficiency or expense arising from the resale may be recovered from the

Purchaser as liquidated damages;

…”[17] (emphasis in original)

  1. [25]
    Paterson Mining further assert the following, drawn from the FASOC, at [22] to [26] of their written submissions:

“22. On about 1 December 2014:

  1. (a)
    DOI paid PM the sum of $500,000, being the deposit pursuant to cl 3.1.1 of the sale agreement;
  1. (b)
    DOI was granted a license to go into possession of the Mine pursuant to cl 7.
  1. On 26 October 2015, DOI registered the transfer of the Mining Tenements from PM.
  1. On 20 November 2015, the date for Completion and the Sunset Date of the sale agreement were extended to 29 February 2016.
  1. On 14 March 2017, DOI paid PM the sum of $310,490 being part of the balance purchase price.
  1. On 23 November 2017, DOI paid PM the sum of $98,510 being part of the balance purchase price.”[18] (citations omitted)
  1. [26]
    It is apparent that the date of payment referred to in FASOC [25] ought to be 14 March 2016 and the sum referred to would more likely be $301,490 rather than $310,490. Further the date of the payment of the sum of $98,510 was in fact 23 November 2016 (not 2017).[19]
  2. [27]
    The respondent in the FAD accepted these facts subject to noted corrections. However, where Paterson Mining say payment of the sum of $98,510 was “part of the balance purchase price”,[20] DOI say “the only amount left owing ... was the amount of $98,510.”[21] 
  3. [28]
    In that regard DOI asserted in the FAD,[22] inter alia, that the sale agreement was amended by mutual agreement on 19 November 2015 to the effect that only the amount of $400,000 (being the Balance Purchase Price) was required to be paid in full satisfaction of DOI’s obligation to pay any monies to Paterson Mining, as any other amounts such as licence and royalty fees were removed from the sale process.[23]  Paterson Mining say that this (amendment) was contingent on DOI paying $400,000 in one payment prior to the amended sunset date.[24] Paterson Mining say the extended date for completion and the sunset date was (ultimately) 7 December 2017.[25]  
  4. [29]
    Having made a part payment of $301,490 of the Balance Purchase Price to Paterson Mining on 14 March 2016, DOI say completion occurred on 23 November 2016 when the remaining $98,510 was paid.[26] They say that they were not required to pay either the licence fee or royalties because the sales agreement was varied.
  5. [30]
    Paterson Mining say this contention should be rejected. They say that DOI’s pleaded position is in contrast to the position adopted by DOI,[27] while the contract was on foot.[28]
  6. [31]
    Paterson Mining are not saying that the sales agreement was not amended on or about 19 November 2015. They are not saying that $400,000 was not paid prior to 7 December 2017. It is evident that that amount ($400,000) was not made in one payment.  
  7. [32]
    Paterson Mining are saying that there were numerous breaches of the terms of the “Early Possession”[29] clause of the agreement which entitled Paterson Mining under cl 12 to terminate the sale agreement. The breaches were identified in a report prepared by Ms Hughes in February 2016. Further, Paterson Mining say DOI does not deny the events, rather they allege the events occurred after the varied sale agreement was completed such that, as at 23 November 2016, DOI had assumed ownership of and liability for the Assets and Paterson Mining could not suffer loss or liability as alleged. 
  8. [33]
    On 28 April 2018, Paterson Mining wrote to DOI electing to terminate the sale agreement pursuant to cl 12 and informing DOI that they would take possession of the equipment.[30] Paterson Mining are not in possession of the equipment. The order Paterson Mining seek in relation to the assets and equipment is that DOI deliver up possession.[31] 
  9. [34]
    Paterson Mining note in submissions that the only evidence before the Court is the affidavits filed and relied upon by them, and that evidence is unchallenged by DOI in the hearing.[32] Further, no evidence was led by DOI in support of any of the positive allegations pleaded in the FAD, or any of the denials pleaded in the FAD.

The evidence of Ms Hughes  

  1. [35]
    Ms Hughes is the sole proprietor of Hughes Consulting where she provides consultancy services in tenement management, geology, geography and the environment.[33] She says she was appointed Company Secretary of Paterson Mining on 27 April 2018 but that prior to her appointment she was the authorised representative for Paterson Mining in its mining activities in Australia. Ms Hughes commenced that role on 1 March 2011, affirmed on 25 July 2012. She says that she was authorised to act on behalf of Paterson Mining in relation to the negotiation and performance of the sale agreement. 
  1. [36]
    In her 15 June 2018 affidavit,[34] Ms Hughes indicates that she represented Paterson Mining in the negotiation of the sale agreement which was entered into on 1 December 2014.[35] Her affidavit references negotiations and conversations with David Oriel, the authorised agent and director of DOI.[36] 

The October 2014 conversation

  1. [37]
    It is Ms Hughes’ evidence that as a result of conversations she had with Mr Oriel in October 2014, prior to execution of the agreement, that Paterson Mining would take the necessary steps to transfer the Mining Tenements to DOI once the deposit was paid, and that if completion did not occur, DOI would transfer the tenements back to Paterson Mining. DOI denies that that conversation occurred.
  2. [38]
    This arrangement according to Ms Hughes was to accommodate the wishes of Mr Oriel to gain access to the mine prior to completion to commence mining.[37]
  3. [39]
    In Paterson Mining’s Outline of Submissions, and as discussed at the hearing, s 17 of the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) and Regulations 4(d) and 4(e) of the Mineral and Energy Resources (Common Provisions) Regulation 2016 (Qld), have the cumulative effect that the mining tenements could not be leased to DOI without a (sub)lease being registered. The consequence they say is that cl 7 of the sale agreement could not, without more, give DOI a right to enter the mine site or carry out mining activities. 
  4. [40]
    Paterson Mining submit that “mindful of that limitation” in order to enable DOI to carry out mining activities prior to completion, the parties agreed that Paterson Mining would transfer the tenements to DOI upon the deposit being paid.[38] They submit that the October 2014 agreement informed how the “licence” would work, that is, the tenements would be transferred so that the licence could effectively operate. In Paterson Mining’s submission, the transfer however only applied to the mining tenements, not the equipment or other assets. Further, in the event that completion of the sale agreement did not occur, DOI would transfer the mining tenements back to Paterson Mining.
  1. [41]
    It is noted that the sale agreement does not otherwise provide for Paterson Mining to transfer title in the mining tenements to DOI prior to completion. Noting the fact that Paterson Mining could not give right or title to the tenements prior to completion without registering a sublease – a step not apparently attractive or appropriate, lends itself to a conclusion that the October 2014 conversations (although denied by DOI) were intended to form part of the sale agreement. 
  2. [42]
    On 22 January 2016, DOI consented to the registration of a caveat over the mining tenements “to protect the Plaintiff’s interests in the Mining Tenements until the Sale Agreement reached Completion”.[39] This, Paterson Mining says,[40] in addition to the fact that the tenements were in fact transferred, is conduct by DOI which supports Ms Hughes’ account of the October 2014 conversation. 
  3. [43]
    I agree. The conduct of the parties in seeking to give effect to Early Possession, including the attitude of DOI to registration of a caveat, supports the evidence of Ms Hughes that the October 2014 conversations were intended to form part of the sale agreement. 

The November 2015 correspondence 

  1. [44]
    As noted already at [29] above, DOI say that on 19 November 2015 Paterson Mining and DOI agreed in writing that: the sale agreement be varied to the effect that DOI would be required to pay the Balance Purchase Price of $400,000 in full satisfaction of its obligation to pay any monies to Paterson Mining; and that other amounts (licence fee and royalties) be removed from the sale process, the sunset date be extended, and the terms of the agreement otherwise remain the same. DOI say all monies were paid prior to the extended sunset date, such that the agreement was completed. 
  2. [45]
    The 19 November 2015 correspondence is an email from Ms Hughes to Mr Oriel which outlined “the proposal as agreed” between Paterson Mining and DOI.[41] The proposal appears to modify the sale agreement to remove an amount which is or may include the royalty from the sale process, while structuring payment of that amount outside the agreement and seeking a personal guarantee of the debt. The email stipulates that the balance payment would be one payment prior to the amended sunset date, and that any failure to do so would render the agreement described in the email null and void. Finally, the email states:

“With the exception of the amended sunset date, nothing in this agreement would prevent Paterson Mining Pty Ltd from invoking any or all the terms of the original sale and purchase agreement dated 1st December 2014 and signed by both parties.”[42]

  1. [46]
    Paterson Mining say that properly considered,[43] the 19 November 2015 email was a conditional offer to vary the sale agreement by varying the requirements to complete the sale agreement contained in cl 5, subject to DOI fulfilling the condition that it pay $400,000 by 29 February 2016, and DOI and Mr Oriel personally signing an acknowledgement letter assuming liability for the “other amounts” referred to at [44] above. They say DOI failed to fulfill both these conditions which preclude them from seeking to rely on and enforce the terms of the conditional offer to vary the sale agreement. 
  2. [47]
    The amended sunset date stipulated in the 19 November 2015 correspondence was 29 February 2016.  

The 7 December 2017 completion and sunset date

  1. [48]
    Paterson Mining say the date for completion and the sunset date was extended by agreement a number of times, ultimately until 7 December 2017.[44] Prior to that date Paterson Mining issued DOI notices to complete on two occasions.[45] Following the extended completion and sunset date (7 December 2017) a notice to complete was issued on 7 February 2018. 
  1. [49]
    I note that as at 23 November 2017, prior to the extended completion date, DOI had paid a deposit of $500,000, and individual payments of $310,490 and $98,510, totalling a further $400,000.
  2. [50]
    Paterson Mining say that by the 7 December 2017 completion date, DOI had failed to pay them any monies in respect of the licence fee, and any monies in respect of royalties. DOI contend that they were not obliged to pay either because the sale agreement was varied.[46] The licence fee pursuant to cl 1.1.22 was $3,333 (plus GST) per month. At the hearing, Counsel for Paterson Mining confirmed that orders in respect of unpaid royalties was not pressed as there was no evidence by either party of what the value of the royalties would be, and consequently it could not be made out.[47]   
  3. [51]
    Paterson Mining say DOI’s pleaded position is in contrast to the position DOI adopted while the contract was on foot.[48] In that regard they reference a letter from DOI’s lawyers dated 7 September 2017 which advances a proposal to resolve the matter which is presented in a way which does suggest that compensation other than the Balance Purchase Price was due.

The 28 April 2018 termination letter

  1. [52]
    Determined objectively, Paterson Mining say that:[49] the sale agreement contemplated an arrangement between Paterson Mining and DOI whereby prior to completion of the sale DOI would be granted a licence to go into early possession in order to operate the mine;[50] DOI would pay a licence fee and royalties until completion; all outstanding amounts owing by DOI would be paid at completion; DOI would be liable for loss or damage during the licence period; and title in and to the Mining Tenements and the equipment would not pass to DOI until completion.
  2. [53]
    Key clauses of the sale agreement are set out at [24] above. The early possession clause[51] provides the purchaser a licence to possess and utilise the Assets and Mine Site until completion unless the purchaser defaults. It required the purchaser to indemnify the vendor for loss or liability arising from the utilisation of the Assets in accordance with the licence, and to maintain and keep the Assets in the same condition as at the date the licence was granted. The sale agreement set out the circumstances giving rise to default;[52] the options in the event of default to affirm or terminate the agreement; and the consequences should the vendor elect to terminate.
  1. [54]
    Paterson Mining contend that based on an inspection of the mine site carried out by Ms Hughes in February 2016,[53] DOI failed to keep the equipment in the same condition as the equipment was received, and failed to keep the tenements in the same condition as they were received.[54]  
  2. [55]
    They also say that DOI failed to comply with conditions of the Environmental Authority (EA) such that:[55] an Environmental Protection Order was issued on 18 January 2017;[56] DOI failed to pay annual fees in respect of the EA; the EA was suspended; and DOI failed to maintain the currency of EPM 18088, EPM18180 and the EA. 
  3. [56]
    Finally, Paterson Mining say that DOI had not indemnified them in respect of any liability in connection with the tenements or Assets as required by the sale agreement.[57]
  4. [57]
    By letter dated 28 April 2018,[58] Paterson Mining elected to terminate the sale agreement pursuant to cl 12 informing DOI that they would take possession of the equipment. The sale agreement did not require the right to terminate to be exercised within a specified or reasonable time. Paterson Mining submit that an agreement to extend time in which to perform is not, without more, sufficient to constitute an election to affirm the contract,[59] and DOI had not pleaded a case that the right to terminate had been lost. 
  1. [58]
    I accept that breaches of the agreement were several and ongoing and any decision to affirm the contract by extending the time for completion was temporary and revocable.  
  2. [59]
    The evidence of Ms Hughes supports a conclusion that there were ongoing breaches of cl 7.4(c) and cl 7.4(d) in failing to keep the Assets in the condition they were received and to comply with all terms and conditions attached to the Mining Tenements. The evidence of Gregory John Paterson points to breaches of cl 7.4(b) failure to indemnify Paterson Mining,[60] cl 7.4(f) failure to pay licence fee from May 2015 until the termination date, and cl 7.4(g) failure to pay royalties as required under the agreement.  
  3. [60]
    I also note at [10] above that as at the date Paterson Mining elected to terminate the agreement, only ML 20633 survived.  
  4. [61]
    I accept that Paterson Mining had the right to terminate the agreement pursuant to cl 12, and by notice dated 28 April 2018 terminated the agreement.[61]

The effect of termination 

  1. [62]
    In oral submissions,[62] Counsel reference Shevill v Builders Licencing Board[63] where Chief Justice Gibbs opined a “fairly simple contractual principle” that parties are at liberty to stipulate in a contract which breaches will give rise to a right to terminate; and Westralian Farmers Ltd v Commonwealth Agricultural Services Engineers Ltd (in liq)[64] to the effect that not only are parties free to stipulate what breaches might give rise to a right to terminate, but also the obligations that flow.  
  2. [63]
    Clause 12.4 of the agreement deals with Paterson Mining’s rights on termination pursuant to cl 12. While cl 12 entitles Paterson Mining upon termination to forfeiture of the deposit and to terminate the licence, they are also entitled to resell the Mining Tenements and Assets and recover any deficiency from DOI as liquidated damages and sue DOI for damages for breach. There are future obligations under the agreement which Paterson Mining is released from upon termination including, for example, the passing of title to the Assets to DOI upon completion.
  1. [64]
    The right to terminate the agreement and the right to recover moneys owing are the rights pursued by Paterson Mining. In submissions they say “the balance of the parties’ rights on termination are not in issue or being pressed by the parties at this stage for commercial reasons.”[65]  
  2. [65]
    Paterson Mining maintain that cl 7 of the sale agreement did not transfer title to the equipment to DOI, rather a licence to DOI to use the equipment. 
  3. [66]
    While it is apparent that there were arrangements made for the transfer of the Mining Tenements to DOI, to enable them to conduct mining activities, there was no agreement, actual or implied for the transfer of the equipment prior to completion. The arrangements for utilising the equipment operated pursuant to cl 7. There is nothing to suggest that title to the equipment passed to DOI. Upon termination Paterson Mining was entitled to terminate the licence to use the equipment. It is in Paterson Mining’s submission that rather than a case for recovery (of the equipment, in the true sense) they are seeking a declaration for delivery up.[66] They say that in this case, the contract contemplates that the licence might be terminated and the equipment could be returned.[67]  
  4. [67]
    It is not in evidence, or able to be determined from the provisions of the contract, what part of the purchase price is referable to what terms. DOI has been in possession of the mining tenements and equipment since 2015. DOI had the benefit of the use and possession of the mining tenements and equipment during that time. There is evidence to indicate that DOI conducted some mining activities which may have generated income which Paterson Mining might otherwise have had. In that regard I can conclude that DOI received a benefit arising from the agreement. It is not a case where the purchaser pays money for an asset but receives no benefit because of the agreement’s termination.[68]
  5. [68]
    As noted, DOI and the liquidator chose not to participate in these proceedings. Accordingly, there is no equitable action pleaded upon which I could consider what, if any of the balance purchase price should be returnable to DOI if it were able to establish what had been forfeited.  
  6. [69]
    Pursuant to the sale agreement cl 7.4(f), DOI was required to pay Paterson Mining the sum of $3,333 plus GST per month other than January, February and March each year. Paterson Mining says DOI were in possession of the Mining Tenements and Equipment from November 2015 (shortly after the transfer of the tenements were registered on 26 October 2015) to 28 April 2018, a total of 21 months at $3,333 plus GST per month, totalling $76,992. 

Conclusion

  1. [70]
    I accept that pursuant to the sale agreement, Paterson Mining granted DOI a licence to use the Assets (being the mining tenements and the equipment) until completion of the sale agreement. The evidence confirms that Paterson Mining transferred to DOI title to the mining tenements at which point DOI went into possession of the mining tenements and equipment, however, title to the equipment did not pass to DOI unless or until completion of the sale agreement. I accept that the sale agreement was not completed, that DOI breached the sale agreement and that Paterson Mining validly terminated the sale agreement. There is no evidence before me to consider what, if any, of the balance purchase price might be recoverable by DOI. 
  2. [71]
    Section 27A LCA provides that subject to the provisions of the LCA or another Act to the contrary, the Land Court may order costs for a proceeding in the court as it considers appropriate. In the circumstances of this matter, there are no applicable contrary provisions that have been brought to my attention, or of which I am aware. The power to award costs must be exercised judicially, by reference to relevant considerations and facts connected with or leading up to the litigation. The respondent was actively engaged in the litigation of this matter, before and subsequent to administration, but following liquidation, their participation through the liquidator has been limited to a watching brief. The rule that costs follow the event may inform the exercise of the discretion as there is justice in this approach. It protects those put to unnecessary and substantial expense at the behest of others.[69] The financial position of the unsuccessful party is not a sufficient reason to deprive a successful party of an order for costs. In the circumstances of this matter the applicant is entitled to costs of the proceeding on a standard basis.
  1. [72]
    The applicant also seeks an order that the respondent pay interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld). Section 58(3) provides that the court may order that there be included in the amount for which judgment is given interest at the rate the court considers appropriate for all or part of the amount and for all or part of the period between the date when the cause of action arose and the date of judgment. 
  2. [73]
    The date from which interest is sought is the date Paterson Mining elected to terminate the sale agreement being 28 April 2018. Paterson Mining commenced proceedings by Originating Application on 15 June 2018. Any delay in the prosecution of the claim was largely beyond their control. In Mitchell Ogilvie Menswear Pty Ltd v Rapid Edge Pty Ltd[70] the Court considered relevant principles in relation to interest saying that the purpose of s 58 is to compensate a successful party from being kept out of the judgment sum, and the Court noted that the proper approach to the exercise of discretion is that interest ought to be granted, unless there are proper reasons for withholding it. I am presented with no proper reason for withholding an order for interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld).
  3. [74]
    In the circumstances Paterson Mining is entitled to the relief it seeks.

Orders

  1. It is declared that the applicant has lawfully terminated the sale agreement executed on or about 1 December 2014 between the applicant and the respondent (the Sale Agreement).
  2. It is declared that the applicant is entitled to retain the $500,000 deposit forfeited under the Sale Agreement.
  3. The Court orders that the respondent pay the applicant licence fees pursuant to cl 7.4(f) of the Sale Agreement in the amount of $76,922.
  4. The Court orders that the respondent deliver up possession of the assets and equipment contained in ‘Annexure A’ to the Further Amended Statement of Claim filed 31 May 2019, being the assets and equipment set out in Annexure A to this order.
  5. The Court orders that the respondent pay the applicant interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld) on the amount described in Order 3 from 28 April 2018 up until the date of judgment.
  6. The respondent pay the applicant’s costs of the proceeding on a standard basis.

Annexure A

Paterson Mining Pty Ltd v David Oriel Industries Pty Ltd [2021] QLC 37

Paterson Mining Pty Ltd v David Oriel Industries Pty Ltd [2021] QLC 37

Paterson Mining Pty Ltd v David Oriel Industries Pty Ltd [2021] QLC 37

Paterson Mining Pty Ltd v David Oriel Industries Pty Ltd [2021] QLC 37

Paterson Mining Pty Ltd v David Oriel Industries Pty Ltd [2021] QLC 37

Paterson Mining Pty Ltd v David Oriel Industries Pty Ltd [2021] QLC 37

Paterson Mining Pty Ltd v David Oriel Industries Pty Ltd [2021] QLC 37

Footnotes

[1]Affidavits filed in 2018 include: Affidavit of Kathryn Margaret Hughes filed 15 June 2018; Affidavit of Mervyn David Oriel filed 21 June 2018; Affidavit of Michael Sean Kelly filed 21 June 2018; Second affidavit of Michael Sean Kelly filed 21 June 2018; Affidavit of Phillip Moody filed 18

[2]Corporations Act 2001 (Cth) s 471B.

[3]EPM 18088 expired 2 July 2019: Hearing book provided to the Court without filing, page 451; EPM 18180 expired 1 November 2017: Hearing book provided to the Court without filing, page 456; EA EMPML00564113 suspended 12 April 2018: Hearing book provided to the Court without filing, page 289.

[4]Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [59](c).

[5]Affidavit of Anthony Angeli filed 31 August 2021 [7]-[9]

[6]Applicant’s outline of submissions filed 3 September 2021 [10].

[7]Respondent’s further amended defence filed 14 June 2021.

[8]Applicant’s outline of submissions filed 3 September 2021 [3].

[9]Applicant’s outline of submissions filed 3 September 2021 [8].

[10]Applicant’s outline of submissions filed 3 September 2021 [5].

[11]Applicant’s outline of submissions filed 3 September 2021 [5]-[6].

[12][2019] QLC 10.

[13]Goldhounds Mining and Exploration Pty Ltd v Department of Natural Resources, Mines and Energy [2019] QLC 10 [9]-[18], [21].

[14]Applicant’s outline of submissions filed 3 September 2021 [9].

[15]Applicant’s outline of submissions filed 3 September 2021 [13].

[16]Applicant’s further amended statement of claim filed 31 May 2019 [4].

[17]Applicant’s further amended statement of claim filed 31 May 2019 [7].

[18]Applicant’s outline of submissions filed 3 September 2021 [22]-[26].

[19]By reference to the Applicant’s further amended statement of claim and the Respondent’s further amended defence.

[20]Applicant’s further amended statement of claim filed 31 May 2019 [26].

[21]Respondent’s further amended defence filed 14 June 2021 [18].

[22]Respondent’s further amended defence filed 14 June 2021 [7].

[23]Reply by the Applicant filed 19 September 2018 [4]; Respondent’s further amended defence filed 14 June 2021 [7], including the email of Hughes to Oriel dated 19 November 2015 and the email of Oriel to Hughes dated 20 November 2015; DOI in the Respondent’s further amended defence filed 14 June 2021 [14] refer to this as the Agreement to Limit the Purchase Price.

[24]Reply by the Applicant filed 19 September 2018 [4].

[25]Applicant’s outline of submissions filed 3 September 2021 [37].

[26]Respondent’s further amended defence filed 14 June 2021 [21]-[22].

[27]Citing 7 September 2017 correspondence from DOI’s lawyer; Applicant’s outline of submissions filed 3 September 2021 [41].

[28]Applicant’s outline of submissions filed 3 September 2021 [41].

[29]Sale agreement dated 1 December 2014 cl 7.

[30]Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [61], Ex KMH-1, pages 153-154.

[31]Applicant’s outline of submissions filed 3 September 2021 [3](d); T 2-36, line 40 to line 47; T 2-37, line 1.

[32]Applicant’s outline of submissions filed 3 September 2021 [29]-[30].

[33]Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [1]-[4]; Hearing book provided to the Court without filing, page 127.

[34]Hearing book provided to the Court without filing, pages 129-386.

[35]Applicant’s outline of submissions filed 3 September 2021 [20].

[36]Applicant’s further amended statement of claim filed 31 May 2019 [1](d); Respondent’s further amended defence filed 14 June 2021 [1](d).

[37]Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [12].

[38]Applicant’s outline of submissions filed 3 September 2021 [67].

[39]Applicant’s further amended statement of claim filed 31 May 2019 [15].

[40]Applicant’s outline of submissions filed 3 September 2021 [36].

[41]Hearing book provided to the Court without filing, page 205.

[42]Hearing book provided to the Court without filing, page 205.

[43]Applicant’s outline of submissions filed 3 September 2021 [55].

[44]Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [52].

[45]Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [53].

[46]Applicant’s further amended statement of claim filed 31 May 2019 [24](a); Respondent’s further amended defence filed 14 June 2021 [24](d).

[47]T 2-5, lines 8 to 10.

[48]Applicant’s outline of submissions filed 3 September 2021 [41].

[49]Applicant’s outline of submissions filed 3 September 2021 [61].

[50] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 [46], per French, Nettle and Gordon JJ.

[51]Sale agreement dated 1 December 2014 cl 7.

[52]Sale agreement dated 1 December 2014 cl 12.

[53]Applicant’s outline of submissions filed 3 September 2021 [42].

[54]Hughes alleges that mercury was stored and possibly used on site in contravention of the EA; Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [59](d).

[55]Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [59], [69].

[56]Hearing book provided to the Court without filing, pages 289-295.

[57]Applicant’s outline of submissions filed 3 September 2021 [46].

[58]Hearing book provided to the Court without filing, pages 153-154; Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [61].

[59] Tropical Trades Ltd v Goonan (1964) 111 CLR 41, 55.

[60]Affidavit of Gregory John Paterson filed 5 August 2021.

[61]Affidavit of Kathryn Margaret Hughes filed 15 June 2018 [61].

[62]T 2-44, lines 31 to 43.

[63](1982) 149 CLR 620, 627.

[64](1936) 54 CLR 361; T 2-45, lines 34 to 38.

[65]Applicant’s outline of submissions filed 3 September 2021 [87].

[66] McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457; T 2-46, lines 15 to 17.

[67]This is in contrast with the equitable cause of action for relief against forfeiture, that a vendor terminating a contract cannot have both. However here, the contract contemplates something different.

[68]Cf McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457.

[69] Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 25) [2020] QLC 22 [5]-[6]; Goldhounds Mining and Exploration Pty Ltd v Department of Natural Resources, Mines and Energy (No 2) [2019] QLC 16 [3]-[4].

[70][2019] QSC 136 [139].

Close

Editorial Notes

  • Published Case Name:

    Paterson Mining Pty Ltd v David Oriel Industries Pty Ltd

  • Shortened Case Name:

    Paterson Mining Pty Ltd v David Oriel Industries Pty Ltd

  • MNC:

    [2021] QLC 37

  • Court:

    QLC

  • Judge(s):

    JR McNamara

  • Date:

    15 Oct 2021

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.