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

Jin Resources (Aus) Pty Ltd ACN 641 111 195 & Others v Steven Nicols[2022] QSC 158

Jin Resources (Aus) Pty Ltd ACN 641 111 195 & Others v Steven Nicols[2022] QSC 158

SUPREME COURT OF QUEENSLAND

CITATION:

Jin Resources (Aus) Pty Ltd ACN 641 111 195 & Others v Steven Nicols & Anor [2022] QSC 158

PARTIES:

Jin Resources (Aus) Pty Ltd ACN 641 111 195

(first applicant)

AND

Omega Gold Limited (Formerly known as Jin Resources (HK) Limited) CR no. 2874493

(second applicant)

AND

Jack Tang Ing Kiet

(third applicant)

v

Steven Nicols

(first respondent)

AND

Spinifex Mines Pty Ltd ACN 074 166

(second respondent)

FILE NO/S:

BS 13222 of 2021

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane

DELIVERED ON:

2 August 2022

DELIVERED AT:

Brisbane

HEARING DATE:

17 December 2021

JUDGE:

Brown J

ORDER:

The Orders of the Court are:

  1. A declaration that the GSA purportedly entered into between the first applicant and the second respondent dated 24 August 2020 was not legally effective to bind the first applicant.
  2. Pursuant to s 418A of the Corporations Act 2001 (Cth) the Court declares that the purported appointment of the first respondent on or about 23 July 2021 as receiver and manager of the first applicant was not valid.
  3. The second respondent pay the applicants’ costs of the application.
  4. That the parties have liberty to apply as to any further relief that should be granted.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSIDERATION – WHAT AMOUNTS TO CONSIDERATION – EXISTING OBLIGATION OR DUTY –  where the second applicant entered into a Sale Agreement with the second respondent to purchase mining tenements and assets – where the Sale Agreement varied to provide for mining tenements to be transferred to the second applicant’s nominated Australian nominee – where completion occurred – where the transfers in favour of first applicant were not immediately registered – where the second respondent lodged a caveat over the tenements and assets preventing the transfers occurring to first applicant – where Milestone Payments to be made after completion – where first applicant and the second respondent entered into a General Security Agreement (“GSA”) providing security over the tenements for the remaining Milestone Payments under the Sale Agreement – where no express consideration – where the caveat was subsequently removed – where the Milestone Payments remain outstanding – where the first respondent was appointed by the second respondent as receiver and manager of the first applicant due to the non-payment of the Milestone Payments – where the applicants seek an order declaring that the appointment of a receiver to the first applicant under the GSA is invalid – whether the Court’s jurisdiction is enlivened under s 418A of the Corporations Act 2001 (Cth) – whether the GSA was supported by good consideration

Corporations Act 2001 (Cth) s 418A

Property Law Act 1974 (Qld) s 55

Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) s 28

Ailakis v Olivero (No 2) (2014) 100 ACSR 524, considered

Astley Industrial Trust Ltd v Grimston Electric Tools Ltd (1965) 109 SJ 149, considered

Coulls Bagot’s Executor and Trustee Co Ltd (1967) 119 CLR 460, cited

Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847, cited

Franklins Pty Ltd v Metcash Trading Pty Ltd (2009) 76 NSWLR 603, cited

Guthridge v Coco [2002] QSC 392, cited

Hill Equipment & Refrigeration Co Pty Ltd v Nuco Pty Ltd (1992) 110 FLR 25, considered

Hill v Forteng Pty Ltd (2019) 138 ASCR 344, cited

Macarthur Coal Ltd v MCG Coal Pty Ltd [2011] QLC 55, cited

New Zealand Shipping Co. Ltd. v. A. M. Satterthwaite & Co. Ltd [1975] AC 154, cited

Nickmere Pty Ltd v Dianne Mining Corporation Pty Ltd (2012) 33 QLCR 14, cited

Pao on v Lau Yiu Long [1980] AC 614, considered

Wigan v Edwards (1973) 47 ALJR 586, considered 

COUNSEL:

W C LeMass for the applicants

N J Derrington for the second respondent

SOLICITORS:

Colin Biggers & Paisley for the applicants

HopgoodGanim Lawyers for the second respondent

Issues for determination

  1. [1]
    The issue for determination in this proceeding is whether a General Security Agreement (“GSA”) between the first applicant, Jin Resources (Aus) Pty Ltd and the second respondent, Spinifex Mines Pty Ltd dated 24 August 2020, to the transfer of mining tenements in Cloncurry, Queensland, on which the Gilded Rose mining project operated was supported by good consideration from the second respondent.
  2. [2]
    If the agreement is found not to be supported by consideration, the applicants seek an order declaring that the appointment of a receiver to Jin Resources (Aus) Pty Ltd under the GSA is invalid, on the basis that the Court’s jurisdiction is enlivened under s 418A of the Corporations Act 2001 (Cth). It is uncontroversial that the order should be made if the Court finds there was no consideration for the GSA. The Receiver was not an active party to the application. Counsel appearing for the first and second applicants appeared was instructed by the directors of the first applicant pursuant to their residual powers.

Background

  1. [3]
    The following facts are uncontroversial.

Parties

  1. [4]
    Jin Resources (Aus) Pty Ltd (the “first applicant”), is a wholly owned subsidiary of Omega Gold Limited (formerly known as Jin Resources (HK) Limited) (the “second applicant”), a company registered in Hong Kong.[1]
  2. [5]
    Mr Richard Trevillion is the sole director and describes himself as the “ultimate owner” of the second applicant.[2]  He swore four affidavits in this proceeding.[3] Mr Trevillion became a director of the second applicant on 13 November 2020, following the resignation of Mr Che Wai (Aaron) Chan.[4] 
  3. [6]
    Spinifex Mines Pty Ltd (the “second respondent”), is a subsidiary of Tombola Gold Ltd (formerly known as Ausmex Mining Group Limited).[5]  Aaron Day is a director of the second respondent and has been a director since 5 June 2020.[6] Prior to that he was a non-executive director of Tombola Gold Ltd, since 1 July 2017.[7] Mr Theunissen is the solicitor who was engaged by Tomobola Gold Ltd since January 2017 to act for it and its subsidiaries.[8] As part of his retainer, he was engaged regarding the potential sale of the Gilded Rose Project and the GSA.[9]  Both Mr Day and Mr Theunissen provided affidavits and gave evidence.
  4. [7]
    Mr Aaron Revelle was a business associate of industry consultant Mr John Dunlop who initiated discussions regarding the sale of the Gilded Rose mining project. He advised Mr Trevillion as to various aspects of the transaction.[10] On 21 May 2020 the first applicant was incorporated by Mr Revelle, following discussions between Mr Trevillion and Mr Revelle in which Mr Revelle advised Mr Trevillion that mining tenements could only be held by an Australian company.[11] The second applicant was the sole shareholder.[12] Mr Revelle became its sole director upon registration and remained so for the period relevant to the negotiation and execution of the GSA.[13] According to the unchallenged evidence of Mr Trevillion, he did not authorise Mr Revelle to sign the GSA and only saw the GSA sometime after he was removed as director.[14]
  5. [8]
    Mr Trevillion lost confidence in Mr Revelle in relation to his conduct of the first applicant.[15] Mr Revelle was subsequently removed as a director of the first applicant on 9 November 2020, and following the conclusion of separate proceedings in the Supreme Court of Queensland to which Mr Revelle was a party, Mr Jack Tang Ing Kiet (the “third applicant”) was appointed by consent.[16]
  6. [9]
    Mr Steven Nicols (the “first respondent”) was appointed by the second respondent as receiver and manager of the first applicant on 23 July 2021.[17]  An injunction was in place preventing Mr Nicols dealing with the Gilded Rose project pending this determination.

The Sale Agreement

  1. [10]
    On 19 October 2019, the second applicant, as the buyer, entered into an agreement with the second respondent, as the seller, to purchase mining tenements and assets known as the Gilded Rose mining project (the “Sale Agreement”).[18] The purchase price of $4,000,000 under the Sale Agreement comprised of:
    1. (a)
      $2,500,000 (comprising the deposit (i.e., “option fee”) and a “Closing Payment” to be paid at “completion”); and
    2. (b)
      $1,500,000 to be paid as post-completion Milestone Payments.[19]
  2. [11]
    The milestone payments were originally linked to production from the mine,[20] but the Sale Agreement was subsequently varied such that there were two Milestone Payments payable twelve months after the date of completion and two years after completion or upon the production of 10,000 ounces of gold, whichever occurred first.[21]
  3. [12]
    Pursuant to clause 1.1. of the Sale Agreement;[22]

“The Seller must sell the Project to the Buyer and the Buyer must buy the Project from the Seller at Completion.”

  1. [13]
    Pursuant to clause 1.4:[23]

“Title to, property in and risk of the Project remains with the Seller until the Effective Time and passes to the Buyer from the Effective Time.”[24]

  1. [14]
    Clause 5 of the Sale Agreement provided for, amongst other things, the Seller’s and Buyer’s obligations at completion. The obligations of the Seller included an obligation by the Seller under clause 5.2.3 to “[d]eliver to the Buyer, or its nominated agent, approved transfer documents in registerable form, signed by the Seller, transferring the Tenements to Jin Resources Pty Ltd.”[25]
  2. [15]
    The agreement relevantly set out the second respondent’s obligations as follows:[26]

“7.1  On and from the Completion Date until the registration of the transfer of the Seller’s interest in the Tenement to the Buyer:

7.1.1 the Seller must take no steps to surrender, cancel, vary or transfer its interest in the Tenement and must not assign, transfer, encumber, declare itself a trustee of or otherwise deal with or dispose of the Tenement or its interest in the Tenement except in accordance with the terms of this Agreement or upon the written direction of the Buyer;

7.1.3  the Parties agree to assist each other and take all steps necessary to satisfy the transfer of the Tenement to the Buyer.”

Third Deed of Variation

  1. [16]
    There were several variations to the Sale Agreement regarding timetabling,[27] however the one of relevance to the present application referred to as the Third Deed of Variation was entered into between the second applicant and the second respondent on 21 May 2020, which was also the date of completion.[28] 
  2. [17]
    Pursuant to the Third Deed of Variation, the Gilded Rose mining tenements were to be transferred to the second applicant’s nominated Australian subsidiary, the first applicant.[29] As alluded to above, cl 2.2 of the Third Deed of Variation also provided for the change in the Milestone Payments and the preconditions for when they were required to be made.[30]
  3. [18]
    Clause 1.1.3 and cl 1.1.7 of the Third Deed of Variation provided:[31]

“1.1.3 Clause 5.2.3 shall be deleted and replaced with:

(a) Deliver to the Buyer, or its nominated agent in Australia (being Jin Resources (AUS) Pty Ltd, by authority of its director Mr. Aaron Revelle) or nominated agent with approved transfer documents in registrable form for the transfer of the Mining Leases that make up the Gilded Rose Project, signed by the Seller and buyer transferring the tenements to the Sellers (sic) nominated Australian subsidiary. Buyer to sign the transfers at first instance.

1.1.7 Completion shall occur as follows:

(a) The Buyer will execute the agreed project transfer documents in Appendix 1 together provide an irrevocable undertaking from Buyer’s lawyer to transfer the Closing Payment;

(b) Upon receipt of the executed transfer forms containing the Gilded Rose project by the Seller exhibited at Appendix 1 of this Deed, the Buyer’s lawyer will deposit the closing payment release into the account nominated by Seller.”

  1. [19]
    Appendix 1 contained the Applications for transfer from Spinifex Pty Ltd to the second applicant.[32]

Completion

  1. [20]
    Completion occurred in Hong Kong on 21 May 2020.[33] As required under the Sale Agreement, the first applicant paid $2,300,000 at completion and the second respondent provided executed transfer forms transferring the tenements to the second applicant.[34]
  2. [21]
    The transfers were not immediately registered by the second applicant. It appears that there were amongst other things issues about the payment of Stamp Duty. A letter from the Department of Natural Resources, Mines and Energy dated 10 August 2020 states that the request to transfer the tenements was not accepted because:[35]

“1. Jin Resources (Aus) Pty Ltd is not a Registered Suitable Operator with the Department of Environment and Science; 2. Applications to transfer ML 2713, ML 2718, ML 2719 and EPM 14475 have not been provided; 3. Evidence if assessment by the Office of State Revenue has not been provided. Evidence that stamp duty has been paid (or evidence that it is not applicable) has not been provided.”

Lodging of the first caveat by the second respondent

  1. [22]
    The second respondent lodged the first caveat over the mining tenements on 2 July 2020, which had the effect of preventing the transfer of the tenements to the first applicant. The stated basis for the caveat was an:

“Ongoing interest in ML's 2709, 2713, 2718 & 2719 and EPM 14475 pursuant to the terms and conditions of the Sale & Purchase Agreement for the Gilded Rose Project between Spinifex Mines Pty Ltd and Jin Resources (HK) Ltd'.”[36]

The GSA and Deed of Assignment

  1. [23]
    According to Mr Trevillion, he was informed by Mr Revelle on 20 July 2020 that Ausmex “want a security deed or something for the outstanding 1.5m”, the outstanding amount being the Milestone Payments under the Sale Agreement.[37]  He was further told by Mr Revelle that Mr McCrae on behalf of Ausmex had stated that the second respondent would release the caveats once the new security documents were signed by the company with the “ACN in the Jin/Ausmex agreement.”[38]
  2. [24]
    Mr Trevillion did not accept that security had to be given.  According to Mr Trevillion, he was not agreeable to providing Ausmex with security over the tenements for the remaining Milestone Payments because it was not required under the Sale Agreement and further, it affected financing transactions he was engaged in in respect of the Project.[39] He deposes to the fact that he was “in pre-final negotiations with three listed entities…to undertake a “reverse buy-out” of Jin HK” for which “it was essential that the Project and the tenements were completely unencumbered”.[40]
  3. [25]
    On 6 August 2020, the solicitors for the second respondent sent an email to Mr Revelle attaching a draft copy of the GSA and a document titled Deed of Acknowledgment requesting the first applicant sign the documents.[41]  In his email, Mr Theunissen emailed Mr Revelle stating:[42]

“As previously discussed, attached is a General Security Agreement which secures the milestone payments under the sale agreement with Jin Resources (HK). I have also attached a deed of acknowledgment between Spinifex, Jin Resources (HK) and Jin Resources (AUS) so it is clear that all parties are aware of the obligation to make the milestone payments.”

  1. [26]
    Mr Trevillion deposes to not receiving a copy of the email with attachments.[43] Mr Trevillion did see a copy of the email later as part of a chain.[44] Mr Revelle wrote a response on 6 August 2020, the contents of which Mr Trevillion had approved, rejecting any entitlement to lodge a caveat and stating that the caveat had to be removed or Supreme Court proceedings would be commenced as it had no caveatable interest.[45]  In the 6 August 2020 email Mr Revelle sent to Mr Theunissen,[46] he asserted that the lodgement of the first caveat by the respondent was “illegally registered” and requested that Ausmex “remove Caveat 318469 furnishing Jin with evidence of such and allow Jin to deal with it’s (sic) assets without fetter.”[47] Mr Revelle further stated that “Any negotiation to enter into additional security documentation will only be entertained by Jin once transfer of Gilded Rose has been effected and completed pursuant to the SPA.”[48]
  2. [27]
    On 7 August 2020, Mr Theunissen responded to Mr Revelle’s email of the previous day,[49] rejecting “any suggestion that Spinifex is in breach of the terms of the SPA” and stating that “Spinifex has no contractual arrangements with Jin Resources (AUS) Pty Ltd, and the documentation provided in draft to you…formalises the arrangements between Jin Resources (HK) and Spinifex”.
  3. [28]
    Mr Theunissen further stated:[50]

“Spinifex stands ready to remove the caveat to permit the tenements to be transferred to Jin Resources (AUS) subject only to having this issue satisfactorily documented as previously discussed.”[51]

  1. [29]
    Curiously, notwithstanding his email of 6 August 2020, Mr Revelle subsequently agreed to execute the GSA without the knowledge of Mr Trevillion.[52] Mr Revelle was not called to give evidence. I ruled as inadmissible extracts of an affidavit of Mr Revelle from other proceedings.
  2. [30]
    On 13 August 2020, Mr Revelle sent an email to Mr Theunissen,[53] attaching a marked-up version of the GSA and a clean version of that document bearing his signature.[54] Mr Revelle’s email stated:

“Jin resources (Aus) Pty Ltd (“Jin Aus”) is of the position that pursuant to Clause 1.1.3 of the Deed of Variation of 21 May 2020, the project has been transferred to Jin Aus. Accordingly the changes made to the GSA reflect this position.

I would suggest the caveat is removed in due course given it superseded by the GSA”.

  1. [31]
    Relevantly, the original GSA had been amended by Mr Revelle in respect of recital C and cl 1.1 in the following ways:[55]

“Jin Resources HK wishes pursuant to Clause 1.1.3 of the Deed of Variation of 21 May 2020 has to transfer transferred the Project to the Grantor, and the Secured Party has agreed to this transfer subject to the terms of this document.

1.1 Liability for Milestone Payments

1.1 In consideration for the Secured Party agreeing that the Project and Tenements may be transferred to the Grantor, tThe Grantor assumes the liability to pay the Milestone Payments to the Secured Party and hereby acknowledges that the Grantor is liabilliableity to pay and agrees to pay the Milestone Payments to the Secured Party.”

  1. [32]
    There is no provision in the GSA obliging Spinifex to remove the caveat. 
  2. [33]
    The GSA was executed on 24 August 2020.[56]  The amendments of Mr Revelle were adopted in the executed document and no consideration for the GSA was recorded.  Mr Theunissen responded to Mr Revelle’s email of 13 August 2020 attaching “the GSA that has now been fully executed.”[57]
  3. [34]
    The GSA purported to grant the second respondent a security interest over all of the first applicant’s assets, which would include the mining tenements. The GSA relevantly provided:[58]

“1.1  The Grantor assumes the liability to pay the Milestone Payments to the Secured Party and hereby acknowledges that the Grantor is liable to pay and agrees to pay the Milestone Payments to the Secured Party.

2.1  The Grantor grants to the Secured Party:

2.1.1  a security interest in all Personal Property; and

2.1.2  a fixed charge over all Other Property (being a security interest over all Other Property as non-circulating assets),

in each case as a security for the payment of the Secured Money. Without limiting the foregoing, the security interests and charges taken by the Secured Party under this document extend to all of the Secured Property being all of the Grantor’s present and after-acquired property.”

  1. [35]
    On 24 August 2020, a Deed of Assignment was also purportedly executed which provided for the transfer of the obligation to make Milestone Payments to the first applicant (the “Deed of Assignment”).[59] Clause 1.2 of the Deed of Assignment stated that the “Transfer of the Project from Jin HK to Jin Australia is made on the basis that Jin Australia jointly and severally assumes all liabilities for the Milestone Payments releasing Jin HK from any liability to make these payments.” According to Mr Theunissen the Deed of Assignment, which he did not draft, was entered into in place of the Deed of Acknowledgment. The basis for that conclusion was not exposed in evidence. Mr Theunissen did not receive a copy of the Deed of Assignment until 19 February 2021 when it was sent by Mr Revelle. Mr Day received an email from Mr Revelle on 16 November 2021 attaching a copy of a Deed of Acknowledgement from Mr Revelle purportedly executed by the first and second applicant and on 19 February 2021 from Mr Revelle.
  2. [36]
    Mr Trevillion deposes to the fact he never signed or gave permission for his electronic signature to be applied to the Deed of Assignment which ostensibly bears both his signature as well as that of Mr Chan.[60] A Deed of Acknowledgement was also purportedly signed on behalf of the second applicant by its then director Mr Chan. Mr Chan denied signing either Deed.  That was not the subject of challenge in these proceedings.[61]  Mr Theunissen and Mr Day stated in evidence that they did not realise until this dispute arose that the authenticity of the execution was in question.
  3. [37]
    Questions have been raised in relation to the appropriateness of conduct of Mr Revelle and a Mr McCrae, a consultant and shareholder of Ausmex. No determination is required by me in relation to the matters raised and I will not address it further.

Circumstances leading up to the removal of the caveat

  1. [38]
    Mr Theunissen does not recall when he was specifically instructed as to the second respondent’s preparedness to remove the first caveat, however, nevertheless deposes to the following:[62]

“(a) the Caveat only allowed the Tenements to be transferred to Omega. As such, the Caveat needed to be removed in order for the Tenements to be transferred to Jin Aus; and

(b) Spinifex was prepared to remove the Caveat to allow the transfer to Jin Aus on the basis that Jin Aus provide security over the Tenements;

(c) once the security was provided, Spinifex would remove the Caveat and lodge a new caveat which allowed the transfer to Jin Aus.”

  1. [39]
    The caveat was not removed until February 2021.

Purported appointment of a receiver

  1. [40]
    It is common ground that the Milestone Payments required under Clause 2.2 of the Third Deed of Variation, and/or under the Deed of Assignment have not been paid.[63] As a result of this non-payment and pursuant to the GSA, the second respondent appointed the first respondent as receiver and manager of the first applicant on 23 July 2021.[64]

Factual Matters in Dispute

  1. [41]
    The applicants contend that the resolution of the matter relies on a factual determination as to whether or not the GSA was entered into by Jin Aus in consideration for Spinifex[65]:

“(A) Agreeing as recorded in Recital C for the benefit of Jin Aus and/or Jun HK, to transfer the Tenements to Jin Aus;

(B) Agreeing for the benefit of Jin/Aus and/or Jin HK to remove the caveat …to enable the transfer of tenements to Jin Aus, such agreements having been made partly orally and partly in writing…”

  1. [42]
    The second respondent contends that the resolution of this matter depends on propositions of law rather than requiring findings of fact. The applicants contend in that regard that the second respondent is seeking to raise an argument that has not been pleaded. I will address that further below.
  2. [43]
    Mr Trevillion, Mr Chan and Mr Williams who gave evidence for the applicants were not required for cross-examination. Mr Theunissen and Mr Day who gave evidence for the respondents were required for cross-examination.
  3. [44]
    Mr Day who gave evidence on behalf of the second respondent was only appointed as a director of the second respondent after the events in question but stated that he acquired knowledge of what occurred through his role as a non-executive director of Ausmex.[66] I found his evidence unreliable in some respects given inconsistencies that arose in his evidence and that he made statements based on the basis of what he was told rather than what he in fact believed.
  4. [45]
    Mr Theunissen was, as set out above, the solicitor engaged to act for Ausmex and its subsidiaries including the second respondent. He made appropriate concessions and I found he was generally honest in the evidence he gave, although constrained.
  5. [46]
    Mr Day in his original affidavit stated he no longer had a clear recollection of the events other than what was contained in emails which related to the caveat lodged by the second respondent and the GSA he had reviewed for the purpose of giving evidence.[67] According to him, the second respondent was concerned that the tenements were going to be transferred to the first applicant and doing so would circumvent the second applicant’s obligation to pay the second respondent the milestone payment.[68] He considered the benefits of the GSA were that it provided Ausmex with the security it needed and allowed the second applicant to structure the transfer and ownership of the tenements in the way that it required.[69]
  6. [47]
    The internal emails exchanged with Mr Day show a concern for the fact that there was no security for future payments[70] which, apparently, Mr McCrae in his capacity as their agent had assured the second respondent could be done after the deal was done. A caveat was subsequently lodged which was signed by Mr Day.
  7. [48]
    In his further affidavit Mr Day stated that:[71]

“At the time Spinifex lodged the Caveat:

(a) the Milestone Payments would become payable in the future;

(b) I believe that I had spoken to Mr McRae, who told me that Omega or Jin Aus might try to transfer the Tenements to a third party (i.e. someone other than Omega or Jin Aus). I do not recall precisely when this conversation with Mr McRae occurred, but I believe it was prior to the lodgment of the Caveat. I recall being concerned that if Omega or Jin Aus transferred the Tenements to a third party, Spinifex would have no security for the Milestone Payments; and

(c) I believed that Spinifex:

(1) had a “caveatable interest” in the Tenements for the sum of $1.5 million to secure the Milestone Payments; and

(2) was entitled to lodge the Caveat to protect that interest.”

  1. [49]
    Mr Day had no compelling reason as to why he subsequently recalled this detail given his statement that he had no recollection apart from that contained in emails in his earlier affidavit. He tried to explain the difference between the expressed concern in [41] of his first affidavit and [5] of his second affidavit on the basis that the first was the concern of the second respondent and the second concern was his personal concern. He agreed that the paragraphs were inconsistent “but the concern is not”. He then contradicted [41(a)] of his first affidavit, only to subsequently state that it was true. He then stated that their concern was that they would not be paid the $1.5 million milestone payment and “that the tenements were going to be transferred away from the Jin Resources outfit.”[72] He claimed the $1.5 million milestone payment was an ongoing interest in the tenements.[73]  His explanations were confused and lacked credibility.
  2. [50]
    On 25 May 2020, Ausmex had issued an announcement to the market which stated that:[74]

“Ausmex Mining Group Limited (“Ausmex” and the Company) is pleased to announce the divestment of the “non-core asset” Guilded Rose Project for a total cash consideration of $A4,000,000.

The project has been acquired by Hong Kong company Jin Resources (HK) Limited (“Jin”) with the project transferred to its Australian Subsidiary.”

  1. [51]
    In cross-examination, Mr Day could not recall whether he had approved the announcement by Ausmex on 25 May 2020, but agreed that the first two paragraphs, which announced that Ausmex Mining Group had divested itself of “the non-core asset’ Gilded Rose and that the project had been acquired by the second applicant “with the project transferred to its Australian subsidiary” were accurate. He also agreed that Gilded Rose had been divested as at 25 May 2020.[75] Mr Day stated he had not seen the Sale Agreement before he signed the caveat but later stated that he had seen it before he signed the caveat.[76]
  2. [52]
    A letter to Mr Nichols, the receiver, dated 26 August 2021 which Mr Day signed, stated that completion of the Sale Agreement had occurred on 22 May 2020 and that “Given this, we confirm that beneficial title in the Project…. has passed from Spinifex Mines as the Seller to the Buyer under the Sale Agreement (notwithstanding that the legal title is still recorded in the names of Spinifex Mines)”.[77]  Mr Day confirmed that the letter was accurate in relation to his understanding of the transaction.[78]
  3. [53]
    Mr Day agreed that under the Sale Agreement, ownership passed at the effective time.[79] He also agreed that cl 7 of the Sale Agreement would convey to him and any rational businessperson that they must not put a caveat on the tenements after completion and lodging a caveat would have been a breach of the agreement.[80]
  4. [54]
    However, he stated that the second respondent did have an ongoing interest because additional information had come to their attention after the agreement and before signing the caveat which he asserted meant his statement that the second respondent had an ongoing interest in the tenements was accurate.[81] While he rejected the suggestion that the caveat was not accurate and that it was a strategy to put pressure on the first applicant,[82] his evidence was not compelling. I do not accept that he held a genuine belief that the second respondent had a bona fide claim of an ongoing interest in the tenements.
  5. [55]
    Given Mr Day’s acceptance that the effect of the Sale Agreement was that the second respondent had divested itself of the tenements in May 2020 to the second applicant and that they were transferred to the first applicant, Mr Day’s evidence that he believed that the second respondent did have an ongoing interest in the tenements as stated in the caveat with his confused and inconsistent explanations lacked credibility. The second respondent’s ongoing interest was being paid the Milestone Payments, for which the second respondent had no security. That accorded with the fact that Mr Kidd had relayed to Mr Day that “AMG needs caveats or some other form of lien to be applied to all of the Gilded Rose MLs and ELA” and that Mr McCrae had told him that they could be applied for “after the deal was done”.[83]
  6. [56]
    Mr Theunissen negotiated the GSA on behalf of the second respondent only with Mr Revelle.[84]  The second respondent relies on his oral conversations with Mr Revelle on 27 July 2020 and the emails exchanged with him on 3, 6 and 7 August 2020 in support of its assertion that the second respondent agreed for the benefit of the first and/or second applicant to remove the caveat to enable the transfer to occur to the first applicant. According to Mr Thuenissen, said to Mr Revelle on or around 27 July 2020 that if the second respondent and the first and second applicant were going ahead with the transfer of tenements on the basis that they would be transferred to the Australian entity, that “in the circumstances where Jin Aus was now involved, the parties would need their security interests registered on the PPSR” and that, amongst other things “ the parties needed to prepare something to acknowledge outstanding payments and a security document and I offered to prepare a standard security document”.[85] According to Mr Theunissen, Mr Revelle had indicated he was agreeable to that course.[86] He cannot recall any discussions as to a caveat.
  7. [57]
    Mr Revelle had sent an email to Mr Theunissen on 3 August following up the conversation on the deed of acknowledgement “and removal of the caveats over Gilded Rose,”[87] without raising any dispute. The further exchange between Mr Theunissen and Mr Revelle occurred on 6 and 7 August has been referred to above. Mr Theunissen stated that when he rejected the assertion by Mr Revelle that the second respondent was in breach of the agreement, he was concerned about the lack of use of defined terms in cl 1.1.3 (which he did not draft) in the Third Deed of Variation, although in oral evidence he stated he did not think he necessarily had all the concerns which were set out in his affidavit at the time.[88]  He stated that he had not expressed them to Mr Revelle.[89] In cross-examination he agreed that that the terminology in the clause which referred to “Mining Leases” and not “Tenements” gave rise to concern as to what was being transferred would have been overcome if Appendix 1 referred to in clause 1.1.7 contained the tenement transfer documents, which he had not seen.[90]
  8. [58]
    In cross-examination, Mr Theunissen did not agree that the lodging of the caveat was necessarily in breach of cll 7.1.1 and 7.1.3.[91]  Nor did he agree he had not referred to the removal of the caveat in cl 1.1 because he did not think it should have been lodged.  He stated that “I thought we had a good argument but I was aware there was a counter argument.”[92]  Those arguments were not exposed in cross-examination.
  9. [59]
    Mr Theunissen was reticent in his evidence, but I do not find he was untruthful in the evidence he gave.  It is difficult to give any weight to his evidence that there were arguments for and against the lodging of a caveat in the absence of any of those matters being articulated, although I accept that he may have been constrained in the answers he could give since he was instructed not to waive privilege. Tellingly his concerns about the third deed of variation did not appear to arise in the context of the negotiation of the GSA as he never raised those concerns with the second respondent.
  10. [60]
    For the reasons outlined below I do not find that Mr Theunissen agreed on behalf of the second respondent to remove the caveat as consideration for the first applicant agreeing to enter into the GSA.

Parties’ Contentions

  1. [61]
    The applicants submit that the second respondent failed to prove that the GSA was supported by consideration on the basis it had not proved as a matter of fact that the second respondent had agreed that in consideration for the first applicant entering the GSA to transfer certain mining tenements to the first applicant as recorded in Recital C of the GSA.  Nor had it established that in consideration for the GSA it had to agreed to remove the caveat it had lodged on 2 July 2020. Further, the applicants contend that as a matter of law, the matters relied upon would not have amounted to valid consideration for the GSA in any event, because they were things which the second respondent was already contractually obliged to do. In that regard they rely on the principles set out by Mason J in Wigans v Edwards[93] and contend that the present case does not fall within any of the recognised exceptions to the general principle that a promise to do no more than perform an existing contractual duty is not an exception.
  2. [62]
    It was submitted on behalf of the Second Respondent that the Court should find that the GSA was supported by consideration because the evidence shows that:[94]

“(a) it was proposed by Spinifex that, in consideration for Jin Aus and Spinifex agreeing to a novation of the Sale Agreement from Jin HK to Jin Aus, and the entry into the GSA, Spinifex would agree to remove the First Caveat that was preventing the transfer of the Project to Jin Aus; and

(b) although no novation of the Sale Agreements was contemporaneously effected, the GSA was in fact entered into by Jin Aus and Spinifex as part of an arrangement by which Spinifex agreed with Jin Aus that it would in fact transfer the Project to Jin Aus and remove the First Caveat.”

  1. [63]
    The second respondent further contends that as it had no pre-existing relationship with the first applicant, a promise to it (regardless of its pre-existing duties to the second applicant) was good consideration.  According to the second respondent, the removal of the first caveat conferred an obvious benefit on the first applicant, and a corresponding detriment to the second respondent.
  2. [64]
    The second respondent submits therefore that the Court should accept that the second respondent’s agreement to remove the first caveat to allow the transfer to the first applicant was sufficient consideration moving from the second respondent in exchange for the promises contained in the GSA.
  3. [65]
    In oral argument, Counsel for the second respondent broadened its argument to contend that consideration could also be established by the second respondent’s performance of releasing the first caveat and permitting the transfer to continue as consideration to support the GSA, even if the existing contractual duty arose prior to the execution of the GSA,[95] as an alternative to showing that there was an enforceable promise by the second respondent at the time of entry into the GSA to remove the first caveat.
  4. [66]
    It is contended by the second respondent that in agreeing to or performing a pre-existing promise to the second applicant, albeit that the second respondent’s conduct may have been in breach of the Sale Agreement with the second applicant, the present case was effectively on all fours with the case of Pao On v Lau Yiu Long[96] (“Pao On”) given that the first applicant had no contractual relationship with the second respondent and no contractual right to enforce the transfer obligations that the second respondent had.

Determination

Principles

  1. [67]
    It is elementary that in order to establish a binding contractual agreement, consideration must be given by a promisee to the promisor or some other person at the promisor’s request.[97]
  2. [68]
    In the present case, there is no express contractual promise stated in the GSA on behalf of the second respondent, particularly as a result of the amendments made by Mr Revelle.
  3. [69]
    The consideration does not however necessarily need to be expressed or fully expressed in the agreement.  In determining whether or not there is consideration for an agreement, the Court may go outside the four walls of a written document and may have regard to extrinsic evidence where it is not stated in the agreement. That was established by the Privy Council in Pao On which has been followed in Australia in this regard. [98] Thus, the Court may have regard to the surrounding circumstances in ascertaining whether or not there was consideration.
  4. [70]
    A promise to do no more than perform an existing contractual duty is not good consideration. In Wigan v Edwards[99]  Mason J stated:

“The general rule is that a promise to perform an existing duty is no consideration, at least when the promise is made by a party to a pre-existing contract, when it is made to the promisee under that contract, and it is to do no more than the promisor is bound to do under that contract. The rule expresses the concept that the new promise, indistinguishable from the old, is an illusory consideration. And it gives no comfort to a party who by merely threatening a breach of contract seeks to secure an additional contractual benefit from the other party on the footing that the first party’s new promise of performance will provide sufficient consideration for that benefit.”

  1. [71]
    There are however recognised exceptions to the general proposition. For example, in Wigan, Justice Mason stated that:[100] 

“An important qualification to the general principle is that a promise do precisely what the promisor is already bound to do is a sufficient consideration, when it is given by way of a bona fide compromise of a disputed claim, the promisor having asserted that he is not bound to perform the obligation under the pre-existing contract or that he has a cause of action under that contract. The qualification recognizes that for the Court itself to examine and determine the correctness of the promisor's claim would be a pointless exercise when the new bargain indicates that the promisee regarded the fresh promise as a benefit, presumably viewing the promise of performance as more advantageous than the remedies available to him for breach of contract. But the law, by insisting that the claim in dispute is one which was honestly or bona fide made, prevents the qualification from assisting the party who would seek to gain an unfair advantage by threatening unscrupulously to withhold performance under a contract.”

  1. [72]
    A further exception to the general rule in relation to an existing party is where the promise obtains a practical benefit from the arrangement which did not otherwise arise under the original contract.[101]
  2. [73]
    A third exception is recognised where the original promise is made again but to a third party.
  3. [74]
    In The Eurymedon[102], the Privy Council held that:

“An agreement to do an act which the promisor is under an existing obligation to a third party to do, may quite well amount to valid consideration and does so in the present case: the promisee obtains the benefit of a direct obligation which he can enforce.”

  1. [75]
    The scope of the third exception was of some controversy between the parties. According to Counsel for the applicants, the proper statement of the exception is that the original promise is made again to a third party “who would otherwise have no means of enforcing the performance of the contract.”[103] Counsel for the applicants relies on Ailakis & Anor v Olivero (No 2)[104] in support of that proposition.  Counsel for the second respondent also relies on the same case, but contends that the latter qualification is an incorrect interpretation of that case.
  2. [76]
    In Ailakis & Anor v Olivero (No 2)[105] the essential facts are encapsulated in the headnote. The respondent was a consultant to and director of a company in which the appellants controlled a majority of shares.[106] The company was involved in mineral exploration and had lost control of the tenement to a competitor. The respondent had agreed to assist the competitor in negotiating for rights to another project, in exchange for the competitor withdrawing its claim to the tenement in question. The respondent had orally agreed with the appellants that he would undertake those negotiations in exchange for the transfer of 1,000,000 of the company’s shares. As a result of the negotiations undertaken by the respondent, the competitor obtained the rights to the other project and the company resumed control of the tenement. The shares were not however transferred to the respondent by the appellants as promised. One argument that was raised by the appellants was that no consideration was given by the respondent because given his position with the company he already had a duty to carry out the relevant negotiations, by virtue of his position as a director of the company. The public nature of the duty[107] was relevant to the argument before the Western Australia Full Court that there was a lack of consideration, however the Court  found that despite the fact director’s duties were embodied in a statute, that did not mean, of itself, that they had a public character.[108] Martin CJ considered that because Mr Olivero’s duties as a director were owed to the company not the appellants, the promise which he made to the appellants which was enforceable by them and provided good consideration.[109] Martin CJ stated that “it is clear that a promise to perform an existing contractual duty made to a third party provides good consideration to the party to whom the promise is given, who would otherwise have no means of enforcing the performance of the contract.”[110]
  3. [77]
    The second respondent submits that the reference to “who would otherwise have no means of enforcing the performance of the contract” is addressing the lack of privity rather than being a matter of principle that it established good consideration that the third party would otherwise have no means of enforcing the performance of the contract. While the two concepts remain distinct in Australian law,[111] what was intended by Martin CJ is unclear, given that while the promisor arguably suffers no detriment in promising to do an act which the promisor is bound to do under an existing contractual duty, the consideration may be found in the benefit to the third party,[112] where, as was said in The Eurymedon “the promisee obtains the benefit of a direct obligation which he can enforce”.[113]
  4. [78]
    However, as was submitted by Counsel for the second respondent, the Court was not asked to consider whether there was good consideration if a promise was being repeated which could be practically enforced by the third party.  I do not consider his Honour’s statement was likely intended to be a qualification on the Privy Council’s statement in The Eurymedon, as opposed to being simply a statement of the benefit albeit framed in the negative.  That is supported by his Honour’s reference to Pao On at [108].  I therefore consider that the second respondent is correct that the decision did not hold as a matter of principle that in order for it to be established that a promise to or performance in favour of a third party is good consideration, it must be established that the third party has no practical way of enforcing the promise.
  5. [79]
    However, I do not accept the second respondent’s submission that the statement in [106] is necessarily confined to being a decision about a promise to perform a public duty as the second respondent contends, given the reference to The Eurymedon which did not involve the performance of a public duty.
  6. [80]
    The significance of the point in the present context is that the second respondent contends it does not matter that, as contended by Counsel for the applicants, the first applicant could have practically enforced the obligation of the second respondent to remove the caveats by applying to remove the caveats. However, for the reasons outlined below the decision does not turn on whether there is such a qualification or not.
  7. [81]
    The second respondent contends the present case is on all fours with Pao On. It is necessary to set out some of the factual matters underlying that decision to understand the Privy Council’s decision.
  8. [82]
    In Pao On,[114]  a private company was constructing a building which was its principal asset. A contract was entered into between the shareholders of the private company (the plaintiffs) with a public company in February 1973 to sell their shares in the private company to the public company, payment for which was the issue of shares in the public company to the shareholders. The majority shareholders of the public company, the defendants, were concerned that the issue of shares in the public company may depress the market. The plaintiffs offered an undertaking not to sell 60 per cent of their acquired shares until one year after they were issued, and it was orally agreed between the plaintiffs and the defendants that the plaintiff should be protected against any loss for any possible loss in the value of their shares from the date of acquisition until the date upon which the plaintiffs could sell the shares. Subsequently, the shareholders of the private company entered into a subsidiary agreement with the shareholders of the public company to retain 60 per cent of the shares they acquired for a year and the shareholders of the public company would meet any fall in the price of the shares by buying them back at a stipulated price.
  9. [83]
    No provision was however made for the position if there was a rise in the market and the plaintiffs realised that in protecting themselves against a possible fall in the market, they had forgone any profit from any possible rise in the market. The shareholders of the private company refused to complete the agreement with the public company unless the subsidiary agreement with the defendants was cancelled and the defendants gave a guarantee by way of indemnity against the possible loss arising out of the agreement with the shareholders of the public company. The defendants as shareholders of the public company fearing completion would not occur which could cause a loss of confidence in the public company and delays of litigation agreed.  They signed a written guarantee. The consideration was stated to be that in consideration of the plaintiffs having agreed to sell their shares in the private company (which was already the subject of an existing promise by the shareholders of the private company owed to the public company) the defendants agreed to indemnify the plaintiffs for any loss in respect of the 60 per cent of shares retained by the plaintiffs.  Subsequent to that guarantee having been entered into, the plaintiffs performed the agreement with the public company and transferred their shares under the main agreement.  However, when the market fell the shareholders of the public company refused to meet the loss and contended that the agreement was unsupported by consideration and unenforceable.
  10. [84]
    The Privy Council found that the consideration stated in the guarantee was sufficient to support the defendant’s promise of indemnity. The performance of the main agreement was, when the guarantee was given, to occur in the future. The guarantee also contained a promise by the plaintiffs to the defendants to fulfill their earlier promises to the company in the main agreement. The Privy Council recognised that an act done before the giving of a promise to make a payment or confer some other benefit can sometimes be consideration for the promise and that in the present case the three requirements were established. The Privy Council stated that:[115]

“Their Lordships agree that the mere existence or recital of a prior request is not sufficient in itself to convert what is prima facie past consideration into sufficient consideration in law to support a promise: as they have indicated, it is only the first of three necessary preconditions. As for the second of those preconditions, whether the act done at the request of the promisor raises an implication of promised remuneration or other return is simply one of the construction of the words of the contract in the circumstances of its making. Once it is recognised, as the Board considers it inevitably must be, that the expressed consideration includes a reference to the plaintiffs' promise not to sell the shares before April 30, 1974 – a promise to be performed in the future, though given in the past — it is not possible to treat the defendants' promise of indemnity as independent of the plaintiffs' antecedent promise, given at the first defendant's request, not to sell…It matters not whether the indemnity thus given be regarded as the best evidence of the benefit intended to be conferred in return for the promise not to sell, or as the positive bargain which fixes the benefit on the faith of which the promise was given — though where, as here, the subject is a written contract, the better analysis is probably that of the “positive bargain.” Their Lordships, therefore, accept the submission that the contract itself states a valid consideration for the promise of indemnity.”

  1. [85]
    The Privy Council found that extrinsic evidence was admissible to prove real consideration, including where there is no consideration expressed in the agreement concerned, the consideration is ambiguously stated or a substantial consideration is stated but an additional consideration exists.[116] It found that while the consideration for the promise of indemnity included the cancellation of the subsidiary agreement it was primarily the promise given by the plaintiffs to the defendants to perform the main agreement with the company not to sell 60% of their shares before a year had passed. It therefore found the real consideration for the indemnity was the promise to perform or the performance of the plaintiffs pre-existing contractual obligations to the company.
  2. [86]
    The Privy Council, on the basis of The Eurymedon did not doubt that a promise to perform or the performance of a pre-existing contractual obligation to a third party could be valid consideration.[117]
  3. [87]
    The Privy Council rejected any notion that the consideration was made under economic duress or that where duress is not established, public policy may nevertheless invalidate the consideration if there has been a threat to repudiate a pre-existing contractual obligation (as was the case here) or an unfair use of a dominating bargaining position.[118]

Consideration

  1. [88]
    The applicants contend the GSA is not a binding contract due to a lack of consideration.[119]
  2. [89]
    In the present case the GSA provided for the second applicant to provide security but did not expressly provide for the second respondent to do anything. The second respondent did not contend that the GSA itself contained a contractual promise.
  1. [90]
    The applicants contend that the respondents’ defence is limited to two contentions[120]:
    1. (a)
      that in consideration for the GSA the second respondent agreed to transfer certain mining tenements to Jin Aus, as principal rather than as agent for the second applicant, which is said to be recorded in recital C to the GSA;
    2. (b)
      secondly, that in consideration for the GSA, the second respondent agreed to remove a caveat that it had lodged in relation to those same mining tenements, said to consist of an oral conversation between Mr Theunissen and Mr Revelle on 27 July 2020 and an emails dated 6 and 7 August between Mr Theunissen and Mr Revelle.
  2. [91]
    As stated above, the applicants contend that insofar as the second respondent seeks to raise any contention that the second respondent provided consideration by performance of a pre-existing contractual duty by removing the caveat for the benefit of the first applicant, the Court should not allow the argument to be raised as it was not pleaded in the Points of Defence. The second respondent’s Counsel concedes it was not raised but stated that there was no prejudice as it was a matter of law, and the only facts it relies on are those admitted on the pleadings, namely that the caveat was removed. The applicants’ Counsel contends that there was prejudice because it had not investigated the circumstances of the lifting of the caveat, which the second respondent contends is speculative and not real prejudice.
  3. [92]
    Dealing first with the question of whether the evidence establishes that there was an agreement as raised in the Points of Defence I am not satisfied there was an actual agreement between those parties in respect of consideration as contended by the second respondent. As set out above regard can be had to extrinsic evidence to determine the question of whether consideration has been provided.
  4. [93]
    As to the first agreement contended by the second respondent, the second respondent contends that as recorded in the recitals to the GSA which had been amended by Mr Revelle and the emails sent by Mr Theunissen on 6 and 7 August, the second respondent was willing to permit the transfer of the tenements to the first applicant subject to the terms of the GSA and the first applicant was willing for that to occur.
  5. [94]
    Recital C of the GSA refers to “Jin Resources HK pursuant to Clause 1.1.3 of the Deed of Variation of 21 May 2020 has transferred the Project to the Grantor and the Secured Party has agreed to the transfer subject to the terms of this document.”[121] The second respondent empahsises the words underlined, which were not deleted by Mr Revelle.[122] The applicants contend however that Recital C was simply stating what had occurred. The applicant says that those words should be read as referring to “in the Deed of Variation of 21 May 2020.”
  6. [95]
    The second respondent had not agreed with the first applicant to transfer the tenements to it nor had the transfer of the tenements been effected in favour of the first applicant at the time of the GSA in August 2020. While the second respondent however contends that there is no warrant for reading the words in the way that the applicants contend, the applicants’ construction appears to be correct when regard is had to the factual matrix and the earlier reference in Recital C.  Although the transfer had not been effected, the second respondent had already delivered the signed transfers to the second applicant providing for the tenements to be transferred the first applicant. On its proper construction clause 1.1.3 of the Third Deed of Variation did not require that the second applicant nominate the first applicant to be the party to whom the tenements were to be transferred given that the clause states that the tenement transfer forms were to be “signed by the Seller and buyer transferring the tenements to the Sellers[123] nominated Australian Subsidiary.” To the extent any nomination was required it had been done in favour of the first applicant by the provision of the transfer forms in favour of the first applicant. The GSA does not otherwise refer to the transfer.[124] Beneficial title had passed upon completion, which had been publicly acknowledged by Ausmex. Recital C does not in the circumstances record an additional promise to the first applicant by the second respondent to transfer the tenements to it.[125] It is accepted by the second respondent that title in the other assets included in the project had passed to the second applicant upon completion.[126]
  7. [96]
    While Mr Theunissen stated that it was arguable that the second respondent was not obliged to transfer the tenements to the first applicant in the circumstances set above, the inconsistencies in the terminology of Mining Leases were clarified by the later referral to tenements and the transfers being in the appendices. The terms of the clause were clearly directed to the transfer of the tenements. As to the suggestion that the rights of the second respondent had to be clarified against the first applicant that clearly arose out of a commercial not legal concern given the terms of the Sale Agreement.
  8. [97]
    As to the second matter, there is some evidence which suggests such an agreement existed, however the weight of the evidence does not support such an agreement. While I accept there was a conversation between Mr Revelle and Mr Theunissen as to the entry into a deed of acknowledgment and removal of caveats over the project in early August, Mr Theunissen’s record of conversation does not reveal a concluded agreement, but rather that he should prepare drafts. To the extent he states Mr Revelle stated it would be fine that would appear to be referring to the preparation of the drafts. Mr Theunissen cannot recall a discussion as to a removal of caveat. Similarly, Mr Revelle’s inquiry as to “where things have progressed”, including as to the removal of the caveat, does not support the fact that there was a concluded agreement at that time.[127] After the draft GSA and a draft deed of acknowledgment was sent, Mr Revelle had sent an email asserting that the lodgement of the caveat was in breach of the Sale Agreement. After Mr Theunissen had refuted the suggestion of a breach he had stated “Spinifex stands ready to remove the caveat to permit the tenements to be transferred to Jin Resources (AUS) subject only to having this issue satisfactorily documented as previously discussed,”[128] That does support the fact that the second respondent was willing to permit the transfer to the first applicant upon entry to the GSA. However, Mr Revelle then returned a marked up GSA which was said to  follow discussions with Mr McCrae and that “ Jin Resources (Aus) Pty Ltd (“Jin Aus”) is of the position that pursuant to Clause 1.1.3 of the Deed of Variation of 21 May 2020, the project has been transferred to Jin Aus.” [129] Mr Revelle had deleted the reference to “in consideration for the Secured Party agreeing that the Project and Tenements may be transferred” in clause 1.1 of the GSA.[130] His covering email also stated that “the existing caveat should have no affect (sic) on the transfer once we receive the stamp duty certificate” and “I would suggest the caveat is removed in due course given it superseded by the GSA”.[131] That supports the fact Mr Revelle did not consider that any promise was being given to remove the caveat to permit the tenements to be registered. That understanding was not refuted by the second respondent. 
  9. [98]
    While subsequent conduct may be evidence of an agreement having been reached, it is not relied upon by the second respondent for that purpose, quite correctly in my view. In an email of 24 August 2020, Mr Theunissen stated “I understand that Hetherington’s will be acting on all parties (sic) behalf regarding the transfer and dealing with caveats”.[132] That is equivocal as to whether there was an agreement by  to remove the caveat in response to the promise of the first applicant to enter the GSA to allow the transfer to occur, given the security under the GSA was to extend to the Gilded Rose Project, and that the security was being given by the first applicant.
  10. [99]
    Given the Deed of Assignment and Deed of Acknowledgement are not said to have been validly entered into and were in any event provided until well after the GSA was entered into, they do not lend any great assistance in determining the nature of the consideration.
  11. [100]
    I am not satisfied that there was an “agreement” in the terms pleaded in the Amended Points of Defence.
  12. [101]
    As stated above, the second respondent’s Counsel however contends that consideration can be established not only through an enforceable promise at the time the GSA was reached but also through the conduct of the second respondent releasing the caveat to allow the transfer of the tenements to proceed.
  13. [102]
    In Hill Equipment & Refrigeration Co Pty Ltd v Nuco Pty Ltd (“Hill Equipment”),[133] the Court found that a subcontract was complete when a purchase order was received by a supplier defendant company to provide certain goods. Subsequent to that time but prior to the subcontract being performed, a guarantee was sought from the directors of the supplier company which was provided two days after the agreement was complete. Kearney J found that there was consideration in the performance by the purchasing company of its obligations under the subcontract with the defendant company, relying on The Eurymedon and Pao On. By reference to English authorities, Kearney J remarked that: “The rationale appears to be that there is consideration where the guarantor by entering into the guarantee thereby induces the other party to act to his detriment by doing something… which otherwise he might not have chosen to do.”[134]
  14. [103]
    Kearney J distinguished the case of Astley Industrial Trust Ltd v Grimston Electric Tools Ltd (“Astley Industrial”)[135] where a vehicle had been let to W by the plaintiffs on hire purchase and four days later the managing director of W guaranteed the payments where the Court found:

“that which had been thought to have been consideration was not a consideration at all, because the perfected contract had passed into an executed contract with effect when the car had been handed over. His Lordship could not, in those circumstances, avoid the conclusion that this was past consideration.”

  1. [104]
    There is no question that the authorities recognise that either a promise of performance of an existing contractual duty or performance itself for a third party are sufficient consideration.[136]
  2. [105]
    The second respondent submits that the delay between the entry into the GSA and removal of the caveat is explicable given there is evidence suggesting that the question of removal and transfers was to be dealt with by Hetherington’s on the parties’ behalf, and the delay in paying stamp duty. Given it is uncontroversial that the caveat was removed in January 2021,[137] it contends there is no prejudice in raising the alternative basis for consideration, given whether or not it constitutes consideration is a matter of law. The applicants’ counsel however submits that it did not investigate the circumstances surrounding the lifting of the caveat and that constitutes prejudice, and the Court should not consider the alternative basis.
  3. [106]
    I do consider that there is prejudice in permitting the argument to be raised at this stage, given the gap in time between the GSA and the removal of the caveat, notwithstanding the email from Mr Theunissen of 24 August 2020. While the facts in terms of the removal of the caveat were admitted on the pleadings, the circumstances of the removal were not matters which were pleaded. The second respondent’s Counsel had directed me to the evidence which could explain the delay which was consistent with the removal of the caveat being in response to the first applicant entering the GSA. There may however be possible explanations that may or may not open as to why the caveats were not removed until January 2021 which could show it was an act disconnected with the GSA. For example, it may have been done in anticipation of the registration of the tenements and a further caveat being lodged to protect the second respondent’s security.
  4. [107]
    In the circumstances of the present case in my view the argument cannot succeed in any event as I do not consider the present case is on all fours with Pao On or that the facts fall within the principles recognised by Kearney J in Hill Equipment for the following reasons.
  5. [108]
    First, there was a considerable time delay between the removal of the caveat and GSA suggesting the performance is not connected with the GSA. The fact that there was any delay in the payment of stamp duty has no bearing on whether or not the caveat should have been withdrawn. Indeed, as a matter of fact, for some unexplained reason the transfers in favour of the first applicant do not appear to have ever been registered[138], the tenements still being in the name of the second respondent at the time of the appointment of the receiver.
  6. [109]
    Secondly, while the second respondent contends that they would not have been able to avoid specific performance if the first applicant brought an action to remove the caveat, that would rely on the first applicant being able to establish that the GSA was entered into on the basis of an implied assumption or promise that the caveat was going to be removed to allow the transfers to proceed. While the matter was discussed, the evidence is equivocal as to whether that was the basis of entry and indeed Mr Revelle seemed to discard it as a consideration when returning the executed GSA.
  7. [110]
    Thirdly, the present case does not appear to be a case to which the three-party rule applied in Pao On and Hill Equipment would apply as an exception to the general principle that past consideration is not good consideration, even if the consideration was the removal of the caveat was lifted in return for the first applicant entering into the GSA.
  8. [111]
    Unlike the position in those cases, in the present case not only had the second respondent and second applicant entered into the Sale Agreement, but it had also reached completion in relation to the transfer of the Gilded Rose project. Money had been paid by the second applicant and transfers provided by the second respondent in favour of the tenements being transferred to the first applicant. Each of the parties had done as required and it only remained for the second applicant’s nominated Australian company to register the transfers which did not require further action from the second respondent.
  9. [112]
    While payment of the Milestone payments still had to be made by the second applicant to the first applicant, the transfer of the tenements was not conditional upon those payments being made. The Milestone Payments were payable by particular dates unless a certain production target was reached earlier, and did not establish an ongoing interest by the second respondent in the tenements to sustain a caveat under the Mineral Resources Act 1989 (Qld).[139] It was a contractual obligation for payment disconnected from the tenements.[140] It was plain on the evidence that what drove the lodgement of the caveat was the concern of the second respondent that it had no security for the milestone payments.
  10. [113]
    The second respondent was in breach of cl 7 of the Sale Agreement in lodging the caveats preventing the registration of the transfer of the tenements to the second applicant. Although not formally conceded, no argument was articulated against the proposition by the second respondent, other than to refer to the fact that a proprietary interest was not necessarily needed to support a caveat under the Mineral Resources Act 1989 (Qld). That is not however an answer to the question of breach. In preventing the transfer of the tenements by lodging the caveat, the second respondent was in breach of the Sale Agreement which had already been performed.
  11. [114]
    The second respondent contends however that does not matter for it to succeed. It contends that in placing the caveat and holding up transfer of tenements pending the signing of the GSA, the second respondent was acting no differently from the shareholders of the private company in Pao On, who refused to complete the agreement to sell the shares to the public company unless provided with the guarantee and then in consideration of that promise, promised to the shareholders of the public company to perform the agreement with the public company.
  12. [115]
    It is clear that a threatened breach to procure a promise which is not tantamount to duress does not exclude a promise given to a third party to avoid such a breach being consideration. However, the difficulty in the present case is that the actions of the second respondent occurred after it had performed its obligation to deliver the transfers of the tenements, not where it had the option of choosing whether or not to proceed with the Sale Agreement and incur a possible claim for damages.
  13. [116]
    Like the actions of the shareholder of the private company in Pao On, where a refusal to complete the original agreement would have been in breach of that agreement, the caveat preventing the registration of the transfer of the tenements was in breach of the Sale Agreement. However, unlike the case in Pao On or Hill Equipment, in the present case completion had occurred in relation to the transfer of the Gilded Rose project. The original agreement with the promise to transfer the tenements had been performed by the delivery of the transfers for the tenements and payment of monies. The payment of the Milestone Payments remained extant, but they were additional obligations under the Sale Agreement after the transfer of the Gilded Rose project. The fact that the transfer of the project was complete was acknowledged by the second respondent, including through media releases to the market. 
  14. [117]
    The lifting of the caveat was not, as found in Pao On or Hill Equipment, a promise to perform a pre-existing contractual promise to a third party, or performance of that party in favour of a third party. What the second respondent was seeking to do was to stop the registration of that transfers that had already been executed by the second respondent in favour of the first applicant and been provided at completion in exchange for payment. That was not the subject of a promise that still had to be performed.
  15. [118]
    Unlike Pao On, the second respondent was not in the position where it could choose not to perform the sale and purchase agreement. Unlike Pao On the performance of the promise in the main agreement was not a matter to occur in the future. In the present case, the second respondent delivered the transfers for the tenements to the first applicant at completion, for which it was paid the agreed amount. What it sought to do was in breach of the Sale Agreement by lodging a caveat contrary to cll 7.1.1 and 7.1.3 of the Sale Agreement and then use that as a tool to further negotiate an agreement with the second applicant. The act which it contends it could have chosen not to do was to lift a caveat for which no legal justification has been provided to this Court, which I find was lodged to protect the Milestone Payments, which are future payments disconnected from the transfer of title.
  16. [119]
    The second respondent was not performing a promise that it had made under the Sale Agreement to the second applicant in favour of the first applicant. It was by lifting the caveat, stopping its interference with the first and second applicant acting on the promise it had already performed by providing the transfers in registerable form.
  17. [120]
    The present case was analogous to that considered in Astley Industrial insofar as the transfers had to be delivered.
  18. [121]
    The three-party rule did not apply in the circumstances as an exception to the rule that past consideration is not good consideration.
  19. [122]
    Given the above finding it is not necessary for me to deal with the arguments raised in respect of the application of s 55 of the Property Law Act 1974 (Qld) or that the first applicant could have removed the caveat under s 28(2) of the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld).
  20. [123]
    Nor could the lifting of the caveat be characterised as forbearance or a compromise in the performance of the pre-existing contractual duty. I do not find that the claim of an interest in the tenements was bona fide.  I do not find that Mr Day had an honest belief that the second respondent had a claim which could found the lodging of the caveats. It was a strategic move in order to obtain security for the Milestone Payments which had left the second respondent exposed. The exception that there was any compromise or forbearance of a claim is therefore not established.
  21. [124]
    The exception to the performance of the promise constituting a practical benefit was not argued other than being raised indirectly in response to the applicants’ argument.  Given I have found that the claim in the caveat was not made bona fide, there is no question of a practical benefit in lifting the caveat was said to be provided to the first applicant it would not constitute good consideration.
  22. [125]
    In the circumstances I find that:
    1. (a)
      there was no consideration agreed for the provision of the GSA by the first applicant;
    2. (b)
      the lifting of the caveat so the transfer of the tenements to the first applicant could proceed was not performance of the pre-existing contractual duty under the Sale Agreement in favour of the first applicant; and
    3. (c)
      even if the lifting of the caveat was in response to the entry into the GSA by the first applicant it was not good consideration at law.
  23. [126]
    The Orders of the Court should be:
    1. (a)
      A declaration that the GSA purportedly entered into between the first applicant and the second respondent dated 24 August 2020 was not legally effective to bind the first applicant.
    2. (b)
      Pursuant to s 418A of the Corporations Act 2001 (Cth) the Court declares that the purported appointment of the first respondent on or about 23 July 2021 as receiver and manager of the first applicant was not valid.
    3. (c)
      The second respondent pay the applicants’ costs of the application.
    4. (d)
      That the parties have liberty to apply as to any further relief that should be granted.
  24. [127]
    I am not prepared to make a retrospective declaration in relation to possession of the property of the first applicant without further argument but have provided for the need to apply.

Footnotes

[1]  Affidavit of Glen Williams sworn 8 November 2021 (“CFI 3”), Exhibit GWW-1 at p. 1-3.

[2]  Affidavit of Richard Trevillion sworn 29 November 2021 (“CFI 18”), at [1]; CFIs 28, 30, 34.

[3]  CFIs 18, 28, 30, 34.

[4]  CFI 18 at [4]; Affidavit of Che Wai (Aaron) Chan sworn 29 November 2021 (“CFI 17”) at [2]-[4].

[5]  CFI 18 at [13].

[6]  Affidavit of Aaron Day sworn 7 December 2021 (“CFI 21”) at [1]-[2].

[7]  CFI 21 at [2].

[8]  Affidavit of Joshua Theunissen sworn 7 December 2021, (“CFI 22”) at [3].

[9]  CFI 22 at [3].

[10]  CFI 18 at [7]-[11].

[11]  CFI 18 at [34]-[40].

[12]  CFI 18 at [41].

[13]  CFI 18 at [40]-[41].

[14]  CFI 18 at [69].

[15]  CFI 18 at [85].

[16]  CFI 18 at [85]-[89], Exhibit RIT-1 at p. 383.

[17]  Affidavit of Steven Nicols sworn 8 November 2021 (“CFI 16”) at [5]-[16]; CFI 18, Exhibit RIT-1 at pp. 406-407.

[18]  CFI 18, Exhibit RIT-1 at pp. 2-15, 17-75.

[19]  CFI 18 at [21], Exhibit RIT-1 at pp. 7, 33-34.

[20]  CFI 18 at [21], Exhibit RIT-1 at pp. 7, 33-34.

[21]  CFI 18, Exhibit RIT-1 at p 159.

[22]  CFI 18, Exhibit RIT-1 at p 20.

[23]  CFI 18, Exhibit RIT-1 at p 20.

[24]  ‘Effective Time’ is defined as “the close of business on the date of Completion”, see CFI 18, Exhibit RIT-1 at p. 33.

[25]  CFI 18, Exhibit RIT-1 at p 22.

[26]  CFI 18, Exhibit RIT-1 at p 25.

[27]  On 10 and 19 December 2019.

[28]  CFI 18, Exhibit RIT-1 at pp. 156-160.

[29]  CFI 18, Exhibit RIT-1 at p. 158.

[30]  CFI 18, Exhibit RIT-1 at p. 159.

[31]  CFI 18, Exhibit RIT-1 at pp. 158 and 159

[32]  CFI 18 at [47]-[48], Exhibit RIT-1 at pp. 162-245.

[33]  CFI 18 at [48]-[49], Exhibit RIT-1 at pp. 251-253.

[34]  CFI 18 at [47]-[48], Exhibit RIT-1 at pp. 162-245.

[35]  CFI 16, Exhibit SN-1 at p. 40.

[36]  CFI 18 Exhibit RIT-1 at p 284.

[37]  CFI 18 at [56], Exhibit RIT-1 at p. 287.

[38]  CFI 18 at [57], Exhibit RIT-1 at pp. 288-289.

[39]  CFI 18 at [59].

[40]  CFI 18 at [61]-[62].

[41]  CFI 18 at [63]-[66], Exhibit RIT-1 at pp. 302-303.

[42]  CFI 22, Exhibit JT-01, at p. 18.

[43]  CFI 18 at [63].

[44]  CFI 18 at [63].

[45]  CFI 18 at [64]-[66], Exhibit RIT-1 at pp. 298-303.

[46]  CFI 22, Exhibit JT-01, at p. 67.

[47]  CFI 22, Exhibit JT-01, at p. 68.

[48]  CFI 22, Exhibit JT-01, at p. 68.

[49]  CFI 22, Exhibit JT-01, at p. 70.

[50]  CFI 22, Exhibit JT-01, at p. 70.

[51]  CFI 22, Exhibit JT-01, at p. 70.

[52]  CFI 18 at [69]-[71].

[53]  CFI 22, Exhibit JT-01, at p. 74.

[54]  CFI 22, Exhibit JT-01, at p. 125.

[55]  CFI 22, Exhibit JT-01, at p. 140.

[56]  CFI 22, Exhibit JT-01, at pp. 184-243.

[57]  CFI 22, Exhibit JT-01, at pp. 181.

[58]  CFI 22, Exhibit JT-01, at pp. 188-189.

[59]  CFI 16, Exhibit SN-1 at p. 9-13.

[60]  CFI 18 at [80]-[81]; see CFI 16, Exhibit SN-1 at p. 13.

[61]  CFI 17 at [10]-[11].

[62]  CFI 22 at [14].

[63]  Applicant’s outline of submissions at [28]; Submissions of the Second Respondent at [5(d)(i)].

[64]  CFI 16 at [5]-[16]; CFI 18, Exhibit RIT-1 at pp. 406-407.

[65]  As pleaded in [27] of the Amended Points of Defence.

[66]  CFI 21 at [2].

[67]  CFI 21 at [26].

[68]  CFI 21 at [41].

[69]  CFI 21 at [41].

[70]  CFI 21, Exhibit ALD-01 at p. 6-12.

[71] Affidavit of A Day sworn 14 December 2021 (“CFI 25”) at [5].

[72]  T-1/1-37.

[73]  T-1/1-37.

[74]  CFI 18, Exhibit RIT-1 at pp. 251 – 252.

[75]  T-1/1-37.

[76]  T-1/1-27-28.

[77]  CFI 16, Exhibit SN-1 at p. 36.

[78]  T-1/1-31.

[79]  T-1/1-29.

[80]  T-1/1-29.

[81]  T-1/1-30.

[82]  T-1/1-33.

[83]  CFI 21, Exhibit ALD-01 at p. 7.

[84]  CFI 22 at [12].

[85]  CFI 22 at [13].

[86]  CFI 22 at [13(e)].

[87]  CFI 22 at [14], Exhibit JT-01 at p. 16.

[88]  CFI 22 at [20(c)].

[89]  T-1/1-42.

[90]  T-1/1-45.

[91]  T-1/1-44.

[92]  T-1/1-48.

[93]  (1973) 47 ALJR 586.

[94]  Submissions of the Second Respondent at [10].

[95]  Relying on Hill Equipment & Refigeration Co Pty Ltd v Nuco Pty Ltd (1992) 110 FLR 25 at 30-1.

[96]  [1980] AC 614.

[97] Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847 at 853, c.f. the position with a deed.

[98] Guthridge v Coco [2002] QSC 392 at [34]-[35] referring to Pao on v Lau Yiu Long [1980] AC 614 at 631.

[99]  (1973) 47 ALJR 586 at 594-5.

[100]   (1973) 47 ALJR 586 at 595.

[101] Hill v Forteng Pty Ltd (2019) 138 ASCR 344 at [11]-[43], where the Full Court accepted that practical benefits as consideration for a contract variation was good law in Australia.

[102] New Zealand Shipping Co. Ltd. v. A. M. Satterthwaite & Co. Ltd [1975] AC 154, 168 (“The Eurymedon”).

[103]  T-1/1-54.

[104]  (2014) 100 ACSR 524.

[105]  (2014) 100 ACSR 524.

[106]  Through entities they controlled, see (2014) 100 ACSR 524 at [5].

[107]  A person who through the operation of the law is under a public duty to act in a certain way is not regarded as furnishing consideration merely by promising to discharge that duty.

[108]  (2014) 100 ACSR 524 at [103].

[109]  With whom Buss and Murphy JJA agreed on this finding.

[110]  (2014) 100 ACSR 524 at [106].

[111] Coulls Bagot’s Executor and Trustee Co Ltd (1967) 119 CLR 460.

[112]  As to which see Heydon on Contract at [5.480].

[113] The Eurymedon at 168.

[114]  [1980] AC 614.

[115]  [1980] AC 614 at 630.

[116]  [1980] AC 614, at 631.

[117]  [1980] AC 614, at 632.

[118]  [1980] AC 614 at 626, 634.

[119]  Points of Claim at [27].

[120]  Amended Points of Defence at [27].

[121]  CFI 22, Exhibit JT-01, at p. 168.

[122]  CFI 22, Exhibit JT-01, at p. 140.

[123]  It is uncontroversial that this should have referred to the Buyer.

[124]  CFI 18, Exhibit RIT-1 at p 158 and 159. There is no dispute between the party that sellers nominated Australian subsidiary was an error and that it should have referred to Buyers nominated Australian subsidiary: Submissions of the Second Respondent at [26(b)]s.

[125]  As to the guiding principles as to when a recital can have a guiding effect see Franklins Pty Ltd v Metcash Trading Pty Ltd (2009) 76 NSWLR 603.

[126]  T1-60/41-46.

[127]  CFI 22, Exhibit JT-01, at p. 16.

[128]  CFI 22, Exhibit JT-01, at p. 70.

[129]  CFI 22, Exhibit JT-01, at p. 74.

[130]  CFI 22, Exhibit JT-01, at p. 140.

[131]  CFI 22, Exhibit JT-01, at p. 74.

[132]  CFI 22, Exhibit JT-01, at p. 181.

[133]  (1992) 110 FLR 25.

[134]  (1992) 110 FLR 25 at 31.

[135]  (1965) 109 SJ 149.

[136]  See Nick Seddon and Rick Bigwood, Cheshire & Fifoot Law of Contract (Lexis Nexis Australia, 11th Australian edition, 2017) at 4.34.

[137]  [24] Amended Points of Claim admitted [24] Points of Defence.

[138]  Although other caveats were registered.

[139]  While the provision in respect of caveats has been interpreted broadly such as in Macarthur Coal Ltd v MCG Coal Pty Ltd [2011] QLC 55 and does not support the present case being sufficient to establish an interest

[140]  C.f. a contractual right for the payment of royalties, which was found not sufficient to establish an interest that could be protected by a caveat in Nickmere Pty Ltd v Dianne Mining Corporation Pty Ltd (2012) 33 QLCR 14.

Close

Editorial Notes

  • Published Case Name:

    Jin Resources (Aus) Pty Ltd ACN 641 111 195 & Others v Steven Nicols & Anor

  • Shortened Case Name:

    Jin Resources (Aus) Pty Ltd ACN 641 111 195 & Others v Steven Nicols

  • MNC:

    [2022] QSC 158

  • Court:

    QSC

  • Judge(s):

    Brown J

  • Date:

    02 Aug 2022

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.