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CITE

Notable Unreported Decision

Tri-Star Petroleum Company v Australia Pacific LNG Pty Ltd (Formerly Oil Company of Australia Limited)[2023] QSC 83Burns J
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Tri-Star Petroleum Company v Australia Pacific LNG Pty Ltd (Formerly Oil Company of Australia Limited)[2023] QSC 83

SUPREME COURT OF QUEENSLAND

CITATION:	Tri-Star Petroleum Company & Ors v Australia Pacific LNG Pty Ltd (Formerly Oil Company of Australia Limited) & Anor [2023] QSC 83
PARTIES:	TRI-STAR PETROLEUM COMPANY ARBN 050 415 739 (first plaintiff/first defendant by counterclaim) TRI-STAR AMERICA TRADING COMPANY ARBN 082 870 371 (second plaintiff/second defendant by counterclaim) TRI-STAR AUSTRALIA HOLDING COMPANY ARBN 109 075 078 (third plaintiff/third defendant by counterclaim) WEST TEXAS OIL AND GAS CORPORATION ARBN 094 222 581 (fourth plaintiff/fourth defendant by counterclaim) v AUSTRALIA PACIFIC LNG PTY LTD (FORMERLY OIL COMPANY OF AUSTRALIA LIMITED) ABN 68 001 646 331 (first defendant/first plaintiff by counterclaim) AUSTRALIA PACIFIC LNG CSG MARKETING PTY LIMITED ABN 72 008 750 945 (second defendant/fifth plaintiff by counterclaim) AUSTRALIA PACIFIC LNG (CSG) PTY LIMITED ABN 23 099 577 769 (second plaintiff by counterclaim) AUSTRALIA PACIFIC LNG (MOURA) PTY LIMITED ABN 95 064 989 813 (third plaintiff by counterclaim) AUSTRALIA PACIFIC LNG CSG PROCESSING PTY LIMITED ABN 66 109 043 487 (fourth plaintiff by counterclaim) AUSTRALIA PACIFIC LNG MARKETING PTY LIMITED ABN 51 141 937 920 (sixth plaintiff by counterclaim) AUSTRALIA PACIFIC LNG CSG TRANSMISSIONS PTY LIMITED ABN 52 138 156 466 (seventh plaintiff by counterclaim) AUSTRALIA PACIFIC LNG GLADSTONE PIPELINE PTY LIMITED ABN 68 144 653 921 (eighth plaintiff by counterclaim) AUSTRALIA PACIFIC LNG PROCESSING PTY LIMITED ABN 43 141 937 948 (ninth plaintiff by counterclaim) AUSTRALIA PACIFIC LNG (SHARED FACILITIES) PTY LIMITED ABN 53 141 941 595 (tenth plaintiff by counterclaim)
FILE NO/S:	BS No 10110 of 2014
DIVISION:	Trial Division
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	28 April 2023
DELIVERED AT:	Brisbane
HEARING DATE:	21 April 2022
JUDGE:	Burns J
ORDER:	THE ORDER OF THE COURT IS THAT: The application filed by the plaintiffs for the referral of questions to a referee for inquiry and report is dismissed; The plaintiffs shall pay the defendants’ costs of the application to be assessed on the standard basis.
CATCHWORDS:	PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – ASSESSORS AND REFEREES – REFERRAL OF QUESTIONS TO A REFEREE – where the plaintiffs applied for an order referring certain questions in the proceeding to a referee for inquiry and report pursuant to r 501 of the Uniform Civil Procedure Rules 1999 (Qld) – where the defendants opposed the making of such an order – whether referral of the questions would be an appropriate exercise of the Court’s discretion – whether referral of the questions would facilitate the just and expeditious resolution of the real issues in the proceeding at a minimum of expense Uniform Civil Procedure Rules 1999 (Qld), r 5, r 501 Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175, cited CPB Contractors Pty Ltd v Celsus Pty Ltd & Ors (No 2) (2018) 268 FCR 590, cited Everingham v Clarke [1994] 1 Qd R 34, cited Kadam v MiiResorts Group 1 Pty Ltd (No 4) (2017) 252 FCR 298, cited LCA Marrickville Pty Limited v Swiss Re International SE (2022) 290 FCR 435, cited McConnell Dowell Constructors (Aust) Pty Ltd v Cardno (Qld) Pty Ltd & Anor [2019] QSC 320, cited Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, cited Santos Limited v Fluor Australia Pty Ltd & Anor (No 2) [2020] QSC 373, cited Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549, cited Wenco Industrial Pty Ltd v WW Industries Pty Ltd (2009) 25 VR 119, cited
COUNSEL:	A Pomerenke KC, with M G Lyons, for the plaintiffs/defendants by counterclaim S Doyle KC, with M Johnston KC and B Kabel, for the defendants/plaintiffs by counterclaim
SOLICITORS:	Jones Day for the plaintiffs/defendants by counterclaim Clayton Utz for the defendants/plaintiffs by counterclaim

[1]
By this application, the plaintiffs apply for the referral of two questions in the proceeding to a referee for inquiry and report pursuant to r 501 of the Uniform Civil Procedure Rules 1999 (Qld).

Background

[2]
Although the background to this as well an associated proceeding^[1] has been aptly described by the plaintiffs’ solicitor as “complex and lengthy, spanning multiple decades”,^[2] it is sufficient for the purposes of this application to record that the proposed questions about which this application is concerned go to only a small component of the overall case across the proceedings.^[3]
[3]
That made plain, the plaintiffs are a group of foreign companies incorporated in Texas and registered in Australia under the Corporations Act 2001 (Cth). In the 1990s, the group discovered and appraised several coal seam gas fields in Queensland and acquired authorities to prospect as well as petroleum leases with respect to those fields under the Petroleum Act 1923 (Qld). The development and operation of those tenements were, for the most part, governed by joint operating agreements (JOAs) entered into by the plaintiffs (or some of them) with other tenement holders.

[4]
The first defendant carried on business in the acquisition of interests in gas tenements, the extraction and processing of coal seam gas from those tenements, and the movement of that gas for sale. Relevantly, the group of which it and the other defendants are members developed a project for the transportation of coal seam gas extracted from various tenements to Curtis Island for cooling to liquid natural gas and then export.

[5]
By a Sale and Purchase Deed dated 14 February 2002, three of the four plaintiffs agreed to assign to the first defendant certain interests in the petroleum tenements and the JOAs in consideration for which the first defendant agreed to pay a fixed purchase price along with vendor royalties on certain defined sale proceeds. In addition, the Deed provided for the retention by the relevant plaintiffs of a 45% reversionary interest in the assigned interests which would automatically revert upon the occurrence of what is described in clause 16 of the Deed as the “Reversion Trigger”.

[6]
At least so far as the plaintiffs’ claim is concerned, one of the issues in this proceeding is whether reversion has occurred and, if so, when. The questions proposed by them for referral were said to “go to the heart” of that issue and significantly affect what else is in issue and, as such, it was submitted that referral is a “sensible and manageable way of seeking to chart a course through what would otherwise be a substantial, lengthy and expensive endeavour for all involved”. On the other hand, the defendants maintained that referral will “impede, rather than advance, the just and expeditious resolution of the real issues at a minimum of expense” and, for those reasons, they opposed the application.

The Reversion Trigger

[7]
By clauses 5.1, 5.2 and 5.3 of the Deed, the first, second and fourth plaintiffs agreed to sell to the first defendant, and the first defendant agreed to buy, particular interests that were together defined as the “Assigned Interests”. This was specified to mean all of the “Tri-Star Petroleum Assigned Interest”, the “Tri-Star America Trading Assigned Interest” and the “WTOGC Assigned Interest”: clause 1.1. Each of those interests was then further defined in clause 1.1 and these relevantly included the plaintiffs’ beneficial interest and corresponding obligations in various petroleum titles and applications for titles set out in Schedule 2 to the Deed, any title granted in replacement or renewal of, or substitution for, those titles and all of the plaintiffs’ beneficial interest and corresponding obligations in relation to various operating agreements set out in Schedule 3 to the Deed.

[8]
Clause 5.4 of the Deed made provision for “Retained Interests”. It was in these terms:

“Notwithstanding any other provision of this Deed, the agreements to sell, transfer and assign the Assigned Interests are subject to and conditional upon the retained Royalty referred to in clause 17 and Reversionary Interest referred to in clause 16.” [Emphasis added].

[9]
Clause 16 of the Deed made provision for what was described as the “Conditional Reversionary Interest”.

[10]
By clause 16.1(a) and (b), the parties to the Deed relevantly agreed that:

“(a)
[T]he sale of each of the Assigned Interests is subject to and conditional upon the relevant Vendor retaining a reversionary interest in its favour of an undivided 45% of all such Assigned Interests, which shall include any interest under permits or operating agreements issued in respect of the Permits or made by the parties in relation to any of the Permits after the date of Completion (the ‘Retained Interest’)

(b)
[T]he Purchaser shall have the full use and enjoyment of the entire interest in the Assigned Interests pending the Reversion Trigger and …” [Emphasis added].

[11]
By clause 16.2(a), provision was made for the reversion of the Retained Interest, as follows:

“When the Reversion Trigger occurs, the interests of the Purchaser in the Assigned Interests shall automatically dilute to 55% of the total of those interests in aggregate so that the Vendors shall hold the Retained Interest in the legal and beneficial interests in the Assigned Interests. For the avoidance of doubt, the parties acknowledge and agree that the reversion of the Retained Interest to the relevant Vendors does not require any further act on the part of the Vendors or Purchaser.” [Emphasis added].

[12]
The expression, “Reversion Trigger”, was defined under clause 16.3:

“The parties agree that the Reversion Trigger will be deemed to have occurred on the first day of the month following the month during which the result of the following calculation first returns a positive number (i.e., greater than zero):

Result = R - Purchase Price – COE - I - Vendor Royalty Payments - Government Royalty.” [Emphasis added].

[13]
As to that formula:

(a)
“R” was defined by clause 16.3 to mean:

“… Sales Proceeds under clause 17 plus all other Revenue as defined in clause 17.2(b)(iv)^[4] derived from or in connection with the Assigned Interests.” [Emphasis added];

(b)
“Sales Proceeds” were defined in clause 17.2 (b)(ii) to mean:

“… (for the purposes of this clause only) the Revenue to the Purchaser or any Affiliate of the Purchaser from Petroleum from the Assigned Interests transferred by the Vendors to the Purchaser under this Deed as at the Completion Date measured at the Delivery Point, without reduction for statutory royalty or any costs and the Revenue received from Petroleum is that amount that would be determined as an arms length value by the royalty section of the Department of Natural Resources and Mines under the Petroleum Act”;

“… all receipts, revenues, incomes, rights, entitlements and benefits (including future profit sharing arrangements and recoveries under consequential loss insurance to the extent they compensate for loss of receipts, revenues, incomes, rights, entitlements or benefits that if

not lost, would have constituted Revenue), without any deductions, set offs or adjustments of any kind”;

(d)
“Assigned Interests” were defined by clause 17.2(b)(iv):

“… in this clause only, includes any tenement, title or right granted pursuant to the Act or otherwise in substitution for or in replacement of a tenement or a previous replacement tenement forming part of the Assigned Interests, or granted over all or any part of the area formerly covered by the tenement or a previous replacement tenement forming part of the Assigned Interests immediately on or at any time after the expiration or surrender of such tenement or part of such tenement, provided that the Purchaser or any Affiliate or Successor in Title of the Purchaser has an interest in such tenement, and includes any extension or renewal of any such tenement”;

(e)
“Purchase Price” was specified to be US$20,000,000: clause 16.3;

(f)
“COE” was defined to mean “all expenditure relating to the Assigned Interests (being all capital, operating and overhead expenditure undertaken by the Purchasers on the [reversionary tenements pursuant to the JOAs]”: clause 16.3;

(g)
“I” was specified to be interest on the figure for COE at the rate of 8% per annum from the completion date, calculated at monthly rests: clause 16.3;

(h)
“Vendor Royalty Payments” was defined to mean all amounts payable to the Vendors as vendor royalties under clause 17: clause 16.3; and

(i)
“Government Royalty” was defined as “all royalties paid to the Queensland Government on production of petroleum corresponding to the Assigned Interests”: clause 16.3.

[14]
The Deed was varied on 3 June 2002, but not in any way that is material to the outcome of this application. Then, on 15 June 2004, the parties to the Deed agreed, amongst other things, that the rights and obligations of the first, second and fourth plaintiffs under the Deed be respectively assigned to, and assumed by, the third plaintiff.

[15]
At the time when the Deed was executed, the sole shareholder of the first defendant was Origin Energy Ltd. Subsequently, ConocoPhillips Australia and Sinopec Australia Pacific LNG Pty Ltd became shareholders in the first defendant and, therefore, joint venturers with Origin Energy.

[16]
As to these transactions, it is important to record that on or about 29 October 2008, ConocoPhillips paid the first defendant the sum of $7,562,688,343 in respect of 100 million ordinary shares in the company. By reference to several ASX announcements made at the time by Origin Energy as well as a report prepared by Grant Samuel as to the value of the shares, the plaintiffs contend in this proceeding that this transaction represented the first “monetisation” of the first defendant’s coal seam gas assets including the interests assigned under the Deed. The first defendant subsequently issued shares to Sinopec on (it seems) 9 August 2011 for US$1,764,705 and on 20 January 2012 for more than US$1.1 billion, subscriptions that the plaintiffs also contend were in truth further “monetisations” of the first defendant’s coal seam gas assets.

The proceeding and this application

[17]
This proceeding was commenced by claim in October 2014. By part of it, the plaintiffs allege that, when regard is had to the receipt by the first defendant of the subscription monies just discussed, the Reversion Trigger must be taken to have occurred no later than on one of a range of four possible dates commencing on 1 November 2008 and ending on 1 August 2012.^[5] They point to clause 16.3 of the Deed, providing as it does that the Reversion Trigger will be deemed to have occurred on the first day of the month following the month during which the result of a calculation carried out in accordance with the formula prescribed by that clause returns a positive number and to the feature that “R” is the only positive element of that formula, with all other elements operating by way of deduction from “R”. The plaintiffs therefore allege that once “R” is large enough to exceed all deductions, the Reversion Trigger must be deemed to have occurred. As to this, they maintain that regardless of the other subscription payments, the “sheer quantum” of the first ConocoPhillips payment is such that if it falls within the definition of “R” the Reversion Trigger will inevitably have occurred. Also of relevance to this application is the plaintiffs’ complaint in this proceeding that the first defendant has not paid royalties to them with respect to coal seam gas extracted from the tenements and sold as liquid natural gas, that is to say, the agreed Vendor Royalties.

[18]
On these issues, the plaintiffs claim declaratory, injunctive and ancillary relief to establish the alleged reversion, and to ensure the performance of the defendants’ obligation to facilitate that reversion along with damages for breach of contract for the alleged sale of the plaintiffs’ gas since reversion or, alternatively, equitable compensation or an account of profits. Relief is also sought to establish the amount of unpaid royalties the plaintiffs should have been paid and to require the defendants to make good any underpayment together with interest.

[19]
Of course, fundamental to the plaintiffs’ case on the alleged reversion is the proposition that the subscription monies, either in whole or in part, fall within the definition of “other Revenue … derived from or in connection with the Assigned Interests” within the definition of “R” in the calculation of the Reversion Trigger. If that is not so, then regard of course cannot be had to those monies when calculating the Reversion Trigger. In this regard, the plaintiffs maintain that “R” was “defined in the widest possible terms” and that the “evident commercial purpose of doing so was to ensure that any and all receipts or benefits derived by [the first defendant] from or in connection with the Assigned Interests would be captured regardless of the particular method of monetisation adopted”.

[20]
For their part, the defendants have pleaded that on the proper construction of the Deed: “Revenue” is limited to receipts in the nature of revenue or income, and not receipts in the nature of capital; the subscription payments were not “derived from or in connection with the Assigned Interests” because they were made to subscribe for shares in the first defendant; and the Deed contains no mechanism for disaggregating amounts received from the issue of shares so as to apportion them to the various assets held by the first defendant at the time of issue. They contend that the evident commercial purpose of the Deed and the reversion provisions is to facilitate the development and exploitation of the “Assigned Interests” by the first defendant (which might well require it to raise funds by issuing shares for that purpose) and then to provide for a partial reversion once the first defendant had been “paid back” the money expended by it in that development (plus interest)”.

[21]
With the battle lines on this construction issue so drawn, the plaintiffs submitted that the “real dispute between the parties” is as to whether the first ConocoPhillips Payment falls within the definition of “R” under clause 16.3 of the Deed.

[22]
To that end, the plaintiffs sought by this application to have the following questions referred to a referee^[6] for inquiry and report under r 501 UCPR:

“1.
Is the payment of $7,562,688.343.91 made to the first defendant by ConocoPhillips Australia Pacific LNG Pty Ltd on or about 29 October 2008 (the First ConocoPhillips Payment) wholly or partly:

(a)
“Revenue” within the meaning of that term as defined in clause 17.2(b)(v) of the Sale and Purchase Deed dated 14 February 2002 between the first, second and fourth plaintiffs and the first defendant (the 2002 Deed); and
(b)
“other Revenue... derived from or in connection with the Assigned Interests” within the meaning of the definition of “R” in clause 16.3 of the 2002 Deed?

2.
If the answer to questions (a) and (b) is “yes”, what part of the First ConocoPhillips Payment constitutes “other Revenue... derived from or in connection with the Assigned Interests” within the meaning of the definition of “R” in clause 16.3 of the 2002 Deed?” [Emphasis in original]

[23]
For completeness, I record that the associated proceeding^[7] was commenced in December 2016. It is said to be the vehicle for three principal claims by the plaintiffs – a markets claim, an infrastructure claim and a joint accounts claim.

[24]
According to the summary offered by the plaintiffs in their submissions, by the markets claim the plaintiffs allege that the first defendant failed to offer them the opportunity to participate in various LNG and domestic gas markets, by the infrastructure claim the plaintiffs allege that they have interests or rights to ownership and access in relation to particular infrastructure necessary to process and transport its share of gas to market and by the joint accounts claim the plaintiffs allege that the first defendant has for a long time improperly charged costs to the joint accounts maintained pursuant to various JOAs. The two proceedings have not been consolidated but have been case-managed together and it is expected that a trial of both proceedings will be held concurrently.

Should the proposed questions be referred to a referee?

[25]
Rule 5 UCPR is, so far as is relevant, in these terms:

“Philosophy—overriding obligations of parties and court

(1)
The purpose of these rules is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.
(2)
Accordingly, these rules are to be applied by the courts with the objective of avoiding undue delay, expense and technicality and facilitating the purpose of these rules.
(3)
…”

[26]
Rule 501 UCPR provides:

“Court may refer question to referee

(1)
The court may, at any stage of a proceeding, make an order referring a question in the proceeding to a referee to—
1. conduct an inquiry into the question; and
2. prepare a report (the referee’s report) to the court on the question.
(2)
However, the court may not make an order under subrule (1) in relation to a question that is required to be tried by a jury.
(3)
An order under subrule (1)—
1. must appoint a person as the referee for the question; and
2. must state the question for the referee; and
3. must require the referee to decide the question or give the referee’s opinion on the question; and
4. may direct the referee to give further information in the referee’s report as the court considers appropriate.
(4)
In this rule—

question means a question—

(a)
whether of fact or law, or both; and
(b)
whether identified by the court or raised by pleadings, agreement of the parties or otherwise.” [Emphasis in original]

[27]
The court may give directions about the conduct of the inquiry before the referee,^[8] and this power would appear to be wide enough to permit the making of directions to the effect that the relevant question be determined on evidence that would be admissible at trial. Absent such a direction, the referee is not bound by the rules of evidence and could obtain information about a matter in any way the referee considers appropriate.^[9]

[28]
On receipt of a report from a referee, the court may accept, vary or reject all or part of the referee’s decision, opinion or findings, decide any matter on the evidence given before the referee, with or without additional evidence, and make an order or give a judgment in the proceeding on the basis of the decision, opinion or findings in the report as it considers appropriate.^[10] At such an adoption hearing, evidence additional to the evidence given before the referee may not be adduced before the court in relation to the question which is the subject of the inquiry except with the leave of the court.^[11]
[29]
There can be no doubt that, unlike the power that previously existed to appoint a special referee,^[12] r 501 UCPR confers a broad discretion on the court to refer a question in a proceeding to a referee for inquiry and report and that power is not merely confined to questions of fact. Indeed, the reference may concern a question of fact or law, or both, and may be a question identified by the court or raised by pleadings, agreement of the parties or otherwise.^[13] That broadening of power came about when amendments to the Supreme Court Act 1991 (Qld) were passed on 12 July 2019^[14] which authorised the making of rules in relation to “referees” (as opposed to “special referees”).^[15] Those rules – rr 501 to 506 UCPR – were made on the same day for the purpose of, it was explained, facilitating the “increased use of referees in Queensland civil proceedings to assist in the effective and expeditious completion of court business”.^[16] Much the same purpose is of course reflected in the philosophy embedded in r 5 UCPR and such an aim otherwise aligns with the trend of civil case management in this country to increasingly recognise that litigation should, amongst other things, be supervised in ways that promote the sensible and efficient use of the public resources that are our courts.^[17]
[30]
It is therefore unsurprising that, as the plaintiffs submitted, the exercise of the discretion under r 501 UCPR will be informed by whether the referral will advance the just and expeditious resolution of the real issues in the proceeding at a minimum of expense (including whether it will avoid undue delay, expense and technicality).^[18] Thus, whether a question ought be referred under that rule is, first and last, a case management decision.

[31]
The plaintiffs bear the onus of demonstrating that their proposal will accord with a proper exercise of the discretion conferred by r 501 UCPR.

[32]
At first glance, the plaintiffs’ proposal may seem to be a sensible case management option because it might resolve in advance of any trial a real issue in the proceeding with all the accompanying benefits this might have, including relieving the court from having to decide that issue, reducing thereby the length of the trial and promoting the prospects of settlement of the wider proceeding. If that is accepted, the plaintiffs’ proposal might very well advance the just and expeditious resolution of the real issues in the proceeding at a minimum of expense. However, on closer inspection, I am not at all persuaded that will be so.

[33]
First, it would be to say the least illusory to pluck from the morass that is this proceeding a construction question (Q.1) and associated factual enquiry (Q.2) while ignoring the much wider dispute which divides the parties. Although I earlier summarised the defendants’ pleaded response on the construction of “R”,^[19] that is only part of their overall response. More broadly, the defendants have pleaded, amongst other things, that the plaintiffs’ conduct since 2008 gave rise to representations on which the defendants relied to the effect that the ConocoPhillips and Sinopec payments were not to be included in “R” and that the Reversion Trigger had not occurred, that the plaintiffs are estopped from alleging that the Reversion Trigger has occurred by reason of the subscription payments and that the plaintiffs’ claims are barred or they are disentitled to relief by reason of laches, acquiescence or unclean hands.

[34]
It is therefore wrong to think that, without more, the size of the first ConocoPhillips payment means that the result of the Reversion Trigger calculation must be a positive number or that it is for that reason unnecessary for the other disputed elements of the calculation to be determined (i.e., “COE”, “I” and the “Vendor Royalties”) or for the “Assigned Interests” to be identified and characterised. To the contrary, regardless of any finding by a referee as to whether the first ConocoPhillips payment is wholly or partly “R”, in the absence of a determination by the court of the defendants’ defences and counterclaims, there can be no finding as to the occurrence of reversion. Once that point is appreciated, it should be seen that what is proposed by the plaintiffs takes on an air of artificiality.

[35]
Second, although I do not doubt that the question whether the first ConocoPhillips payment is to be included in the Reversion Trigger calculation is an issue of some moment in this proceeding, it is by no means the only issue and it is an issue which is inextricably linked with other issues in the proceeding, some of which will depend on an assessment of evidence (both lay and expert) that is common to both that question and the other issues.

[36]
Indeed, without even going beyond the reversion formula, those other issues include whether the “Assigned interests” include certain tenements and infrastructure, whether “I” is to be calculated on the gross amount of “COE” and, if so, whether the Deed is to be rectified (either in equity or under s 87 of the Trade Practices Act 1974 (Cth)), whether “COE” is limited to amounts properly chargeable to certain accounts and whether there is any amount unpaid by way of Vendor Royalties.

[37]
There will also likely be background facts in issue between the parties that might need to be taken into account on the proper construction of the Deed. Although the admissibility of evidence of that type is said by the plaintiffs to be far from assured, both sides contend for a construction of the reversionary provisions in accordance with a particular, but different, commercial purpose. It may therefore be that evidence of extrinsic facts will be relevant and admissible not only on the proper construction of the Deed to the extent of any relevant ambiguity but also on the objective facts and circumstances known to the parties going to the genesis of the transaction as well as the background and context in which the parties were operating when entering into the Deed.^[20]
[38]
In the result, there will in all probability be any number of contested factual issues, including issues of credit, that will require the calling of several of the same witnesses on the reference as will need to be called at any trial. That means that if the proposed questions are referred to a referee the same evidentiary ground will have to be traversed twice and, if the report of the referee is contested at the adoption hearing stage, thrice.

[39]
Third, four of the six variables in the formula are contested in the proceeding – namely, “R”, “COE”, “I” and “Vendor Royalty Payments” – but the proposed questions go to only one of those variables – “R”. In that regard, “R” has two components – (1) “Sales Proceeds” and (2) “plus all other Revenue … derived from or in connection with the Assigned Interests” – both of which are in issue in this proceeding but only the latter of which is engaged by the proposed questions. Furthermore, as the defendants submitted, many of the variables in the formula have “intertwined components and definitions”. For example, both “R” and “Vendor Royalty Payments” refer to “Sales Proceeds”, the definition of “Sales Proceeds” in turn refers to “Revenue” and the “Assigned Interests”, the definition of “R” refers to “Revenue” and the “Assigned Interests”, the definition of “COE” refers to the “Assigned Interests” and “I” refers to “COE”.

[40]
Plainly, in determining the scope and meaning of “R”, it will be necessary to have regard to the other uses of that defined term within clause 16.3 of the Deed and that will necessarily require a consideration of other claims which concern the same defined terms. It would be short-sighted to construe “R” in isolation from, and before, the other variables are construed. The proper approach is to identify the commercial purpose of the Deed, and the reversion provisions within it, construed as a whole and in their proper context.

[41]
Last, as I touched on earlier,^[21] any report by a referee will not finally determine the proposed separate questions. Rather, the court may at the adoption hearing vary or reject all or part of the decision, opinion or findings in the report, or decide any matter on the evidence given before the referee, with or without additional evidence. Further, where a party is dissatisfied with the referee’s conclusion as to a question of law or the application by the referee of legal standards to established facts, the court will need to consider and determine such a matter afresh.^[22]

[42]
So, in truth, what the plaintiffs have proposed will, if ordered, impose two substantial hearings on the defendants over their objection. That would of course not follow if the report is ultimately accepted by the parties and the court, but my firm impression from the material advanced on the hearing of this application is that any report by a referee on the proposed questions will need to be treated as provisional, at best, because its delivery will be accompanied by the high probability that it will be challenged at the adoption hearing by the disappointed parties. One need only reflect on the wide gulf that already exists between the parties on the first of the two proposed questions to accept that this would be so.

[43]
Ultimately, and as I have explained,^[23] the fate of this application depends on whether referral will facilitate the just and expeditious resolution of the real issues in the proceeding at a minimum of expense. In most cases, that will be a matter of impression. Here, for the reasons I have just given, I am not persuaded that those objectives, or any of them, will be achieved by such a referral. To the contrary, my impression is that the proposed reference would achieve little to advance the proper resolution of the case.

Orders

[44]
For these reasons, the application must be dismissed with costs.

[45]
There remains the question of what (if any) orders should be made to manage the proceeding. Much will depend I suspect on progress in the associated proceeding but, regardless, because both proceedings are already the subject of court supervision that will be a matter for the supervising judge.

Footnotes

[1] Tri-Star Petroleum Company & Ors v Australia Pacific LNG Pty Ltd & Ors, Number BS4026 of 2014.

[2] The pleadings in this proceeding run to over 4,000 pages and, in the associated proceeding, to almost 1,000 pages.

[3] Transcript 1-29, 1-50.

[4] In this regard, the Deed contains what the parties agree was an error; “clause 17.2(b)(iv)” should be read as a reference to “clause 17.2(b)(v)”.

[5] It should be noted, however, that the plaintiffs’ primary case is that the Reversion Trigger occurred on 1 November 2008, being the first day of the month following the month in which the first defendant received $7,562,688,343.91 from ConocoPhillips in respect of the issue of 100 million shares.

[6] In that regard, the Order proposed by the plaintiffs envisages that the referee be chosen from a panel of five eminent Australian lawyers.

[7] Tri-Star Petroleum Company & Ors v Australia Pacific LNG Pty Ltd & Ors, Number BS4026 of 2014.

[8] Rule 505(1) UCPR.

[9] Rule 503(1)(b) UCPR.

[10] Rule 505D(1) UCPR.

[11] Rule 505D(3) UCPR.

[12] See, for example, the discussion in Everingham v Clarke [1994] 1 Qd R 34, 37, a case decided by reference to the power to appoint a special referee under s 12 of the Judicature Act 1876 (Qld).

[13] Rule 501(4) UCPR.

[14] Queensland Civil and Administrative Tribunal and Other Legislation Amendment Act 2019 (Qld), Part 6.

[15] See Uniform Civil Procedure (Referees) Amendment Rule 2019.

[16] Explanatory Notes for SL 2019 No. 135 (Uniform Civil Procedure (Referees) Amendment Rule 2019), p 1.

[17] See Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175, [113]. And see more specifically on the topic of referees, Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549; Kadam v MiiResorts Group 1 Pty Ltd (No 4) (2017) 252 FCR 298; CPB Contractors Pty Ltd v Celsus Pty Ltd & Ors (No 2) (2018) 268 FCR 590.

[18] See McConnell Dowell Constructors (Aust) Pty Ltd v Cardno (Qld) Pty Ltd & Anor [2019] QSC 320,[37]; Santos Limited v Fluor Australia Pty Ltd & Anor (No 2) [2020] QSC 373, [21].

[19] At [20].

[20] As to which, see Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104,[48]-[50]; LCA Marrickville Pty Limited v Swiss Re International SE (2022) 290 FCR 435, [56]-[58].

[21] At [28].

[22] Wenco Industrial Pty Ltd v WW Industries Pty Ltd (2009) 25 VR 119, [17].

[23] At [30].

Editorial Notes

Published Case Name:
Tri-Star Petroleum Company & Ors v Australia Pacific LNG Pty Ltd (Formerly Oil Company of Australia Limited) & Anor
Shortened Case Name:
Tri-Star Petroleum Company v Australia Pacific LNG Pty Ltd (Formerly Oil Company of Australia Limited)
MNC:
[2023] QSC 83
Court:
QSC
Judge(s):
Burns J
Date:
28 Apr 2023
White Star Case:
Yes

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Cases Cited List of Cases Cited by this judgment

Case Name	Full Citation	Frequency
Aon Risk Services Australia Limited v Australian National University	View on:JADE(2009) 239 CLR 175	2 citations Jump To Cite 1 - (2009) 239 CLR 175 Cite 2 - (2009) 239 CLR 175
CPB Contractors Pty Ltd v Celsus Pty Ltd & Ors (No 2)	(2018) 268 FCR 590	1 citation Jump To Cite 1 - (2018) 268 FCR 590
Everingham v Clarke	[1994] 1 Qd R 34; [1992] QSC 421	2 citations Jump To Cite 1 - [1994] 1 Qd R 34 Cite 2 - [1994] 1 Qd R 34
Kadam v MiiResorts Group 1 Pty Ltd (No 4)	(2017) 252 FCR 298	2 citations Jump To Cite 1 - (2017) 252 FCR 298 Cite 2 - (2017) 252 FCR 298
LCA Marrickville Pty Limited v Swiss Re International SE	(2022) 290 FCR 435	1 citation Jump To Cite 1 - (2022) 290 FCR 435
McConnell Dowell Constructors (Aust) Pty Ltd v Cardno (Qld) Pty Ltd	[2019] QSC 320	2 citations Jump To Cite 1 - [2019] QSC 320 Cite 2 - [2019] QSC 320
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd	View on:JADE(2015) 256 CLR 104	1 citation Jump To Cite 1 - (2015) 256 CLR 104
Santos Limited v Fluor Australia Pty Ltd & Anor (No 2)	[2020] QSC 373	2 citations Jump To Cite 1 - [2020] QSC 373 Cite 2 - [2020] QSC 373
Super Pty Ltd v SJP Formwork (Aust) Pty Ltd	View on:NSWLR(1992) 29 NSWLR 549	2 citations Jump To Cite 1 - (1992) 29 NSWLR 549 Cite 2 - (1992) 29 NSWLR 549
Wenco Industrial Pty Ltd v WW Industries Pty Ltd	View on:VR(2009) 25 VR 119	2 citations Jump To Cite 1 - (2009) 25 VR 119 Cite 2 - (2009) 25 VR 119

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Tri-Star Petroleum Company v Australia Pacific LNG Pty Ltd (Formerly Oil Company of Australia Limited)[2023] QSC 83