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Hangri Investments Pty Ltd v Active Resources Inc[2025] QSC 12

Hangri Investments Pty Ltd v Active Resources Inc[2025] QSC 12

SUPREME COURT OF QUEENSLAND

CITATION:

Hangri Investments Pty Ltd v Active Resources Inc [2025] QSC 12

PARTIES:

HANGRI INVESTMENTS PTY LTD

(plaintiff/applicant)

v

ACTIVE RESOURCES INC

(first defendant/respondent)

JON ERIC NIX

(second defendant/respondent)

ARROW RESOURCES LTD

(third defendant/respondent)

FILE NO/S:

BS No 2992 of 2023

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

10 February 2025

DELIVERED AT:

Brisbane

HEARING DATE:

30 October 2024

JUDGE:

Martin SJA

ORDERS:

The applicant to bring in minutes of order.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – PARTIES – JOINT AND JOINT AND SEVERAL CONTRACTORS – where the applicant commenced proceedings against the respondents – where the respondents, as joint contractors, entered into a deed of settlement with the applicant to resolve the proceedings – where the deed required the first respondent to make payment of the settlement sum to the applicant –  where the deed contained a forbearance clause that remained operable until valid termination of the deed by any party or full payment of the settlement sum – where the first respondent defaulted in its obligations under the deed – where the applicant purported to unilaterally terminate the deed and seek judgment against the first respondent – where the applicant also sought summary judgment against the third respondent – whether the obligations created by the deed were joint in nature – whether the deed was validly terminated unilaterally against the respondents as joint contractors

Uniform Civil Procedure Rules 1999 (Qld), r 292

Carringville Pty Ltd v The Gatto Group Pty Ltd [2003] NSWSC 123, considered

General Credits (Finance) Pty Ltd v Fenton Lake Pty Ltd [1985] 2 Qd R 6, applied

Lion White Lead v Rogers (1918) 25 CLR 533, considered

Legal Services Commissioner v Sheehy [2019] 1 Qd R 541; [2018] QCA 151, considered

Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560; [2019] HCA 32, considered

National Australia Bank v McBride [2011] QSC 52, cited

COUNSEL:

M Martin KC for the plaintiff/applicant

A Rae for the defendants/respondents

SOLICITORS:

Mills Oakley for the plaintiff/applicant

Dentons for the defendants/respondents

  1. [1]
    Active Resources is incorporated in the State of Delaware in the United States of America. It holds interests in some coal mining ventures in West Virginia. Mr Nix is a director and the chief executive officer of Active Resources. Arrow Resources is a company incorporated in Australia, which has acquired all issued shares in Active Resources.
  2. [2]
    Arrow Resources was incorporated to raise capital for Active Resources’ mining ventures in the United States, which it did through the sale of convertible notes and by having itself listed on the Australian Securities Exchange.
  3. [3]
    Hangri is a company incorporated in Australia. In 2021, Hangri paid US$12 million to Arrow Resources pursuant to convertible note agreements. In February 2022, Hangri subscribed for US$3 million worth of shares in Arrow Resources, and in March it then purchased US$1 million worth of shares in Arrow Resources from Mr Nix.
  4. [4]
    In March 2023, Hangri commenced these proceedings in which it alleged that Active Resources and Mr Nix had engaged in misleading and deceptive conduct. Default judgment was entered against Active Resources. Mr Nix and Arrow Resources defended the proceeding.
  5. [5]
    After some negotiations, the parties entered into a deed of settlement. Under that deed, each party agreed to “refrain and forbear from commencing or further pursuing against any other Party, in any form or manner whatsoever, any Claim with respect to the Dispute, including the Proceeding” (the “forbearance clause”).
  6. [6]
    The terms of the deed are considered below.
  7. [7]
    Active Resources defaulted in its obligations under the deed and Hangri purported to terminate it on the basis of that default. In this application, Hangri seeks judgment against Active Resources for US$9,212,621. That was not opposed.
  8. [8]
    Hangri also seeks summary judgment against Arrow Resources for US$1,922,433. Arrow Resources opposes that on the basis that the deed has not been validly terminated and, therefore, the forbearance clause still works in its favour.
  9. [9]
    For the reasons which follow, I find that Hangri is entitled to judgment.

The deed of settlement

  1. [10]
    The parties to the deed were:
    1. Active Resources, Mr Nix and Arrow Resources (collectively the “Company Parties”), and
    2. Hangri and three others who are not parties to the proceeding (collectively the “Investor Parties”).
  2. [11]
    Under clause 2.1 each party to the agreement agreed to “refrain and forbear from commencing or further pursuing against any other Party, in any form or manner whatsoever, any Claim with respect to the Dispute, including the Proceeding”. Without limiting the generality of that forbearance, the Investor Parties explicitly agreed, among other things, that they shall not “seek to collect payment on the Convertible Notes” or “seek summary judgment against Arrow”.
  3. [12]
    By clause 2.1(c), that forbearance operates until the earlier of “the valid termination of this Deed by any Party” and “the payment of the Settlement Sum”. Hangri is, by definition, a “Party”.
  4. [13]
    Under clause 2.2, Active Resources agreed to pay Hangri US$11,212,621 in four instalments – the Settlement Sum.
  5. [14]
    Clause 8 provides that: “Should Active default in payment of any of [the instalment payments] then upon default the Settlement Sum (less any instalment amount paid) becomes immediately due and owing and Active will consent to judgment against it in the Supreme Court of Queensland, Brisbane Registry in the amount of the Settlement Sum (less any instalment amount paid).”

Active Resources defaults

  1. [15]
    Active Resources paid the first instalment of US$2 million, but not the second or third instalment payments which were due to be paid in June and July of 2024.
  2. [16]
    On 30 September 2024, the solicitor for Hangri sent a letter to the US lawyer acting for all three defendants. It referred to the first and third defendants in the subject line and in the body of the letter to the deed of settlement. It stated: “Our client Hangri Investment [sic] Pty Ltd[1] with the support of QOC Founder Nominees Pty Ltd gives notice that it hereby terminates, with immediate effect the June 2024 agreement due to your client’s breach.”
  3. [17]
    On 15 October 2024 Hangri filed this application, seeking judgment against Active Resources in the sum of US$9,212,621 and summary judgment against Arrow Resources in the sum of US$1,922,433 under r 292 of the Uniform Civil Procedure Rules 1999 (UCPR).
  4. [18]
    For the judgment sum against Active Resources, the plaintiff relied on clause 8 of the settlement deed. Active Resources conceded that the settlement deed required it to consent to judgment in the unpaid amount of the settlement sum. It so consented and an order was made at the hearing.

The case against Arrow Resources

  1. [19]
    The sum of US$1,922,433 sought against Arrow Resources relates to interest said to be payable on the convertible notes. In support of summary judgment for that amount, Hangri relies upon the statement of claim and various admissions made by Arrow Resources in its defence.
  2. [20]
    Arrow Resources argues that the forbearance in clause 2.1 precludes Hangri from seeking summary judgment against it. It did not otherwise seriously dispute the debt. Hangri argues that the settlement deed was validly terminated by its letter of 30 September 2024, and that it is free to bring this application.
  3. [21]
    The dispute between Hangri and Arrow Resources is whether, on the proper construction of the settlement deed, the forbearance contained in clause 2.1 continues to operate in defence of Hangri’s claim, or whether the settlement deed was validly terminated.
  4. [22]
    Arrow Resources raised two related arguments as to why the agreement remains on foot:
    1. first, that the deed and the general law of contract did not allow Hangri to unilaterally terminate the settlement deed; and
    2. secondly, by relying on clause 8 against Active Resources, Hangri treats the agreement as remaining on foot.

Could Hangri unilaterally terminate the deed?

  1. [23]
    Arrow Resources argues that any right Hangri might have to terminate the agreement can only be as against the party in breach. Thus, it is argued, Hangri can only terminate so far as Active Resources is concerned.
  2. [24]
    The position of parties with joint obligations was considered in Lion White Lead v Rogers[2]. In that case, Rogers had invented a process of manufacture and engaged Blackman to assist in the sale of the process. Rogers and Blackman agreed to give Fletcher an option to purchase the process in consideration of them receiving a 20% interest in a company which would be created and would have a working capital of £20,000. The company (Lion White Lead) was formed, but it did not achieve the necessary working capital. Rogers obtained an order (among other relief) that the sale agreement was not binding upon him or him and Blackman.
  3. [25]
    Rogers had, alone, sued the other parties. On appeal it was argued that, as Rogers and Blackman were joint contractors, they must agree between themselves whether they would elect to affirm or disaffirm the contract. In deciding this point, Isaacs and Rich JJ dealt, first, with the position that obtains where a party renounces a contract before the time for performance arrives and, secondly, where time for performance has arrived and a party actually breaches the contract. They said:

“If A and B jointly agree with C, and if C announces, before the normal moment of performance arrives, that he renounces the contract, it is competent for A and B jointly to accept that renunciation, and to terminate the contract. But that is a new agreement, and requires the assent of all. A may refuse, and if so B and C must abide by the bargain until the time for actual performance arrives. The contract may or may not then be normally performed. But once that time has arrived, if C commits an actual breach going to the root of the bargain, A has a right, by virtue of the contract already made, to say he will not proceed further, and he may refuse notwithstanding B's desire to waive his rights and proceed. The same necessity of a new bargain which in the case first put prevents A from altering the existing position prevents B in the second case from affecting A's accrued rights. It is the second case that arises here. The time for performance having arrived and an actual fundamental breach having occurred, Rogers is entitled to say — "I will not proceed further. There is nothing to compel me.” [3]

  1. [26]
    The effect of this decision was summarised in Glanville Williams on Joint Obligations[4] in this way:

“Where A contracts with B and C, and A breaks his contract, B may rescind for the breach even though C wishes to affirm the contract”.

  1. [27]
    The difference which may arise between several contracts each made by a tenant in common and a contract made by joint tenants was considered by Young CJ in Eq in Carringville Pty Ltd v The Gatto Group Pty Ltd[5]. He said that, ordinarily, one joint owner can give a tenant notice to quit which will bind all, but a tenant in common may only give a notice in respect of his or her undivided share. In this case, the only possible approach is to construe the deed as one joint agreement. This arises from the nature of the consideration and the description of the two groups of parties to the deed.
  2. [28]
    I acknowledge that cl 1.2(o) of the deed provides that, unless the context requires otherwise, an obligation or liability assumed by, or a right conferred on, two or more parties binds or benefits all of them jointly and each of them severally. But, for the reasons which follow, I am of the view that the relevant obligations created by the deed are joint in nature. The forbearance does not flow one way – each party has agreed to refrain and forbear from commencing actions against any other party and that interlocking forbearance comes to an end if the deed is validly terminated by any party – cl 2.1(c)(i).
  3. [29]
    A similar approach was taken in Legal Services Commissioner v Sheehy[6]. That case concerned an appeal against a decision of the Queensland Civil and Administrative Tribunal which had dismissed an application that Ms Sheehy should have been disciplined for her conduct of a conveyancing matter. The circumstances of the appeal required the court to consider whether the particular contract could be terminated at the election of one, but not both of the sellers. McMurdo JA (with whom Philippides JA and Douglas J agreed) referred to Lion White Lead and summarised the relevant portion of the reasons in this way: “in the case of the second kind, the contract might be terminated by the unilateral act of one innocent party, despite the preparedness of the other to keep the contract on foot.” In this case it is Hangri which is the innocent party.
  4. [30]
    The effect of Arrow Resources’ argument is that it wishes to maintain the immunity from suit which was premised upon the continuation of the Deed or the payment of the Settlement Sum. The Deed provides that the Proceeding (which forms part of the Dispute – cl 1.1) will be dismissed by Hangri upon payment of the Settlement Sum. Hangri is not obliged to do that given the failure to pay the Settlement Sum.
  5. [31]
    For the foregoing reasons, Hangri was entitled to terminate the Deed.
  6. [32]
    It was also faintly argued that the letter of 30 September 2024 from Hangri’s solicitor was ineffective to terminate the deed because it was sent to the US lawyer acting for all the defendants and contained the following: “Our client Hangri Investment Pty Ltd … gives notice that it hereby terminates, with immediate effect the June 2024 agreement due to your client’s breach.” It was contended by Arrow Resources that was ineffective because neither the client nor the asserted breach was identified. The relevant effect is the purported termination on the basis of a breach. The only client which had an obligation under the deed which could have been breached was Active Resources. This was sufficient notice to constitute a termination if otherwise available.

Has Hangri treated the Deed as remaining on foot? 

  1. [33]
    Active Resources argues that because Hangri has relied upon cl 8 against Arrow Resources it should be regarded as treating the deed as remaining on foot. I do not accept that argument. Clause 8 provides that, in the case of default in payment, the whole Settlement Sum (less any instalment amount paid) becomes immediately due and owing. That was a right which accrued to Hangri before the termination.
  2. [34]
    The principle was expressed in Mann v Paterson Constructions Pty Ltd[7] in the following way:

“[167] At least since the decision of Dixon J in McDonald v Dennys Lascelles Ltd, it has been accepted that, where a party to a contract elects to accept the other party’s repudiation of the contract, both parties are released from contractual obligations which are not yet due for performance, but existing rights and causes of action continue unaffected. Dixon J explained the position thus:

“When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected. When a contract is rescinded because of matters which affect its formation, as in the case of fraud, the parties are to be rehabilitated and restored, so far as may be, to the position they occupied before the contract was made. But when a contract, which is not void or voidable at law, or liable to be set aside in equity, is dissolved at the election of one party because the other has not observed an essential condition or has committed a breach going to its root, the contract is determined so far as it is executory only and the party in default is liable for damages for its breach.” (Emphasis added, citations omitted)

  1. [35]
    That exposition demonstrates the basis for Hangri’s capacity to recover against Active Resources. So far as Arrow Resources is concerned, the cause of action against it existed separately. Although the deed has come to an end, that cause of action remains on foot.

What does Arrow Resources owe?

  1. [36]
    It was agreed in one of the recitals to the deed that, at the time of entering into the deed, Arrow Resources owed Hangri US$1,182,246.58 in accrued interest. Interest continued to accrue from that time until 6 June 2024 which increased that amount. The parties agreed that the relevant amount is US$1,911,452.06.
  2. [37]
    The case for Arrow Resources was based upon the arguments concerning termination and it has not succeeded. Hangri relies upon General Credits (Finance) Pty Ltd v Fenton Lake Pty Ltd[8] for the proposition that an agreement compromising a proceeding may be summarily enforced by an application in the proceeding provided that the court is clearly satisfied that justice can be done under the summary procedure. It was not contended that, apart from the argument concerning construction of the Deed, there was any defence to the application. I am satisfied that justice can be done under this procedure in those circumstances.

Disposition

  1. [38]
    The applicant (Hangri) is to bring in minutes of order reflecting these reasons. I will hear the parties on costs.

Footnotes

[1]  In the deed of settlement Hangri is described as Hangri Investment Pty Ltd rather than Hangri Investments Pty Ltd.

[2]  (1918) 25 CLR 533

[3]  25 CLR 533 at 551. Barton J agreed.

[4]  Butterworths, London, 1949 at p 157

[5]  [2003] NSWSC 123

[6]  [2018] QCA 151

[7]  (2019) 267 CLR 560

[8]  [1985] 2 Qd R 6. See also National Australia Bank v McBride [2011] QSC 52

Close

Editorial Notes

  • Published Case Name:

    Hangri Investments Pty Ltd v Active Resources Inc

  • Shortened Case Name:

    Hangri Investments Pty Ltd v Active Resources Inc

  • MNC:

    [2025] QSC 12

  • Court:

    QSC

  • Judge(s):

    Martin SJA

  • Date:

    10 Feb 2025

  • White Star Case:

    Yes

Appeal Status

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

Cases Cited

Case NameFull CitationFrequency
Carringville Pty Ltd v The Gatto Group Pty Ltd [2003] NSWSC 123
1 citation
Jump To
Cite 1 - [2003] NSWSC 123
General Credits (Finance) Pty Ltd v Fenton Lake Pty Ltd[1985] 2 Qd R 6; [1984] QSC 109
1 citation
Jump To
Cite 1 - [1985] 2 Qd R 6
Legal Services Commissioner v Sheehy[2019] 1 Qd R 541; [2018] QCA 151
2 citations
Jump To
Cite 1 - [2018] QCA 151
Cite 2 - [2019] 1 Qd R 541
Lion White Lead Ltd v Rogers (1918) 25 C.L.R., 533
1 citation
Jump To
Cite 1 - (1918) 25 C.L.R., 533
Mann v Paterson Constructions Pty Ltd [2019] HCA 32
1 citation
Jump To
Cite 1 - [2019] HCA 32
Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560
1 citation
Jump To
Cite 1 - (2019) 267 CLR 560
National Australia Bank v McBride [2011] QSC 52
1 citation
Jump To
Cite 1 - [2011] QSC 52

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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