TASMANIA MINES LTD v CANADIAN SUPERIOR OIL LTD [1996] NSWCA 516

TASMANIA MINES LTD v CANADIAN SUPERIOR OIL LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MAHONEY ACJ, CLARKE JA and Simos AJ 22 August 1996, 23 September 1996

[1996] NSWCA 516

Construction of deed — joint venture mining development — whether obligations to contribute certain amounts were "liabilities incurred at completion date"

In 1983 the appellant, Tasmania Mines Ltd (Tasminex) and McIntyre Mines (Australia) Ltd (McIntyre) entered into a deed under which Tasminex granted to McIntyre the right to earn an interest in certain mining tenements. Under the deed, McIntyre agreed to implement and complete a "pre-development" program and, following its completion, advise Tasminex whether or not it elected to proceed to development. If McIntyre elected to proceed, it was to then provide a detailed production plan and financing schedule, the latter of which set out the pro rata contributions of each party to the joint venture.

Following the settlement of a further dispute, the parent of McIntyre, and another overseas company, agreed to sell Tasminex all the issued shares held in their respective wholly owned Australian subsidiaries. Cl6 of the agreement provided that the vendors would satisfy all liabilities of any nature incurred by the subsidiaries prior to the completion date. At the completion date, Tasminex had not yet made an election as to the share it would take in the development. The contributions to be made by McIntyre and Tasminex to the development had therefore not been finalised or paid. Tasminex argued unsuccessfully at trial, and again on appeal, that the failure of McIntyre to pay its contributions meant liabilities which it had incurred remained outstanding with the consequence that the parent company was obliged to satisfy them in accordance with cl6.

HELD: