PROCESS MINERALS INTERNATIONAL PTY LTD -v- CONSOLIDATED MINERALS PTY LTD [2011] WASCA 219 (13 October 2011)

Last Updated: 13 October 2011

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION : PROCESS MINERALS INTERNATIONAL PTY LTD -v- CONSOLIDATED MINERALS PTY LTD [2011] WASCA 219

CORAM : MARTIN CJ

NEWNES JA

MURPHY JA

HEARD : 12 & 13 SEPTEMBER 2011

DELIVERED : 13 OCTOBER 2011

FILE NO/S : CACV 107 of 2010

BETWEEN : PROCESS MINERALS INTERNATIONAL PTY LTD

Appellant

AND

CONSOLIDATED MINERALS PTY LTD

First Respondent

PILBARA MANGANESE PTY LTD

Second Respondent

ON APPEAL FROM:

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Coram : KENNETH MARTIN J

Citation : PROCESS MINERALS INTERNATIONAL PTY LTD -v- CONSOLIDATED MINERALS PTY LTD [2010] WASC 266

File No : CIV 2272 of 2009

Catchwords:

Contract - Contractual construction - Secondary processing of manganese fines - Right to use tailings storage facility - Turns on own facts

Legislation:

Nil

Result:

Appeal allowed

Cross-appeal dismissed

Category: B

Representation:

Counsel:

Appellant : Mr J T Gleeson SC & Mr M L Bennett

First Respondent : Mr S Penglis

Second Respondent : Mr S Penglis

Solicitors:

Appellant : Bennett & Co

First Respondent : Freehills

Second Respondent : Freehills

Case(s) referred to in judgment(s):

Agricultural & Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570

Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564

BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] UKPCHCA 1; (1977) 180 CLR 266

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337

Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286

Posgold (Big Bell) Pty Ltd v Placer (Western Australia) Pty Ltd [1999] WASCA 217; (1999) 21 WAR 350

Sportsvision Australia Pty Ltd v Tallglen Pty Ltd (1998) 44 NSWLR 103

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165

1 MARTIN CJ: This appeal should be allowed for the reasons given by Murphy JA with which I agree. I agree also with his Honour's preliminary view of the nature of the declaratory relief that should be granted to give effect to the success of the appeal.

2 NEWNES JA: I agree that the appeal should be allowed for the reasons given by Murphy JA and with his Honour's preliminary view as to the appropriate declaratory relief.

MURPHY JA:

3 The appellant, Process Minerals International Pty Ltd (PMI) appeals against a decision of Kenneth Martin J in an action in which PMI sued Consolidated Minerals Pty Ltd (Consolidated) and Pilbara Manganese Pty Ltd (Manganese) in relation to certain contractual arrangements first entered into in September 1996.

4 The principal agreement the subject of the action, described as the 'Super Fines Agreement', was executed on 10 September 1996. It was entered into between PMI (then known as Port Services (WA) Pty Ltd) and Consolidated (then known as Valiant Consolidated Ltd) and Manganese (then known as Valiant Manganese Pty Ltd). Manganese is and was at all material times a wholly owned subsidiary of Consolidated. In the court below, and in this appeal, the parties did not contend that it was necessary to distinguish between Consolidated and Manganese for any material purpose. In these reasons, unless otherwise indicated, I will refer to 'Consolidated' as including Manganese.

5 The Super Fines Agreement was amended by a 'Deed of Acknowledgment' and 'Heads of Agreement' each dated 25 August 2004. There were subsequent amendments in 2007. The parties agreed that, for the purposes of this appeal, the court should confine its consideration to the proper construction of the Super Fines Agreement, as amended in 2004.

6 For the reasons given below, in my view, PMI in substance succeeds on the appeal and Consolidated fails on the cross-appeal.

7 The following background is taken from the primary judge's factual findings which, save to the extent otherwise indicated in these reasons, are not materially challenged.

Overview 1996 - 2009 (reasons [1] - [37])

8 Prior to September 1996 Consolidated was engaged in the business of extracting manganese lump and manganese fines at the Mike Mine in the North-West of Western Australia. By 1996, the manganese ore deposits were almost exhausted, as a result of which Consolidated sought to acquire further tenements. In that regard, Consolidated acquired certain tenements approximately 20 km north of Mike Mine, upon which stood a manganese ore processing plant. The tenements were on a location known as Woodie Woodie. In the period leading up to September 1996, two directors of Consolidated, Dr Bradford Farrell and Mr Simon Farrell (unrelated) had developed a close relationship with a Mr Christopher Ellison. Mr Ellison was a director of a company, Crushing Services International Pty Ltd (Crushing) which provided crushing services to Consolidated at the Mike Mine.

9 Mr Ellison devised a separation plant, known as a 'Dinosaur', for use at Mike Mine which could extract smaller solids of less than 1.2 mm in size containing manganese from the watery slurry produced at the mine. These small solids, which he called 'super fines', were not, however, commercially processable. At Mike Mine there was believed to be some, unquantified, benefit to Consolidated in reducing the overall storage capacity required for waste generated by its operations.

10 The use of these fines (which, in these reasons, I will refer to as 'extra fines' with a view to using neutral terminology) and their potential for processing in the future, became the subject of negotiations between Mr Ellison and the Farrells over the course of 1996. To this end, Mr Ellison, who wished to keep such a venture separate from the crushing business operated by Crushing, formed PMI as a separate company.

11 PMI and Consolidated entered into the Super Fines Agreement on 10 September 1996. PMI had at trial contended that the Super Fines Agreement was partly oral and party written. The judge found it to be wholly written and there is no appeal against that finding.

12 Shortly after this there were changes in the corporate structures of Consolidated and PMI. Consolidated went into administration. The Farrells ceased to be directors in 1998 and Mr Kiernan (a director of Crushing) joined the board of Consolidated. Mr Kiernan was a director of both PMI and Consolidated up until about April 2001. He then ceased to be a director of PMI, but remained a director of Consolidated. After the departure of Mr Kiernan from the board of PMI, Mr Ellison was left as its 'controlling personality'.

13 In 2004, PMI built a trial processing plant at Consolidated's Woodie Woodie tenements to test the processing of extra fines produced by Consolidated's operations. The Super Fines Agreement was amended in 2004 by the Heads of Agreement and Deed of Acknowledgement.

14 In 2005, PMI replaced its trial plant with a new, permanent plant. PMI's permanent plant was located several hundred metres to the west of Consolidated's plant at Woodie Woodie.

15 PMI extracted extra fines, for processing, from two purpose-built storage facilities at Woodie Woodie. One was known as 'tailings storage facility 1', also known as 'Rhodes Pit'. The other was known as 'tailings storage facility 2'.

16 The Super Fines Agreement was further amended in 2007 by an agreement made around 15 June 2007 known as the 'June 2007 Agreement'. In March 2008 PMI and Consolidated entered into another agreement described as the 'Camp East Agreement'. That agreement provided for Consolidated to pump its slurry tailings, via a pipeline, directly to PMI's plant at Woodie Woodie. The pumping of slurry tailings to PMI's plant, which commenced in 2008, is known as 'direct tailing'. The judge found (reasons [168]) that the parties agreed as between themselves who would be responsible for, relevantly, the capital and operating costs of the pipes and pumps that would transport the slurry first from Consolidated's plant to PMI's plant, and then on to the Camp East tailings storage facility. Although not specifically mentioned by the judge, on the face of the agreement, it appears as though the parties agreed that those costs would be borne by Consolidated.

17 Camp East reached its capacity as a tailings storage facility by the end of November 2009. Following this, Consolidated used an area known as 'Area 1', to the west of Camp East, as a tailings storage facility.

The operations at Mike Mine (reasons [46] - [66])

18 With that overview, it is convenient to outline, specifically, the nature of the operations at Mike Mine.

19 Consolidated's ore treatment plant at Mike Mine consisted of a heavy media drum beneficiation plant, to extract the lump manganese product, and a cyclone plant for the extraction of fines. Consolidated also a used front-end crusher and a wash plant owned and operated by Crushing.

20 Manganese ore was mined by blasting which generated 'Run of Mine' (ROM) ore. The ROM ore consisted of rocks, up to 600 mm in diameter, for processing. That ore was then taken to a pad for crushing and processing.

21 The crushing process would produce crushed ore of less than 75 mm in size. The crushed ore would then be fed into a wash plant, screened and separated into three sizes:

(a) 75 mm - 8 mm (called 'lump ore');

(b) 8 mm - 1.2 mm (called 'fines'); and

(c) less than 1.2 mm (which I have referred to as the 'extra fines').

22 The lump ore was processed in the drum beneficiation plant. The saleable product was separated in this process from ore with a lower manganese content. The separated material was waste material, and was described by Mr Ellison as 'coarse rejects'. The coarse rejects were dry stacked around the mine. The saleable product was transported by road to Port Hedland for export.

23 The fines were fed into the fines beneficiation plant which used a cyclone process to separate out saleable manganese fines from low manganese-bearing solids. The low manganese-bearing solids, which had been separated out, were also dry stacked.

24 The extra fines were suspended in a slurry, after passing through the wet screens at the wash plant. The slurry, or wet fine tailings stream, was deposited into tailings storage facilities, also known as tailings ponds. Water in the slurry was subsequently pumped off or evaporated, leaving small residual solids as waste in situ. Over time the settled waste solids would compact in situ in a process called consolidation. Once the capacity of the tailings storage facility is reached, it is necessary to establish a new tailings storage facility to take the tailings.

25 The Dinosaur commenced operation in the latter part of 1995. It extracted the extra fines of less than 1.2 mm out of the slurry from the wash plant, and thereby reduced the volume of wet fine tailings that had to be deposited into a tailings storage facility at Mike Mine. The Dinosaur operated on the basis that the slurry was sent directly from the wash plant into the Dinosaur plant.

26 The extra fines extracted by the Dinosaur plant were dry stacked and stored, albeit separately from the coarse rejects (reasons [215]). They were not then regarded as commercially suitable for processing because there was no market for them (reasons [64]). Waste water emitted from the Dinosaur, containing other solids, was then filtered, purified and discharged into streams for deposition in the tailings pond (reasons [65]).

27 The Mike Mine ore body was exhausted around October/November 1996, at which time Consolidated's operations ceased at that location.

The acquisition of Woodie Woodie and negotiations towards the Super Fines Agreement (reasons [67] - [78])

28 In the period 1995 to 1996, Mr Ellison was 'enthusiastic' over the prospect of potentially reprocessing the extracted manganese solids generated from the Dinosaur plant at Mike Mine, as well as the prospectivity at Woodie Woodie. Mr Ellison became acquainted with Consolidated's negotiations to purchase the Woodie Woodie tenements and Simon Farrell requested Mr Ellison to assist with Consolidated's due diligence. Mr Ellison and other Crushing staff had inspected the Woodie Woodie mine site. Mr Ellison noticed a stockpile of a material which he referred to as 'coarse rejects' and estimated the amount of material to be in the vicinity of three to four million tonnes, stockpiled in what he referred to as a 'coarse rejects stockpile'. Mr Ellison also conducted testing on coarse reject materials from Woodie Woodie, which indicated a manganese content of about 20% - 25%. Mr Ellison also noticed a substantial quantity of fine tailings lying in the Rhodes Pit on Woodie Woodie.

29 Mr Ellison's negotiations with the Farrells extended to embrace Woodie Woodie. Mr Ellison raised the prospect of a more sophisticated version of the Dinosaur plant. The new plant would be built also to process the extra fines extracted from the slurry, which would reduce, even further than at Mike Mine, the storage area needed for wet fine tailings. There was also the prospect of refining the extra fines, potentially to generate a saleable, albeit smaller, refined manganese product.

30 Evidence was also led from Simon Farrell, Dr Farrell, and Mr Ellison, regarding discussions concerning the prospect of processing 'coarse rejects', with a view to establishing a mutually known surrounding circumstance relevant to the proper construction of the written terms of the Super Fines Agreement. The judge recorded that he assessed that evidence with considerable scepticism and indicated that, in any event, the admissibility of general negotiations was, at that point, highly questionable (reasons [75]). The judge, nevertheless, accepted that Dr Farrell was against any proposal for PMI to deal with coarse reject material in stockpile at Mike Mine, on the basis that it might interfere with rehabilitation obligations at Mike Mine, which was then rapidly reaching its exhaustion as a mine (reasons [76]).

The parties' operations at Woodie Woodie (reasons [99] - [142], [173] - [195])

31 Consolidated took over the Woodie Woodie mine site in late 1996. For the first six to nine months, nothing much was done as Consolidated was experiencing financial problems. In October 1997, Consolidated entered into administration. Eventually, Consolidated emerged from administration in March 1998. After this, Consolidated contracted with Crushing to install a crusher circuit as well as a wet screen to upgrade the Woodie Woodie beneficiation plant. Some of Crushing's plant was utilised to commission and operate an upgraded plant at Woodie Woodie for a period of approximately 15 months to produce saleable lump product and fines product. Over that period, Crushing carried out work which included the modification and reinstallation of the cyclone chamber in the Woodie Woodie fines beneficiation plant. Crushing operated the plant for some 15 months until Consolidated exercised its right to buy out Crushing. Consolidated then began reoperating the Woodie Woodie manganese extraction plant in its own right.

32 In 2004, PMI commenced operations at Woodie Woodie, with the installation of its trial plant. The trial plant was not capable of directly receiving wet fine tailings.

33 PMI's trial plant was replaced in June 2005 by a permanent processing plant. It was installed near Rhodes Pit. The dry extra fines material within Rhodes Pit was excavated, put into a dump truck, and transported to PMI's plant. PMI later also removed and processed dry extra fines material from tailings storage facility 2.

34 PMI also configured its plant to accept a wet fines tailings stream (slurry) by pipeline, direct from Consolidated's plant. However, as noted earlier, it was not until 2008 that PMI's plant began to receive wet slurry directly from Consolidated's plant pursuant to the Camp East Agreement (see [16] above).

35 After processing, PMI pumped the waste tailings, via pipeline, to Camp East. However, Camp East was a short-term storage facility. By mid-2009, it was reaching its limit. PMI's plant was processing extra fines from the slurry received directly from Consolidated's plant, as well as from the dry materials it was excavating and transporting to its plant.

36 In February 2009, Consolidated made an application to use another former mining pit, designated 'Area 1', as the next proposed tailing storage facility. Consolidated proposed to cease pumping its wet fine tailings directly into PMI's plant. Consolidated also proposed to disallow PMI to emit future waste from PMI's plant into Area 1, although it did indicate that it would not object to PMI extracting solids from Area 1 if it used a screw classifier, and that it would allow the deposition of slimes emitted from the screw classifier into Area 1.

37 In very broad terms, disputes arose between the parties in or around 2009 concerning:

(a) whether Consolidated had assigned to PMI, under the Super Fines Agreement, the rights to ownership of waste material known as 'coarse rejects' stockpiled at Woodie Woodie;

(b) whether Consolidated had agreed, under the Super Fines Agreement, to provide PMI with a tailings storage facility into which PMI could dispose of its own waste tailings at Woodie Woodie and, if so, whether Consolidated had to make such provision at no cost to PMI;

(c) whether, under the Super Fines Agreement or the Camp East Agreement, Consolidated was required to continue to direct feed wet fine tailings to PMI's plant at Woodie Woodie, even after the facility at Camp East had been exhausted as a tailings storage facility.

38 The judge found:

(a) that coarse rejects were not 'Super Fines' within the meaning of the Super Fines Agreement (reasons [203] - [246]);

(b) Consolidated was obliged, on the proper construction of the Super Fines Agreement, or by the implication of an ad hoc term, to provide an approved tailings storage facility to allow PMI to discharge its waste from its processing plant at Woodie Woodie (reasons [275] - [276]), however PMI was obliged to pay a reasonable commercial fee for the tailings storage facility (reasons [284] - [289]);

(c) there was no express or implied term of the Super Fines Agreement which, in terms, required Consolidated to send its wet fine tailings directly from its plant to the PMI plant (reasons [292] - [310]), but the 'best endeavours obligation' in cl 4.1(b) required Consolidated to continue to do so (reasons [311] - [337]);

(d) the Camp East Agreement did not, on its proper construction, independently require Consolidated to send tailings directly to PMI's plant after Camp East had been exhausted as a tailings storage facility (reasons [338] - [343]).

39 In substance, this appeal concerns the findings referred to in subparagraphs (a) and (b) of the preceding paragraph. There is no challenge to the other findings on the principal issues determined by the judge.

The appeal

40 PMI appeals in relation to his Honour's findings that:

(a) coarse rejects were not Super Fines within the meaning of the Super Fines Agreement (ground 1); and

(b) the Super Fines Agreement required PMI to pay a commercial fee for the provision of tailings storage facilities (ground 2).

The notice of contention

41 By its notice of contention, Consolidated submits that there were other bases upon which the judge should have construed 'Super Fines' under the Super Fines Agreement as excluding coarse rejects.

The cross-appeal

42 Consolidated cross-appeals with respect to:

(a) the judge's finding that certain documents subsequent to the Super Fines Agreement were inadmissible with respect to the proper construction of the Super Fines Agreement in relation to the issue of coarse rejects (ground 1);

(b) the judge's finding that Consolidated was required to provide a tailings storage facility to PMI based on the definition of the word 'Operations' in the Super Fines Agreement (ground 2), or on the basis of an alleged implied term (ground 3).

The issues arising from the appeal, notice of contention and cross-appeal

43 There are, in effect, two substantive issues requiring determination in this appeal. The first is whether coarse rejects at the stockpile at Woodie Woodie are 'Super Fines' within the meaning of the Super Fines Agreement. The second is whether the Super Fines Agreement obliges Consolidated to provide tailings storage facilities for use by PMI to dispose of waste tailings emitted from PMI's processing plant and, if so, whether PMI is obliged to pay a commercial fee for the provision of those facilities.

44 The principal terms of the Super Fines Agreement are set out verbatim in his Honour's reasons ([83]) and it is unnecessary to replicate them here. The following observations may be made as to its terms.

Definition of Super Fines

Subparagraph (a) of the definition

45 By subpar (a) of the definition of Super Fines, which applies, relevantly, to mining lease 46/150 (Mike Mine), Super Fines is defined as all 'minus 1.2 mm tailings that has left [Consolidated's] manganese beneficiation plant [and is either] in stockpile or in tailings ponds on the tenements'. (emphasis added)

46 The words 'minus 1.2 mm tailings' and Consolidated's 'manganese beneficiation plant' are not defined, but would be understood in the light of the mutually known circumstances existing at the date of the agreement. These included, in relation to Mike Mine, that:

(a) ore was crushed, screened, and separated into three sizes, namely, lump ore (75 mm - 8 mm), fines (8 mm - 1.2 mm) and extra fines (less than 1.2 mm, which, when leaving the wash plant, were suspended in a slurry);

(b) Consolidated's drum beneficiation plant treated lump ore, and its fines beneficiation plant (using a cyclone process) treated fines;

(c) before the introduction of the Dinosaur plant, the slurry was deposited into tailings ponds;

(d) PMI's Dinosaur plant, after it commenced operation, treated the slurry from the wash plant from which dry extra fines were extracted; and

(e) the coarse rejects (from Consolidated's drum beneficiation plant), the rejects (from Consolidated's fines plant) and the extra fines (extracted by the Dinosaur) were all stacked and stored at the mine.

47 Viewed in this light, Consolidated's 'manganese beneficiation plant' is to be taken as referring to both its drum beneficiation plant and its fines beneficiation plant. The words 'minus 1.2 mm tailings' denote the manganese-bearing solids (extra fines) which were suspended in the slurry and left in situ in the tailings ponds, or which had been extracted by the Dinosaur plant and then dry stacked.

48 The word 'tailings' is not defined and the parties did not contend or establish that it was a term of art or that it had a defined industry usage. In its ordinary meaning it denotes 'the residue of any product, as in mining; leavings': The Macquarie Dictionary (4th ed 2005) (cited by the judge at [208]).

Subparagraph (b) of the definition of Super Fines

49 By subpar (b), Super Fines are defined in respect of, relevantly, the Woodie Woodie Mine, as all tailings that have either:

(a) left the wash plant; or

(b) left the beneficiation plant.

The former part of the definition includes the manganese-bearing solids (extra fines) within the slurry.

50 The latter part of the definition, on its ordinary meaning, would encompass material that is waste material that has left the beneficiation plant. Whether the ordinary meaning is to be given to it is the subject of the first issue in this appeal.

PMI's rights to the Super Fines

51 By cl 2.1(a), Consolidated assigns to PMI the 'ownership rights' to the Super Fines in consideration of the payment of the Purchase Price. Also, by cl 4.1(a), Consolidated promises that 'full title and right in the Super Fines shall vest in' PMI.

52 By cl 2.3, property in the Super Fines passes to PMI 'on the signing of this Agreement'.

53 By cl 2.1(b) and cl 4.1(e), Consolidated grants to PMI the exclusive right to remove, treat and exploit the Super Fines located in the tenements, in accordance with the agreement.

PMI's rights of access to and use of the tenements

54 By cl 2.2(a), PMI is to have non-exclusive possession and use of the tenements to carry out its Operations, in accordance with site rules and statutory regulations. By cl 2.2(b), PMI may pass and re-pass over all of the tenements upon the natural surface of the ground with or without mechanical vehicles or contrivances. By cl 2.2(c), PMI may install, erect and use its Plant, at a mutually agreed location on the tenements, to carry out its Operations as it thinks fit.

55 For this purpose Operations means all activities by PMI to build, operate and manage the Plant on the tenements, the required treatment and processing of Super Fines undertaken by PMI through the Plant, and the sale of product (cl 1.1, definition of Operations).

PMI's Plant

56 Plant means the processing plant/s 'to be constructed' by PMI on the tenements for the processing of Super Fines (cl 1.1, definition of Plant).

57 The Plant 'to be constructed' is that provided for in cl 3.1, being a plant which, the parties acknowledged, PMI intended to 'design, construction [sic], operate and manage' to process 'high quality manganese fines' suitable for sale as product.

58 By cl 3.2, PMI agrees continuously to operate the Plant in a proper and efficient manner and according to the best and most approved methods.

59 By cl 2.2(c), PMI has the right to 'install, bring, erect and use on the Tenements the Plant', including without limitation all 'buildings, plant, equipment, machinery and appliances' as it thinks fit.

60 By cl 2.2(d), PMI has the right to remove the Plant, 'with the right in these assets to remain in the sole ownership' of PMI.

61 By cl 19, at the expiration of the agreement, or if the Plant is moved to another location within the tenements, PMI agrees to 'remove the Plant and all buildings, plant, machinery and vehicles belonging to or brought upon' the tenements by PMI.

62 It was also acknowledged by Consolidated that PMI intended to design the Plant to process Super Fines of less than 1.2 mm and that accordingly Consolidated should not reduce the screening cover on its plants to under 1.2 mm: cl 4.1(d).

The exercise of PMI's rights

63 By cl 4.1(b), Consolidated agrees to use its best endeavours, consistent with its own operations, to make available to PMI all Super Fines capable of being processed and treated.

64 By cl 2.4, PMI agrees, in exercising its rights, not to unduly interfere with the current operations of Consolidated and agrees to comply with all reasonable requests of Consolidated in respect of the location and conduct of PMI's Operations.

PMI's costs of the Plant

65 By cl 3.1, it was agreed that PMI should design, construct, operate and manage its Plant 'at its sole cost'.

The parties' contributions to costs

66 By cl 7, PMI agreed to be fully responsible for the supply and operation of electricity for its operation.

67 Also by cl 7, Consolidated agreed to provide PMI with access to process water for its operations, and PMI agreed to be fully responsible for the necessary pumps, piping and operation of the water facility.

68 By cl 8, Consolidated agreed to provide, implicitly at its own expense, certain accommodation units to PMI and also agreed to make available other accommodation at a cost to PMI of $60 per man per day.

69 It was a term of the amending Heads of Agreement (cl 2.1(b)) that PMI would pay Consolidated $0.25 per tonne of Super Fines product transported, as a contribution to Consolidated's road maintenance costs.

Sale of PMI's product

70 By cl 6, it was, in effect, agreed that PMI could sell its product in competition with Consolidated, save that PMI could not, without Consolidated's consent, sell its (PMI's) product to a party who had, at the date of the Super Fines Agreement, purchased manganese from Consolidated.

Purchase Price

71 By cl 5.1, the payment of the Purchase Price to Consolidated by PMI is the consideration for the assignment of the Super Fines to PMI and its rights of access under the agreement.

72 The Purchase Price is defined in cl 1.1 to be:

(a) $8.40 per tonne for all minus 1.2 mm manganese concentrate product which is derived from feed 'directly entering into' PMI's plant from Consolidated's beneficiation plant;

(b) $5.00 per tonne for all minus 1.2 mm manganese concentrate product derived from feed from stockpiles and tailings ponds.

73 The two parts of the definition address different approaches to PMI's receipt of tailings for processing. The second involves it having to remove (from stockpiles) or excavate and remove (from tailings ponds) Super Fines for treatment at its plant. The first, on the other hand, envisages PMI receiving Super Fines directly from Consolidated's plant without PMI having to undertake the work and cost of removal and excavation.

74 Clause 5, prior to amendment, also included the payment of 50% of the net profit of PMI's sale of product as part of the consideration. This was deleted by the heads of agreement in 2004.

Term

75 By cl 10, the parties agreed that the Super Fines Agreement would continue for the life of the mine conducted by Consolidated on the tenements, including the life of the mine on the 'Future Tenements'.

76 The term 'Future Tenements' is defined by cl 1.1 to mean, relevantly, any other mining tenement owned, managed or controlled by Consolidated at a future date and on which is located Super Fines.

The pleaded issue and the finding of fact as to the nature of the coarse rejects stockpile at Woodie Woodie

77 PMI had pleaded (statement of claim 28 - 29) that at Woodie Woodie there was a stockpile known as the 'Coarse Rejects Stockpile' which consisted of tailings that had left the beneficiation or wash plants. It sought a declaration that 'the Coarse Rejects Stockpile comes within the definition of Super Fines in clause 1 of the Super Fines Agreement'. Consolidated admitted (defence par 20) that there was as stockpile of material known as the Coarse Rejects Stockpile located at Woodie Woodie; said that it contained rejected lump and fines material greater than 1.2 mm in size with a density too light to be classified by Consolidated's beneficiation plant as manganese lump or fines product; and denied that it was tailings for the purposes of cl 1 of the agreement because 'tailings' within the meaning of subpar (b) of cl 1.1 meant, only, a slurry of minus 1.2 mm manganese waste material and water, and did not include coarse reject material in the stockpile.

78 It was accepted in this appeal that the judge found, in effect (reasons [229]), that the stockpile existing at the time of trial on Woodie Woodie known as the Coarse Rejects Stockpile was a stockpile of tailings in the sense of waste material (ts 113 - 115).

79 The resolution of this issue in the appeal falls to be decided with reference to that finding of fact.

The parties' contentions

80 PMI submitted that the judge erred in finding that 'Super Fines' did not include coarse rejects by virtue of the following matters. It is said that he failed to give effect to the ordinary meaning of 'tailings'; that he failed to give effect to the express wording of subpar (b) of the definition of 'Super Fines'; that he attached weight to other clauses (cl 1.1 definition of 'Purchase Price' and cl 4.1(d)); that he wrongly had regard to the established distinction between 'lump' product and 'fines' product; that he wrongly treated a letter dated 13 February 1996 allegedly from Mr Kiernan to Mr Farrell as admissible on the question of construction, or alternatively he attributed too much weight to it; and that he failed to find that certain discussions between Mr Ellison and the Farrells concerning coarse rejects were admissible on the issue of construction and in failing to accept their evidence as reliable.

81 Consolidated submits that the judge did not make the errors alleged, and its notice of contention contended that:

1. The primary judge's decision in respect of the appellant's 'coarse rejects' claim should be upheld for the following reasons additional to those stated by the primary judge:

(a) 'Super Fines' was (and is) a phrase used to identify very fine material 'as a dust' and for which there was a market (albeit a very limited one) in 1996: S Farrell at T517;



(b) the phrase 'coarse rejects' was used at the time the SFA was entered into, and they were stacked separately from the wet tailings at Mike Mine: reasons for decision at [215] and the transcript references referred to therein;



(c) the coarse rejects had been used at Mike Mine for pit wall construction (Ellison at T325) and road construction (S Farrell at T423-5);



(d) the material object and purpose of the SFA was to reduce the volume of wet tailings material required to be stored in tailings storage facilities: reasons for decision at [63], [74] and [192]. There was no evidence of any problems or concerns regarding the storage of coarse rejects:



(e) it was the -1.2mm material that the respondents did not have the technology to process in 1996: S Farrell at T517. However, they did have the technology to extract manganese from coarse rejects - it was simply a matter of adjusting the specific gravity in the plant, but it was not economic to do so because at that time a unit of manganese was worth about $1.85-$1.95: S Farrell at T424 and T518. See also [217] of the reasons for decision.

82 The contention in subpar (a) above was abandoned during the hearing of the appeal.

83 Consolidated also alleges, in its cross-appeal, that the judge erred in failing to have regard to the following evidence on the question of construction. First, Mr Ellison's email to Mr Kiernan of 8 August 2003 in which he requested the right to treat coarse rejects. Secondly, Mr Ellison's email dated 29 October 2004 in which he asked that the Super Fines Agreement be varied to provide 'Tailings means all minus 1.2 mm ore that has left the wash plant or the beneficiation plant from the tenements'.

Disposition of the issue

84 In my respectful view, the judge erred in his construction of the Super Fines Agreement in relation to coarse rejects. My reasons are as follows.

85 First, in its ordinary meaning, the word 'tailings' is wide enough to include waste in any form, and not just slurry or waste of a dimension less than 1.2 mm. Secondly, there is a sharp contrast in the definition of Super Fines between subpar (a) and subpar (b), with the former including, expressly, a reference to less than 1.2 mm fines. Objectively, it could not be supposed that having expressly used the words in subpar (a), and then in the same definition omitted those words from subpar (b), the parties intended that subpar (b) should be read as if the omitted words were there. Thirdly, there is nothing in the terms of the Super Fines Agreement to indicate that notwithstanding the generality of the language in subpar (b), Consolidated retained for itself the coarse rejects.

86 Fourthly, coarse rejects were not, at the time of the agreement, being processed by Consolidated and if and to the extent that Consolidated had plans in the future for treating coarse rejects, they were not communicated to PMI (see reasons [55] and [218]). Accordingly, it cannot, objectively, be said that the parties, in subpar (b), implicitly intended to exclude coarse rejects because they understood them to be within the scope of Consolidated's then existing or future planned operations.

87 Fifthly, the construction preferred by the judge, and urged by the respondent in this appeal, is, in effect, that the words in subpar (b) 'all tailings that have left the wash plant or the beneficiation plant' mean 'all tailings that have left the wash plant and the beneficiation plant of a size less than 1.2 mm'. There are, however, a number of difficulties with this. One is that there is no reference to these additional words (italicised) in subpar (b). Another is that the asserted additional words would be a roundabout way of saying, in substance, what was said in subpar (a), but was omitted from subpar (b) of the definition of Super Fines. It would attribute an intention to the parties to achieve indirectly what they did not directly provide for.

88 Sixthly, there is nothing in the definition of the Purchase Price as amended, or prior to the heads of agreement, which is inconsistent with the ordinary meaning of subpar (b). The definition of 'Royalty' (which was the 'Purchase Price' prior to amendment) expressly provides for a royalty to be paid by PMI at a price for 'all 1.2 mm manganese concentrate product derived from feed from stockpiles'. It is clear that the parties knew that coarse rejects were capable of being stockpiled. Also, by their reference to 'manganese concentrate product', the parties, in the definition, have clearly differentiated the end product from tailings size. There is no finding of fact that coarse rejects as 'feed' necessarily produce concentrated manganese product of greater than 1.2 mm. In any event, the other part of the consideration, when the Super Fines Agreement was first entered into, was Consolidated's right to 50% of PMI's net profit as defined. This would include, the judge found, the net profit where PMI generated end product greater than 1.2 mm (reasons [238]). Accordingly, (adopting the language of Latham CJ in Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286, 299) 'it is apparent that there may be business reasons' why the parties agreed that coarse rejects were to be included as Super Fines.

89 Seventhly, exhibit 11, being Mr Kiernan's memorandum to Mr Simon Farrell on 13 February 1996 (set out at reasons [220]) appears, in its terms, to be the first 'proposal' in writing by PMI to Consolidated about the possibility of an agreement regarding what the heading of the letter refers to as 'Superfines recovery project'. Although the third paragraph refers to the 'Mike Pit', as well as 'product from the [Woodie Woodie]' leases, the penultimate paragraph puts the proposal in more general terms: 'We would plan to establish a similar process to recover waste from the [Woodie Woodie] leases' (emphasis added). The letter concludes: 'We will await your reply to our proposal'. The judge did not make a finding as to what PMI's reply to that communication was.

90 In my view, the memorandum is too distant in time from the Super Fines Agreement (being seven months earlier), it is too preliminary in nature, and it is too general in its language, to be of any assistance in the construction of the Super Fines Agreement. It is nothing more than an early proposal for negotiation.

91 However, I reject the appellant’s contention that the judge erred in failing to take into account evidence of negotiations between Mr Ellison, Mr Simon Farrell and Dr Farrell in 1996 concerning coarse rejects. In my view, given the long passage of time (14 years) and the self-serving nature of much of the evidence, the judge was entitled to treat their evidence with 'considerable scepticism' and to form the view that it would only serve as, in effect, inadmissible evidence of general negotiations (reasons [75]). The appellant's further contention that the judge erred in failing to take into account his finding (reasons [76]) that Dr Farrell was against any proposal for Consolidated to deal with the coarse rejects at Mike Mine, also in my view, lacks substance. The contention is that in light of that finding, it must be presumed that the parties intended that PMI would have the opportunity to treat coarse rejects at the Woodie Woodie mine. The latter proposition does not, in my view, follow logically as a consequence of the finding identified with respect to Mike Mine.

92 As to the respondent's notice of contention and cross-appeal, those matters do not assist the respondent or support the judge's construction of the Super Fines Agreement in relation to coarse rejects. None of the matters in the notice of contention separately, or in combination, govern the meaning of the definition of 'Super Fines' in the Super Fines Agreement. The fact that the parties used the phrase 'coarse rejects' at the time of the entry into the Super Fines Agreement does not assist Consolidated. Fundamentally, the task is to construe the language used by the parties, rather than the language which they did not use. If anything, the point is against Consolidated because the parties have used language wide enough to cover coarse rejects, without expressly making it clear that coarse rejects were to be excluded.

93 The fact that coarse rejects had been used at Mike Mine for pit walls and for road construction is, at best, equivocal as the judge found (reasons [219]). It tends, if anything, to point against Consolidated's construction because it tends to indicate that the parties understood coarse rejects to be waste material.

94 Also, it is overstating it to say that 'the' material object and purpose of the Super Fines Agreement was to reduce the volume of wet tailings. The agreement evidently contemplated the treatment of dry tailings from stockpiles and in the form of the dry consolidated residue within tailings dams. The degree, if any, to which wet tailings would be reduced would depend upon the nature and scope of PMI's future operations including, relevantly, the extent to which PMI's future operations were devoted to processing dry tailings as opposed to the wet slurry from Consolidated's plant.

95 I would add here, parenthetically, that whilst PMI suggested, in this appeal, that the judge in his reasons found that the parties expected some reduction in tailings storage facility to occur in the future (ts 143), I would not read his Honour's reasons that way. In my view, the finding at reasons [261] is clear and to the effect that at the time the Super Fines Agreement was entered into, it was not then known whether there would be a likely reduction in the tailings storage capacity required by Consolidated in the future. None of the other passages referred to by PMI alters that finding.

96 Finally, the fact that Consolidated had the technology to treat coarse rejects at the time the Super Fines Agreement was entered into tends, in my view, again to point away from the construction advanced by Consolidated because, having used language wide enough to include coarse rejects, the parties did not exclude coarse rejects from the agreement's operation.

97 As to the cross-appeal, the judge did not err in not using post-contractual communications from Mr Ellison to Mr Kiernan in 2003 and 2004 to construe the Super Fines Agreement.

98 Whilst the respondent accepts the general principle that it is not legitimate to use, as an aid in the construction of a contract, anything which the parties said or did after it was made (see Agricultural & Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 [35]), it nevertheless contends that there is a long and well-established exception in the case of evidence that goes to identify the subject matter of the contract: Posgold (Big Bell) Pty Ltd v Placer (Western Australia) Pty Ltd [1999] WASCA 217; (1999) 21 WAR 350 [50]; Sportsvision Australia Pty Ltd v Tallglen Pty Ltd (1998) 44 NSWLR 103, 114 - 115. In this regard, the respondent contends that the subsequent communications identify whether 'the subject matter of the contract extends to the coarse rejects'.

99 In my opinion, the respondent is misstating the true or substantive use to which it seeks to put the subsequent communications. In substance, it is not using the subsequent communications to identify the subject matter of the contract, but rather to allow one party's subjective intention as to the meaning of the definition of 'Super Fines' in the contract to bear upon what those words mean as a matter of the contract's proper construction. The contract requires construction as at the date that it was entered into and the communications relied upon by the respondent are not, for the purpose for which the respondent seeks to use them, admissible.

100 Accordingly, with reference to the finding of fact referred to in [78] above, the first issue should be resolved in favour of PMI.

The judge's reasons and the declaration made

101 The judge referred to a number of express provisions (cl 2.1 (b), cl 2.2 (a), cl 2.2(c) and cl 3.1) of the Super Fines Agreement in his consideration of this issue.

102 It appears that the judge, particularly in the light of those provisions, construed the agreement as containing, on its proper construction, an express or implied term to the effect that Consolidated would provide PMI with the use of a tailings storage facility on the tenements for the deposition of PMI's waste (reasons [276]).

103 However, the judge did not go on to make any express finding, in his reasons for judgment, as to whether the Super Fines Agreement contained an express term, or an implied term, dealing with the allocation of the costs associated with the tailings storage facilities which he found Consolidated was obliged to provide to PMI.

104 Rather, his Honour expressed his view on this issue as follows (reasons [282], [284], [285], [286], [289]):

Whilst a utilisation of the defendants' approved TSF by PMI is not explicitly dealt with under the terms of the SFA, nevertheless, a broad policy theme found in the SFA of PMI proceeding by the SFA to design, construct, then finally operate and manage its secondary processing plant, 'at its sole cost' (by reference to cl 3.1 of the SFA) is pervasive.



...



On the basis that PMI was to independently operate its own plant as a secondary Super Fines processing operation on the defendants' tenements, I assess it is both reasonable and equitable that PMI would do so at its sole cost. That must mean that PMI would pay to the defendants a reasonable commercial fee, appropriate for PMI's utilisation of Area One, and for any TSF that PMI would use subsequent to Area One.



There remains a question as to whether (with proper notice and sufficient time for PMI to pursue all required approval arrangements) the defendants might choose to simply identify an area on their tenements as potentially suitable for use by PMI as PMI's exclusive TSF, but then leave it to PMI to seek and obtain all necessary approvals and expend whatever capital is necessary to establish a workable TSF at that site ... In my view, the answer to this question must be, 'no'.



... In my view, Consolidated must bear the cost of sterilising an area for ultimate site use as a TSF by PMI, since it is Consolidated who must reach the decision as to what areas across the considerable area of the Woodie Woodie tenement holdings that they plan to mine. But aside from the issue of area sterilisation cost, I see no valid reason why PMI ought not to ultimately reimburse Consolidated for the capital costs of an actual establishment of any TSF, which PMI is to exclusively use. To the extent that PMI may share a TSF with Consolidated, then the capital and operative costs involved would be apportioned between them, on a reasonable proportionate volume usage basis, that could be assessed by a third party in the absence of a consensus between the parties.



...



Ultimately, the defendants carry the non-delegatable rehabilitation responsibility for these TSF areas on their tenements. Because of that responsibility, it is simply not feasible or appropriate in my assessment, for the defendants to relinquish hands-on control of a TSF site, to PMI.



It is one thing for Consolidated to seek to recoup reasonable capital and operating costs of providing TSF benefits to PMI on a commercial basis, which I would assess as permissible under the philosophy of the SFA. It is quite another, however, to effectively require PMI to essentially establish itself an approved TSF on Consolidated's tenements, once Consolidated identify, then sterilise a potentially suitable TSF site for PMI's exclusive use. Greater responsibility and involvement, in my view, is required of the defendants regarding any TSF to be established on its tenements, irrespective of who the user(s) of that TSF happen to be. (emphasis added)

105 Although the judge in his reasons did not make any findings as to the express or implied terms concerning the costs of the provision of the tailings storage facilities, the final orders were, relevantly, in these terms:

1. The Court declares that, on the proper construction of the [Super Fines Agreement] ...

(b) [Consolidated] must, during the subsistence of the Agreement, provide to [PMI] the use of a sufficient tailings storage facility (or facilities) on the tenements the subject of the Agreement as follows:

(i) if the tailings storage facility (or facilities) is to be jointly used by [PMI] and [Consolidated], [PMI] must pay to [Consolidated] a reasonable commercial fee in respect of the capital and operating costs of the tailings storage facility to be apportioned between them on a reasonable proportionate volume usage basis;



(ii) if the tailings storage facility (or facilities) is to be used exclusively for the purpose of disposing of material discharged from [PMI's] plant, [Consolidated] must identify and bear the costs of sterilising the area where such facility is to be located, and [PMI] must reimburse [Consolidated] for the capital costs of establishing that facility. (emphasis added)

106 Accordingly, the orders may be understood as setting out the terms which the judge considered were to be found expressly or impliedly in the Super Fines Agreement.

Disposition of the issue

107 Clause 2.2(a), read with the definition of 'Operations' in cl 1.1 (particularly subpar (b)), provided that Consolidated granted to PMI the non-exclusive 'use' of the tenements to carry out the 'required treatment and processing' of the Super Fines through the Plant in accordance with site rules and statutory regulations. Clause 4.1(e) also gave PMI the exclusive right to 'process and treat' Super Fines located on the tenements.

108 As counsel for Consolidated acknowledged, processing done 'through' the Plant would necessarily involve separating waste from the saleable product. Accordingly, by cl 2.2(a), the parties agreed that PMI could 'use' the 'tenements' to carry out the process, to be undertaken through the Plant, of separating out waste material from saleable product. The carrying out of that process would necessarily involve the deposition of waste material which, under cl 2.2(a) is to be done in accordance with site rules and regulations. The judge found, in effect, and the finding is unchallenged, that Consolidated had a non-delegable responsibility for the management, control and, ultimately, the rehabilitation of tailings facilities on the tenements (reasons [288]). Although not expressed as a finding of mutually known fact antecedent to the agreement, that is the tenor of the finding. Also, cl 2.2(a) is to be understood in the context that it was common ground, prior to entry into the agreement, that the parties were aware that whether or not the Super Fines Agreement was entered into, Consolidated would require a tailings storage facility as part of its own operations (reasons [265] - [266])

109 It follows, in my view, that a reasonable person in the position of the parties would have understood cl 2.2(a) to mean that PMI had the right to use tailings storage facilities on the tenements, including any constructed by Consolidated, for the purpose of treating and processing Super Fines (as defined): Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165, 179 [40].

110 However, there is nothing in the language of cl 2.1(b), cl 2.2(a), cl 2.2(c) or cl 3.1 which would warrant reading into the text of the agreement a wider obligation by Consolidated positively to provide PMI with tailings storage facilities for PMI's use. It is one thing for Consolidated to allow PMI to use the storage facilities on the tenements for its tailings purposes, subject to its obligation not to unduly interfere with Consolidated's own operations (cl 2.4). It is another thing for Consolidated to be obliged positively to provide PMI with tailings storage facilities for PMI's use on the tenements during the subsistence of the agreement.

111 Accordingly, in my view, neither cl 2.2(a) nor any of the other provisions to which the judge referred provides a basis for construing the Super Fines Agreement in the way declared by the judge, as obliging Consolidated 'during the subsistence of the Agreement, [to] provide to PMI the use of a sufficient tailings storage facility'.

112 Similarly, there can be no implied term importing such a wider obligation, as such a term would be inconsistent with the express term of the agreement in cl 2.2(a), which does no more than allow PMI to use the tenements, including any tailings storage facilities on the tenements. In any event, in this appeal, PMI expressly disavowed reliance on any implied term requiring provision of tailings storage facilities (ts 142 - 143, 151). Nor, on PMI's case in this appeal, could there be such an implied term. PMI's case was that Consolidated would always have a tailings storage facility on the tenements during the life of the mine. On that basis, an alleged implied term requiring Consolidated to 'provide' one to PMI would not be necessary to give business efficacy to the Super Fines Agreement and the agreement would be effective without it: BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] UKPCHCA 1; (1977) 180 CLR 266, 282 - 284; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337, 354.

113 I turn now to the ancillary terms found by his Honour to apply in relation to allocating costs in connection with the provision of tailings storage facilities.

114 In my respectful view, the cost allocation obligations declared by the judge are matters which the parties, if acting reasonably and with the benefit of hindsight knowledge acquired from the operation of the agreement over a number of years, might possibly have negotiated in 1996 and incorporated into their agreement then, or subsequently in 2004, but they are not to be found expressly or impliedly in the terms of the Super Fines Agreement. The observations of Dixon J (as his Honour then was) in Luna Park (310) are apposite, 'it may be suspected that in the case now in hand the living thought [encased within the words of the contract] was itself incomplete and ill-considered. But the actual intention of the parties and the implications which are involved must be discovered from the entirety of the writings'. In this case, the written language of the Super Fines Agreement, construed in the context of the mutually known surrounding circumstances, does not manifest the intentions attributed to the parties by the judge in the declaratory orders.

115 In the end, in this appeal, neither party contended that there were express or implied terms of the Super Fines Agreement in the terms declared by the judge concerning cost allocation arrangements. As it transpired, the dispute, in this appeal, was whether, as PMI contended, the parties agreed on the proper construction of the agreement, that it should have the use of the facilities at, in effect, no cost, or whether, as Consolidated contended, PMI should bear (solely) the cost of having and maintaining tailings storage facilities. Neither party contended for an implied term in that regard.

116 Unlike the terms of the Super Fines Agreement addressing the costs of power, water, and accommodation, there was no express term dealing with the costs associated with the use of tailings storage facilities. The absence of such a term should also be noticed in light of the parties' express agreement dealing with the basis upon which PMI would contribute to the costs of the road infrastructure on the tenements.

117 Although there was no term expressly identifying an obligation on the part of PMI to pay for the use of tailings storage facilities or to bear the costs of tailings storage facilities, Consolidated's argument in this appeal was, in essence, that an obligation is to be found in cl 3.1.

118 Clause 3.1 provides, relevantly, that the parties acknowledge that PMI intended to design, construct, operate and manage the Plant 'at its sole cost'. Consolidated contends that 'Plant' includes tailings storage facilities.

119 I am unable to accepted Consolidated's submissions.

120 There was nothing in the mutually known background circumstances to indicate that PMI intended to design, construct, operate and manage a tailings dam or other tailings storage facility. As the judge in effect held, Consolidated remained, and was to remain, responsible as tenement-holder for tailings storage facilities on the tenements.

121 Also, other provisions of the agreement indicate that 'Plant' does not including tailings storage facilities. Clause 2.2(c), which allows PMI to 'install, bring, erect and use on the tenements the Plant', suggests that the parties understood 'Plant' to mean things brought onto the tenements for installation, erection and use, rather than parts of the corporeal land over which the tenements were granted. By cl 2.2(d), PMI has the right to remove the Plant, and the assets comprising the Plant are to remain in the 'sole ownership' of PMI. Plant in that context cannot mean tailings storage facilities. Also, by cl 19, PMI had an obligation to remove the Plant in the circumstances specified. Again, Plant could not, in that context, include tailings storage facilities. These considerations indicate that cl 3.1 does not assist PMI.

122 A further submission made by Consolidated was that because, under the Super Fines Agreement, PMI owned the Super Fines (as defined) any waste product from PMI's treatment of the Super Fines is the property and responsibility of PMI. I agree with Consolidated's submission that Super Fines, within the meaning of the Super Fines Agreement, is the physical waste material suspended in wet slurry or in dry form in stockpiles or tailings storage facilities. I also agree that PMI owns such waste material under the Super Fines Agreement. It is that material which is to be treated and processed by PMI in accordance with the terms of the Super Fines Agreement. For the reasons given earlier, PMI has the right to use the tenements, including the tailings storage facilities on the tenements, for its operations in relation to the processing of that material, whether suspended in the slurry or in dry form. The waste product from PMI's plant, once deposited into the tailings storage facilities, forms part of the ground to be rehabilitated by Consolidated as tenement holder. PMI has no property in that waste material once it has been deposited in tailings storage facilities on tenements. None of this, however, points to any term of the Super Fines Agreement by which it may be said that PMI is obliged to pay for the cost of the tailings storage facilities on tenements. Nor does it assist Consolidated in the meaning of the word 'Plant' in cl 3.1.

123 Consolidated also submitted that it is significant that PMI and Consolidated are, in effect, independent operators on the tenements who compete in the same market for the sale of manganese. That is so, but again, this submission does not lead to the identification of any term of the agreement by which PMI is obliged to pay for the cost of tailings storage facilities on the tenement, or affect the meaning of 'Plant' in cl 3.1. It is also to be recalled that for much of the life of the Super Fines Agreement (1996 to 2004), the parties' agreement as to profit-sharing arrangements in relation to the sale of PMI's product remained undisturbed.

124 Accordingly, I do not accept Consolidated's submission that cl 3.1 required PMI to pay for the cost of any tailings storage facilities on the tenements which it uses. There is no other express provision requiring PMI to pay for the cost and, as I have noted, no implied term to that effect was alleged.

125 PMI has provided a proposed minute of orders of somewhat ambiguous meaning, dealing, in part, with future hypothetical events.

126 The Super Fines Agreement has, potentially, a very long term of operation into the future. It is well established the declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions, or which might pertain to circumstances that have not occurred and might never happen: Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564, 581 - 582.

127 Subject to hearing further argument by the parties, my preliminary view is that PMI is entitled to the following declarations.

128 On the first issue, a declaration that on the proper construction of the Super Fines Agreement dated 10 September 1996, as amended in 2004 (the Agreement), and in the events which have happened, as at 20 May 2010 (being the last day of the trial), the materials in the stockpile known to the parties as the 'Coarse Rejects Stockpile', located on the Woodie Woodie tenements, are Super Fines within the meaning of the Agreement.

129 As to the second issue, a declaration that on the proper construction of the Agreement, and in the events which have happened, PMI is entitled to use the tailings storage facility on the Woodie Woodie tenements known as Area 1 Pit, marked on the diagram attached hereto (being the attachment to the further reamended statement of claim), for the deposition of waste from its plant, and PMI is not obliged to bear or contribute to the cost of creating, operating or maintaining Area 1 Pit.