In the matter of Sun Cable Pty Ltd (Administrators Appointed)

Sun Cable Pty Ltd (Administrators Appointed) ACN 623 991 006 (Sun Cable) and its subsidiaries are engaged in the development of a large solar energy infrastructure project known as the AAPowerLink Project that plans to generate and distribute clean energy across Australia, Singapore, and other markets (the Project).

In July and October 2020, Consolidated Pastoral Company Pty Limited (ACN 010 080 654) (CPC) granted to Sun Cable options to enter into a long-term sub-lease and easements over a large area of land in the Northern Territory known as Powell Creek, within the Newcastle Waters station of which CPC is the pastoral leaseholder. In conjunction with each option, CPC also granted Sun Cable a licence to have access to the land during the option period for the purpose of undertaking feasibility investigations for the Project. If the options are exercised, the terms of the sub-lease and easements permit Sun Cable to use the land for the purpose of the Project, including installing Project infrastructure on the land.

Sun Cable’s assets, including its shares in its subsidiaries and its interests under the options, have been sold to Helietta Holdings 1 Pty Ltd on terms that require the options to be assigned to the buyer or its nominee by a specified end date. That end date is 31 August 2023. CPC has not approved the assignment and novation of the options to the buyer’s nominee. The buyer has a right to terminate the agreement in the event that the options are not assigned and novated by the end date.

These reasons concern:

Following an urgent concurrent hearing of those applications on 28 August 2023, I determined that it would be unjust in all the circumstances of this case to deprive Sun Cable of a judicial determination of its application, and that the Court therefore should not exercise its discretion to stay or dismiss Sun Cable’s application. I also determined that CPC has unreasonably delayed and withheld its approval of Sun Cable’s proposed assignee of the options, that CPC is now obliged to execute the proposed deeds of assignment and novation, and that the Court should make the orders sought by Sun Cable for specific performance of that obligation. On 29 August 2023, I made orders dismissing CPC’s application for a stay, and made the declarations and orders for specific performance sought by Sun Cable, on the basis that my reasons would be published as soon as possible. These are my reasons.

As I have already mentioned, the Project is being undertaken by Sun Cable and its subsidiaries, which are depicted in the diagram below (the Sun Cable Group):

Mr Christopher Clarke Hill, Mr David McGrath, and Mr John Park were appointed as the joint and several administrators of Sun Cable on 10 January 2023 (the Administrators). At that time, Sun Cable had procured various regulatory approvals for the Project, but the design was incomplete, and financing had not been obtained to commence construction. Sun Cable was not generating revenue and was reliant on funding from its shareholders to discharge its liabilities.

Sun Cable’s founding shareholders—Grokco Pty Ltd as trustee for the Grok Trust (Grok) and Squadron Energy Pty Ltd (Squadron)—were its primary source of funding. In the latter part of 2022, Sun Cable had sought further funding from Grok and Squadron in the amount of $65 million for Sun Cable’s ongoing costs of the Project. [1] The Administrators understand that Grok and Squadron had differing views at that time about the viability or feasibility of distributing renewable electricity generated in the Northern Territory to Singapore, and that they were unable to reach a consensus about the future direction and funding structure of Sun Cable. That impasse resulted in the appointment of the Administrators.

The Administrators engaged in a campaign to sell the Project assets, and to that end produced an Information Memorandum for potential buyers in February 2023 (the Sale Process). The Information Memorandum contained the following information about the Project that is relevant for present purposes.

The Information Memorandum presented an overview of the Project, which identified Stage 1 and Stage 2 components of the Project, and additional “emerging opportunities”. Stage 1 was described as delivering 2.7 gigawatts (GW) of electricity generated from solar energy, with a view to delivering approximately 66 per cent of that to Singapore and approximately 34 per cent to Darwin. Stage 2 was described as generating additional capacity of equal scale to Stage 1, with the inclusion of energy generated by wind. Approximately 100 per cent of the 3.0GW electricity proposed to be produced through Stage 2 was proposed to be delivered to Darwin.

The Information Memorandum stated that:

In relation to regulatory approvals, the Information Memorandum stated that:

In relation to the funding status of the Project, the Information Memorandum stated:

Mr McGrath gave evidence that the balance of the $210 million that had been raised in March 2022 has not been available for Sun Cable to draw down because the Project had failed to achieve certain milestones. The $65 million debt funding for Sun Cable to operate during the period of the administration was provided by Eriostemon Pty Ltd (Eriostemon), a company associated with Grok.

In relation to the land that is the subject of the options relevant to these proceedings, the Information Memorandum stated:

The Information Memorandum also stated:

The Information Memorandum described the role of each company within the Sun Cable Group. AAPowerLink Australia Assets Pty Ltd (AAPL) holds Project assets that are geographically located in Australia. AAPL is the prospective seller of electricity to be generated by the Project to Darwin, and the prospective exporter of such electricity to Singapore.

The Information Memorandum stated that, following the conclusion of the administration period, Sun Cable is expected to spend approximately $202.5 million in order to reach final investment decision and equity close in April 2024. Debt close is expected to be in January 2026. The estimated construction time frame for Stage 1 of the Project is 9.25 years after equity close.

The Sale Process concluded with Sun Cable and the Administrators entering into the agreement for the sale of the Project assets to Helietta Holdings 1 Pty Ltd on 26 May 2023 (the Sale Agreement and the Buyer).

The Buyer is part of the Grok group of companies.

The assets that are to be sold to the Buyer under the Sale Agreement include “Material Contracts”, intellectual property, and Sun Cable’s shares in each of the subsidiaries owned directly by Sun Cable—including Sun Cable Pte Ltd, which indirectly owns 100 per cent of AAPL, as shown in the diagram set out at [6] above.

The Sale Agreement provides that specified conditions precedent must be satisfied before completion of the Sale Agreement, including that counterparties to the “Material Contracts” consent to the novation of the relevant contract to the Buyer.

If all conditions precedent are not satisfied by the “End Date” stipulated in the Sale Agreement, then either party may terminate the Sale Agreement provided that it is not then in default.

Since entering into the Sale Agreement, the Administrators have sought and obtained the Buyer’s consent to amend the Sale Agreement by extending the End Date on three occasions. On the first occasion, the End Date was extended from 26 July 2023 to 2 August 2023. The second and third extensions moved the End Date to 18 August 2023, and then to 31 August 2023, respectively.

The Administrators have obtained the consent of the counterparties to all Material Contracts other than the following contracts (the Option Deeds):

The Sub-Lease Option Deed relates to 12,000 hectares of land at Powell Creek which is identified in the deed and defined as the “Option Area”.

The recitals to the Sub-Lease Option Deed state:

Pursuant to clause 2.1 of the Sub-Lease Option Deed, CPC granted to Sun Cable an irrevocable and exclusive option for Sun Cable to sub-lease the Option Area on the terms of the Sub-Lease in Annexure D to the deed.

The Sub-Lease in Annexure D to the Sub-Lease Option Deed provides for a sub-lease of the whole of a portion of the Option Area for an initial term of 40 years, with options to renew for six further terms of five years, for the sole purpose of the construction, operation, maintenance, and decommissioning of the Project. The rent payable under the Sub-Lease is $250 per hectare, increased annually by reference to the consumer price index.

The option is exercisable at any time within five years after the date of the deed by the Grantee delivering to the Grantor a notice of exercise of call option together with three copies of the Sub-Lease with all particulars completed by the Grantee, including the particulars of the size of the area of land to be sub-leased. Clause 10.1 of the Sub-Lease Option Deed provides that the Sub-Lease binds the Grantor and the Grantee from the time that those materials are delivered to the Grantor, irrespective of whether the Grantor signs the Sub-Lease. This is subject to clause 5.2 of the Sub-Lease Option Deed, which provides that the exercise of the option does not become binding until the Grantee, acting reasonably, is satisfied that the Northern Territory Minister for Environment and Natural Resources has granted written consent to the execution of the sub-lease in accordance with the Pastoral Land Act 1992 (NT), and the Grantee has entered into an Indigenous Land Use Agreement with either the registered native title holders or the prescribed body corporate for the native title holders of the Option Area.

The Sub-Lease Option Deed also includes in clause 6.1 a non-exclusive licence for the Grantee to enter and remain on the Option Area, and adjacent land owned or lawfully occupied by CPC, for the purpose of undertaking investigations in relation to the feasibility of the Project. The licence is granted for the five-year term of the deed, or until earlier termination of the deed or entry into the Sub-Lease. The licence fee payable by Sun Cable is $25,000 per annum, increased annually in accordance with the consumer price index. Clause 6.5 of the Sub-Lease Option Deed requires the Grantee to minimise adverse impacts to the environment and to comply with all environmental requirements or recommendations of relevant authorities. Clause 6.7 of the Sub-Lease Option Deed provides:

The Access Easement Option Deed relates to some parts of the land to which the Sub-Lease Option Deed relates, and to some additional adjacent land.

The recitals to the Access Easement Option Deed state:

Pursuant to clause 2.1 of the Access Easement Option Deed, CPC granted to Sun Cable an irrevocable and exclusive option to take an easement over the specified land on the terms set out in the Access Easement in the form of Annexure D to the deed.

The Conditions of Easement in Annexure D to the Access Easement Option Deed entitle the Grantee to exercise a right of way over the “Easement Site” and to construct an access road on that site. The Access Easement is for an initial term of 40 years, with options to renew for six further terms of five years.

The process for the exercise of the Access Easement Option, and the conditions precedent to the exercise of that option being binding, are the same as those processes and conditions for the Sub-Lease referred to at [30] above.

Pursuant to clause 6.1 of the Access Easement Option Deed, CPC granted Sun Cable a non-exclusive licence to enter and remain on the land that is the subject of the deed, and adjacent land owned or lawfully occupied by CPC, for the purpose of undertaking investigations in relation to the feasibility of the Project. The licence is granted for the five-year term of the deed, or until earlier termination of the deed or entry into the Access Easement. Clauses 6.5 and 6.7 of the Access Easement Option Deed are in the same terms as clause 6.7 of the Sub-Lease Option Deed set out at [31] above.

The Connection Easement Option Deed relates to land adjacent to or in the vicinity of the land covered by the Sub-Lease Option Deed and the Access Easement Option Deed.

The recitals to the Connection Easement Option Deed state:

Pursuant to clause 2.1 of the Connection Easement Option Deed, CPC granted to Sun Cable an irrevocable and exclusive option to take an easement over part of the relevant land on the terms set out in the Connection Easement in Annexure D to the deed.

The process for the exercise of the Connection Easement Option, and the conditions precedent to the exercise of that option being binding, are the same as those processes and conditions for the Sub-Lease referred to at [30] above.

The terms of the Connection Easement in Annexure D to the Connection Easement Option Deed entitle the Grantee to install and operate equipment for the transmission and distribution of electricity on, over, under, or through the Easement Site, and to convey, transmit, and distribute electricity and other electrical energy in all its forms from, on, over, under, and through the Easement Site. The Easement is for an initial period of 40 years, with rights to renew for six further terms of five years. The Easement Fee payable by the Grantee is $5,000 per annum, increased annually in accordance with the consumer price index.

Pursuant to clause 6.1 of the Connection Easement Option Deed, CPC granted Sun Cable a non-exclusive licence to enter and remain on the relevant land, and adjacent land owned or lawfully occupied by CPC, for the five-year period of the Connection Easement Option Deed for the purpose of undertaking investigations in relation to the feasibility of the “Transmission Infrastructure”, which is defined as meaning an electricity and transmission facility and its ancillary equipment and infrastructure. Clauses 6.5 and 6.7 of the Connection Easement Option Deed are in the same terms as clause 6.7 of the Sub-Lease Option Deed set out at [31] above.

Clause 13.1 of each of the Option Deeds provides:

Clause 17 of each of the Option Deeds provides for a dispute resolution process in respect of any disputes arising concerning the deed.

Clause 17.1(a) provides that the party claiming that a dispute has arisen must give written notice to the other party specifying and identifying the nature of the dispute.

If the dispute has not been resolved within three business days after service of the notice under clause 17.1(a), then clause 17.1(b) requires the dispute to be referred in the first instance to representatives nominated by the parties to meet and discuss the dispute in good faith, acting reasonably.

If the dispute has not been resolved within three business days of the commencement of those discussions, then clause 17.2(a) requires the representatives to jointly appoint an independent mediator to mediate the discussions. Clause 17.2(b) stipulates the process to be followed to appoint a mediator if the parties cannot agree on the appointment. Mediation must take place within five business days after the mediator’s appointment, and each party is required to attend and participate in the mediation in good faith.

Clause 17.3(a) provides that, if the dispute remains unresolved within five business days after the commencement of the mediation, the parties must appoint an expert to decide the dispute. Clause 17.3(b) sets out the process to be followed to appoint an expert if the parties cannot agree on the appointment. Clause 17.4 sets out the necessary qualifications for the expert. The expert must have five years current and continuous standing in their profession and, in the case of a dispute concerning a legal matter, must be a practising barrister or solicitor appointed by the president of the appropriate governing body of barristers or solicitors.

Clause 17.5 provides that the expert must give written reasons for their decision, which is final and binding on the parties “except for any manifest error”.

Clauses 17.6 and 17.7 make provision for payment of the expert’s fees, and for the appointment of a replacement expert if the appointed expert is unable to make a decision.

Clause 17.8(a) provides that a party must not start court or arbitration proceedings concerning a dispute arising under the deed, unless that party has complied with the provisions of clause 17. Clause 17.8(b) provides that the restriction in clause 17.8(a) does not prevent a party from “taking immediate steps to seek urgent interlocutory relief from a court”.

As I have already mentioned, it is a condition precedent to the Sale Agreement that counterparties to the Material Contracts consent to the novation of the relevant contract to the Buyer. The Administrators have obtained the consent of the counterparties to all Material Contracts other than the Option Deeds.

Mr McGrath has given evidence that the land that is the subject of the Option Deeds forms a critical part of the Project. The land was selected by Sun Cable as its preferred site for the Project both because it is one of the most consistently sunny places on Earth and because is very flat, making it suitable for solar panels. The land is also close to a railway corridor for the transmission of electricity and transport of equipment.

Shortly after the Administrators were appointed, Mr Troy Setter—Chief Executive Officer of CPC—sent an email to Mr Hill introducing himself and introducing CPC as the owner of the land “where Sun Cable plans to build the solar farm part of the project”. The Administrators and their staff, including Mr Drew Forbes, were in regular contact with Mr Setter during the period up to the conclusion of the Sale Process, kept him informed about the administration of Sun Cable and the Sale Process, and obtained CPC’s consent to disclose the Option Deeds to potential buyers.

As stated earlier in these reasons, [2] the Sale Process culminated in the Sale Agreement entered into with the Buyer on 26 May 2023.

On 29 May 2023, Mr Forbes sent an email to Mr Setter to arrange a discussion to “get the ball rolling on the formal assignment/consent process” following the conclusion of the sale process.

On 2 June 2023, Mr Forbes sent an email to Mr Setter attaching a letter from Grok Ventures dated 31 May 2023, which introduced the Buyer as an entity affiliated with Grok and referred to Grok’s support and significant equity investment in Sun Cable since 2019, and to a loan facility that Grok had provided to enable Sun Cable to continue progressing its operations during the voluntary administration. The letter stated:

The letter then enclosed a proposed novation deed which provided for the Option Deeds from Sun Cable to the Buyer with effect from the date of completion of the Sale Agreement. The letter requested that CPC sign and return the deed of novation at its earliest convenience, and invited CPC to contact Mr Jeremy Kwong-Law—Chief Executive Officer and Chief Information Officer of Grok Ventures—if it had any questions about the Project or the letter. The novation deed enclosed with the letter named the Buyer as the substitute party. The deed was not in precisely the same form as Annexure F to the Option Deeds, but CPC does not suggest that its terms differed from Annexure F in any material respect.

During the period between 5 June and 20 June 2023, Mr Forbes sent several emails to Mr Setter enquiring as to whether CPC had considered the proposed deed of novation and seeking to arrange a time to discuss CPC’s position. Mr Forbes and Mr Setter had a telephone discussion on the evening of 20 June 2023, following which Mr Forbes sent Mr Setter an email on the morning of 21 June 2023 reforwarding his email of 2 June 2023 attaching the Grok Ventures letter and deed of novation, and stating:

It appears that Mr Setter did not respond to that email. Mr Forbes sent a further email to Mr Setter on 27 June 2023 asking whether CPC had made any progress in relation to the proposed novation of the Option Deeds. Mr Setter’s executive assistant replied to Mr Forbes, advising that Mr Setter was on leave until 4 July 2023, and asking whether it could wait until his return. Mr Forbes replied on 29 June 2023 in terms that made it clear that the issue could not wait:

It appears that, in Mr Setter’s absence, Mr Forbes decided to reach out to another director of CPC, Ms Jacqui Cannon. On 29 June 2023, Mr Forbes sent an email to Ms Cannon (which he copied to Mr Setter) referring to discussions that Ms Cannon had been engaged in with Sun Cable in relation to the proposed novation of the Option Deeds. Mr Forbes attached his initial email to Mr Setter together with the 2 June 2023 letter from Grok Ventures and the proposed novation deed. Mr Forbes invited Ms Cannon to contact him if she had any questions and requested that CPC’s consent to the novation be confirmed as soon as possible.

Mr Setter replied to Mr Forbes later on 29 June 2023, stating:

It appears that no further information was forthcoming from Mr Setter or CPC in the following days. Mr Forbes sent a further email to Mr Setter and Ms Cannon of CPC on 4 July 2023 requesting a further update that morning. Mr Setter replied:

Terra Firma Investments Pty Ltd (TF Investments) was an unsuccessful bidder for the Project Assets in the Sale Process. TF Investments, and its advisers Terra Firma Capital Partners Pty Ltd (TF Capital), had access to detailed information about the Project through the Sale Process, including the information in the Information Memorandum to which I have referred above. [3]

There is a close connection between TF Investments and/or TF Capital, on the one hand, and CPC, on the other hand, the full extent and nature of which is not clear from the evidence. Mr Setter described “Terra Firma” as an adviser to CPC. Mr Setter also gave evidence that CPC’s majority shareholder, Mr Guy Hands, is the former Chief Investment Officer and former Chairman of “Terra Firma”. Mr Setter does not know whether CPC’s majority shareholder has any ownership interest in “Terra Firma”. A website for “Terra Firma” describes CPC as being “under Terra Firma’s stewardship”.

On the afternoon of 5 July 2023, Mr James White of TF Capital sent an email to Mr Setter about various matters, including “the Sun Cable list of conditions”. Mr White’s email stated that “as discussed, plan is for Manish & I to get these to you this week”. The reference to “Manish” is a reference to Mr Manish Yadav, whom Mr Setter described as an employee of “Terra Firma”. A schedule attached to the email listed various actions to be addressed during a visit by Mr Hands to CPC’s stations. The first item in that schedule related to “Suncable list of conditions”. The schedule recorded that Mr Yadav was to draft a list of “conditions we want to sign the change of control with new owners” following a meeting in Brisbane.

On the evening of 5 July 2023, Mr Forbes sent a further email to Mr Setter requesting an update following Mr Setter’s discussions with Terra Firma on 4 July 2023. Mr Setter replied by email to Mr Forbes (copied to Mr McGrath):

Mr McGrath understood Mr Forbes’ email as referring to the signed deed of novation. However, it appears from Mr White’s email to Mr Setter—to which Mr Forbes was not privy—that Mr Setter was in fact referring to a “list of conditions” that TF Investments and/or TF Capital and/or CPC wanted. Where it is either not necessary or not possible on the basis of the evidence to distinguish between TF Investments and TF Capital, I will refer to Terra Firma.

On 10 July 2023, Mr Forbes sent an email to Mr Setter and Ms Cannon stating:

On 14 July 2023, Mr Setter sent an email to Mr Forbes setting out the following “updated questions”:

Mr Setter gave evidence in cross-examination confirming that this list was compiled based upon a meeting that he had had with Terra Firma. Mr Setter acknowledged that Terra Firma had contributed to the list, but maintained that he and other people (whom he did not name) also had “a lot of input” into the list.

Mr Forbes replied to Mr Setter by email later that day requesting an urgent call on Monday, 17 July 2023, “to understand the basis for the below requests and expected timing, noting that the transaction is to complete on or before 26 July 2023”.

Mr McGrath and Mr Forbes did have a telephone call with Mr Setter and Ms Cannon on 17 July 2023 in which they discussed the 14 July information request, and in which Mr McGrath and Mr Forbes asked questions about the extent to which the 14 July information request was driven by Terra Firma. Neither Mr McGrath nor Mr Setter were cross-examined about their slightly different recollections of that conversation, and nothing material turns on those differences.

Mr Forbes sent an email to Mr Setter on 20 July 2023 attaching materials in response to the 14 July information requests, including a document setting out responses prepared by Sun Cable to the questions posed in the 14 July 2023 information request, a copy of a presentation prepared by the Administrators in June 2023 for the purpose of the Administration Funding Facility reporting on the expenditure and cash position of the Project, and corporate structure diagrams showing both the structure of the Sun Cable Group prior to completion of the Sale Agreement and the intended structure of the Buyer’s corporate group immediately after completion of the Sale Agreement.

Mr Setter replied by email on the morning of Friday, 21 July 2023 confirming that those materials had been received.

On Monday, 24 July 2023, Mr Forbes sent an email to Mr Setter asking whether there was any feedback on the materials provided and “importantly, whether you have an update on the timeline for execution of the novation”.

Mr Setter replied on Wednesday, 26 July 2023, stating:

On Thursday, 27 July 2023, Mr Setter sent a further email to Mr Forbes, advising that Terra Firma had requested a group call and had asked for a summary of the latest business plan, the budget for the next year, and an updated liquidity report or liquidity summary for Sun Cable, prior to the call.

In cross-examination, Mr Setter confirmed that Terra Firma wanted the business plan and budget for the next year, but maintained that he had also decided that he wanted that information after a discussion with Terra Firma earlier that morning. It is difficult to reconcile that evidence with the terms of Mr Setter’s 26 July email—which convey that the response to the request for CPC’s consent to the novation would be determined by Terra Firma on the basis of the information provided to it—and with the terms of Mr Setter’s 27 July email—which describe the further information requested as material that “they” (that is, Terra Firma) had asked for. However, nothing turns on this in circumstances where Sun Cable does not contend that the information was requested for the benefit of Terra Firma in connection with its interest in investing in the Project.

Mr Forbes had a call on 28 July 2023 with Mr Setter, Mr White, and Mr Yadav of Terra Firma, and Mr Kwong-Law of Grok Ventures. Mr Setter has given evidence that Mr Kwong-Law spoke about the viability and cost of supplying to Singapore, that it may not be viable to do so, and that there was still due diligence to be conducted on the subsea cable and work to be done on the undersea mapping. Mr Kwong-Law was not sure that it was going to work. Mr Setter also gave evidence that, during his discussions with Sun Cable on behalf of CPC before CPC entered into the Option Deeds, representatives of Sun Cable had said that Sun Cable would need a massive offtake to supply Singapore in order to make the Project viable.

On Tuesday, 1 August 2023, Mr Kwong-Law sent an email to Mr Setter, Mr White, Mr Yadav, and various other recipients—including Mr McGrath, to whom the email was copied. The email provided information in response to the 27 July information request, including a slide deck presentation for prospective investors dated August 2023. Mr Kwong-Law’s email stated:

The investor presentation appears to be a draft prepared on the assumption that the Sale Agreement is completed. It refers to Grok Ventures as the new majority owner of the Sun Cable renewables development platform. It contains a statement that Grok Ventures reaffirms Sun Cable’s goals for the Project and remains focussed on delivering electricity to Darwin and Singapore, and to implementing a financing strategy that ensures the Project is well positioned to reach financial close. In relation to that financing strategy, the presentation states that Grok Ventures is seeking capital partners to co-invest in order to fund development expenses up to Financial Close. The pre-Financial Close investment was proposed to be raised in two stages, with the first stage being for the work required to achieve conditional EMA license approval, and the second stage to be raised in 2024 following EMA license approval. The reference to “EMA” appears to be a reference to the Singaporean Energy Market Authority. The timing of Financial Close addressed in the investor presentation is entirely consistent with the dates specified in the Information Memorandum for Financial Investment Decision and Equity Close in 2024, and for Debt Close and Financial Close in 2026 for Stage 1 of the Project.

On Thursday, 3 August 2023, Mr Forbes sent an email to Mr Setter, Mr White, and Mr Yadav, stating:

Mr White replied on Friday, 4 August 2023, confirming that the information pack from Grok had been received and that Terra Firma was in the process of reviewing the new information. Mr White stated: “We appreciate the time sensitivity and will come back to you soon in relation to next steps.”

On Tuesday, 8 August 2023, Mr McGrath sent an email to Mr Setter attaching a letter, which stated:

On Wednesday, 9 August 2023, Mr White sent an email to Mr Forbes stating that, after completing their review of the information package provided by Grok, they had a better understanding of several points discussed during the telephone call on 28 July 2023, and that they were therefore able to narrow the focus of their questions to the following three main areas:

In cross-examination, Mr Setter confirmed that Mr White had written the list of questions and acknowledged that Terra Firma would have more interest than CPC in matters such as fund raising for the Project, because Terra Firma are considering investing in the Project. However, Mr Setter said that he was also interested in the questions asked on 9 August 2023. Mr Setter described the reasons for his interest in those questions at some length in his affidavit sworn on 27 August 2023.

In relation to the questions under the heading “Updated Business Plan”, Mr Setter gave evidence that it was “important for CPC to be satisfied that the first phase of the Proposed Project was still viable” because “[i]t is not in CPC”s interests to have a project on our land that we might have to clean up if the project collapses”. Mr Setter deposed that, before CPC entered into the Option Deeds:

In relation to the questions asked on 9 August 2023 about an updated business plan, Mr Setter deposed that:

In relation to the third question under the “Updated Business Plan”, Mr Setter deposed that he had asked about changes to the proposed mix of energy generation activities because CPC wanted to “satisfy itself as to the financial implications of the proposed change to energy generation”, and to “consider the impact on CPC of the proposed changes”, including any potential requirement for additional land, any potential impact on livestock on certain parts of CPC’s land, and any proposed change in the location of certain cables and their proximity to railway lines.

Mr Setter also deposed that the expected percentage share of long-term earnings to be derived from each energy activity “was (and remains) critical for CPC. That is because the solar farm is the most important project for CPC.”

In relation to the questions asked on 9 August 2023 under the heading “Partnership with Quinbrook”, Mr Setter deposed that he wanted to be satisfied that Quinbrook had “the experience and capability to develop and deliver the Proposed Project”, “ values that would align with the indigenous communities based on the Newcastle Waters station and the environment”, were “aligned with ESG”, and “understood the challenges with Northern Australia and that Darwin is not a big user of electricity". Mr Setter deposed that he wanted to be satisfied about these matters because “[it] was (and remains) important to CPC that it understands who it is in business with”. In addition, Mr Setter deposed that “CPC wanted to make sure that Grok Ventures’ partner on this project was motivated to follow through on the project”. CPC was “attempting to seek comfort that Quinbrook were aligned with Grok Ventures on this potentially very long term project and, to do this, sought to understand over what timescales Quinbrook were motivated and what objectives they were driving towards”. According to Mr Setter, the second question under the “Partnership with Quinbrook” heading asked for specifics of the milestones because that information was “necessary for CPC to reasonably consider whether the options under the Option Deeds are likely to be executed”.

Mr Setter deposed that the questions under the heading “Future Fundraising / Long Term Financing” in the 9 August 2023 information request were asked because “CPC was concerned that a very significant amount of long-term fundraising was likely to be required over the next few years in order for the project to be executable”, it appeared to be unclear whether plans to raise additional funding from external investors would succeed and, in that case, it was unclear whether Mr Cannon-Brookes was “prepared to and could ensure that the project was fully funded and proceeded”. According to Mr Setter, CPC was also concerned to understand whether AAPL intended meet “the same milestones and timing that Sun Cable had agreed to”, because “if the milestones were not met, and the options were not exercised, then CPC would do other projects with the land or have to adjust CPC’s other project plans”. Mr Setter deposed that the question about competition for investment between the onshore and offshore elements of the Project was important to CPC because it is concerned about a scenario in which available investment funds might be channelled into supporting offshore activities rather than onshore activities, and CPC was “seeking comfort that such a scenario would not likely to arise [sic], so as to avoid the risk of stalling of the part of the project on CPC’s land and failure by the Proposed Assignee to meet its rental payment obligations”. Mr Setter deposed that the final question about opportunities to be offered to prospective future investors was asked because CPC was concerned about “the long term alignment between Sun Cable’s future investors and existing investors” and wanted to understand whether AAPL was looking at “splitting the project, building a small onshore project that has little value to us and may not be viable or a bigger project that is viable.”

It is Mr Setter’s understanding that:

On Sunday, 13 August 2023, Mr McGrath sent an email to Mr Setter, Mr White, and Mr Yadav, noting that CPC and Terra Firma had at that point had approximately ten weeks in which to consider the request for consent to novation of the Option Deeds, and reiterating the Administrators’ position as set out Mr McGrath’s letter of 8 August 2023. The email stated that CPC was presently unreasonably withholding consent to the novation, which was a condition precedent to completion of the Sale Agreement. The email also stated that the Sale Agreement was of significant and material value to Sun Cable, and that it would allow for the Administrators to repay drawings made under the facility that had funded Sun Cable’s operations during the administration period, and for Sun Cable’s creditors to be paid in full. The email concluded by requesting CPC’s consent to the novation request by 5:00pm on Monday, 14 August 2023.

The time stipulated in Mr McGrath’s 13 August email came and went.

On the evening of Tuesday, 15 August 2023, Mr Setter sent an email to Mr McGrath stating:

Mr McGrath replied by email to Mr Setter later that evening in the following terms:

On the evening of 17 August 2023, Mr McGrath received by email a letter from McCullough Robertson Lawyers, who advised that they were acting on behalf of CPC. That letter referred to Mr McGrath’s 8 August 2023 letter and stated the writer’s understanding that the Administrators had requested CPC’s consent to the novation of the Option Deeds by 5:00pm on 17 August 2023. The letter requested that the Administrators provide copies of the Option Deeds, copies of the correspondence referred to in Mr McGrath’s 8 August 2023 letter, and a copy of the proposed deed of assignment and novation. The letter then set out the writer’s understanding that Sun Cable had refused to provide the information requested by CPC on 9 August 2023. The letter requested that Mr McGrath confirm that the writer’s understanding was correct or, alternatively, that the Administrators provide the information requested.

On 18 and 19 August 2023, the Administrators’ solicitors provided copies of the Option Deeds, novation deeds for each Option Deed in executable form in the form of Annexure F to each Option Deed, and copies of the previous correspondence between the Administrators, CPC, and Terra Firma concerning the novation of the Option Deeds.

On 18 August 2023, the Administrators sought and obtained the Buyer’s agreement to extend the End Date under the Sale Agreement. The End Date was extended to 31 August 2023 pursuant to an Amendment Deed executed on 18 August 2023.

On 18 August 2023, the Administrators’ solicitors replied to McCullough Robertson Lawyers’ letter of 17 August 2023. The Administrators’ solicitors set out the history of communications in relation to the proposed novation and assignment of the Option Deeds, the information requested by CPC on 14 and 27 July 2023, and the information provided by Sun Cable in response to those requests, without admitting that those requests were within the scope of the information that CPC was entitled to require under clause 13.1(a) of the Option Deeds. The Administrators’ solicitors described those information requests as “wide ranging” and as seeking information that is “not reasonably necessary to determine whether AAPL is able to satisfy Sun Cable’s obligations under the Option Deeds”. The Administrators’ solicitors then referred to the third information request made by CPC on 9 August 2023 as seeking “information that is plainly beyond what is reasonably required by CPC to determine whether AAPL is able to satisfy Sun Cable’s obligations under the Option Deeds. It is also information which Sun Cable does not have.” The Administrators’ solicitors rejected McCullough Robertson Lawyers’ contention that Sun Cable had failed to provide information required to satisfy requests made in accordance with clause 13.1(a)(i) of the Option Deeds. The Administrators’ solicitors conveyed Sun Cable’s offer to pay upfront the remaining licence fees payable under the Option Deeds and confirmed that Sun Cable would be responsible for CPC’s costs in connection with entering into the novation deeds. Noting that CPC had provided no comments on the form of novation deed enclosed with Grok Ventures’ 2 June 2023 letter, the Administrators’ solicitors enclosed deeds of novation in the form of Annexure F to the Option Deeds. The letter continued:

At 10:00am on 22 August 2023, the Administrators’ solicitors sent an email to CPC’s solicitors drawing their attention to the fact that the execution copies of the deeds of assignment and novation sent to them on 18 August 2023 wrongly named a related entity of CPC as the continuing party to the Option Deeds. The email attached replacement deeds naming CPC as the continuing party.

At 11:55am on 22 August 2023, CPC’s solicitors sent an email to the Administrator’s solicitors attaching a Notice of Dispute pursuant to clause 17 of the Option Deeds.

In describing the background to the disputes, the Notice of Dispute stated that CPC had sought information from Sun Cable in accordance with clause 13 of the Option Deeds in relation to the proposed assignment and novation of the Option Deeds to AAPL Assets.

The Notice of Dispute stated that several of the information requests made by CPC on 14 July 2023 “were addressed only in very brief terms or were not addressed at all”, including “requests relating to the key outstanding items that will impact deliverability of the project and its associated timelines” and “specific information … concerning future planned fundraising activities” and “specific information … concerning three new material contracts entered into since 1 April 2023”.

The Notice of Dispute stated that the draft investor slide deck provided in response to CPC’s second information request made on 27 July 2023 contained only some information about the business plan, budget, and updated liquidity report that CPC had requested, and that it “did not meet the information requested”.

The Notice of Dispute stated that Sun Cable had refused to provide any information in response to CPC’s third information request made on 9 August 2023, and that Sun Cable had contended that CPC was unreasonably withholding and delaying its approval of AAPL Assets as the proposed assignee in breach of clause 13.1(a) of the Option Deeds.

The Notice of Dispute then set out the disputes that had arisen between CPC and Sun Cable under the Option Deeds in the following terms:

The Notice of Dispute was the first occasion on which CPC had communicated to Sun Cable or the Administrators any complaint about the information provided in response to CPC’s 14 July and 27 July information requests.

The Notice of Dispute concluded by requesting that Sun Cable advise as to who it nominated to act on its behalf in progressing the first stage of the clause 17 dispute resolution process.

Sun Cable filed its application for declaratory relief and orders for specific performance on 23 August 2023. In resisting the application being set down for hearing on urgent basis, CPC made submissions to the Court suggesting that there was no urgency because it was open to the Administrators to seek the Buyer’s agreement to a further extension to the End Date that would allow sufficient time for Sun Cable and CPC to engage in the dispute resolution process provided for in clause 17 of the Option Deeds.

By email dated 27 August 2023, Mr Kwong-Law of Grok Ventures informed Mr McGrath that the Buyer would not agree to extend the End Date. Mr Kwong-Law’s email states:

Mr McGrath gave evidence that, if the Sale Agreement is completed, the Buyer (a Grok-related entity) will have to outlay a relative small sum after part of the purchase price is offset against the debt owing to Eriostemon under the facility referred to at [14] above, which has exceeded the initial $65 million facility limit during the course of the administration. If the Sale Agreement is terminated, then the Administrators will have insufficient funding to continue to operate Sun Cable’s business while seeking an alternative buyer for the Project assets and, in the absence of further funding, the Administrators will have to recommend at the second meeting of creditors that Sun Cable be placed into liquidation. In a liquidation scenario, Sun Cable will have no liquid assets to be realised for distribution to creditors, and no funds to repay the debt to Eriostemon. There is a strong probability that the whole of Grok’s investment in the Project to date would be lost.

It was put to Mr McGrath in cross-examination that, if the completion of the Sale Agreement was required to be deferred to enable Sun Cable and CPC to undertake the clause 17 dispute resolution process in relation to the disputes identified in the Notice of Dispute, then it would be highly like that the Buyer would not terminate the Sale Agreement while that process was on foot. Mr McGrath answered that he did not know what the Buyer would do because he had not specifically asked it about that scenario. However, the Buyer had informed him that it has no intention of extending the End Date. I infer that Mr McGrath was referring to the email from Mr Kwong-Law referred to at [114] above. Mr McGrath gave evidence that it is his understanding that the Buyer remains highly motivated to complete the Sale Agreement by the current End Date.

Sun Cable seeks:

By interlocutory process filed on 24 August 2023, CPC seeks an order that all of the claims referred to above be stayed or dismissed on the grounds that Sun Cable and the Administrators have commenced the application for declaratory relief and specific performance without complying with the parties’ agreed dispute resolution process in clause 17 of the Option Deeds.

Subject to one qualification, the disputes described in the Notice of Dispute issued by CPC on 22 August 2023 are central to the resolution of the issues raised by Sun Cable’s proceedings commenced on 23 August 2023. The qualification is that CPC relied only on Sun Cable’s failure to provide the information that it requested on 9 August 2023 in disputing Sun Cable’s allegation that it had unreasonably withheld or delayed its approval of AAPL as the proposed assignee. The non-specific complaints expressed in the Notice of Dispute about Sun Cable’s responses to CPC’s first and second information requests made on 14 and 27 July 2023 thereby became irrelevant to the determination of the proceedings.

Sun Cable does not contend that the “first dispute” (to the extent that it concerns the 9 August information request) and the “second dispute” described in the Notice of Dispute fall outside the scope of clause 17 of the Option Deeds. However, Sun Cable submits—and I accept—that its claim in these proceedings for an order for specific performance is not capable of being determined by an expert under the clause 17 dispute resolution process.

As Sun Cable and CPC submitted, the Court has a wide discretionary power to stay legal proceedings where the parties have entered into a binding contract to engage in an alternative process for the resolution of their dispute, including a process that involves the determination of that dispute by an expert.

The principles that inform the exercise of the discretion are well established and were not in contest in the present case. [4]

The starting point for the exercise of the discretion is that the parties should be held to their bargain. The onus rests on the party opposing a stay to demonstrate good reason why the court action should be allowed to proceed. That onus has been described as a heavy one.

A stay will be refused if it would be unjust in all the circumstances to deprive the party opposing the stay of the right to have its claim determined judicially. Examples of matters that may, depending on all the circumstances, justify refusal of a stay include where:

The question is whether Sun Cable has discharged its onus of proving that, in the circumstances of the present case, it would be unjust to deprive it of the right to have its claims for declaratory relief and specific performance determined judicially.

Sun Cable submits that it would be unjust to stay the proceedings because the contractual dispute resolution process in clause 17 of the Option Deeds could not be completed before the End Date under the Sale Agreement of 31 August 2023. If the proceedings are stayed pending the parties undertaking that process, the Buyer will therefore become entitled to terminate the Sale Agreement at any time after 31 August 2023. Accordingly, there is a risk that the Buyer will terminate the Sale Agreement, and it is unjust that Sun Cable should be exposed to that risk.

CPC submits that it has properly invoked the agreed dispute resolution process, and that it would not be unjust for these proceedings to be stayed whilst the parties undertake that process to the point of a binding outcome as provided for in clause 17 of each Option Deed. CPC submits that this contractual obligation agreed between Sun Cable and CPC under the Option Deeds should not be undermined by reason of the impending End Date under the Sale Agreement, which was determined by Sun Cable and the Buyer, and which is entirely outside CPC’s control.

CPC further submits that Sun Cable (acting through the Administrators) and the Buyer agreed to extend the End Date to 31 August 2023 in circumstances where Sun Cable now contends that CPC had constructively refused to approve AAPL as the assignee even before CPC made its first information request on 14 July 2023, and where the Administrators and the Buyer must have known the terms of the Option Deeds they were seeking to have assigned to AAPL, including the terms of clause 17. The extended End Date that they agreed upon on 18 August 2023 did not allow sufficient time for completion of the clause 17 process. Although clause 17 had not been invoked by Sun Cable or CPC at the time of that negotiation between Sun Cable and the Buyer, CPC submits that the Administrators must have known that there was a dispute from 13 July 2023 (being the date as at which Sun Cable now contends that CPC had constructively refused to consent to the proposed assignment and novation of each Option Deed), on 9 August 2023 (when CPC issued its third information request), or from 13 August 2023 (when Mr McGrath sent his email to Mr Setter in response to the third information request, stating that CPC was unreasonably withholding its consent to the assignment and novation of the Option Deeds). CPC submits that it was therefore open to Sun Cable to invoke the clause 17 process on and from 13 July 2023, or alternatively on and from 9 August 2023, or alternatively on and from 13 August 2023. CPC points to the absence of evidence that the Administrators sought the Buyer’s agreement on 18 August 2023 to extend the End Date by a period that would have been sufficient for Sun Cable and CPC to undertake and complete the clause 17 process. CPC submits that there is no evidence that the Administrators would have then been unable, or that they are presently unable, to secure the Buyer’s agreement to a longer extension period. Indeed, CPC contends that it would be in the commercial interests of the Buyer and Grok to agree to a longer extension period. For those reasons, CPC characterises the impossibility of completing the clause 17 process prior to 31 August 2023 as a problem of Sun Cable’s own making, and submits that this problem does not render it unjust to stay these proceedings.

Mr McGrath was not cross-examined about the reasons for the length of the extension to the End Date to 31 August 2023 that was negotiated and agreed with the Buyer on 18 August 2023, or about the commercial interests—of Sun Cable, on the one hand, and of the Buyer, on the other hand—that informed that negotiation. Sun Cable submits that the notion that the Administrators and the Buyer must have had the terms of clause 17 of the Option Deeds in mind when negotiating the extension of the End Date under the Sale Agreement is absurd. Sun Cable submits that the setting of an end date under a sale agreement is a matter that is negotiated having regard to the commercial deadlines of the buyer and what needs to be done in order for the transaction to complete. It cannot be expected to turn on a process under an agreement between the seller and a third party that has not been invoked at the time of the end date negotiation between the buyer and the seller, in circumstances where that process may or may not be invoked by the third party in the future.

In my opinion, it would be unjust to stay these proceedings—depriving Sun Cable of a judicial determination of its claims for declaratory relief and specific performance—for the following reasons.

Mr Kwong-Law’s email of 27 August 2023 establishes that the Buyer does not intend to extend the End Date beyond 31 August 2023 because it understands from the Singaporean EMA that the Buyer cannot submit an application to the EMA for a Conditional Electricity Import Licence as part of the 4GW Singaporean Government tender process until the Sale Agreement has been completed, and that the EMA will not accept any such application submitted after mid-September because the EMA requires time to review and consider all applications as part of that tender process. An import licence from the EMA is described as a one of the “major regulatory approvals” for the Project in the Information Memorandum referred at to [12] above. Its importance to the Project is also apparent from the draft investor presentation referred to at [83] above. Mr Kwong-Law’s email of 27 August 2023 states that it would be “a hugely value destructive event” if Sun Cable is precluded from applying for and obtaining a Conditional Licence because the export of renewable energy to Singapore is “core” to Grok’s business plan for the Project and, without that element, that business plan would be “severely impacted”. Those are the reasons given in Mr Kwong-Law’s email for the position there stated that “Grok cannot agree” to any further extension of the End Date.

Mr Kwong-Law’s email was admitted into evidence subject to an order under s 136 of the Evidence Act 1995 (NSW) limiting its use so that it is not evidence of the truth of the statements recorded in the email as having been made to Grok by representatives of the EMA. The email is nevertheless evidence of the intention of Grok and the Buyer not to agree to any further extension of the End Date under the Sale Agreement, and their reasons for that intention [5] . CPC’s submissions effectively invited the Court to infer that Grok would be able to negotiate with the EMA to submit an application for a Conditional Licence later than mid-September 2023, that an extension to the End Date under the Sale Agreement would therefore not be the “hugely value destructive event” that Mr Kwong-Law describes, and that it is in Grok’s commercial interests to either agree to a further extension of the End Date or to refrain from terminating the Sale Agreement after 31 August 2023 because this would facilitate a resolution of the current dispute between Sun Cable and CPC, leaving open the prospect of the eventual completion of the Sale Agreement which will in turn facilitate the repayment of the administration funding facility to Eriostemon in full. On Mr McGrath’s evidence referred to at [115] above, the alternative outcome if the Buyer were to terminate the Sale Agreement is a strong probability that the whole of Grok’s investment in the Project to date—including through the administration funding facility—would be lost.

I reject those submissions made by CPC. There is no rational basis to infer that the EMA would depart from the timeframes that it has told the Buyer it intends to apply to the 4GW Singaporean Government tender process in order to accommodate one tenderer. Nor is there any rational basis for inferring that the Buyer would assume that the EMA could be persuaded to adopt such a course. That is because any such course would be likely to found complaints, and possibly claims against the EMA, by other tenderers participating in the 4GW Singaporean Government tender process.

Mr Kwong-Law’s description of the Buyer being precluded from applying for and obtaining a Conditional Licence as a “hugely value destructive event” is entirely consistent with the discussion of electricity exports to Singapore, and a licence to export to that market, in the Information Memorandum and in the more recent investor presentation. There is no rational basis for inferring that the Buyer would not, in truth, regard it as a value destructive event, or that it would be willing to risk such an event.

Any extension of the End Date under the Sale Agreement to facilitate the completion of the clause 17 dispute resolution process under the Option Deeds, which commenced on 22 August 2023, would put the End Date beyond mid-September 2023. The same is true of any extension that the Administrators might have sought to negotiate with the Buyer on 18 August 2023 if time had already started running under clause 17 from either 9 or 13 August 2023. Even after the completion of the clause 17 process at some time after mid-September 2023, there would be the prospect of Sun Cable and CPC litigating disputes about whether the expert determination had been made in accordance with the Option Deeds. [6] Depending on the outcome of the expert’s determination, further time may also be required for Sun Cable to apply for orders for specific performance requiring CPC to take steps necessary to give effect to the determination. I reject CPC’s submission that there is no evidence that the Administrators would have been unable, or are presently unable, to secure the Buyer’s agreement to extend the End Date for a period sufficient to accommodate the clause 17 process. Mr Kwong-Law’s 27 August 2023 email is evidence that, on the balance of probabilities, the Administrators would not have been able to negotiate such an extension. CPC’s contention that it would be in the commercial interests of both the Buyer and Grok to agree to such an extension is without foundation, and I reject it. If the Buyer were to agree to such an extension, or if it undertook to refrain from terminating the Sale Agreement for a period following the End Date on 31 August 2023, the Buyer would be exposed to the risk of being obliged to complete the Sale Agreement (if the clause 17 process resulted in an outcome favourable to Sun Cable) in circumstances where it understands that it would have lost the opportunity to apply for a Conditional Licence from the EMA in the meantime. There is no proper basis for drawing the inference for which CPC contended—that it would be in the Buyer’s commercial interests to take that risk in order to keep alive a possibility of the administration debt facility being repaid to Eriostemon. The Court will not speculate about where the balance of the commercial interests of different entities within the Grok group of companies lies. Having regard to all of those matters, the notion underpinning CPC’s submissions—that the Buyer would probably have given some binding undertaking to Sun Cable to refrain from terminating the Sale Agreement for some period after 31 August 2023, if only the Administrators had asked it to do so—is wholly unrealistic, as Sun Cable submitted.

CPC’s submission to the effect that Sun Cable is responsible for all of the difficulties referred to above because it failed to invoke the clause 17 process as early as 13 July 2023 lacks substance, and I reject it. Whilst Sun Cable now contends that CPC had constructively refused to approve AAPL as the assignee by 13 July 2023, that is a contention that has emerged from looking at the events as a whole and applying some hindsight. There is no evidence to support an inference that Sun Cable viewed CPC’s conduct as amounting to a constructive refusal by 13 July 2023 at the time. I do not consider that Sun Cable’s conduct in engaging with CPC’s first two information requests in a cooperative manner during the period from 14 July until 8 August 2023 can fairly be said to have created the problems described above, such that the Court should now exercise its discretion to stay these proceedings and deprive Sun Cable of a judicial determination of its claims. In any event, I have rejected Sun Cable’s contention that CPC had constructively refused to approve the proposed assignee by 13 July 2023, for the reasons explained below.

For all of those reasons, it would be unjust in all the circumstances of this case for the Court to exercise its discretion to stay these proceedings.

The issues raised by the parties’ submissions may be summarised as follows.

First, had CPC constructively refused to approve AAPL as the proposed assignee as at 13 July 2023 by unreasonably failing to respond to Sun Cable’s requests for approval during the period from 2 June 2023 until 13 July 2023?

Second, in the period after 14 July 2023, did CPC unreasonably withhold its approval by insisting on the provision of the information requested on 14 July, 27 July, and 9 August 2023, and by declining to approve AAPL without that information and, if so, is CPC obliged to provide its approval and execute the proposed deed assignment and novation in respect of each Option Deed?

Although this second issue was expressed by the parties as arising in respect of the period from 14 July 2023 onwards, their submissions were directed solely to the third information request made by CPC on 9 August 2023. My consideration of this issue below is therefore similarly confined.

The second issue turns on:

Although the first and second issues arise in relation to each Option Deed, the parties’ submissions were directed to the Sub-Lease Option Deed, implicitly assuming that the outcome in relation to that deed would apply to the Access Easement Option Deed and the Connection Easement Option Deed. I proceed on the same basis, recognising that it was common ground between the parties that the three Option Deeds are an interconnected suite of agreements.

I have considered all of the parties’ written and oral submissions in relation to the first and second issues. Given the urgency with which these reasons for judgment have been prepared, it has not been practicable to refer to every detail of those submissions. Nor has it been necessary to do so in order to explain my reasons for upholding Sun Cable’s claims for declarations and specific performance.

The applicable principles may be summarised as follows: [7]

CPC submitted that the obligor is entitled to rely on a ground for refusing consent that was not known to, and therefore not relied on, by the obligor at the time of refusal. [8] However, that submission does not seem to me to be relevant to the determination of the issues in the present case, because CPC did not identify any ground for delaying, withholding or refusing its approval of AAPL as the assignee that it relies on in these proceedings, which was not known and therefore was not relied on by CPC, at the relevant times.

In oral closing submissions during the hearing, senior counsel for CPC disavowed any suggestion that the change in the proposed assignee from the Buyer to AAPL was relevant to the issues described in Mr Setter’s evidence as affecting CPC’s consideration of the proposed assignment and novation.

Nevertheless, I do not think that CPC can sensibly be said to have constructively refused to approve AAPL as the proposed assignee by 13 July 2023, in circumstances where CPC did not know that AAPL was the proposed assignee until 10 July 2023. [9] I therefore reject Sun Cable’s submissions in relation to the first issue.

I accept CPC’s submission that Sun Cable bears the onus of establishing that it has provided to CPC such information as it reasonably required in accordance with clause 13.1(a)(i) of the Option Deeds, and that CPC has unreasonably delayed or withheld approving AAPL as the proposed assignee, in breach of clause 13.1(a)(ii) of the Option Deeds.

At the time that CPC entered into the Option Deeds, the ability of Sun Cable to comply with the tenant’s obligations under any Sub-Lease that it might ultimately exercise the option to enter into was dependent on the successful execution of the Project. As senior counsel for CPC said in oral closing submissions, neither Sun Cable nor any of its subsidiaries in the Sun Cable Group will have any assets of value if the Project fails. If the Sale Agreement is completed, that will be the case in relation to the Buyer and the Sun Cable Group subsidiaries it will control, including AAPL.

At the time that CPC entered into the Sub-Lease Option Deed in July 2020 and the other Option Deeds in October 2020, Sun Cable had raised only $36 million (from the Series A capital raise undertaken in November 2019). [10] No further capital was raised until March 2022. [11] It is plain from the Information Memorandum prepared in February 2023 that the amount of $36 million was, by any objective measure, a small part of the total funding that would be required to investigate the feasibility of the Project, obtain the necessary regulatory approvals, design and construct the Project across the large geographical area of its intended operation, raise the funding required to design and construct the Project and, assuming the successful completion of all of those activities, deliver and sell the electricity proposed to be generated by the Project to local and foreign electricity markets.

The Option Deeds were entered into before Sun Cable had investigated and determined the feasibility of the Project, or at least those aspects of it proposed to be undertaken on CPC’s land that was the subject of the Option Deeds. Sun Cable’s rights under the Option Deeds included a licence to access that land for the purpose of investigating the feasibility of the Project. Those feasibility investigations were one of the purposes for which the Option Deeds were entered into, as recorded in the recitals.

Viewed objectively, the information available to CPC when it entered into the Option Deeds could not have allowed CPC to assess whether the very long-term Project was “viable”. The information that was contained in Sun Cable’s proposal to CPC dated 30 January 2020 stated that Sun Cable was developing the Australia-Singapore Power Link (ASPL) to supply Singapore and Darwin with competitive, dispatchable renewable electricity. The “key aspects” of the Project were described as a 10GW capacity solar farm with battery storage on up to 12,000 hectares, a high voltage overhead transmission line system to Darwin, a converter terminal “tap” supported by a Darwin-based battery, and a 2.2GW subsea cable system connecting to Singapore’s transmission grid, supported by a Singapore-based battery. The proposal described the components of infrastructure that were proposed to be installed on CPC’s land if CPC granted the option for the Sub-Lease, and if the Project proceeded and Sun Cable exercised the option. The proposal stated that: “Project development will continue to the target financial close date of end 2023. Construction will run from 2024 to late 2027. The likely operational lifespan of the project is 65 years.” The following statement was the only information about Sun Cable and its investors contained in the proposal:

Mr Griffin’s previous and existing projects listed in Appendix A to the proposal were installations between 30 and 140 megawatts (MW) in size, compared to the 10GW (or 10,000MW) capacity solar farm that was envisaged to form part of Sun Cable’s Project. Of the 26 projects listed in Appendix A, ten were operational, six were under construction, three were described as “construction imminent”, and seven were in the development phase.

When CPC entered into the Option Deeds, the feasibility studies were yet to be undertaken for the Project, and their outcome could not have been predicted. That is recorded in the recitals to each of the Option Deeds, which also stated that Sun Cable was yet to obtain both the financial support and the regulatory approvals that would be required to develop the Project, or parts of the Project, on the option land. Even assuming that those feasibility studies would prove to be favourable, CPC could not have made any meaningful assessment about whether Sun Cable would successfully raise the necessary funding to design and construct the Project, or about whether the design and construction would succeed in delivering the capability to generate renewable electricity in the manner and on the scale proposed, and on competitive terms.

It is unnecessary to enumerate all of the other uncertainties inherent in the nature and scale of the Project, which Mr Setter describes as “visionary”. In his affidavit sworn on 27 August 2023, Mr Setter did not identify any information provided to CPC during what he describes as its “due diligence” process that CPC undertook after receiving Sun Cable’s proposal referred to above, and before entering into the Option Deeds, that could have provided a basis for CPC to make the assessments referred to above. Mr Setter’s evidence referred to information that Sun Cable provided to CPC about the other projects that Mr Griffin and his team had delivered in Australia and internationally. As I have explained above, [12] the size of those projects was not comparable to the Project. Mr Setter also referred in very general terms to explanations given to CPC by Sun Cable representatives about the “broad and deep shareholder basis and the commitments from new shareholders to back the development and build stage of the company and project”. Having regard to the events that subsequently resulted in the appointment of the Administrators, I infer that these were not binding commitments. Mr Setter also referred to the “fully subscribed capital raise” that had been “taken up by the existing shareholders, meaning that Sun Cable did not need to seek external capital”. As I have set out above, [13] that capital raise was for $36 million only. Put simply, CPC was not in a position when it entered into the Option Deeds to assess whether Sun Cable was ultimately likely to exercise the options and, if so, whether it would be likely to be able to comply with all of its obligations under the Sub-Lease—both for the initial 40-year term and for the total term of up to 70 years if options to renew were exercised.

Notwithstanding all of the uncertainties referred to above, CPC granted an option to Sun Cable to enter into a sub-lease of up to 12,000 hectares of CPC’s pastoral leasehold land at Powell Creek for a term of at least 40 years, and up to 70 years including renewal periods. The option was granted on terms that permitted Sun Cable to unilaterally determine if and when it exercised the option, as well as the size of the area of the land over which it would take the Sub-Lease. That, in turn, would determine the amount of rent that would be payable to CPC under the Sub-Lease. The terms of the Sub-Lease provided no security for the tenant’s obligations to which CPC could have recourse in the event of default by the tenant, other than a decommissioning bond which Mr Setter has given evidence is only provided in stages, and only after the first 20 years of the Sub-Lease have expired. The Sub-Lease Option Deed conferred no right on CPC to require any information about the status of the Project, Sun Cable’s financial status, or any other matter before Sun Cable became entitled to exercise the option and the Sub-Lease became binding on CPC.

Clause 13.1(a)(i) of the Option Deeds requires Sun Cable to provide to CPC “all information … which is reasonably required by [CPC] to determine whether a proposed assignee (or the party in Control of the proposed assignee) is able to satisfy the Grantee’s obligations under this Deed” (emphasis added). As CPC submits, the word “Deed” is defined in clause 1.1 of each Option Deed as “this deed and includes the Annexures attached”. CPC submits that it follows “as a matter of text” that “the matter that CPC is entitled to determine under clause 13.1(a)(i) is whether a proposed assignee is able to satisfy the Grantee’s obligations, not only under clause 6 of the Option Deed but also under the sublease which is Annexure D to the Option Deed”. I reject that submission, which relies on reading the words “this Deed” without regard to their immediate context within the phrase “the Grantee’s obligations under this Deed”. The form of Sub-Lease in Annexure D to the Sub-Lease Option Deed forms part of “this Deed”, but the Grantee is under no obligation to exercise the option and, if the option is not exercised, the Grantee will never have any obligations in respect of Annexure D. CPC submits that the “obligations contained in the sublease document become binding by force of the terms of the Option Deed” when the Grantee delivers the notice of exercise of option and the sub-lease document to CPC in accordance with clause 4 of the Sub-Lease Option Deed, and that “there is not a new and different contract formed” by the exercise of the option. [14] I reject that submission, which fails to grapple with the fact that Grantee must determine the size of the area of land in respect of which it wishes to enter into the Sub-Lease, and complete those particulars in the Sub-Lease (which will directly affect the calculation of the rent payable), before delivering those documents to CPC in order to exercise the option.

In my opinion, a reasonable businessperson with knowledge of the nature of the Project and its inherent uncertainties to which I have referred above, [15] with knowledge of the commercial purpose and objects to be secured by the Option Deeds as recorded in the recitals to each deed, and having regard to Sun Cable’s right under the Sub-Lease Option Deed to determine the area of land (if any) in respect of which it would exercise the option to enter into a Sub-Lease (which would, in turn, affect the amount of rent payable under any such Sub-Lease), would have understood the words “the Grantee’s obligations under this Deed” in clause 13.1(a)(i) as referring to the obligations owed by Sun Cable to CPC under the Option Deed at the time of the proposed assignment, and any other obligations that fall to be performed by the Grantee under the Option Deed during the remainder of its five-year term. In my opinion, the reasonable businessperson would not have read those words as extending to any obligations that the Grantee may owe to CPC in the future under a potential Sub-Lease that has not been entered into as at the date of the proposed assignment, and that may never be entered into during the term of the Option Deed. To read the words in that way would strain their literal meaning and would also make commercial nonsense of clause 13.1(a) by obliging the Sun Cable to provide to CPC information of kind which it would be unable to provide because the proposed assignee’s ability to satisfy any future obligations under the Sub-Lease would depend on the Project being developed and successfully operated during the term of that potential Sub-Lease. This is nonsensical in circumstances where one of the express objects of the Option Deed was to facilitate the Grantee investigating whether the Project is even feasible. [16] I reject CPC’s submission the “evident commercial purpose” of clause 13.1(a)(i) was “to allow CPC to protect itself against the danger of an assignee who might not be able to perform the obligations under the Option Deeds, including under the 40 year sub-lease”. In so far as that submission concerns the Sub-Lease, the “danger” is inherent in the nature of the Project and the uncertainties referred to above. The Sub-Lease Option Deed provided no protection for CPC against that danger vis-à-vis the Grantee. Clause 13.1(a)(i) does not provide a mechanism for CPC to protect itself against that same danger vis-à-vis a proposed assignee.

For those reasons, and irrespective of whether the Sub-Lease Option Deed is properly characterised as a conditional contract to grant a sub-lease, [17] I reject CPC’s submissions that clause 13.1(a)(i) of the Sub-Lease Option Deed, properly construed, required Sun Cable to provide to CPC with information requested by CPC in order to determine whether AAPL is able to satisfy the rental and other obligations of the tenant under a prospective future Sub-Lease of either the whole or some presently unknown part of the Option Area as defined in the Sub-Lease Option Deed, under which the amount of rent payable will depend on the size of the land to be sub-leased.

The information requested by CPC on 9 August 2023 is identified at [87] above. The requests relate to the business model and plans for the Project, the relationships between Sun Cable and its contractors engaged for the Project, and future fundraising plans. All of those matters are ultimately directed to the prospects of the Project being successfully developed and operated in the future, which will impact upon the ability of the proposed assignee AAPL to comply with any Sub-Lease, Access Easement, and Connection Easement, if the options are exercised. The information requests are not directed to AAPL’s ability to comply with the Grantee’s obligations under the Sub-Lease Option Deed if it is assigned and novated. The same is true in relation to the Access Easement Option Deed and the Connection Easement Deed. For the reasons explained above, Sun Cable was not obliged by clause 13.1(a)(i) of the Option Deeds to provide that information to CPC.

CPC submits that, in determining whether to approve AAPL as the assignee, it is entitled to take into account whether AAPL has the willingness and financial capacity to develop, construct, and operate a viable long-term project on CPC’s land, and whether AAPL is able to satisfy its obligations under the Option Deeds and under the 40-year Sub-Lease that is the subject of the Sub-Lease Option Deed. CPC submits that it is entitled to be positively satisfied of those matters before approving AAPL as the proposed assignee. I reject those submissions. They are inconsistent with the principles summarised at [145] above, having regard to the terms of the Option Deeds, their commercial object, and the circumstances in which they were entered into, as described above. It is plain from the information about the Project contained in the February 2023 Information Memorandum that the matters about which CPC now seeks to be satisfied are uncertainties that are inherent in the nature and scale of the Project, and that they are uncertainties of the same kind as those that existed when CPC entered into the Option Deeds.

By withholding its approval of AAPL as the assignee on the basis that Sun Cable has not provided the information requested on 9 August 2023, CPC is withholding that approval for reasons that are extraneous to the relationship between CPC and Sun Cable. That relationship—which CPC entered into in the circumstances described above—is one of pastoral leaseholder and option holder, under which CPC has the right to continue its existing agricultural use of the land during the option period, and Sun Cable has the right to exercise the option to enter into a long-term sub-lease, the key elements of which will be determined unilaterally by Sun Cable at the time of exercising the option. As I have already mentioned, CPC does not at that point have the right to require from Sun Cable any assurances or guarantees about the business plans, fundraising activities or financial status of the Project, or about Sun Cable’s willingness and financial capacity to develop, construct, and operate the Project on CPC’s land and to comply with the terms of that Sub-Lease over its 40 year term.

CPC is entitled to be satisfied that AAPL is a “suitable substitute” for Sun Cable in that relationship, and to consider any detriment to any proprietary and financial interests to which CPC is entitled that might flow from approving the proposed assignment and novation to AAPL, consistently with CPC’s existing rights under that relationship. [18] It is plain from the terms of the 9 August 2023 information request, and from Mr Setter’s evidence, [19] that CPC is seeking to satisfy itself that Stage 1 of the Project is “viable” and is “going to work”, including by seeking assurances that Mr Cannon-Brookes is “prepared to and could ensure that project was fully funded and proceeded”, in order to “avoid the risk of stalling of the part of the project on CPC’s land”. By withholding its approval of AAPL as the assignee on the basis that Sun Cable has not provided the information requested on 9 August 2023, CPC is seeking to acquire a commercial benefit for itself—both by eliminating or reducing risks that it necessarily accepted when it entered into the Option Deeds in the circumstances described above, [20] and by increasing the risks to Sun Cable by appropriating to CPC a right to withhold approval of an assignee on grounds that CPC could not have invoked to preclude Sun Cable from exercising the options. It is important to bear in mind that Sun Cable has complied with its obligations under the Option Deeds to date, and has investigated the feasibility of developing the solar farm component of the Project on CPC’s land, on the basis of its rights in the Option Deeds, including its right to assign the Option Deeds in accordance with clause 13.1. As Sun Cable submitted, the re-allocation of risk that CPC seeks to achieve is a collateral advantage, in the sense that it is outside the contemplation of the Option Deeds. [21] It is unreasonable for CPC to seek to replace the contractual relations created by the Option Deeds by some alternative arrangement more advantageous to CPC, even assuming that it might have been consistent with CPC’s proprietary or commercial interests to enter into that alternative arrangement with Sun Cable at the outset. The point is that CPC did not do so. [22] CPC’s withholding of consent is unreasonable because it deprives Sun Cable of a benefit for which it contracted under the Option Deeds, namely the right to assign to a suitable substitute consistently with the rights and interests of CPC under the Option Deeds. [23]

I reject the evidence of Mr Setter and the submissions of CPC to the effect that CPC is reasonably withholding consent until it is able to be satisfied that its land will not be used or occupied by AAPL in a way that is “undesirable” to CPC, including by reason of any non-alignment of the “values” of the assignee with indigenous communities on the land and with environmental, social, and corporate governance (ESG) principles. [24] Contrary to Mr Setter’s subjective understanding, CPC is not “in business with” Sun Cable. As Sun Cable submitted, the manner in which the land may be used by Sun Cable—and any assignee—is governed not by values but by the terms of the Option Deeds and, if the options are exercised, the Sub-Lease, Access Easement, and Connection Easement. Those terms included a limitation on the permitted use of the land to the Project and Project Activities, as defined, requiring Sun Cable to minimise adverse impacts on the environment, and to comply with environmental requirements and recommendations of relevant authorities. [25] Those terms also provided that the binding exercise of the option was conditional on Sun Cable being satisfied that it has entered into an Indigenous Land Use Agreement. [26]

For the reasons explained above, Sun Cable was not obliged by clause 13.1(a)(i) of the Option Deeds to provide to CPC the information requested on 9 August 2023. That information is irrelevant to the relationship between CPC and Sun Cable under the Option Deeds, and to the suitability of AAPL as a substitute party for Sun Cable in that relationship. CPC has declined to approve AAPL as the proposed assignee on the basis that Sun Cable has not provided that information. CPC has thereby unreasonably delayed and withheld its approval of the proposed assignee since 9 August 2023, in breach of clause 13.1(a)(ii) of the Option Deeds.

I reject CPC’s submission that it cannot be said to have unreasonably withheld or delayed approving AAPL as the proposed assignee at a time prior to 22 August 2023, when the Administrators first proposed a deed of assignment and novation capable of fulfilling the requirements of clause 13.1(d) of the Option Deeds. There is no evidence that the timing of the provision of that deed, in the form and terms required by Annexure F of the Option Deeds, had any bearing on CPC’s decision to withhold its approval of the proposed assignee. Clause 13 of the Option Deeds envisages that approval will be sought by Sun Cable and will be forthcoming from CPC in the absence of reasonable grounds for withholding it. The object of clause 13.1(d) is to ensure that Sun Cable does not purport to give effect to an assignment of the Option Deed to the approved assignee unless and until that assignee has entered into a deed of assignment and novation in the terms already agreed by CPC and Sun Cable and recorded in Annexure F to the Option Deeds. It is implicit in clause 13.1(d) that the deed of assignment and novation will then be executed by CPC, because it is expressly provided that Sun Cable must pay CPC’s costs in connection with entering into that deed. The timing of the presentation of the deed of assignment and novation to CPC naming the proposed assignee on 22 August 2023 has no bearing on the reasonableness or otherwise of CPC’s withholding of its approval of the proposed assignee, in circumstances where CPC was aware of the identity of the proposed assignee from 10 July 2023.

I accept Sun Cable’s submission that CPC, not being entitled to withhold its approval of AAPL as the proposed assignee, is subject to an obligation implied in the substance and structure of clause 13 of the Option Deeds to approve AAPL as the assignee and execute the deeds of assignment and novation. As Sun Cable submitted, this implied obligation is consistent with the obligation implied in each and every contract that each party agrees to do all such things as are necessary on its part to enable the other party to have the benefit of the contract. [27] I also accept Sun Cable’s submission that CPC should be ordered to specifically perform that obligation, because the subject matter of the Option Deeds comprises interest in land, and damages would be likely to be a wholly inadequate remedy if the Option Deeds are not assigned by the End Date under the Sale Agreement and the risk of the Buyer terminating the Sale Agreement is realised.

For all of the foregoing reasons, I made the orders referred to at [5] above on 29 August 2023.