This was an appeal regarding the proper construction of the royalty formula in the parties’ long-term Mining Right and Site Lease Agreements (MRSLAs). The appellants contended that the words used in the formula referred to the annual benchmark pricing system for iron ore (ABPS). The ABPS ceased in 2010, and the appellants contended that the MRSLAs contained an implied term to address the resulting contractual gap. The Court of Appeal held that although industry participants would have understood the words of the royalty formula to refer to the ABPS at the time of entry into the MRSLAs, the reference to the ABPS was inessential machinery for the determination of an export market price. The Court further held that that machinery could be substituted by the Court for alternative machinery to determine the export market price, or alternatively, that there was an implied term to the same effect.
An application for special leave has been filed.
