The dispute boils down to the phrase that began “notwithstanding all the contrary provisions,” falling in the middle of the paragraph on production royalties. What did that mean? If it referred to the whole agreement, the mining company owed $75,000 a year, no matter what. However, if “here” applies only to sales of production royalties, without mining, there has been no liability for production royalties, the mining company is not required to pay the minimum production licence. Royal Mail Estates Limited`s High Court case against Maple Teesdale Borzou Chaharsough Shirazi was recently linked to the interpretation of a contrary agreement. In that case, Kensington Gateway Holdings Ltd (the “company”) claimed to enter into a contract with Royal Mail Estates Limited (“Royal Mail”) for the sale and purchase of real estate. Under the contract, Royal Mail agreed to sell properties for $20 million. The buyer was defined in the contract as the business. In such a situation and without explicit agreement to the contrary, all beneficiaries of a facility must contribute to the costs of their maintenance and repair. In 2016, the mining company exercised its right to abandon ownership and the agreement. The landowner complained of minimum production charges for the short duration of the agreement. The landowner argued that the “provocative” language in the middle of the sale of production royalties required the mining company to pay at least $75,000 per year, whether or not it was undermining the country, i.e. the annual catch-up language meant that if the mining company did not have a mining operation in a year and the mining company paid zero production royalties , it would need another $75,000 a year. Basically, this principle advises that, for no reason to the contrary, we give competing assumptions in the same way.
This case teaches that “notwithstanding” clauses are shabby tools that can be used if you try to retain a contract without causing any surprises. The case also shows the dangers of the word “entry.” “Entering” could relate to anything — the whole agreement, just a paragraph or just a particular approach within the framework of the agreement. It`s a lazy way to make a point. The court ruled for the mining company and concluded that “entering” applies only to sales of production royalties. The court noted that the “disgruntled” penalty appeared in the middle of a long paragraph on production costs. This is not a separate paragraph elsewhere in the agreement: “If the provision provides for a minimum payment due each year on the anniversary of entry into force, it would be expected to be set separately.” Id. at 473. In a paragraph of the payment agreement, the mining company agreed to pay production royalties based on the amount of material it obtained. In the paragraph that covered the licence fee, it stated, “Notwithstanding the contrary provisions of this section, the tenant pays the landlord a minimum annual licence of $75,000.” Id. at 472.
The paragraph adds that the mining company would make a catch-up payment at the end of the year if royalties fell below $75,000 in any given year. The Court dismissed the appeal and ruled in Royal Mail`s favour that the wording of the clause in question, in order to reach an agreement contrary to the meaning of S. 36C (1), had to objectively mean that “the parties intended that the contract would not enter into force as agreed with the agent.” A contrary agreement often occurs when a contract is requested between two or more parties, but one or more of the parties are a company that has yet to be registered.