Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd (No 6)

[2013] FCA 1414

FEDERAL COURT OF AUSTRALIA

Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd (No 6)
[2013] FCA 1414

Citation:	Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd (No 6) [2013] FCA 1414
Parties:	ALLIANCE CRATON EXPLORER PTY LTD v QUASAR RESOURCES PTY LTD and HEATHGATE RESOURCES PTY LTD
File number:	VID 551 of 2010
Judge:	MANSFIELD J
Date of judgment:	18 December 2013
Date of hearing:	18 December 2013
Place:	Adelaide
Division:	GENERAL DIVISION
Category:	No catchwords
Number of paragraphs:	11
Counsel for the Applicant:	B Roberts
Solicitor for the Applicant:	HWL Ebsworth
Counsel for the First Respondent:	M Hoffmann QC
Solicitor for the First Respondent:	Minter Ellison
Counsel for the Second Respondent:	R Higgins
Solicitor for the Second Respondent:	Herbert Smith Freehills

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	VID 551 of 2010

BETWEEN:

ALLIANCE CRATON EXPLORER PTY LTD
Applicant

AND:

QUASAR RESOURCES PTY LTD
First Respondent

HEATHGATE RESOURCES PTY LTD
Second Respondent

JUDGE:	MANSFIELD J
DATE OF ORDER:	18 DECEMBER 2013
WHERE MADE:	ADELAIDE

THE COURT ORDERS THAT:

1.The interlocutory application of the applicant of 12 December 2013 is refused.

2.The question of costs of the application is reserved.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	VID 551 of 2010

BETWEEN:

ALLIANCE CRATON EXPLORER PTY LTD
Applicant

AND:

QUASAR RESOURCES PTY LTD
First Respondent

HEATHGATE RESOURCES PTY LTD
Second Respondent

JUDGE:	MANSFIELD J
DATE:	18 DECEMBER 2013
PLACE:	ADELAIDE

REASONS FOR JUDGMENT

1. This matter has a long history which I need not repeat.  In May this year, directions were given to reach a hearing date and a hearing date has now been fixed and a timetable for interlocutory steps and procedural steps fixed to ensure a fair trial for the three parties involved.  That timetable has had to be varied from time to time, most recently on 10 December 2013.  The history of the matter shows that the issues to be litigated are quite technically complex and will require considerable opportunity on the part of both sides to prepare their lay evidence and their expert evidence. 

2. The applicant has had a considerable period of time to do that and a timetable has now been fixed for it to provide its expert evidence.  In the course of a valuer being engaged (and I might add, engaged as it appears only on 1 November 2013) to provide a valuer of the relevant exploration licence as at 30 October 2004 and at the present day, certain material was given to that valuer.  The valuer on 15 November 2013 indicated that the information then available was sufficient to prepare the 2004 valuation and that he proposed to provide a current valuation based upon a feasibility study prepared in September 2008. 

3. More recent material has become available, namely a 2012 “Start-Up Plan”.  Correspondence between the valuer and solicitors instructing the valuer have now led to the present application seeking particular discovery of 18 categories of documents which the valuer asserts in his affidavit would assist him in providing the most reliable, up-to-date valuation.  The proposed valuation is said to be on two bases.  One is on a comparable transactions basis which does not require any further valuation information, and the other is on a discounted cash flow basis which he says, does require further information. 

4. It has been argued on behalf of the respondents that the application for particular discovery should not be allowed as it does not relate to the pleadings sufficiently to warrant the order which is sought.  I do not accept that.  The issue of valuation, arising in regard to the value of a 75 per cent interest in the relevant exploration licence, is asserted in the final version of the amended statement of claim and in the book particulars and it was not suggested when valuation evidence was built into the timetable that valuation evidence was inappropriate.  Nor is it said that a confidentiality regime could not adequately accommodate issues of confidentiality with respect to the additional categories of documents which are sought. 

5. I note that the valuer was provided with Practice Note 7 of this court with a letter of instruction so I assume that the valuer accepts that he has an overriding duty to assist the Court on matters relevant to his area of expertise and that his paramount duty is to the Court and not to the applicant who has retained him through solicitors.  I note also that the valuer is required to declare when providing his report that he has made all enquiries that he believes are desirable and appropriate and that no matters of significance that he regards as relevant have to his knowledge been withheld from the Court.  Of course, such a report may be qualified by saying what he does not have access to.

6. I start, therefore, with the tentative view that the valuer given that responsibility should be entitled to receive such documents as are appropriate for the final valuation to be given.  However, there is a matter of timing.  It is unrealistic to expect that this further particular discovery if ordered could be given before the start of the new year.  The valuer has deposed that if he receives this material by 23 December, he will be in a position to report by the end of January.  As he could not receive this material by the end of December, but probably not until the first or second week of January, the timetable would be pushed further out to an extent to which I am not confident that responsive expert evidence can properly and fairly be prepared in a timely manner. 

7. Secondly, in my view and as pointed out by counsel for the respondents, assuming there is a conflict between expert valuers for the applicant and for the respondents as to the current day valuation, or indeed as to the 2004 valuation, the Court is extremely likely in accordance with its normal practice to order a meeting of the experts to be conducted either formally or informally at which the reasons for the differences in their opinions should be identified and if those differences depend upon assumptions, the assumptions which need to be revisited will also be identified.  It may well be that the assumptions to be made on the basis of the material presently available to the valuer will in any event require revisiting because of the elapse of time before the trial, which is in the middle of 2014. 

8. It may be that the assumptions will be required to be revisited because on the material I have before me, there is a prospect of a 2014 “Start-Up Plan” becoming available in the first half of that year and which will require the revisiting of the assumptions.  I also would not be critical of the valuer for having worked on the assumptions which are presently available to him either from the 2008 feasibility study or the 2012 “Start-Up Plan” or in respect of the other bases for at least a number of the pieces of information which are the subject of the application as identified by Mr Hoffmann in the course of his submissions relating in particular to categories 3, 4, 5, 6, 7 and 8 of the categories specified in Annexure A to the application. 

9. In any event, the point I wish to make is that the experts will confer together.  They will both be endeavouring to fulfil their paramount duty to the Court to the extent to which it is necessary to revisit assumptions made.  There should be a shared basis for the correct assumptions to be made at some convenient time much closer to the trial which will enable the experts to revisit the quantification post-evaluation process they have adopted and I suspect it will largely be a matter that the experts can agree upon and produce or adjust revised valuations in the light of that underlying material on which the valuations are based. 

10. In those circumstances, I do not think it is necessary to go into the detail of the extent to which, if at all, a case is made out presently for particular discovery of category 1 or the categories where it is said the contemporary information is available by reason of the references to which Mr Hoffmann took me.  Nor do I consider at present that the material expressed so general in category 9 is appropriate to be the subject of specific discovery.  For those reasons, I presently refuse the application.  I do not have a sufficiently firm view about whether in any event I would have refused the application in the light of the submissions of the parties to make presently an order for costs. 

11. That would require me to go away and consider in considerable detail the references to which I have been taken in the course of submissions.  It would require a judgment within the next few days and then, as I have said, a delay of the timetable.  Rather than rule on costs, I will defer ruling and reserve the question of costs of this application.  I note that, depending upon the outcome of the meeting of the valuation experts when and if it becomes necessary, the appropriateness of an order for costs on this application may become more apparent.  So there will be liberty to apply to any party to apply for the costs of this application. 

I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.

Associate:

Dated:       20 December 2013