Australian Kimberley Diamonds Nl v Cambridge Consolidated Nl
[2001] WASC 218
AUSTRALIAN KIMBERLEY DIAMONDS NL & ANOR -v- CAMBRIDGE CONSOLIDATED NL [2001] WASC 218
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASC 218 | |
| Case No: | CIV:2042/1998 | 2 AUGUST 2001 | |
| Coram: | MASTER SANDERSON | 17/08/01 | |
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Order actions be tried together | ||
| B | |||
| PDF Version |
| Parties: | AUSTRALIAN KIMBERLEY DIAMONDS NL (ACN 009 245 210) ZEPHYR MINERALS NL (ACN 008 894 442) CAMBRIDGE CONSOLIDATED NL (ACN 059 458 374) BENNETT & CO (A FIRM) CAMBRIDGE GULF EXPLORATION NL ZEPHYR MINERALS NL ANDREW JAMES DRUMMOND AUSTRALIAN KIMBERLEY DIAMOND NL AUSTRALIAN KIMBERLEY DIAMONDS NL CAMBRIDGE GULF HOLDINGS NL BRIAN JAMES DENNIS CONWAY |
Catchwords: | Practice and procedure Application to have action tried together Turns on own facts |
Legislation: | Nil |
Case References: | Central Coast Leagues Club Ltd v Gosford City Council, unreported; SCt of NSW; BC 9802257 Radford v De Forberville (1977) 1 WLR 1262 Ruxley Electronics & Construction Ltd v Forsyth (1995) 3 WLR 118 Tito v Waddell (1977) 1 Ch D 106 Wigsell v The Corporation of the School for the Indigent Blind [1882] 8 QBD 357 Cameron v McBain [1948] VLR 245 Hinchcliffe v Caroll [1969] VR 164 Rush & Tompkins Ltd v Greater London Council [1989] AC 1280 Saker v Creative Land Management Pty Ltd [2000] WASC 44 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- ZEPHYR MINERALS NL (ACN 008 894 442)
Plaintiffs
AND
CAMBRIDGE CONSOLIDATED NL (ACN 059 458 374)
Defendant
BENNETT & CO (A FIRM)
Third Party
- Applicant
AND
ZEPHYR MINERALS NL
First Respondent
ANDREW JAMES DRUMMOND
Second Respondent
(Page 2)
AUSTRALIAN KIMBERLEY DIAMOND NL
Third Respondent
ZEPHYR MINERALS NL
First Cross-Claimant
AUSTRALIAN KIMBERLEY DIAMONDS NL
Second Cross-Claimant
CAMBRIDGE GULF EXPLORATION NL
First Cross-Respondent
CAMBRIDGE GULF HOLDINGS NL
Second Cross-Respondent
BRIAN JAMES DENNIS CONWAY
Third Cross-Respondent
Catchwords:
Practice and procedure - Application to have action tried together - Turns on own facts
Legislation:
Nil
Result:
Order actions be tried together
Category: B
(Page 3)
Representation:
CIV 2042 of 1998
Counsel:
Plaintiffs : Mr A F Mizen
Defendant : Mr W S Martin QC & Mr N P Gentilli
Third Party : No appearance
Solicitors:
Plaintiffs : Alan Mizen
Defendant : Jackson McDonald
Third Party : No appearance
CIV 1732 of 2001
Counsel:
Applicant : Mr W S Martin QC & Mr N P Gentilli
First Respondent : No appearance
Second Respondent : No appearance
Third Respondent : No appearance
First Cross-Claimant : Mr A F Mizen
Second Cross-Claimant : Mr A F Mizen
First Cross-Respondent : No appearance
Second Cross-Respondent : No appearance
Third Cross-Respondent : No appearance
Solicitors:
Applicant : Jackson McDonald
First Respondent : No appearance
Second Respondent : No appearance
Third Respondent : No appearance
First Cross-Claimant : Alan Mizen
Second Cross-Claimant : Alan Mizen
First Cross-Respondent : No appearance
Second Cross-Respondent : No appearance
Third Cross-Respondent : No appearance
(Page 4)
Case(s) referred to in judgment(s):
Central Coast Leagues Club Ltd v Gosford City Council, unreported; SCt of NSW; BC 9802257
Radford v De Forberville (1977) 1 WLR 1262
Ruxley Electronics & Construction Ltd v Forsyth (1995) 3 WLR 118
Tito v Waddell (1977) 1 Ch D 106
Wigsell v The Corporation of the School for the Indigent Blind [1882] 8 QBD 357
Case(s) also cited:
Cameron v McBain [1948] VLR 245
Hinchcliffe v Caroll [1969] VR 164
Rush & Tompkins Ltd v Greater London Council [1989] AC 1280
Saker v Creative Land Management Pty Ltd [2000] WASC 44
(Page 5)
1 MASTER SANDERSON: This is an application by Cambridge Consolidated NL, the defendant in CIV 2042 of 1998, for an order that the action be heard with CIV 1732 of 2001. Further consequential orders are sought including an order that the evidence heard in one action be deemed the evidence in the other. There is a mirror application made in CIV 1732 of 2001. The proceedings which are now CIV 1732 of 2001 were originally commenced in the Federal Court in 1995. The action was cross-vested to this Court pursuant to orders of Lee J made 21 May 2001. For ease of reference, throughout these reasons I will refer to the companies who are plaintiffs in CIV 2042 of 1998 as "AKD/Zephyr". I will refer to Cambridge Consolidated NL as "Cambridge". I will refer to CIV 1732 of 2001 as the "Federal Court proceedings" and I will refer to CIV 2042 of 1998 as the "Supreme Court proceedings".
2 At the time the Federal Court proceedings were commenced, Cambridge was known as Cambridge Gulf Exploration NL. This change of name does not appear to have been reflected in the title of the Federal Court proceedings. It is convenient if I begin by detailing the nature of the action in the Federal Court.
3 Action in that court was originally commenced by Cambridge. That action has now fallen away and what remains is what in this Court is referred to as a counterclaim by AKD/Zephyr and what is referred to in the Federal Court as a cross-claim. The respondents in the Federal Court proceedings are Cambridge, Cambridge Gulf Holdings NL (In Liq) and Brian James Dennis Conway. Mr Conway is now dead and his estate is insolvent. No leave has been obtained by the liquidator of Cambridge Gulf Holdings NL or the trustee of Mr Conway's estate to take any part in these proceedings and they can both be regarded as no longer relevant parties. The argument then in the Federal Court proceedings is between AKD/Zephyr on the one hand and Cambridge on the other.
4 The statement of claim in the Federal Court proceedings pleads that pursuant to an agreement made in September 1992, Zephyr transferred to Cambridge 85 100th shares in certain exploration licences in consideration for Cambridge carrying out within 12 months certain nominated exploration and sampling activities on the tenements. (Some time after this agreement was entered into Zephyr transferred part of its holding in the exploration licences to AKD. This explains the involvement of AKD in these proceedings). The terms of the agreement between Zephyr and Cambridge (referred to in the pleading as the Mining Agreement) are pleaded and it is alleged that although certain geophysical site investigations were carried out, not all of the work required under the
(Page 6)
- Mining Agreement was completed by Cambridge. It is pleaded that in September 1993 Cambridge transferred its interest in the exploration licences back to Zephyr. It is further pleaded that at all material times Cambridge had an interest in certain mining tenements which abutted AKD/Zephyr's exploration licences. The fact that the respective holdings of the parties were contiguous is of particular relevance.
5 The re-amended cross-claim (in the Federal Court proceedings) raises a number of claims against Cambridge. There are claims in trespass, conversion, breach of duty of confidence, misleading and deceptive conduct and breaches of the Corporations Law. What is of particular relevance to this application is the plea in par 31 which, when read with preceding paragraphs, is a plea to the effect that in the course of its sampling operation, Cambridge found diamonds on AKD/Zephyr's exploration licences. When Cambridge's defence to cross-claim was originally filed this allegation was admitted.
6 In October 1998 Cambridge filed a motion seeking leave to amend the defence to cross-claim withdrawing the admissions as to the finding of diamonds. This application was supported by a series of affidavits which, on any fair reading, cast doubt on whether or not diamonds were actually found on AKD/Zephyr's exploration licences. The application for leave to amend was, not surprisingly, vigorously resisted by AKD/Zephyr. The matter took almost three years to resolve. Eventually, in May 2001, Lee J gave leave to Cambridge to amend its defence to cross-claim so as to withdraw the admissions. Thus the question of whether Cambridge found diamonds on the AKD/Zephyr exploration licences is an issue central to the Federal Court proceedings.
7 Turning then to the Supreme Court proceedings, the plaintiffs plead that by deed dated 26 October 1996 the defendant agreed to drill at its cost for the plaintiff, by 31 March 1997, 30 drill holes at sites nominated by AKD/Zephyr. It is pleaded that only seven holes were drilled and that as a consequence of the breach of contract on the part of Cambridge, AKD/Zephyr have suffered loss and damage. The loss claimed is the cost of drilling the further 23 holes and other associated on-costs which is said to amount to something over US$7 million. The statement of claim pleads certain matters in relation to the way in which it is said the contract between the parties was terminated or repudiated. But these matters are not relevant to this application. The claim by AKD/Zephyr then is a simple one - they claim damages for breach of contract.
(Page 7)
8 By its defence Cambridge admits the contract but disputes its terms. Also put in issue is the circumstances in which the contract was terminated. Cambridge denies that AKD/Zephyr are entitled to the damages claimed or any damages. Clearly damages are an issue between the parties. Cambridge submits that in the Supreme Court proceedings it is relevant to know whether or not there were diamonds on the AKD/Zephyr exploration licences. This they say is relevant to the value to be attached to the tenements. It is submitted by Cambridge that it is arguable that the proper measure of damages in this case, assuming AKD/Zephyr are successful, is not the cost of drilling the holes but the diminution in value of the tenements as a consequence of the holes not being drilled.
9 Counsel for both parties spent considerable time analysing the authorities which begin with Wigsell v The Corporation of the School for the Indigent Blind [1882] 8 QBD 357 and include Tito v Waddell (1977) 1 Ch D 106, Radford v De Forberville (1977) 1 WLR 1262, Ruxley Electronics & Construction Ltd v Forsyth (1995) 3 WLR 118 and Central Coast Leagues Club Ltd v Gosford City Council, unreported; SCt of NSW; BC 9802257. I do not propose to examine these authorities in any detail. It is sufficient for the purposes of this application if I say that I am satisfied that it is at least arguable that, if Cambridge is found to be liable to AKD/Zephyr in the Supreme Court proceedings, the measure of damage may be the difference in the value of the tenements if the holes were drilled as against the value without the holes being drilled. That being the case, the question of whether or not there were any diamonds found on the exploration licences is an issue between the parties and an issue of some importance. As the same issue is raised in both proceedings, it is appropriate that they be heard together to avoid the prospect of inconsistent results in two separate actions. Prima facie then, Cambridge is entitled to the order that it seeks.
10 Counsel for AKD/Zephyr raised a number of matters which, it was said, properly considered, mitigated against the order sought by Cambridge being made. First, counsel indicated that on his present instructions it was not intended to lead any evidence as to the existence or otherwise of diamonds on AKD/Zephyr's exploration licences in the Supreme Court proceedings. Given the way in which Cambridge has approached the issue of damages this is somewhat surprising. But even assuming this position is maintained at trial, there is still the prospect of the two actions producing inconsistent results. The Judge in the Supreme Court proceedings based upon evidence led by Cambridge and not rebutted by AKD/Zephyr may conclude that there were no diamonds on
(Page 8)
- the exploration licences. It may then be open to AKD/Zephyr in the Federal Court proceedings to argue that diamonds were present. There may be no issue estoppel simply because the issue was not joined when the Supreme Court proceedings were heard. However unlikely this possibility may be, it is an outcome which can be avoided entirely if the two actions are heard together.
11 Secondly, it was submitted by counsel that the Supreme Court proceedings are virtually ready to be entered for hearing. The Federal Court proceedings, on the other hand, are some distance away from trial. This is because in the Federal Court proceedings AKD/Zephyr have not yet obtained expert evidence and this may be a long complex process. While I appreciate the strength of that argument, particularly in light of the fact that it has only been since May of this year that AKD/Zephyr have been aware that in the Federal Court proceedings they will need evidence in relation to diamonds on the exploration licences, it does not seem to me to outweigh other factors in favour of these matters being heard together.
12 The third point made by counsel related to the time likely to be taken if both matters were combined. It was submitted that the Supreme Court proceedings were relatively straightforward and would occupy no more than a few days hearing time. The Federal Court proceedings, on the other hand, were somewhat more complex. In particular counsel pointed to the fact that the relief claimed included an account of benefits Cambridge received as a result of raising $20 million based upon release of information to the stock exchange to the effect that diamonds had been found on its tenement. It was said that evidence would need to be led as to market conditions at the time of the capital raising, the use that could have been made of the funds and other relevant matters. This, it was said, would involve a considerable amount of evidence which would inevitably occupy the court for an extended period. Again, I acknowledge the strength of counsel's argument. There is no doubt that the time taken to hear these matters, if they are heard together, would be considerably longer than if the Supreme Court proceedings were heard alone. But again I am not satisfied that these considerations outweigh considerations in favour of having these actions heard together.
13 Fourthly, counsel for AKD/Zephyr highlighted a difficulty in relation to the evidence it is said would arise if both matters were heard together. The difficulty arises in this way. As part of its defence to the Supreme Court proceedings Cambridge alleges that the parties entered into a deed of settlement which affected the parties' respective rights and interests
(Page 9)
- both with respect to the agreement the subject of this action and the Federal Court action. The position is somewhat complex and I do not propose to go into any detail. It is enough if I say that it is the position of AKD/Zephyr that in relation to the Supreme Court proceedings it will be necessary for the parties to lead evidence as to the settlement negotiations. This evidence, it is said, will cover matters which would be privileged in the context of the Federal Court proceedings. It was submitted that if the two actions were heard separately, no evidence could be led in the Federal Court proceedings of discussions which were privileged in the context of those proceedings.
14 In response to these submissions counsel for Cambridge made two points. First, this is a trial by Judge alone. It is frequently the case that during the course of a trial a Judge hears evidence which is inadmissible either because it is irrelevant or otherwise. Once a decision is taken that the evidence is inadmissible it is simply put to one side and not considered. That can be done here if both actions are tried together. Secondly, it is clear that if the two actions were tried separately the Supreme Court proceedings would be heard before the Federal Court proceedings. If evidence is given of settlement negotiations and any privilege which might have attached to that evidence is lost, then it is lost for all purposes and will be available if it is relevant in the Federal Court proceedings. In other words, AKD/Zephyr will be no worse off if the two actions are heard together than they would be if the actions were tried separately.
15 While I acknowledge the concerns of AKD/Zephyr in relation to this matter, I am not persuaded that the dangers in relation to the evidence justify separate trials.
16 Finally, it is said on behalf of AKD/Zephyr that Cambridge is now estopped by its conduct from denying that diamonds were found on the exploration licences. With respect to counsel I have some difficulty following this argument. Leave has been granted to amend the Federal Court proceedings to withdraw admissions. If an estoppel is said to arise it will need to be pleaded and there will then be a factual issue between the parties. Furthermore, if it were the case that an estoppel had arisen it would operate not only in the Federal Court proceedings but in the Supreme Court proceedings. It would be an anomalous position if Cambridge was precluded from arguing in the Federal Court proceedings that no diamonds were found on the exploration licences but could put that argument in these Supreme Court proceedings. In my view counsel's
(Page 10)
submissions on this question highlighted the need to have this issue resolved in the one proceedings.
17 In the course of his submissions counsel for Cambridge dealt at some length with the nature of the third party proceedings and the interrelationship between the settlement agreement allegedly concluded between Cambridge and AKD/Zephyr and the Federal Court proceedings. The position is rather complex and given that I have already concluded that the two matters should be heard together, I need not examine the issues in detail. Suffice it to say, however, that I do think there is a sound argument for saying that because of the issues raised in the third party proceedings it is appropriate that both actions be heard together. I would regard this as a secondary but nonetheless compelling reason for making the orders sought by Cambridge.
18 I am satisfied that it is proper to make the orders sought in both sets of proceedings. Subject to hearing from counsel I intend to make orders in terms of the application.
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