Brimstone Resources Ltd v Empire Resources Ltd - [2018] WASC 185

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   BRIMSTONE RESOURCES LTD -v- EMPIRE RESOURCES LTD [2018] WASC 185
CORAM:   SMITH AJ
HEARD:   12 JUNE 2018
DELIVERED          :   20 JUNE 2018
FILE NO/S:   CIV 1959 of 2018
BETWEEN:   BRIMSTONE RESOURCES LTD
Plaintiff
AND
EMPIRE RESOURCES LTD
Defendant

Catchwords:

Interlocutory injunction - Plaintiff seeks an order restraining the defendant from exercising powers conferred by a mining mortgage and dealing with the secured property - Construction of joint venture contract documents - Whether claim of specific performance arguable - Turns on own facts

Legislation:

Nil

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	Mr J C Yeldon & Mr C P Stokes
Defendant	:	Mr W C J Zappia

Solicitors:

Plaintiff	:	Chris Stokes & Associates
Defendant	:	HWL Ebsworth Lawyers

Case(s) referred to in decision(s):

Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199
Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57
Burns Philp Hardware v Howard Chia Pty Ltd (1987) 8 NSWLR 642
Daniels v Daniels [2008] WASCA 230
Harvey v McWatters (1948) 49 SR (NSW) 173
Inglis v Commonwealth Trading Bank of Australia (1971) 126 CLR 161
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76
Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110
Welldog Pty Ltd v Prox Pty Ltd [2017] WASCA 62

SMITH AJ:

Application for interim orders heard as an urgent matter

The plaintiff filed a chamber summons on 6 June 2018 seeking an interim injunction. After hearing the parties on 12 June 2018, upon the defendant undertaking that it would not take any steps to enforce its rights, under a security deed dated 16 August 2017 or a mining mortgage dated 16 August 2017 until after the delivery of reasons in respect of the application for interim orders, the matter was adjourned to 18 June 2018 for judgment.
On 18 June 2018, an order was made that the application be dismissed and the parties were provided with a brief oral summary of the main points of my reasons for concluding that the plaintiff had not made out a prima facie case for the orders sought in its amended chamber summons. I reserved the right to provide my reasons in full as to why I reached this conclusion. This judgment sets out those reasons.

Background - the joint venture

The plaintiff and defendant own tenements collectively known as Penny's Find as tenants in common in shares of 60% by the defendant and 40% by the plaintiff. Penny's Find contains deposits of gold and is located approximately 50 km from Kalgoorlie.
The plaintiff is a private company. The defendant is a publicly listed company.
By an agreement dated 13 November 2015, the plaintiff and defendant agreed to undertake the development and mining of ore deposits and the refining and treatment of the ore mined from Penny's Find by entering into an agreement titled 'Penny's Find Mining Joint Venture Agreement' (the joint venture…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] WASC 185
Decision Date: 20 JUNE 2018

CaseChat Overview and Summary

Brimstone Resources Ltd initiated legal proceedings against Empire Resources Ltd, seeking an interlocutory injunction to prevent Empire from exercising powers granted by a mining mortgage and dealing with the secured property. The dispute revolves around the interpretation of joint venture contract documents and the potential claim for specific performance. The court was tasked with determining whether the plaintiff had an arguable claim of specific performance and if the plaintiff's equity warranted the granting of an interlocutory injunction.

The primary legal issue before the court was whether the plaintiff had established a prima facie case for specific performance and if the balance of convenience favoured the grant of an interlocutory injunction. The court examined the principles of equity, the nature of the rights asserted by the plaintiff, and the practical consequences of the interlocutory order. The court also considered the adequacy of damages as a remedy and the relevance of the interests of third parties.

The court held that the plaintiff had not demonstrated a prima facie case for specific performance, as the requisite strength of the probability of ultimate success depended on the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought. The court emphasised that the plaintiff's equity must be clearly identified and that an interlocutory injunction can only lie to protect an equitable or legal right that the plaintiff might enforce by final judgment. The court concluded that the balance of convenience did not favour the grant of an interlocutory injunction, as the plaintiff had not shown that it would suffer irreparable injury for which damages would not be adequate compensation.

The court dismissed the application for an interlocutory injunction, finding that the plaintiff had not established an arguable claim for specific performance. The court further noted that the plaintiff had not demonstrated a clear equity that warranted the grant of an interlocutory injunction. Consequently, the court did not grant the injunction, and the matter proceeded to trial on the merits.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Interlocutory relief will not lie where there is no right to final relief.[8] Whether there is a prima facie case turns on the governing consideration that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought.[9][8] Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 [17] (Gleeson CJ).[9] Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 [65] ‑ [71] (Gummow & Hayne JJ, Gleeson CJ & Crennan J agreeing); applied in Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [9] (Beech J). In Sino Iron Pty Ltd v Mineralogy Pty Ltd, the Court of Appeal recently stated the following important principles of law that are squarely relevant to the disposition of this application:[10][10] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 [130] ‑ [134], [141], [144].… Where equity's jurisdiction is invoked in an application for an interlocutory injunction, it is necessary to identify the legal or equitable rights which are said to be determined at trial and in respect of which final relief is sought. The power to grant an interlocutory injunction is not to be exercised by reference to unconstrained notions of what appears to be just: it must be exercised by reference to the rights claimed by the applicant in the proceedings. The final relief itself need not be injunctive in nature in this connection: Lenah. An interlocutory injunction in the auxiliary jurisdiction can only lie in order to protect an equitable or legal right which the plaintiff might enforce by final judgment: Lenah. The usual form of the interlocutory injunction in this court is 'until after judgment in this action, or further order'. The usual form of the order, as well as the purpose of the order, indicates that there is no 'free-standing' right to an interlocutory injunction: Lenah. The first question to be answered by the plaintiff in seeking an interlocutory injunction is, 'what is your equity?'The parties to this appeal did not take issue with the observations made in Mineralogy Pty Ltd v Sino Iron Pty Ltd as to the general principles to be applied in the exercise of the power to grant an interlocutory injunction. Those observations proceed, at least implicitly, on the basis that the question of adequacy of damages is an aspect of the balance of convenience, not a separate requirement. We will also proceed on that basis. Three further points should, however, be observed. First, in an interlocutory injunction application in equity's exclusive jurisdiction, the question of whether damages or other remedies at law are adequate does not arise: Heavener v Loomes. Secondly, in equity's auxiliary jurisdiction, the question of whether the plaintiff will suffer irreparable injury for which damages will not be adequate compensation involves no more than a consideration of whether the injury cannot properly be compensated in damages, or by an order for accounts or some other interim remedy. The question of whether the injury cannot properly be compensated in damages involves a consideration of whether it is just in all the circumstances that the plaintiff be confined to their remedy in damages. See R v MacFarlane; Ex parte O'Flanagan and O'Kelly; McCarty v The Council of the Municipality of North Sydney; Action Cycles Pty Ltd v Ross; Meagher, Gummow & Lehane. Thirdly, as the Full Court of the Federal Court observed in Samsung Electronics Company Ltd, in assessing the balance of convenience in an interlocutory injunction application, the interests of the public and third persons are relevant and have more or less weight according to other material circumstances; whether those interests tend to favour the grant or refusal of an injunction in any given case depends upon the circumstances of the case; and hardship visited upon third persons or the public generally by the grant of an interlocutory injunction will rarely be decisive.Specific performance and analogous equitable reliefSpecific performance is not a remedy of right, but a discretionary remedy for the enforcement of contracts, although the discretion is to be exercised on a principled basis and not arbitrarily or capriciously: Loan Investment Corporation of Australasia v Bonner.In Pakenham Upper Fruit Company Limited v Crosby, Isaacs and Rich JJ drew attention to the distinction between, on the one hand, specific performance in its 'true' sense, and relief 'approximate to specific performance', on the other. The former presupposes an executory agreement and the order is made to ensure that something is done such as the execution of a deed or conveyance, in order to put the parties in the legal position relative to each other in which they had agreed to be placed: JC Williamson Limited v Lukey; Sydney Consumers' Milk and Ice Co Ltd v Hawkesbury Dairy and Ice Society Ltd; Bridge Wholesale Acceptance Corporation (Australia) Ltd v Burnard; Burns Philp Trust Co Pty Ltd v Kwikasair Freightlines Ltd.In the case of specific performance in the sense of relief analogous to specific performance, the plaintiff seeks an order that the defendant perform its obligations according to the terms of the contract, and the remedy is frequently sought by way of injunction, including mandatory injunction: Sydney Consumers' Milk; Burns Philp Trust. Equity will not, however, make such an order if it considers that the plaintiff's remedies at law are adequate: Dougan v Ley; Coulls v Bagot's Executors; Sydney Consumers' Milk; Burns Philp Trust; McIntosh v Dalwood (No 4).…Also, a plaintiff may itself be required to pay a disputed sum into court as a means of doing equity where it is the plaintiff who is applying for injunctive relief. Payments into court pending trial are not uncommon in the context of a suit to restrain the defendant from withdrawing services under an agreement which the defendant had purportedly terminated. In Businessworld Computers Pty Ltd v Australian Telecommunications Commission, the respondent (Telecom) had disconnected the applicant's telephone services for alleged non-payment of accounts. The applicant commenced proceedings challenging the lawfulness of the disconnection, and sought an interlocutory injunction, pending trial, under which Telecom was to be 'restrained … from continuing the disconnection' of the services. The order sought was, in substance, a mandatory injunction for restoration of the telephone services.…The Full Court observed, in effect, that, where a party (applicant) seeks a mandatory injunction to restrain the other party (respondent) from terminating their agreement in the (alleged) exercise of a contractual right, the applicant should itself show its readiness and willingness to perform the agreement to which it seeks to hold the respondent. In such a case where moneys were allegedly due under the agreement, that would ordinarily require the applicant, in addition to the usual undertaking as to damages, to pay any amounts not in dispute to the respondent, and to pay into court any disputed amounts, although in some circumstances (as in Businessworld) the court may require some amount less than the full disputed amounts to be paid into court. In determining what amount should be paid into court in that regard, consideration should be given to the solvency of the applicant. Where the applicant does not pay all the disputed amounts either to the respondent or into court, or does not give security for all the disputed amounts (in addition to an undertaking to pay all future amounts), then the respondent could 'be forced to continue to do business, and incur perhaps ever greater indebtedness, and ultimately be left lamenting for amounts unpaid'.