CITIC Ltd v Mineralogy Pty Ltd [No 2] - [2020] WASC 252

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   CITIC LTD -v- MINERALOGY PTY LTD [No 2] [2020] WASC 252
CORAM:   KENNETH MARTIN J
HEARD:   22 JUNE 2020
DELIVERED          :   3 JULY 2020
FILE NO/S:   CIV 1514 of 2016
BETWEEN:   CITIC LTD
First Plaintiff
SINO IRON PTY LTD
Second Plaintiff
KOREAN STEEL PTY LTD
Third Plaintiff
CAPE PRESTON RESOURCE HOLDINGS PTY LTD
Fourth Plaintiff
AND
MINERALOGY PTY LTD
First Defendant
CLIVE FREDERICK PALMER
Second Defendant

Catchwords:

Practice and procedure - Electronic discovery to be given by categories - Dispute over particular category - Issues of relevance, proportionality and oppression - Sub-issue concerning drilling costs incurred many years ago - Contextual arguments concerning repudiatory breach of CPOA agreement - Turns on own facts

Legislation:

Nil

Result:

Residual discovery request refused

Category: B

Representation:

Counsel:

First Plaintiff	:	Mr J H Karkar QC & Ms T Spencer Bruce
Second Plaintiff	:	Mr J H Karkar QC & Ms T Spencer Bruce
Third Plaintiff	:	Mr J H Karkar QC & Ms T Spencer Bruce
Fourth Plaintiff	:	Mr J H Karkar QC & Ms T Spencer Bruce
First Defendant	:	Mr K S Byrne
Second Defendant	:	Mr K S Byrne

Solicitors:

First Plaintiff	:	Allens
Second Plaintiff	:	Allens
Third Plaintiff	:	Allens
Fourth Plaintiff	:	Allens
First Defendant	:	Kane Jones
Second Defendant	:	Alexander Law

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

CITIC Ltd v Mineralogy Pty Ltd [2020] WASC 223

KENNETH MARTIN J:

Introduction

At a hearing across Monday, 22 June 2020, I dealt with the parties' disputes over categories of discovery for the purposes of this action in the context of the looming 10-day trial, fixed to commence before me on 7 December 2020. During the course of the day I was able to resolve, on an extempore basis, all but one of a dozen or so disputes over categories of mutual discovery - which categories are helpfully summarised in colour coded annexures provided by the parties - and which have been revised on an evolving basis. The latest iterations of those annexures emerged only on Monday morning, at about 6.00 am (WST) under the cover of Allens' (the solicitors for the plaintiffs) email.
During the course of the hearing I resolved all of the category disputes as regards documents requested by the CITIC Plaintiffs from Mineralogy and Mr Palmer. These were categories identified respectively as C11, C13, C14, C15 and C16. Extempore reasons delivered during the course of the day resolved such disputes.
As regards the categories of discovery requested by Mineralogy and Mr Palmer from the CITIC Plaintiffs and still resisted, there had been, essentially, disputes over seven categories or classes of documents which were requested, but resisted. Again, either by concession, or on extempore rulings made with the benefit of counsel's assistance through the course of the day, I was able to resolve, by reference to the last iteration of the parties' table of categories, the residual discovery disputes concerning categories - M1, M2, M5, M7, M8, M11 and M12. Issues concerning categories M14 and M18 have been put aside for the moment, on the basis of a foreshadowed and forthcoming reamended reply and defence to counterclaim to be filed by the CITIC Plaintiffs and which is said address an issue concerning the amount of measured and indicated magnetite ore, which the CITIC Plaintiffs could locate within mining leases M08/123 through M08/125. It is anticipated that the forthcoming amendment to the reply pleading is likely to resolve, or at least heavily truncate, the ambit of that document dispute regarding that category.

Category M9

Consequently, the residual dispute only relates to one class or category of documents as is sought by Mineralogy and Mr Palmer, namely, M9. The M9 category itself is described by Mineralogy under a heading 'Drilling Obligation', as follows:
Documents, including itemised financial data, and copies of contracts for services, including drilling, mobilisation and demobilisation service contracts, recording or referring to the amounts spent by the CITIC Parties to (purportedly) comply with the Drilling Obligation (as defined in the CPOA), and the dates on which those amounts were incurred (excluding the 2011 drillhole data base previously provided). This category does not include underlying supporting invoices unless a specific request is by Mineralogy parties by reference to a particular cost item (D[77](d), [144]).
The date range of the request for M9 is for the period from 31 March 2006 to the present time.
The observed M9 end point references to D[77](d) and [144] is an intended reference to the pleadings, in particular, to pleas to be found within Mineralogy's current further amended defendant and counterclaim pleading - which was the subject of my grant of leave to so amend, on 27 May 2020.
I will return to discuss the wider context of those pleas in due course.
Discovery and inspection as regards this category is resisted by the CITIC Plaintiffs and not merely on the basis of relevance, but primarily on the basis of the oppressive burden said to be carried by assembling all the documents now sought (even allowing for the last sentence M9 truncation as presented).
A significant amount of affidavit evidence contends that the documents requested, if they could still be located, are likely to be voluminous. More significantly, it is said that the burdens in trawling back to 2006 to hunt for, unearth or relocate these documents, are said to be disproportionately burdensome at this time. That is said to be even more so where there has, it is also said, been more than ample past opportunities for Mineralogy to access or inspect all such documents in much earlier time periods. That was when they could all be located within a data room that had been assembled by CITIC Ltd and was made available to Mineralogy for inspection and verification purposes - albeit an opportunity not taken up then by Mineralogy at those earlier times.
The CITIC Plaintiffs say that this history and some other matters, when evaluated contextually, render the present request for the M9 class of document at this time as being disproportionately oppressive, in a context of the looming trial as a whole.
Bearing in mind the rival stances of the parties and a significant amount of evidence that was filed and relied upon by each side concerning the M9 documents, it became necessary for me to reserve my decision so as to take some more time to consider and weigh this residually disputed category of documentation.
Before I am able to render a decision, it is necessary to say something more about the background and litigation procedural history around which the present M9 category of discovery dispute arises in the present action. The action concerns the agreement known as the China Project Option Agreement (CPOA). I also note there was a predecessor action in this court over the same agreement, namely, CIV 3012 of 2012. Pursuant to the terms and conditions of CPOA, Mr Palmer and Mineralogy agreed to grant CITIC Ltd (under the previous name of CITIC Pacific Limited) options to acquire companies which have allocations of magnetite ore resources (or further allocations of resources).

Background context

By way of background, I refer generally to my earlier reasons as given concerning Mineralogy's application to amend its defence and counterclaim in this same action: see my revised reasons, CITIC Ltd v Mineralogy Pty Ltd [2020] WASC 223 delivered extempore on 27 May 2020, then subsequently revised and published on 18 June 2020.
Within those reasons I had sought to summarise the parties' rival contentions as regards the CPOA entered on 22 October 2008, but later varied on 30 March 2012. In particular, I sought to explain a contention of the CITIC Plaintiffs that there should be orders in effect for specific performance made against Mineralogy and Mr Palmer - as regards the admitted exercise by CITIC Ltd of a 'First Option' as afforded to it under the CPOA, on 13 April 2012.
At [20] of those earlier reasons I attempted to summarise a number of the pleaded defences as they are raised by Mineralogy and put against the CPOA First Option specific performance orders as sought at trial by the CITIC Plaintiffs.

Alleged termination of the CPOA by Mineralogy by reason of its repudiation by CITIC

One of the resistance arguments, as I had summarised at [20(a)] of CITIC v Mineralogy, is that the CPOA is said by Mineralogy to have been repudiated by CITIC Ltd. It is pleaded that this repudiation and breach (as alleged) of the CPOA led to a termination consequence, namely, that Mineralogy and Mr Palmer had then elected to terminate all further obligations of performance under the CPOA and so, the CPOA came to an end. That plea by Mineralogy of a repudiatory breach by CITIC Ltd being duly accepted by them is found particularly in par 77 through par 88, but see particularly par 78 of the further amended defence and counterclaim of Mineralogy filed (by leave) on 9 June 2020 of Mineralogy (FADAC).
Before further addressing the issue of an accepted repudiatory breach of the CPOA under Mineralogy's FADAC (as presently relevant to discovery issues and relevance), it is necessary to see the text of some of the CPOA's express provisions - around which the breach and repudiation arguments are made by Mineralogy.
Even before that, however, in a context of arguments about alleged and disputed repudiatory breaches of the CPOA by CITIC Ltd, it is important to remember that there has been preceding CPOA alleged termination litigation between all of the present parties (save for the fourth plaintiff) that came to be resolved the day before a listed trial under the consent orders of the parties and which were made by Chaney J on 30 September 2015 in that previous action, CIV 3012 of 2012. Chaney J had made the declarations as seen set out in [11] of my reasons in CITIC v Mineralogy to effectively circumvent the trial listed before him the next day. By consent, costs, as seen, were ordered against Mineralogy.
Those orders should be understood in the context of Mineralogy and Mr Palmer filing a fourth further amended defence in that proceeding (by leave of Edelman J granted 24 February 2015) on 16 February 2015. By the fourth amended defence, Mineralogy and Mr Palmer had made admissions to the effect of order 2 of Chaney J's 30 September 2015 orders, namely, that earlier purported terminations of the CPOA, as had been communicated to CITIC Ltd by Mineralogy by its letter of 4 October 2012 and by Mr Palmer, under his letter of 17 October 2012, were 'invalid'.
None of that is in contention in the present litigation as a matter of history concerning that prior litigation under CIV 3012 of 2012 and its, in the end, consensual earlier resolution under the declarations made by Chaney J on 30 September 2015 (and extracted by the court's order on 1 October 2015).
Consequently, present arguments (in this proceeding) as to necessarily later (than 30 September 2015) alleged repudiatory breaches of the CPOA by CITIC Ltd, by which Mineralogy or Mr Palmer, they say, have elected to accept, emerge within that historic CPOA litigation environment. That environment, of course, is of the prior Mineralogy (and Mr Palmer) assertions as to accepted repudiatory breaches of the CPOA by CITIC Ltd which, after commencement of the CIV 3012 of 2012 litigation by CITIC (on 13 December 2012) were later consensually declared as 'invalid' at 30 September 2015. The present consequence of this CPOA litigation history is in its consequence from a repudiatory breach of the CPOA perspective to CPOA events unfolding after 30 September 2015.
I can turn back then to some of the express terms of the CPOA that manifest as being presently relevant to the disputed M9 discovery category sought by Mineralogy.

Some express terms of the CPOA

As seen from CITIC v Mineralogy at [33], the text of CPOA cl 3, by cl 3.2 and cl 3.3, provides for a time frame within which CITIC Ltd might exercise its 'First Option'. It is not in contention that CITIC Ltd did that on 13 April 2012 - within one day of the as was extended time for the 'First Option' to be exercised by CITIC Ltd (remembering, of course, that the CPOA itself had been entered into as between CITIC Ltd, Mineralogy, and Mr Palmer on 22 October 2008 and that a draft version of the CPOA had been appended to even earlier agreements perfected between the essential protagonists at the end of March 2006).
I turn briefly to consider some history preceding the ultimate perfection of the CPOA at 22 October 2008.
On 21 March 2006, Mineralogy and each of Sino Iron and Korean Steel entered into agreements (the MRSLAs) granting Sino Iron and Korean Steel mining rights and leases. It is from this time that the CPOA had been in contemplation as a further future agreement between Mineralogy and CITIC Ltd, effectively deploying the same methodology as had been used around the entering of the two original Sino Iron and Korean Steel MRSLAs.
CITIC Ltd entered the Sino Iron Takeover Agreement on 31 March 2006. Subsequent to acquiring Sino Iron in July 2006, CITIC Ltd commenced negotiations in relation to a takeover of Korean Steel.
At the M9 issues hearing on 22 June 2020, counsel for Mineralogy, Mr Byrne, submitted that a draft version of the proposed future CPOA had been appended as an attachment to the Korean Steel Takeover Agreement of 1 November 2007 (see ts 146). That envisaged takeover was completed on 22 October 2008 and CITIC Ltd then became the ultimate holding company of Korean Steel.
It is therefore clear that the CPOA had enjoyed at least a two and a half year gestation period prior to being perfected at 22 October 2008.
And so, I return to examine in more detail other clauses of the CPOA.
Next, I need to refer to CPOA cl 3.3. It designates that 'the exercise price for the First Option will be the Purchase Consideration' (my emphasis).
The terms 'First Option' and 'Purchase Consideration' are both defined terms under the CPOA.
'First Option' is defined in the CPOA as:
Means the option granted under clause 3.1 to acquire 100% of a Further Company which will have entered into Project Agreements with Mineralogy.
The term 'Purchase Consideration' is defined in the CPOA as:
Shall mean $US200,000,000 (two hundred million US dollars) for each and every Sale Interest, plus the CPI increase from 1 March 2006 until the date of transfer of any Sale Interest in respect of a Further Company, under any option set out in this Agreement. The Purchase Consideration for the first or subsequent Sale Interest will be reduced by the amount which CITIC spends to comply with the Drilling Obligation. (my emphasis)
Given the present M9 dispute, I need to dwell on the definition of 'Purchase Consideration' - as regards its eventual computation by way of reduction for the amount CITIC Ltd 'spends' to comply with the 'Drilling Obligation'.
Within the CPOA, the term 'Drilling Obligation' is yet another defined term, which:
means CITIC's obligation set out in clause 2.4 and Schedule 1.
So then, it is necessary to journey on, to examine CPOA cl 2.4, which itself appears under a heading 'Drilling Obligation'. It reads:
CITIC will carry out the Drilling Obligation for up to five years from the date of the Sino Takeover Agreement for Area A, [note: that date being 31 March 2006] to endeavour to locate measured and indicated Magnetite Ore within Area A up to a total of 6,000,000,000 (six billion) tonnes of which up to 4,000,000,000 (four billion) tonnes may be subject to Project Agreements with Further Companies. The exercise of any option hereunder is subject to sufficient Magnetite Ore being available within Area A excluding the Transport Corridor. CITIC must report to Mineralogy every 12 months from the date hereof in writing setting out full geological results for any resources or reserves defined in accordance with the JORC Code and CITIC must provide an updated geological model each 12 months commencing on the date 12 months after the date of this agreement. (my emphasis in bold)
For more of the CPOA's Drilling Obligation of CITIC context, see also CPOA cl 2.6 under the heading 'Information':
The Seller [either Mineralogy of Mr Palmer] must provide CITIC with all information reasonably requested by CITIC evidencing its compliance with this Agreement. CITIC must provide the Seller with all information reasonably requested by the Seller evidencing its compliance with this Agreement.
I have mentioned CPOA cl 2.6 in a context of that expressly made mutual covenant as regards the 'evidencing' of matters concerning each side's respective compliance with the CPOA. There is little doubt that the covenant would embrace required information concerning the drilling work CITIC had performed across Area A and what amounts of money CITIC had expended in terms of it executing that Drilling Obligation under CPOA cl 2.4 - and which is seen as being of potentially up to some five years in duration (ie, from 31 March 2006 to 31 March 2011).
To reiterate, the amount spent by CITIC Ltd in terms of it discharging its CPOA Drilling Obligation bears relevantly, as a subtractable amount in a necessary calculation of the Purchase Consideration that is to be computed as eventually payable by CITIC Ltd to either Mineralogy or to Mr Palmer (depending on who is the CPOA Seller) for acquisition of (the shares in) a Further Company, under the First Option, once that option is exercised by CITIC Ltd (as is admitted to have occurred on 13 April 2012).
Returning to the CPOA and cl 3, cl 3.5 therein provides under a heading 'Form of acquisition' that:
Subject to clause 3.6(e) the First Option and any Further Option may only be exercised in the form of the acquisition from the Seller of all of the shares in a Further Company, which shall have entered into the Project Agreements subject to any necessary Government approval, and which has the same rights as Sino Iron to carry out a Project.
The CPOA terms seen as used within cl 3.6 above, namely, 'First Option', 'Further Option', 'Seller', 'Project Agreements' and 'Project', are all once again defined terms under cl 1.1 of the CPOA. They can be found collected together in Schedule A to my earlier CITIC v Mineralogy reasons.
As regards what is to follow, after the exercise of an option (which here, as regards the First Option, is agreed to have been exercised by CITIC Ltd at 13 April 2012), the express terms of CPOA cl 3.6, particularly subclauses (a) through (d), are then to be engaged. Again, I have set out all of cl 3 in CITIC v Mineralogy at [33], to which reference can be made if necessary for present purposes.
To recap then, having now revisited all those CPOA express terms, it may be better appreciated Mineralogy, by its most recent FADAC pleading, is again contending against CITIC Ltd that the CPOA came to be ended by Mineralogy as the contractually 'innocent' CPOA counter party subsequently to 30 September 2015, and now based on further repudiatory breach conduct, or breaches by CITIC Ltd. This is to have happened following and notwithstanding CITIC Ltd's exercise of the First Option as given to it under the CPOA at 13 April 2012, and even further notwithstanding Chaney J's uncontroversially made declarations of 30 September 2015 thereby avoiding the looming trial in CIV 3012 of 2012, which events are fully admitted as regards that previous action over the CPOA and its resolution.
To the end of identifying precisely the further alleged CPOA repudiatory conduct of CITIC Ltd as regards the CPOA resulting in termination, it is necessary to turn closely to Mineralogy's current FADAC and, particularly, as regards the issues relating to disputed discovery category M9, to Mineralogy's FADAC pleas made under par 77(d) and par 144.

Mineralogy's FADAC

Before examining FADAC par 77 and, in particular, subpars 77(c) and (d) thereof as regards what Mineralogy says about the CPOA breach issue and of CITIC Ltd's Drilling Obligation and drilling costs under CPOA cl 2.4, it is perhaps more helpful to note, first, that by FADAC par 78 Mineralogy pleads this:
By reason of the matters referred to in paragraph 77 herein:
(a)CITIC has evinced an intention not to perform its obligations under the CPOA in accordance with its terms;
(b)CITIC has thereby repudiated the CPOA;
(c)Cape Preston Resource Holdings Pty Ltd has evinced an intention not to perform its obligations under the option agreement between it and Mineralogy; and
(d)Cape Preston Resource Holdings Pty Ltd has repudiated the option agreement between it and Mineralogy.
As to precisely when in a temporal sense Mineralogy (or Mr Palmer) actually did communicate an election to CITIC Ltd to accept as regards the CPOA being ended by such alleged repudiatory breaches by CITIC Ltd as are the subjects of par 77 of the FADAC (and pars 78(a) and (b)) seen above, that question is somewhat blurred in the FASOC. There are the further FADAC references to be observed at par 84, par 85 and par 87 to the alleged repudiation of the CPOA 'in the premises'.
At FADAC par 85 reference is seen to Mineralogy and Mr Palmer being entitled to terminate the CPOA and (also) the option agreement. By FADAC par 87, there is a plea that CITIC Ltd had '[I]n the premises' committed a serious breach of the terms of the CPOA, as regards earlier FADAC pleas in par 25(n) and par 25A and giving Mineralogy and Mr Palmer, it is put, the entitlement to terminate the CPOA.
But as to 'when' that termination of the CPOA was communicated to CITIC Ltd by Mineralogy for repudiatory breach by CITIC Ltd, that critical temporal plea is only located at FADAC par 88. There it is found, made in these terms by Mineralogy:
By their Amended Defence in this proceeding, Mineralogy and [Mr] Palmer accepted CITIC's repudiation of the CPOA and gave Notice of Termination of the CPOA.
But, so seen, that is not fully clear, either as a date or dates.
As a matter of record, Mineralogy's amended defence filed in this action, CIV 1514 of 2016, came to be filed on 1 July 2016 (see folio document 6). That amended defence pleading for this action was the second iteration of Mineralogy's defence pleading. As I explained in CITIC v Mineralogy, the current FADAC is the eighth defence iteration by Mineralogy, on my calculations.
CIV 1514 of 2016 had been commenced by the first, second and third plaintiffs by their writ with an indorsed statement of claim, on 31 March 2016 (some nine months after Chaney J's declarations resolving CIV 3012 of 2012, on 30 September 2015).
A fourth plaintiff (Cape Preston Resource Holdings Pty Ltd) was added as a co-plaintiff to the present action under leave given by my orders of 26 February 2018, leading to an amended writ of summons of 9 March 2018 and then, to the CITIC Plaintiffs' amended statement of claim of 19 March 2018.
For relevant purposes then, the date of the 'amended defence' of Mineralogy in CIV 1514 of 2016, for the purposes of the repudiation acceptance plea, as seen under FADAC par 88, is 1 July 2016.
I also note FADAC par 88A, as regards Mineralogy then accepting (by its Further Amended Defence) a repudiation of the option agreement by the fourth plaintiff. The Further Amended Defence (folio document 14) in this action was filed by Mineralogy, on 13 January 2017.

The FADAC par 77 repudiation and termination of the CPOA

Finally, it is feasible to turn back to the FADAC repudiatory brach pleas by Mineralogy made under par 77.
Although the discovery table addressing category M9 makes reference to FADAC par 77(d), the current weight of the oral argument before me across Monday, 22 June 2020, focused intensively upon FADAC par 77(c) and its accompanying particulars.
I mention both FADAC pars 77(c) and 77(d), on a basis that Mineralogy's pleas under par 78 would look to invoke the multiple subparagraphs of FADAC par 77 on several bases - as regards any or all of the as articulated conduct as is so identified, providing the material facts upon which Mineralogy contends CITIC Ltd, unequivocally, evinced and communicated to Mineralogy and Mr Palmer its intention to not perform its obligations under the CPOA, in accord with the terms of that agreement (see FADAC par 78(a)).
It is important to remember FADAC par 77 operates in the shadow of an omnipresent preface that displays the causative word 'because'. The preface is important, reading as it does in the following terms:
As to paragraph 68 [of the CITIC Plaintiffs' amended statement of claim], it [ie, Mineralogy] denies the allegations contained therein because:-
The plea formally responds to the CITIC Plaintiffs' plea made under par 68 of the CITIC Plaintiffs' amended statement of claim of 19 March 2018 (ASOC) that:
68.CITIC is, and at all material times has been, ready, willing and able to comply with the terms of the CPOA so as to complete the First option.
By inference, therefore, what Mineralogy appears to be saying by its preface to FADAC par 77 is that the as related following matters as they are assembled under par 77(a) through par 77(g) are relied upon as demonstrating its assertion that CITIC Ltd was not, in fact, ready, willing and able to perform the CPOA obligations arising upon CITIC Ltd exercising its First Option under the CPOA - which CITIC Ltd elected to exercise on 13 April 2012 and as to which it brings the present action to compel Mineralogy to perform.
I accept that a contracting party that has actively renounced its own performance obligations to its counterparty in a contractual relationship would present, usually, as being at some distance short of demonstrating a readiness or willingness to perform their contractual obligations, if that is established.
I omit, for the moment, what are the extensive particulars given to FADAC par 77(c) so as to see first, under cover of the FADAC par 77 'because' chapeau as now seen, the two key FADAC subparagraphs, 77(c) and 77(d), may be seen in their broad terms.
Under that chapeau, they respectively provide:
77(c)CITIC has proposed to reduce the Purchase Consideration specified in CPOA by varying amounts, each in excess of the amount which CITIC has actually spent to comply with its Drilling Obligation;
(Particulars not presently cited.)
77(d)in calculating the amount of drilling costs by which it contends it is entitled to reduce the Purchase Consideration, CITIC has included costs incurred after 31 March 2011 that, by reason of clause 2.4 of the CPOA, it is not entitled to include;
Particulars
The costs that CITIC was not entitled to include to reduce the Purchase Consideration under the CPOA are all of those costs that it asserts to have been incurred in fulfilling its drilling obligation that were in fact incurred after 31 March 2011. Mineralogy will provide further particulars after discovery has been completed.

M9 and FADAC par 77(d)

I conclude, with little difficulty, that FADAC par 77(d) provides no basis at all in potential relevance to support the M9 requested category of documents which Mineralogy seeks and the CITIC Plaintiffs reject.
The Mineralogy FADAC plea under par 77(d) on its terms relates only to an issue as to a bright line temporal border arising from the CPOA itself and against accepting any drilling costs spent by CITIC Ltd post 31 March 2011 as set off amounts against the Purchase Consideration. As seen, CPOA cl 2.4 by its introductory sentence displays reference to CITIC Ltd carrying out this CPOA drilling obligation for up to five years from, in effect, 31 March 2006. Hence, a 31 March 2011 cut-off date for accepting CITIC Ltd's expenditure presents as a cut-off date as a matter of the bare interpretation of CPOA cl 2.4.
The FADAC par 77(d) argument by Mineralogy, which it will be remembered is relied upon as effectively being at the level of a repudiatory breach of the CPOA by CITIC Ltd, looks to be capable of ready resolution at a trial simply by reference to the temporal time cut-off expenditure line of 31 March 2011 either being engaged or not. The present range of M9 discovery as is called for by Mineralogy is thus not supported by any issues over or around FADAC par 77(d). That plea provides no basis at all to support the scale of a discovery exercise sought to be undertaken to assemble all the documents the subject of the present request made under category M9.
Moreover, in order to advance the FADAC par 77(d) plea and indeed to elevate it to a level of conduct by CITIC Ltd which might constitute conduct sufficient to be assessed at a level of a potential repudiatory breach of the CPOA, Mineralogy is expected to already hold some basis for it pleading that repudiation by conduct CPOA conclusion. That may well be identifying certain of CITIC Ltd's drilling costs as falling temporally well beyond the contended 31 March 2011 expenditure cut‑off time line, so as then not to be legitimately included within a quantification of the Drilling Obligation 'amount', by which CITIC Ltd would then set it off against the CPOA $US200 million Purchase Consideration that is otherwise to be paid for the first option acquisition.
Thus, to support M9, par 77(d) of the FADAC can essentially be put aside as not supporting what is asked. That leaves just par 77(c).

FADAC par 144 and par 145

Before I return to consider FADAC par 77(c), which was the essential focus of the oral arguments by Mineralogy, in passing I should earlier look at the other aspect of its FADAC as seen relied upon to support the M9 request, namely, FADAC par 144.
The plea at FADAC par 144 manifests there as within Mineralogy's counterclaim in the following terms:
As at the time that CITIC exercised the First Option on 13 April 2012, the amount that CITIC had spent, or ought reasonably to have spent, to comply with the Drilling Obligation was no more than the sum of US$60,000,000.
Particulars
Further particulars of the amount that CITIC spent, or ought reasonably to have spent, to comply with the Drilling Obligation will be provided following receipt of expert evidence prior to trial.
By FADAC par 145 of the counterclaim there follows the related plea that:
In the premises of paragraph 144 above, the Purchase Consideration for the exercise of the First Option is the sum of approximately US$205,000,000.
Particulars
The Purchase Consideration payable on exercise of First Option is the sum of US$200,000,000, plus the CPI Increase of approximately US$65,000,000 at 31 December 2017, reduced by the amount which CITIC has properly spent to comply with the Drilling Obligation (US$60,000,000), or a total of US$205,000,000 (clauses 3.3 and 1.1 of CPOA).
The counterclaim pleas under FADAC par 144 and par 145 do not present as being made in the alternative.
The contention then of Mineralogy under its FADAC counterclaim would seem to accept, in effect, at least the amount of $US60 million as being money 'spent' by CITIC Ltd in terms of its Drilling Obligation under CPOA cl 2.4 and so, as a reduction against the starting figure amount of $US200 million in the definition of the term 'Purchase Consideration' in the CPOA.
As deployed in FADAC par 144 and par 145 of the counterclaim, Mineralogy looks to be advancing its (alternative) plea of it suffering loss and damage (see par 146) in the sum of $US205 million - as the value of Mineralogy's lost opportunity to receive the Purchase Consideration under the CPOA. Mineralogy would have received that sum as the consideration paid for, in effect, CITIC Ltd's acquisition (via the fourth plaintiff) of the shares in the Further Company, upon the completion of the acquisition made by the exercise of the First Option under the CPOA.
So understood, Mineralogy's current FADAC counterclaim provides no basis to support the range of documents which are the subject of document category M9. In fact, the counterclaim pleas made by Mineralogy under par 144 through to par 146 would rather suggest that Mineralogy itself carries an evidentiary burden on its counterclaim of establishing Mineralogy lost a minimum $US205 million valuable opportunity, to be shown on the basis of Mineralogy's foreshadowed expert evidence (see par 144 particulars).

FADAC par 77(c)

I turn back to the particulars to Mineralogy's FADAC par 77(c) to assess their import as regards supporting the M9 discovery category as sought by Mineralogy.
In that process it needs to be recalled the FADAC par 77(c) plea of Mineralogy now seen is advanced:
(a)in refutation (under the chapeau to FADAC par 77) against the CITIC Plaintiffs' plea that CITIC Ltd was ready, willing and able to perform as regards its CPOA obligations following its exercise of the First Option on 13 April 2012,which Mineralogy denies; and
(b)as one component of the FADAC par 77 breach of the CPOA by CITIC Ltd pleas, all said by par 78 of the FADAC as regards such conduct amounting to repudiatory breaches of the CPOA by CITIC Ltd, and which repudiatory breach conduct, as we have now seen, is ultimately pleaded to have been communicated by Mr Palmer and by Mineralogy as putting an end to the further performance of the CPOA. That, as seen, was done, it is put, upon the filing of Mineralogy's amended defence in the present action - on 1 July 2016 (FADAC par 88) (ie, some four years and two and a half months after CITIC Ltd is admitted to have exercised its First Option under the CPOA on 13 April 2012).
I earlier set out the material plea that is FADAC par 77(c). But it is necessary to see it with all its accompanying particulars.
For ease of reference, I have renumbered the given particulars to FADAC par 77(c) which, as will be seen, refer to various letters, statements, communications or the like. I have renumbered Mineralogy's aggregate par 77(c) particulars as (i) through to (viii).
At the outset, I should highlight par 77(c)'s reference to what CITIC Ltd had 'proposed' as regards the Purchase Consideration. There is a certain marginality to a notion that a renunciation of a party's obligations of performance under their contract might be found in a mere 'proposal' by a contracting party that is put to the other party. However, that is the par 77(c) Mineralogy plea founding an alleged termination of the CPOA for repudiatory breach by CITIC Ltd that is ultimately to be assessed.
For completeness then, Mineralogy's FADAC par 77 duly renumbered for its particulars presents as below:
As to paragraph 68, it denies the allegations contained therein because:
...
(c)CITIC has proposed to reduce the Purchase Consideration specified in the CPOA by varying amounts, each in excess of the amount which CITIC has actually spent to comply with its Drilling Obligation;
Particulars
(i)By letter dated 6 December 2011 from CITIC Pacific Mine Management Pty Ltd (CPMM) on behalf of CITIC and its attachment, CPMM asserted that CITIC had spent $93,494,223 up to that date.
(ii)By letter dated 2 May 2012 from CPMM on behalf of CITIC and its attachment, CPMM asserted that CITIC had spent the Australian dollar equivalent of US$100,183,958 up to that date, while failing to state how much it had spent in Australian dollars.
(iii)By letter dated 27 September 2012 from CITIC and its attachment, CITIC asserted that it had spent US$135,562,053 up to that date, while failing to state how much it had spent in Australian dollars.
(iv)In a meeting held by telephone on 18 November 2011, attended by Helen Dillon, Rickard Walkland, Gavin Maclaren and Ben Strate on behalf of CITIC and by Mr Palmer and Geoff Smith on behalf of Mineralogy, Helen Dillon said that CITIC's preliminary estimate of its costs of fulfilling its Drilling Obligation was about $80,000,000.
(v)In October 2012, on the information then available to it, Mineralogy calculated that CITIC had demonstrated the expenditure of no more than $91,888,129 in costs of fulfilling its Drilling Obligation. Those costs are summarised in attachment A to a letter from Mineralogy to Allens dated 20 July 2018.
(vi)Additionally, CITIC claimed costs incurred after 31 March 2011 as pleaded in par 77(d) below. The actually expenditure in fulfilling the Drilling Obligation will have been less, as those sums included expenditure incurred after 31 March 2011.
(vii)By the letter dated 1 November 2013 from Allens to Mineralogy, and by the letter dated 17 December 2014 from Allens to Mineralogy, CITIC asserted that the sum identified in its letter dated 27 September 2012 [ie, the letter referred to in (iii) above and identifying expenditure of US$135,562,053 up to 27 September 2012] ought to be the basis for calculation of the Purchase Consideration.
(viii)Further particulars will be provided following receipt of expert evidence prior to trial.

Observations on the particulars to FADAC par 77(c)

Examining the par 77(c) particulars I first direct particular attention to the dates of the communications and conduct referred to. I do that in the context of Chaney J's consent declarations of 30 September 2015, in the earlier action, CIV 3012 of 2012, as regards Mineralogy's consensually declared 'invalid' past communications of a CPOA termination on the basis of repudiatory conduct by CITIC Ltd, that must be put aside in light of that result.
Next, as regards dates and the CPOA cl 2.4 drilling costs as expended by CITIC Ltd, I should also observe that all par 77(c) particularised events (save only for foreshadowed further particulars post a receipt of expert evidence under particular (viii)), as will be seen, are events particularised as coming to pass prior to 30 September 2015 - prior to when the consent declarations were made by Chaney J in CIV 3012 of 2012.
Apart from the vacuous par (viii), the only other possible reference to an event or communication post Chaney J's declarations of 30 September 2015 is a reference by particular (v) as regards an attachment A, in a letter from Mineralogy to Allens of 20 July 2018. But it will be seen, however, that the mentioned CITIC Ltd drilling expenditure figure of $91,888,129 dates back to Mineralogy's 2012 treatment of that sum as being then demonstrated expenditure of CITIC Ltd of no more than that amount, made by Mineralogy, on the information available to it then. That was in October 2012.
Hence, on analysis the matters relied on by the particulars to par 77(c) as regards repudiatory conduct by CITIC Ltd overwhelmingly pre-date the declarations of 30 September 2015 by Chaney J as made to resolve CIV 3012 of 2012.

Summary of the par 77(c) FADAC repudiation and CPOA termination plea of Mineralogy

To attempt to summarise the FADAC par 77(c) plea at this point, it will by now have been noticed that save for particulars seen under par 77(c)(vi) (which would seek to align that plea to that made later under par 77(d), as regards a temporal cut-off expenditure date of 31 March 2011 for CITIC Ltd drilling expenditure costs), the essence of the par 77(c) plea looks to be over an allegation of CITIC Ltd seeking to wrongly reduce the CPOA Purchase Consideration amount on the First Option by too much - on a basis of a set-off that claimed for amounts of CITIC Ltd drilling costs alleged by Mineralogy as being in excess of what CITIC Ltd had 'actually spent'.
The character of that par 77(c) contention by Mineralogy still presents as somewhat 'murky' overall. The essence, on paper at least, would appear to be raising a grievance against CITIC Ltd over it claiming (by proposing) to Mineralogy that it had spent greater amounts of money in complying with its CPOA cl 2.4 Drilling Obligation than it 'actually' had spent. But a basis to support a seriously pejorative contention as to CITIC Ltd falsely claiming to have expended an amount claimed, but not in fact actually having spent all of the as claimed amount as cl 2.4 drilling costs does not emerge out of any of the letters or statements that are presently identified by the eight particulars to par 77(c) of the FADAC.

So I am driven, in the end, to an assessment that the vice to be observed as being complained of by Mineralogy under FADAC par 77(c) is over an allegation as to CITIC Ltd seeking to reduce the amount payable as Purchase Consideration due under the CPOA for the First Option, illegitimately, by CITIC Ltd falsely claiming to have spent greater drilling costs sums than it actually spent.
Were such a complaint proven by Mineralogy, then I could accept as a matter of potentiality that such deliberately deceitful alleged conduct could, arguably, provide a basis to support a finding of repudiatory CPOA conduct by CITIC Ltd. Of course, Mineralogy would carry the evidentiary burden of proof to establish that serious charge.
On the other hand, if what is really in dispute is some lesser grievance over only a timing or characterisation argument for CITIC Ltd expenditure money as actually spent by it, then the force of proposal conduct by CITIC Ltd as regards that potentially providing a foundation to ascertain repudiatory conduct of the CPOA, look to diminish rather significantly.
I now turn to the respective written submissions as exchanged by the parties insofar as they bear upon the disputed discovery category M9 by way of elaboration of the issue landscape around category M9 as now related.

Evidence on the present application relevant to category M9

The parties adduced a considerable body of evidence as regards their contested discovery categories for the hearing of 22 June 2020.
For Mineralogy, it relied upon evidence from an affidavit of Kane Christopher Jones sworn 19 June 2020 and, specifically, as regards category M9, upon what is found under par 8 through par 11 of Mr Jones' affidavit and its relevant attachment. I return to that evidence in due course.
The CITIC Plaintiffs read and rely upon an affidavit of Michelle Elise Dunn affirmed 19 June 2020. Ms Dunn is a Project Co-ordinator -Special Project, with CITIC Pacific Mine Management Pty Ltd (CPMM), a subsidiary of CITIC Ltd. I will return to elaborate upon what she says, particularly at par 4 to par 8 of her affidavit as regards CITIC Ltd's cl 2.4 CPOA drilling expenditure, supporting material and as to the drilling costs data unavailability at the present time.
The CITIC Plaintiffs also relied upon the affidavit of Jeremy Peter Rich (a solicitor for the CITIC Plaintiffs), affirmed 19 June 2020. Mr Rich's affidavit essentially contains passing correspondence between the parties and their legal advisers stretching across the period 6 December 2011 through to 17 December 2014. I will refer to some of the aspects of that correspondence in due course.
The CITIC Plaintiffs also relied upon a communication found within an affidavit of Tania Cini (a partner of the CITIC Plaintiffs' solicitors) sworn 24 October 2018 as regards a communication in this action of 4 July 2018 sent by Allens on behalf of the CITIC Plaintiffs to the lawyers for Mineralogy, including to Mr Kane Jones, legal counsel, and to a Mr Danny Jacobson, solicitor. That 2018 communication essentially complained about a lack of proper particulars from Mineralogy as regards the then iteration of the defence par 77 pleas, and particularly under par 77(c) and par 77(d), as they were then fashioned. The communication led to a Mineralogy response of 20 July 2018 providing further particulars (see par 77(c) FADAC particular (v)).

Evidence and submissions of parties as regards Mineralogy category M9

Mineralogy evidence

Mineralogy's written submissions

By its written submissions filed 19 June 2020, towards category M9, Mineralogy submits:
[19]This category is relevant to the contention that the CITIC Parties have purported to reduce the Purchase Consideration (ie, the sum to be paid for the First Option) by amounts improperly claimed as drilling costs. (my emphasis in bold)
[20]The category is primarily directed at the financial data recording the drilling costs. As Mineralogy is unaware of the other kinds of documents which may be probative of the drilling costs, the category is framed more broadly.
[21]Mineralogy does not seek discovery of all underlying invoices; however provision is made for further requests to be made should that be necessary after interrogating the financial data and other documents.
[22]The CITIC Parties propose that any discovery given by the CITIC Parties' [sic] in relation to drilling costs be limited to those cost codes that are not included in Attachment A to Mineralogy's letter to Allens dated 20 July 2018 - ie, to the cost codes which remain in dispute. The CITIC Parties contend those cost codes account for the difference between the figure of $91,888,219 previously identified by Mineralogy and the figure of $135,562,053 proposed by the CITIC Parties.
[23]The proposal by the CITIC Parties unfortunately cannot be accepted. As the particulars to paragraph 77(c) of the Defence state, the estimate was based on the 'information then available to' Mineralogy. The information did not include the documents sought in this category.
[24]The estimate of expenditure recorded in the letter dated 20 July 2018 was not a definitive analysis of the drilling costs, nor did it descend into considering the items comprising the cost codes. It was not prepared with the rigour required by a court proceeding. The financial data is necessary to obtain an expert opinion on the drilling costs.
From these submissions I draw particular attention to Mineralogy's suggestion of impropriety as regards the level of CITIC Ltd's claimed drilling costs.

Mr Jones' affidavit

Before moving to consider the contrary submissions of the CITIC Plaintiffs concerning category M9, it is convenient to return to see par 8 through par 11 of Mr Kane Jones' affidavit of 19 June 2020. There he says this:
8....
The CITIC Parties propose that any discovery given by the CITIC Parties' [sic] in relation to drilling costs be limited to those cost codes that are not included in Attachment A to Mineralogy's letter to Allens dated 20 July 2018 - ie, to the cost codes which remain in dispute. Those cost codes account for the difference between the figure of $91,888,219 previously accepted by Mineralogy and the figure of $135,562,053 proposed by the CITIC Parties.
By par 9 Mr Jones attaches as KCJ-3 the letter of 20 July 2018 from Mineralogy to Allens, found at pages 35 to 41 of his affidavit attachments. It is apparent from the terms of KCJ-3 that it responds to Allens' letter to Mineralogy of 4 July 2018 adopting the same paragraph numbering in response.
It will be remembered from Ms Cini's affidavit attachment that the Allens letter of 4 July 2018 complained over the lack of particulars and, significantly here, in relation to FADAC pars 77(c) and (d).
From page 37 of Mr Jones' affidavit further particulars from Mineralogy are seen there provided to FADAC par 77(c) in their content. They align almost precisely to what I earlier set out as the particulars currently given by Mineralogy under FADAC par 77(c) by particulars (as I renumbered them) (iv), (v), (vi) and (vii). There is no need to repeat what I earlier set out.
Attachment A to Mineralogy's letter of 20 July 2018 is the attachment that is referred to by par 77(c)(v). Attachment A identifies what, at October 2012, upon information then available, Mineralogy had then assessed concerning the level of drilling expenditure costs CITIC Ltd had then demonstrated to Mineralogy, as regards a level of accepted expenditure then of $91,888,129 - which is the total seen under the heading 'Drilling Obligation Costs - Summary' (page 41 of Mr Jones' affidavit).
By par 10 of his affidavit, Mr Jones then relates:
10.I am informed by Chris Spielvogel, Geologist for Mineralogy, and believe that he prepared the table in the letter dated 20 July 2018.
(Reference to 'the table' in par 10 I take to be a reference to Attachment A, as mentioned in par 5(e)(ii) of Mineralogy's letter of 20 July 2018 to Allens.)
Mr Jones continues:
11.I am informed by Mr Spielvogel, and believe that:
(a)the table was prepared in October 2012;
(b)the table was not intended to be a definitive analysis of drilling costs;
(c)the data denoted with 'YES' appeared to be able to claimed but the actual cost needed to be broken down to confirm the amount;
[Comment: However, I can see nothing at all to be denoted by a word 'YES' in the Attachment A to which the above reference might be applicable.]
(d)the dated needed more information before it could be interrogated accurately, including as to what costs are covered in the accounting software (eg, MYOB);
(e)the costs seemed excessive;
(f)Mineralogy still needs to drill down into the data to understand the ancillary costs such as mobilisation, induction and other costs, and items such as meterage costs;
(g)an independent external audit was required to review the plaintiffs' data.
Mr Jones' relayed response as regards Mr Spielvogel's suggested 2020 views as now communicated by him to Mr Jones indicates a fairly significant 'volte face' against the position as stated in Mineralogy's letter to Allens of 20 July 2018.
It should also be noted that the 20 July 2018 response then communicated by Mineralogy to Allens was no casual communication. It saw Mineralogy responding to a formal request made in this action for better particulars following Ms Cini's communication for Allens of 4 July 2018. That request for better par 77(c) and (d) details had issued then on a basis that the pleas, particularly made under FADAC par 77(a) through (d) and (g), were suggested then as being liable to be struck out, on a basis they failed to state the defendant's (ie, Mineralogy's) case with reasonable particularity. The 20 July 2018 response provided by Mineralogy then, seen within the framework of this action, was a formal answer to the demand for better particularity of those FADAC par 77 pleas. It ought not to be casually resiled from.
Moreover, the 20 July 2018 Mineralogy response adopted, in effect, at then the results of a six years earlier assessment exercise as had been conducted by Mineralogy in October 2012 as regards Mineralogy's then either accepting or not accepting drilling costs expenditures as claimed by CITIC Ltd. That was for the money spent by CITIC Ltd, on Mineralogy's case, over a five-year period spanning from the end of March 2006 to the end of March 2011.
The (2006 - 2011) CITIC Ltd drilling expenditure under CPOA cl 2.4 events were long enough distant at the time of Mineralogy's 20 July 2018 response to Allens. They are even further distant now, in a context of a looming December 2020 trial, as regards a potential trawling exercise over expenditures by CITIC Ltd of, in most cases, over a decade ago being explored again, effectively, to be reconducted from scratch. That prospect, even in concept, now presents as repugnant unless it is essential to trial issues. That is the question.
I can turn now to the position as identified under the CITIC Plaintiffs' written submissions concerning the requested category of documents by Mineralogy as M9.

CITIC Plaintiffs' evidence

CITIC Plaintiffs' written submissions

The CITIC Plaintiffs' position concerning M9 is found with pars 8 through 19 of the CITIC Plaintiffs' written submissions filed 19 June 2020 (folio document 91).
Relevantly, they provide, after noting that Mineralogy's M9 date range document category request spans March 2006 to the present in 2020 as regards category M9, as follows:
15.This category is as oppressive as it is disproportionate. It requires production of every invoice for every expense incurred, in circumstances where Mineralogy was given every opportunity between 2011 and 2013 to audit the drilling costs claimed.
[Reference is made back to Mr Rich's affidavit at par 7 and to the correspondence attached to Mr Rich's affidavit as JPR-1 through JPR‑14 spanning, as I earlier indicated, many communications passing between the CITIC Plaintiffs and Mineralogy back and forth across three years between 6 December 2011 and 7 December 2014.]
Documents supporting the drilling costs incurred were made available to Mineralogy for a period of three years and during that time a data room was established to enable Mineralogy to undertake its review of the material. Despite numerous invitations from CITIC to do so, Mineralogy never availed itself of the opportunity to inspect the material. Eventually, the data room was recommissioned in 2014.
[Referring to Mr Rich's affidavit and to attachment JPR-14, being the letter from Allens to Mineralogy of 17 December 2014.]
It is wholly unreasonable, in the circumstances, for Mineralogy to require, in effect, that the data room be recommissioned, which in any event cannot now be done.
[And referring to Ms Dunn's affidavit at par 5, to which I refer below.]
16.Further, it appears that from the particulars ... by October 2012, Mineralogy had examined CITIC's table of claimed drilling costs and determined that certain cost items and an amount of $91,888,129 of costs were justified. It is clear, from a comparison of CITIC's table and Mineralogy's attachment A, that Mineralogy had examined CITIC's table, accepted a good majority (in value) of the cost items both as to the description of the cost object title, the nature of costs, as well as the precise total amount in respect of each item. Clearly, there should be no discovery in respect of these items.
17.Implicitly, at least, Mineralogy rejected cost items totalling $43,573,924. The inference reasonably available is that Mineralogy had a basis or reasons for that rejection and had information to support that basis or those reasons upon which it can rely on at trial to make good its claims referred to at paragraphs 12 and 13 above. In those circumstances, it is oppressive and disproportionate for Mineralogy and Mr Palmer to seek discovery of documents recording or referring to the amounts spent on these items and the dates on which these amounts were incurred from 31 March 2006 to date.
18.The fact that certain items of cost claimed by CITIC were wholly rejected by Mineralogy, rather than reduced in quantum, and other items were wholly accepted as to description and quantum, indicates that any dispute in relation to the rejected items is not over the quantum of expenditure on each of those items, but rather relates to whether they should be included as cost objects in performing the drilling obligation. So, any dispute over these items should not necessitate discovery of invoices and the like, or documents otherwise recording the quantum of expenditure. This is particularly so in the circumstances identified in in paragraph 15 above.
19.Accordingly, discovery of category M9 should not be ordered.

Ms Dunn's affidavit

Returning to Ms Dunn's affidavit I note that at par 4 of her affidavit of 19 June 2020 she relates under the heading 'Drilling Costs Supporting Material':
4.Based on my review of relevant correspondence and enquiries of other CITIC personnel, I believe that:
(a)CITIC compiled documents supporting the calculation of its drilling costs in December 2011 and made that supporting material available for inspection by Mineralogy at CITIC's Perth offices.
(b)CITIC continued to make the drilling cost documents available for inspection by Mineralogy between December 2011 and August 2012 at CITIC's Perth offices.
(c)For a period of about a month, a data room containing the relevant materials was established at CITIC's offices in Perth. The establishment of the data room involved relocating Beijing-based personnel familiar with the data to Perth for the whole time the data room was open.
(d)Mineralogy was invited to attend the data room to inspect documents and verify the expenditure.
(e)CITIC continued to offer Mineralogy access to materials supporting the drilling costs through to November 2013.
(f)Mineralogy never availed itself of the opportunity to review the drilling cost documents or attend the data room.
(g)Given that there was a cost associated with maintaining the data room, the data room was eventually decommissioned.
Under a heading 'Drilling Cost Data Availability', Ms Dunn continues:
5.During the project construction phase the accounts and procurement functions relating to the Sino Iron project were largely based in Beijing and the material made available to Mineralogy was compiled by personnel in Beijing. That function in Beijing has since been shut down. I have made enquiries of CITIC's finance teams in Australia, Hong Kong and Beijing regarding the continued availability of the previously‑compiled supporting documents and data room material. Based on my enquiries to date, I cannot confirm the content, composition or continued existence of the data set that was previously compiled and made available to Mineralogy at CITIC's Perth office from 2011.
6.Further, the drilling cost financial data was located across three databases, MYOB, AX and SAP. Based on my enquiries to the finance department in Perth, I understand that the MYOB and AX databases are legacy databases which are no longer operational. CITIC no longer has licenses to access these legacy databases. Even if new licenses could be obtained, that does not mean that the data in the legacy MYOB and AX databases would be accessible due to database software changes.
7.In addition, I understand from members of CITIC's finance teams that underlying transaction data (such as invoices, purchase orders and other drilling cost documents) related to the MYOB and AX databases is inaccessible.
8.Even if it were possible to seek to replicate the supporting material compiled and made available to Mineralogy in 2011, the time, cost and effort required to do so would be very significant given the large number of individual transactions involved in the total drilling costs figure and the time that has passed since those transactions occurred.
The burden of this evidence from Ms Dunn goes towards a contended unacceptable oppressiveness to the CITIC Plaintiffs of them reassembling again, to the extent it can be accessible in 2020, all of the M9 documents as sought and notwithstanding Mineralogy asserting therein (last sentence) that it is not seeking all invoices for CITIC Ltd's drilling expenditures.

A recap

In a context of the CITIC Plaintiffs' expressed resistance to category M9 as sought by Mineralogy, concerning drilling obligation expenditures claimed by CITIC Ltd effectively as amounts to be set off against the CPOA Purchase Consideration payable at completion following the exercise of the First Option by CITIC Ltd (from $US200 million as adjusted) it is necessary to remember towards FADAC par 77 and other components of Mineralogy's pleading, that the M9 Drilling Obligation documents are seen to bear potentially upon the following trial issues:
(a)Mineralogy resisting the CITIC Plaintiffs' specific performance bedrock contention that they were ready, willing and able to perform their obligations as regards completion in respect of the First Option, when it was exercised by CITIC Ltd on 13 April 2012 for the purposes of cl 3.1, cl 3.2 and cl 3.3 of the CPOA. However, prima facie, such M9 CITIC Ltd drilling costs documents present on their face to have minimal, if any, relevance to the end assessment of that pre-requisite issue, as matters are presently pleaded.
(b)Specifically, out of FADAC par 77(c) and par 78, that the proposal by CITIC Ltd to claim as drilling costs under CPOA cl 2.4 at 27 September 2012 an amount of $US135,562,053 (as the amount then 'proposed' by CITIC Ltd to reduce the level of Purchase Consideration payable by CITIC Ltd to the Seller under the CPOA in respect of the First Option for the acquisition of the shares in the Further Company) was repudiatory of the CPOA by CITIC Ltd.
The contended repudiatory seriousness of the CITIC Ltd breach conduct emerges from Mineralogy's use of the phrase 'in excess of the amount which CITIC Ltd has actually spent to comply'. By inference, it appears to be correlatively suggested the CITIC Ltd amount proposed to reduce the Purchase Consideration in respect of the claimed moneys as being spent by CITIC Ltd under the Drilling Obligation of CPOA cl 2.4 was not 'actually spent'. That seriously pejorative assertion against CITIC Ltd also emerges, as seen earlier, out of Mineralogy's par 19 category M9 written submissions, as submitted, on this application, which refers to 'amounts improperly claimed as drilling costs' (my emphasis). That submission by Mineralogy confirms a tone of suggested repudiatory impropriety by CITIC Ltd, in terms of a deliberately excessive claim for costs, and pitched at a quantum level above what was actually spent.
But for Mineralogy to sustain the allegation of such impropriety, which is a serious charge to level against CITIC Ltd, Mineralogy would first be expected to already hold some respectable body of evidence to plead and support such a charge. Correlatively, Mineralogy will not be permitted to engage in a documentary fishing expedition under a vast discovery exercise so as to hopefully unearth there for the first time some founding documentary evidence to back up its serious contention of impropriety in CITIC Ltd in a context of what is ultimately a charge of contractual repudiation by reason of such conduct (see Legal Professional Conduct Rules 2010 (WA) r 36).
(c)The last of the potential grounds of relevance for the M9 documents as regards the end amount CPOA 'Purchase Consideration' is simply that some such documents look to be reasonably necessary for CITIC Ltd to prove at the trial the level of a reduction amount, to show what it spent concerning its Drilling Obligation under CPOA cl 2.4. CITIC Ltd's costs so spent need to be shown to derive a final Purchase Consideration amount of US dollars (reduced from $US200 million) in a context of ascertaining the payment amount required by the CPOA to be paid over to Mineralogy, or to Mr Palmer (depending on who is the Seller), in order to perform its payment obligation and obtain specific performance relief as regards the CPOA First Option.
To some extent, an earlier uncontroversially agreed category M6, in terms of documents requested by Mineralogy and agreed to be provided by the CITIC Plaintiffs, would look to encompass a number of the passing communications in relation to proposals made by the parties over reducing the CPOA Purchase Consideration for the First Option.
Primarily, however, it will be for the CITIC Plaintiffs to prove up as a part of their case at the trial the quantum of the Drilling Cost amounts to be properly set off by way of subtraction in the ultimate calculation of the Purchase Consideration amount as derived for payment to the Seller.

Determination upon category M9 sought by Mineralogy

Weighing all the materials which have been assembled as regards documentary category M9 as sought by Mineralogy for the purpose of the CITIC Plaintiffs giving their discovery and inspection in this litigation, I am of the end view that the Mineralogy request as framed presently must be refused as being grossly disproportionate to the presenting trial issues measured against the volume of the vast document assembly task and thus, unduly oppressive.
I do accept that in mid-2020, for reasons essentially as explained in Ms Dunn's affidavit, it must now be very burdensome for the CITIC Plaintiffs to try to provide the category M9 documents as currently formulated and, in particular, for over a period sought spanning 14 and a quarter years from 31 March 2006 to June 2020.
I also bear in mind a history of the prior CPOA litigation, by CIV 3012 of 2012, ultimately resolved the day before its scheduled trial under consent declarations of Chaney J of 30 September 2015, as extracted on 1 October 2015. The task and issue of calculating the drilling obligation expenditure of CITIC Ltd as spent by it under cl 2.4 of the CPOA, in order to to calculate the residual amount of the Purchase Consideration payable to the Seller under the CPOA for the First Option has been live since at least 13 April 2012. It was live in the earlier proceedings, CIV 3012 of 2012 begun on 13 December 2012 as resolved on 30 September 2015. That being the case, Mineralogy must surely have directed its attention to this drilling costs set off issue in the past as to what was due under the CPOA as the end Purchase Consideration payable to the Seller. That is readily apparent from the evidence, including in the 2012 exchanges between the parties and their lawyers collected under passing communications as found assembled in Mr Rich's affidavit spanning December 2011 to December 2014.
Moreover, FADAC par 77(c) as regards CITIC Ltd's contended repudiatory CPOA conduct, in terms of it proposing amounts as seen, carries along with it a side wind of alleged impropriety against CITIC Ltd, for it claiming moneys over and above what CITIC Ltd had 'actually spent'. It is for Mineralogy to make good upon that contention of impropriety. It is not for Mineralogy to be allowed carte blanche in mid‑2020 to demand and conduct a documentary fishing expedition to try and find some support for serious charges. That should have been work done at the time the allegation of impropriety was pleaded out.
The five-year period as is envisaged under CPOA cl 2.4 as regards CITIC Ltd's drilling obligation, looks to have ended at the end of March 2011. So the exercise of reconstructing, in effect, a CITIC Ltd drilling expenditure data room that had once existed, in order to provide a 2020 further opportunity for Mineralogy to 'verify' for itself afresh CITIC Ltd expenditures is, I accept, a proposition that emerges too late. In any event, it is no longer feasible based on Ms Dunn's evidence - which I accept.
The disproportionality of ventilating all these as proposed drilling costs verifications, in effect, de novo in mid-2020, in a context of Mineralogy's plea of repudiatory conduct by CITIC Ltd as regards the 'proposal' exercise of quantifying ultimately the Purchase Consideration by working out the amount of the drilling obligation expenses of CITIC Ltd to perform the required subtraction, looms as overwhelmingly disproportionate to the worth of the M9 exercise.
Just under eight years ago, at October 2012, it appears the same parties were then a long way apart in terms of the as demonstrated drilling expenditures of CITIC Ltd by their then different positions of $US135,562,053 claimed by CITIC Ltd - with Mineralogy then not accepting more than (on the information then available to Mineralogy) of $AUD91,888,129.
To allow eight years on what looms as a quasi Royal Commission into Mineralogy's proposed verification of all the drilling costs as claimed by CITIC Ltd in set off from the Purchase Consideration, effectively as a fresh exercise in 2020, for the purposes of the trial, is unrealistic to the presenting issues at trial. It is clearly disproportionate in its likely magnitude and cost. On my assessment, such a diversion would likely derail any prospect of completing a trial within a 10‑day period, in a context of asserted CPOA repudiation - which, on its face, presents as somewhat less than overwhelming (by making of a proposal that is said to be repudiatory conduct) and for circumstances where CITIC Ltd is now seeking performance of the First Option promises made to it under the CPOA and in that context proposing to pay the as ascertained end amount of Purchase Consideration to the CPOA Seller.
The proportionality of the as proposed M9 exercise as currently framed by Mineralogy is simply not justified.
My negative conclusion against M9 is particularly illustrated from the September 2012 and October 2013 communications, to be found as JPR-11 and JPR-12 respectively to Mr Rich's affidavit. Then CITIC Pacific Ltd director, Mr Vernon Moore, on 27 September 2012 had written to the deputy chairman of Mineralogy, in the following terms (JPR-11):
There are now over 10,000 lines of financial data from CPL's MYOB, AX and SAP databases from which these costs have been derived. A significant proportion of these cost items will be associated with purchase orders, which will in turn be associated with individual invoices. In the case of the SAP data, invoices are retrievable from the SAP system in soft copies. However, in the case of each of the AX and MYOB data, individual invoices will need to be recovered from hard copy archives.
If Mineralogy wishes to verify CPL's calculation of the Drilling Obligation costs, we propose that an industry standard review process be adopted. In the current circumstances, we consider that it would be appropriate for the review to be conducted in accordance with applicable Australian auditing standards and principles. We anticipate that this may involve a high-level review of the summary data prepared by CPL and the processes undertaken in compiling it and, if necessary, the sampling and verification of a portion of the underlying documentation. For the purpose of ensuring that the verification process is undertaken in an efficient, cost-effective and timely manner under these standards, CPL suggests that Mineralogy instructs its external auditors to do the work.
As Ms Dunn's affidavit relates, and as I fully accept for the CITIC Plaintiffs, that 2012 offered opportunity was not taken up by Mineralogy when offered in September 2012 (see Ms Dunn's affidavit par 4). The CITIC Pacific letter of 27 September 2012 had attached (see par 2) a table (page 19 of Mr Rich's affidavit) that showed a total of $US135,562,053 in costs by CITIC Ltd.
A year later, on 29 October 2013, Mineralogy, by its Deputy Chairman, Mr Smith (see JPR-12 at pages 20 and 21 of Mr Rich's affidavit), in the face then of the litigation commenced on 13 December 2012 in this court as CIV 3012 of 2012, wrote as follows under the heading 'Re: Exercise of First Option Under China Project Option Agreement (CPOA'):
Mineralogy calculates that the Purchase Consideration under the Takeover Agreement is US$145,162,104 which is calculated as follows:
Initial Purchase Consideration  US$200,000,000
less
amount alleged by CITIC spent

on Drilling Obligation (as per CITIC's letter
dated 2 May 2012)  US$102,183,958

Note: Mineralogy reserves its right to inspect
CITIC's records and conduct an audit
...
Total Purchase Consideration   US$148,026,065.87

Furthermore, Mineralogy gives notice under Sub Clause 3.6(c)(iii) that it has satisfied the provisions of 3.6(c)(i) and (ii) of the CPOA.
But that response had then ignored Mr Moore's 27 September 2012 communication, in favour of a prior communication by CITIC Pacific of 2 May 2012 (see attachment JPR-8 to Mr Rich's affidavit). That omission was pointed out by Allens' correspondence of 1 November 2013 (JPR-13, page 25, item 3). The communication (when CIV 3012 of 2012 was still pending) concluded:
As to your note reserving Mineralogy's right to inspect CITIC's records and conduct an audit of the drilling costs, we refer to CITIC's letters dated 12 December 2011, 6 January 2012, 24 January 2012 and 24 August 2012 by which CITIC invited Mineralogy to attend at its Perth office to inspect the documents supporting its calculations. Despite CITIC expending significant time and resources to make the supporting information available for inspection, that invitation was never taken up by Mineralogy. If Mineralogy now wishes to inspect the supporting documents, please let us know so that CITIC can again commence the necessary preparations to make the data available.
Again, the as offered opportunity of 2014 was not taken up by Mineralogy, as Ms Dunn's affidavit confirms.
In Allens' communication to a Mr Dunham and Mineralogy of 17 December 2014 (JPR-14), Mineralogy was advised that the data room had then been decommissioned (see par 4.2 of that communication) and observing then that at no stage did Mineralogy personnel attend the data room to review the material which had been made available. Instead, 'Mineralogy wrote to CITIC [Ltd] wrongfully purporting to accept the "repudiation" of the CPOA on 4 October 2012'. However, the consensual declarations by Chaney J resolving CIV 3012 of 2012 at 20 December 2015 had consensually declared Mineralogy's and Mr Palmer's attempts at termination of the CPOA on the basis of suggested repudiatory conduct by CITIC Ltd to be 'invalid'.

Conclusion

The assembled body of communications, all passing prior to the consent declarations which determined action CIV 3012 of 2012, all support the present contention of the CITIC Plaintiffs, which I must accept, that the scale of the document assembly exercise as envisaged under Mineralogy's category M9 request is, indeed, disproportionately oppressive. That conclusion is reached within the context of present issues arising for trial in December 2020 in this action and by reference to past events, including by reference to the resolution of CIV 3012 of 2012.
Consequently, the M9 request is disproportionate and oppressive. It will be refused in the exercise of the court's discretion as regards discovery and inspection.
The costs of the M9 exercise conducted as it has been now, on the papers, should be in the cause - that being the costs outcome governing the other disputed discovery document category disputes, which were otherwise resolved by me on 22 June 2020.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DW
Associate to the Honourable Justice Martin
3 JULY 2020