CITIC Ltd v Mineralogy Pty Ltd [No 5]

[2021] WASC 89

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   CITIC LTD -v- MINERALOGY PTY LTD [No 5] [2021] WASC 89

CORAM:   KENNETH MARTIN J

HEARD:   7 - 9 & 15 DECEMBER 2020

DELIVERED          :   30 MARCH 2021

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:

Specific performance - Option agreement - Option exercised - Failure to perform proximate to exercise of option - No opposition at trial to orders compelling enforcement of option rights - Some terms of orders at issue - Terms of accompanying required Project Agreements and Takeover Agreement not fully agreed - Issue of construction as to allowable scope of adaption and deviation from template (Sino) Project Agreements and (Korean Steel) Takeover Agreement as referred - Scope of insubstantial terms - Argument for ad hoc implied term invoked to reach adaption outcome if not reached by construction of option agreement - Remaining disputes  between parties determined

Legislation:

Iron Ore Processing (Mineralogy Pty Ltd) Agreement Act 2002 (WA)

Result:

Orders for specific performance settled

Category:    B

Representation:

Counsel:

First Plaintiff	:	Mr J H Karkar QC, Mr S H Parmenter QC & Mr A D Barraclough
Second Plaintiff	:	Mr J H Karkar QC, Mr S H  Parmenter QC & Mr A D Barraclough
Third Plaintiff	:	Mr J H Karkar QC, Mr S H Parmenter QC & Mr A D Barraclough
Fourth Plaintiff	:	Mr J H Karkar QC, Mr S H Parmenter QC & Mr A D Barraclough
First Defendant	:	Mr P Dunning QC & Mr K S Byrne
Second Defendant	:	Mr P Dunning QC & Mr K S Byrne

Solicitors:

First Plaintiff	:	Allens
Second Plaintiff	:	Allens
Third Plaintiff	:	Allens
Fourth Plaintiff	:	Allens
First Defendant	:	Kane Jones
Second Defendant	:	Jonathan Shaw Solicitor (as from 6 December 2020)

Cases referred to in decision:

CITIC Ltd v Mineralogy Pty Ltd [2020] WASC 223

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

CITIC Ltd v Mineralogy Pty Ltd [No 3] [2020] WASC 398

CITIC Ltd v Mineralogy Pty Ltd [No 4] [2020] WASC 439

CITIC Pacific Ltd v Mineralogy Pty Ltd [2014] WASC 358

Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337

Fitzgerald v Masters (1956) 95 CLR 420

Hughes v St Barbara Mines Ltd [No 4] [2010] WASC 160

James Adam Pty Ltd v Fobeza Ltd [2020] NSWCA 311

Leech v Schweder (1874) LR 9 Ch App 463

Mineralogy Pty Ltd v Sino Iron Pty Ltd [2020] WASC 40

Mineralogy Pty Ltd v Sino Iron Pty Ltd [2021] WASC 45

Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16] [2017] WASC 340

Van Duren v Hammond & Roberts Pty Ltd [No 2] [2019] WASC 246

TABLE OF CONTENTS

Introduction

Background

Procedural history

CPOA - 'Acquisition of further entities'

Further background to the acceptance of Balmoral Iron

Trial repercussions

CITIC's drilling costs

The CPI Increase

The trial residual drafting disputes

Specific performance of the First Option under the CPOA

Formal findings of fact for the trial

The Project Agreements and Takeover Agreement

The CITIC plaintiffs' 2FASOC

Paragraph 17(ja)

Paragraphs 17B and 17C

The CPOA construction dispute

Principles of contractual interpretation

The parties' arguments

Some unique features

Determinations upon the parties' rival constructions of the CPOA

The CITIC plaintiffs' proposed construction

The CITIC plaintiffs' ad hoc implied term

The defendants' proposed construction

Conclusions on CPOA proposed construction

Process to resolving drafting disputes

Project Agreement (c):  Fortescue Projects Consolidation Agreement

Project Agreement (b):  Balmoral Iron Facilities Deed

An existing Balmoral Iron Facilities Deed

Drafting disputation over Project Agreement (b)

Project Agreement (d):  Fortescue Coordination Deed

Drafting disputation over Project Agreement (d)

Schedule 1

The (Balmoral Iron) Takeover Agreement

The Korean Steel Takeover Agreement

Drafting disagreements:  the Balmoral Iron Takeover Agreement

First Area:  dual tranches of deposit or not?

Second Area:  Treasurer's consent

Third Area:  cl 4.1(b)

Concluding observations

Project Agreement (a):  the Balmoral Iron MRSLA

Some more history

The approach

General themes underlying the Balmoral Iron MRSLA discord

The disagreements case by case

The Amendment Deed

The Balmoral Iron MRSLA

Sundries

Conclusions and orders for specific performance

Draft proposed specific performance order

KENNETH MARTIN J:

Introduction

1. In this action commenced in 2016 (but with disputed issues having their genesis a decade prior to that), after a flurry of interlocutory activity across 2020, the parties ultimately agreed by the time of the December 2020 trial, that orders for specific performance should be made concerning the performance of an aspect of an agreement perfected between them on 22 October 2008.

2. Towards the discretionary equitable remedy of specific performance, the venerable English text Seton H W, Forms of Judgments and Orders in the High Court of Justice and Court of Appeal (7^th ed, 1912) (Seton) still provides some directional utility. 

3. In vol 3 at chapter L, section I of Seton the authors discuss specific performance, in the context of the right to obtain such relief.  At page 2,138, discussing the nature of the equitable jurisdiction, the authors endorse the first instance observations of Sir George Jessell, Master of the Rolls, in Leech v Schweder, delivered 21 January 1874.  Jessell MR observed (page 467):[1]

   No principle can be more sacred than that a man shall be compelled to perform his contract.

   [1] Jessell MR's reasons are not themselves published, but are found included in the reported (allowed) appeal of the Master's decision being Leech v Schweder (1874) LR 9 Ch App 463 commencing at 465. References to Jessell MR's judgment are references to the page in the reported appeal.

4. The Master of the Rolls then further observed (page 467):

   In all cases where a Court of Equity has jurisdiction to enforce the specific performance of contracts, and persons voluntarily, without any fraud, accident, or mistake, enter into contracts, a jurisdiction should be exercised.

5. Forms of orders, as assembled by Seton at chapter L, section I (particularly forms 3, 4 and 6, pages 2136 - 2137) are seen to commence with a court declaring a party is entitled to specific performance, then proceeding to address the performance aspects of the required conduct more precisely in terms of the order.

6. I render those commencing observations towards the present trial context, where the parties' essential agreement had ultimately been expressed (albeit very late in the piece) towards an advocated issuance by the court of specific performance orders against the defendants.  Nevertheless, there still remained residual disagreements of detail ‑ concerning the precise terms of such orders the court is still asked to resolve at trial. 

7. To grapple with those residual issues, it is necessary to comprehend a somewhat drawn out procedural background in the long lead-up to the present trial.  Such procedural background provides a necessary insight required to grapple with what remains as the fallout residual controversies, following what was once a full blown long term contractual 'war'.  The dispute was initially over the contested enforcement of acquisition rights under an agreement, and then, over the option rights thereunder, which were exercised in 2012.

Background

1. The trial between the parties over their residual disputes commenced on 7 December 2020.  It manifests as a breach of contract action pursuing relief in the character of specific performance orders to obtain the rights and property claimed by the first plaintiff, CITIC Ltd (CITIC).  Sino Iron Pty Ltd (Sino Iron) and Korean Steel Pty Ltd (Korean Steel), being the CITIC wholly-owned subsidiaries exercising the relevant mining rights, are joined to the action, as second and third plaintiffs respectively. 

2. The action emanates from a written agreement of 22 October 2008 (as later varied at 30 March 2012) and referred to as the China Project Option Agreement (the CPOA) (Trial Bundle, vol 1, tab 25). 

3. In broad terms, the CPOA provided a mechanism by which CITIC could elect to obtain from Mineralogy, the first defendant, (or from Mr Palmer, the second defendant) the control over all shares in a so‑designed Further Company (as defined in CPOA cl 1.1).[2]  That corporation, when acquired, was to hold essentially the same mining and processing of ore rights from Mineralogy as Sino Iron and Korean Steel also enjoyed, enabling the Further Company to engage in more ore extraction from the mining tenement held by Mineralogy at Cape Preston (known are Area A) in the north-west of Western Australia.  Effectively, the First Option arrangement under the CPOA, if exercised, would afford to CITIC mining rights to extract an even greater volume of magnetite iron ore in Area A (specifically, rights to an additional one billion tonnes of magnetite ore extraction).

   [2] Capitalised and bolded terms are found defined within the CPOA in the definition clause 1.1.  Rather than unnecessarily clutter these reasons with definitions, Schedule A to these reasons contains a list of definitions of those terms, as well as other relevant terms, as found in clause 1.1.  For ease, I have bolded some of these terms on their first appearance in these reasons.

4. It is fully accepted CITIC exercised its First Option right under the CPOA as afforded to it, in relation to the acquisition of a Further Company.  That was on 13 April 2012. 

5. Nevertheless, for various reasons there has ensued, post April 2012, an ongoing failure by CITIC to complete upon the First Option exercise - now almost nine years ago. 

Procedural history

1. A series of four interlocutory reasons for decision of mine were delivered in this action, CIV 1514 of 2016, across 2020.  I refer, namely, to CITIC Ltd v Mineralogy Pty Ltd [2020] WASC 223 published 18 June 2020 (CITIC v Mineralogy), CITIC Ltd v Mineralogy Pty Ltd[No 2] [2020] WASC 252 delivered 3 July 2020 (CITIC v Mineralogy [No 2]), CITIC Ltd v Mineralogy Pty Ltd [No 3] [2020] WASC 398 delivered 4 November 2020 (CITIC v Mineralogy [No 3]) and CITIC Ltd v Mineralogy Pty Ltd [No 4] [2020] WASC 439 delivered 1 December 2020 (CITIC v Mineralogy [No 4]).  Read together, those reasons chronicle the concluding phases across 2020 for the dispute in this action as between these protagonists.  They record an unusually extensive interlocutory history before the ultimate commencement of the December 2020 trial.

2. I incorporate into these reasons, by reference, my prior 2020 reasons mentioned above, as background.  I do not repeat them all again verbatim.  Too many issues that were once key flashpoints of intense dispute, then disappeared or changed across 2020 in the lead up to the trial.  Even in days just before the trial began it was not clear what the final issues requiring trial resolution would be.

3. In CITIC v Mineralogy [No 4], delivered six days prior to the commencement of trial, I observed then, that the outstanding issues as between the parties had continued to narrow to that point.  At [12] ‑ [14] in those reasons, I observed:

   The residual trial issues which currently remain are few.  They were discussed in CITIC Ltd v Mineralogy Pty Ltd [No 3], commencing at [75] of those reasons. Things have moved on and narrowed even further since then concerning Balmoral Iron Pty Ltd, as I explain later, and the acceptance of that entity as the 'Further Company'.

   If the CITIC plaintiffs were successful at the looming trial, essentially now limited to them first proving their readiness, willingness and ability to perform their obligations arising upon the exercise of the First Option and then, second, in relation to proving the correct amount of the First Option Purchase Consideration (which stills sees unresolved the problematic issue of quantifying the CITIC drilling costs for the purposes of their subtraction from the ultimate Purchase Consideration).  If those issues are met by the CITIC plaintiffs, only then will some further but wholly subsidiary issues present at the trial concerning the terms of any mandatory performance relief orders that would issue from this court, made by reference to CPOA terms.

   Those issues would arise around the terms of the orders that the court would be asked to make concerning the content of various further company completion documents, including Project Documents, associated with completing that First Option transaction and the mandatory relief orders from the court - if the parties are unable to consensually resolve those terms.  ...

4. After 1 December 2020, following publication of CITIC v Mineralogy [No 4], the disputed trial issues between the parties (with a few hiccups along the way) continued to narrow.  By commencement of the trial, all former issues around what had been the initially qualified acceptance by CITIC towards Balmoral Iron Pty Ltd (Balmoral Iron) as the defendants' nominated corporation, were resolved.  Balmoral Iron is the company proposed by the defendants to be the CPOA's First Option subject Further Company.  By a purchase of all its shares (by the fourth plaintiff, Cape Preston Resource Holdings Pty Ltd (CPRH), a nominated corporate vehicle and wholly owned subsidiary of CITIC), Balmoral Iron would become another corporation (ultimately) wholly controlled by CITIC.

5. At the time of the trial's commencement, there had been communicated an unequivocal acceptance by CITIC of Balmoral Iron for the purpose of the exercise of the First Option under the CPOA, essentially to acquire the shares in Balmoral Iron from Mineralogy.  Effectively, that transaction would see an acquisition of extensive and valuable contractual rights as held by Balmoral Iron (granted to it by Mineralogy) - to a further billion tonnes of magnetite ore in Area A and to other contractual rights.  All these valuable contractual rights had earlier been obtained by Balmoral Iron from Mineralogy, at the time when the corporation was a wholly owned subsidiary of Mineralogy.

6. By the commencement of the trial, the parties had also resolved a former dispute over a required formal proof of the readiness, willingness and ability of the four plaintiffs (who I refer to jointly as 'the CITIC plaintiffs') to perform their obligations on the takeover side of the CPOA's First Option envisaged transaction.  A major aspect of that performance obligation was to render the payment of the Purchase Consideration.  Satisfaction of the 'readiness' requirement follows necessarily upon the defendants at the commencement of the trial both supporting and advocating that specific performance orders should issue against them from the court.  Prior to that, the defendants' formal position under their pleaded defences had been that such relief was unnecessary - since it was put that post 22 September 2020, Mineralogy had stated that it was willing to perform.

7. Nevertheless, that stance changed by the trial.  Mineralogy and Mr Palmer both said through senior counsel at the trial, that orders for specific performance should be made by the court, as a result of the CPOA's First Option rights being implemented through Balmoral Iron (as the Further Company) and which was to be 'taken over' by, in effect, its shares being purchased by CPRH from Mineralogy.  Consequently, completion of the First Option would deliver to CITIC control of Balmoral Iron via another intermediary holding corporation subsidiary of CITIC (ie, CPRH). 

8. So then, by the end of the trial, the residual issues of disputation really only concerned arguments over the precise terms of specific performance orders to be issued by the court. 

9. Nevertheless, in this respect, some key issues over details still divided the parties. 

10. Consequently, there emerged at the trial, a series of mini drafting and terminology disputes.  Such disputes were over various express terms proposed to be included in the CPOA defined Project Agreements - being agreements to which, under the CPOA, Balmoral Iron must be party, or if not, must become a party, before my completion on the First Option takeover transaction for Balmoral Iron. 

11. There also presented a number of drafting disagreements to be resolved over express terms in the proposed Takeover Agreement, being the contractual mechanism under which CPRH is to acquire all the shares in Balmoral Iron from Mineralogy.

CPOA - 'Acquisition of further entities'

1. The earlier 2020 reasons in CITIC v Mineralogy set out the critically important cl 3 of the CPOA (see [33] of those reasons). 

2. Of key importance, as will be seen, to the present residual drafting disputation are CPOA cl 3.6(a), (c)(i), (c)(iii) and (f), in particular. 

3. Because CPOA cl 3 must be read and interpreted in its overall holistic CPOA setting, I need to set it out again in full below.  It provides:

   3.Acquisition of further entitlements

   First Option

   3.1Provided the Korean Takeover Agreement has been completed, CITIC or its nominee will have an option to acquire a Further Company (First Option).

   3.2The First Option may be exercised at any time up to 5pm, 31 March 2012.  [Note:  Under a variation agreement to the CPOA dated 30 March 2012 the date originally set by cl 3.2 came to be varied to read '14 April 2012'.]

   3.3The exercise price for the First Option will be the Purchase Consideration.

   Further Options

   3.4Provided it has exercised the First Option and there are sufficient resources in Area A, CITIC (either in its own name or on behalf of a nominee) may, subject to the conditions referred to in clauses 2 and 8 hereof, exercise any of the Further Options by giving written notice to Seller at any time during the Option Period.  Any options not exercised in the Option Period shall, upon the expiry of such period, lapse.  The exercise of any option hereunder is subject, if required, to any necessary government approval of the Project Agreements in respect of any Further Company.

   Form of acquisition

   3.5Subject 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.

   Conduct after exercise of an option

   3.6Following the exercise of any option:

   (a)the Seller must immediately notify CITIC in writing of the name and details of the relevant Further Company that the Seller has nominated as the vehicle for completion of that option and whether Palmer or Mineralogy will be the Seller;

   (b)CITIC must notify the Seller of the name and details of the proposed purchaser of the Further Company.

   (c)Mineralogy must ensure that, no later than 20 Business Days after the Exercise Date:

   (i)the Further Company becomes a party to the necessary Project Agreements;

   (ii)the Further Company has disposed of any assets to the Seller or its nominee at a nominal amount of $1 including any shares or assets which are not required for the development of the Project; and

   (iii)it gives CITIC written notice that it has satisfied its obligations under paragraphs (i) and (ii), as soon as possible after those obligations are satisfied; and

   (d)If the Further Company is not a party to the State Agreement then, for a period of 90 days from the Exercise Date, Mineralogy must attempt to have the Further Company become a party to the State Agreement on the same terms as the terms on which Sino Iron is a party to the State Agreement.  If the Further Company is not a party to the State Agreement then upon the Further Company becoming a party to the State Agreement Mineralogy must give notice to CITIC that it has done so.

   (e)

   (i)If the Further Company is not or does not become a party to the State Agreement within the period of 90 days from the Exercise Date and CITIC has not agreed to extend the period then CITIC is not obliged to proceed to acquire the Further Company and may instead by notice to Mineralogy require that the Total  Extraction Limit (as defined in the relevant Mining Right and Site Lease Agreement) for a company already owned by CITIC be increased by 1,000,000,000 tonnes (which for the avoidance of doubt may be a company in respect of which CITIC has previously given a notice under another application of the clause).  Upon such notice being given the Mining Right and Site Lease Agreement for that Company will be deemed amended as provided in Part B of Schedule 2. Where the Total Extraction Limit (as defined in the Mining Right and Site Lease Agreement) is increased in accordance with this paragraph (e), the obligation to pay the Mineralogy Royalty (as defined in the Mining Right and Site Lease Agreement) and the State Government Royalty (as defined in the Mining Right and Site Lease Agreement) applies to the Total Extraction Limited [sic] (as defined in the Mining Right and Site Lease Agreement) as increased by one billion [sic] tonnes.

   (ii)At the same time as giving the notice referred to in paragraph (e)(i) CITIC must procure that the company which holds the Mining Right and Site Lease Agreement pays to Mineralogy an amount equal to what would have been the Purchase Consideration if CITIC had acquired a Further Company in accordance with this clause 3.

   (iii)Any exercise by CITIC of its rights under this paragraph (e) to cause an increase in the Total Extraction Limit (as defined in the relevant Mining Right and Site Lease Agreement) will extinguish one of the Options.

   (iv)If CITIC fails to procure that the Further Company pay the amount referred to in sub-paragraph (e)(ii) then the relevant Option will be deemed not to have been exercised.

   (f)No later than the date which is the 7 Business Days after the date that CITIC receives written notice under paragraph (c), the relevant parties must enter into a Takeover Agreement in substantially the same form as the Korean Steel Takeover Agreement but modified in the manner described in Schedule 3 and must complete the transactions contemplated by it in accordance with its terms including entering into or varying the Project Agreements.

   (g)Mineralogy must execute on its own behalf and on behalf of any other party to the State Agreement that has authorised it to do so (including without limitation, the parties to the Fortescue Projects Consolidation Deed) any document necessary or desirable for the purpose of making a Further Company a party to the State Agreement.

   (h)Mineralogy must maintain any authorisation it has to execute amendments to the State Agreement on behalf of other parties to the State Agreement (including the attorney granted to it under the Fortescue Projects Consolidation Deed) even if any such party ceases to be a wholly owned subsidiary of Mineralogy.

   Failure to Exercise the Option

   3.7CITIC agrees with the Seller that in the event that CITIC does not exercise all Options before the expiry or termination of the Option Period:

   (a)it will forfeit the payment described in clause 2.1, together with all interest and any other income which has accrued thereto; and

   (b)this Agreement shall automatically terminate and, subject to clause 2.1, neither party shall have any claim or right of action against the other.

   Project Approval

   3.8CITIC shall be responsible for ensuring that each Further Company obtains all Project Approvals required in respect of projects being carried out by that Further Company. Mineralogy must use its best endeavours to assist CITIC or its nominee to obtain the Project Approvals.

   Product Makeup

   3.9The Parties acknowledge that a Further Company may not exceed the Product Makeup.

1. As now seen from within CPOA cl 3.3, the exercise price for the First Option is the Purchase Consideration (as defined).  This money term definition in the CPOA reads:

   Purchase Consideration shall mean $US200,000,000 (two hundred million US dollars) for each and every Sale Interest, plus the CPI Increase from the 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 Interests will be reduced by the amount which CITIC spends to comply with the Drilling Obligation.  (my emphasis in bold)

2. Also to be assimilated within the above definition of 'Purchase Consideration' are the further imbedded CPOA definitions as utilised.  I refer then to the defined further CPOA terms, 'Sale Interest', 'CPI Increase', 'Further Company', 'Agreement' and 'Drilling Obligation'.  They can be found in Schedule A to these reasons.

3. I turn now to the once disputed issue over the unqualified acceptance of Balmoral Iron as the CPOA Further Company, for the purposes of CPOA cl 3.

Further background to the acceptance of Balmoral Iron

1. As chronicled under CITIC v Mineralogy [No 4], CITIC, through its lawyers Allens, had communicated to the defendants' lawyers on 29 November 2020, CITIC's then conditional acceptance of Balmoral Iron as the CPOA Further Company.

2. The purchaser of the shares in the Further Company for CITIC had earlier been nominated to be CPRH - which, again, is a wholly owned subsidiary corporation of CITIC. 

3. CITIC's 29 November 2020 communication towards then what was only a conditional acceptance of Balmoral Iron as the Further Company had followed CITIC and its lawyers and advisors undertaking an extensive due diligence exercise towards that corporation, post 22 September 2020.  See CITIC v Mineralogy [No 4] at [38], where I had then observed:

   The communication of that conditional acceptance of Balmoral Iron Pty Ltd only occurred on Sunday, 29 November 2020 by the CITIC plaintiffs as they completed a due diligence exercise in respect of that corporation.

4. There followed some subsequent uncertain communications over the acceptance of Balmoral Iron as the Further Company.  Eventually, however, a final position of acceptance of Balmoral Iron emerged over the weekend preceding the scheduled commencement of the December 2020 trial.  At this time, a series of conditions tied to CITIC's still qualified acceptance of Balmoral Iron as the Further Company - finally came then to be met and was then resolved with Mineralogy and Mr Palmer (see the affidavit of Monisha Maria Sequeira sworn 6 December 2020).  Essentially, CITIC's acceptance conditions concerned the terms of promised instruments of guarantee to be provided by Mr Palmer and the terms of an indemnity to be provided by Mineralogy.

5. With a few more stutters along the way, by the commencement of the trial there remained only the minor residual disputes over some aspects of that submitted documentation - to be addressed later by these reasons.

6. CITIC's ultimately unconditional acceptance of Balmoral Iron as the CPOA Further Company, all of whose shares were to be acquired by CPRH, at last resolved as the trial began.

Trial repercussions

CITIC's drilling costs

1. CITIC's ultimately unconditional acceptance of Balmoral Iron as the CPOA's Further Company, carried with it some further positive trial repercussions.  There had once been a fierce dispute over ascertaining the precise quantum of CITIC's drilling costs by reference to its CPOA Drilling Obligation.  As seen, the precise amount of those drilling costs, once ascertained, is to be subtracted as an input factor used in deriving the ultimate Purchase Consideration amount to be paid to the Seller (Mineralogy being the agreed Seller for the purpose of the First Option) as the acquisition price under the (exercised) First Option for the shares in the Further Company. 

2. However, what had long loomed as a wasteful, messy and complex drilling costs quantification exercise, ultimately was no longer required at trial.  That result followed upon the position ultimately reached as to CITIC's unconditional acceptance of Balmoral Iron as the agreed Further Company.  A settled upon figure is now agreed for CITIC's drilling costs.

3. It is important at this stage to highlight a change in Mineralogy and Mr Palmer's defensive positions, as to the performance of the First Option, as reflected in a communication of 22 September 2020 (Trial Bundle, vol 4, tab 197).  This pivotal communication is set out and explained in CITIC v Mineralogy [No 3] at [16] - [17] and [50] - [55].  It will also be remembered that this communication was later attempted to be qualified by the defendants - so as to be said to have been conditional upon the CITIC plaintiffs' acceptance of only Balmoral Iron as the Further Company.  More disputation erupted over that suggested qualification by Mineralogy to its 22 September 2020 communicated stance.

4. For a time after 22 September 2020, there had been a major looming pre‑trial issue over the existence of that suggested limitation of the Further Company, to being only Balmoral Iron.  This gave rise in turn to late pleading amendments and then, to further disputed issues around rebuttal arguments as advanced by the CITIC plaintiffs, challenging Mineralogy's attempted qualification to its position.  This introduced more issues as to alleged waiver, acquiescence and estoppel - all put against Mineralogy and Mr Palmer - around the issue of the CITIC plaintiffs needing to laboriously prove at a trial the precise level of the CITIC drilling costs as the negative input component in ascertaining the Purchase Consideration - if Balmoral Iron was not accepted by CITIC as the Further Company under the CPOA. 

5. However, the eventual unconditional acceptance by CITIC of Balmoral Iron as the Further Company just before the trial began, removed all need for that otherwise wasteful drilling costs quantification exercise to be undertaken.

6. An agreed level of CITIC's drilling costs under its Drilling Obligation came to be accepted by Mineralogy and Mr Palmer at the trial.  The sum as agreed between the parties is $US135,562,053 (see the CITIC plaintiffs' second further amended statement of claim filed 1 December 2020 (2FASOC), par 67B). 

The CPI Increase

1. There had also emerged a smaller scale dispute over an adjusting of the Purchase Consideration by reference to a CPI Increase to the time of the eventual date of the transfer of the Sale Interest in respect of Balmoral Iron.  That was a relatively minor drafting dispute issue and, as will be seen, it was also resolved. 

2. Consequently, what were the formerly problematic issues presenting during most of 2020, as to a precise ascertainment of the First Option's exercise price, and thereby to fix upon a precise Purchase Consideration numerical amount for the purpose of facilitating a completion on the First Option CPOA rights transaction, were, at the end, all resolved before the trial began.

The trial residual drafting disputes

1. A summary of what still divided the parties at the December 2020 trial can be usefully extracted from the following paragraphs of what was provided as a skeleton outline during senior counsel for the defendants' closing (received by email on 15 December 2020):

   [80]The defendants dispute that they are in breach of the CPOA.  The defendants have offered Balmoral Iron, which has now been accepted.  The defendants have indicated they are ready, willing and able to complete the First Option.

   [81]There is no threat by the defendants not to perform the CPOA (c/f Turner v Bladin (1951) 82 CLR 463, 472). Both parties seek specific performance. The dispute concerns the precise form of orders and the manner in which specific performance ought to be granted. There is a genuine dispute between the parties concerning the form of the Project Agreements and the Takeover Agreement.

   [82]Specific performance or an order in the nature of specific performance should be granted because the parties each seek to perform their obligations under the CPOA.

2. Those three paragraphs delineate the residual parameters of the trial dispute. 

3. The defendants' formal submission as to an absence of any CPOA breach by Mineralogy arising from CITIC's exercise of its First Option, should immediately be resolved and put to one side.

4. Mineralogy has long been in breach of its First Option performance completion obligations under the CPOA.  Until 22 September 2020 Mineralogy, by its pleadings in this action, had been articulating a gamut of reasons seeking to justify its non-performance, including (non-exclusively) by asserting CITIC's alleged repudiation of the CPOA and, as well, the contended contractual frustration of the CPOA.  See CITIC v Mineralogy, which explains the main issues of dispute as then presenting on the pleadings regarding breach of the CPOA by Mineralogy.

5. Mineralogy had also pursued at one time a counterclaim for significant damages for breach.  But that all changed under the dramatic volte‑face communication made on behalf of Mineralogy and Mr Palmer of 22 September 2020 (as I explained in some detail in CITIC v Mineralogy [No 3]). 

6. Therefore, a First Option non-performance omission breach by Mineralogy against the CPOA, occurring from 2012 up until at least 22 September 2020, is well established.  That feature of past breach by Mineralogy and its non-performance over time, delivers a solid contractual cause of action platform for the CITIC plaintiffs to support specific performance relief if that discretionary equitable remedy is otherwise appropriate in all the circumstances - and as I ultimately assess, it is.

Specific performance of the First Option under the CPOA

1. The extensive prior litigious history underlying the First Option CPOA transaction in the present action, and indeed, in an even earlier action begun and then settled within this court (CIV 3012 of 2012 - see CITIC Pacific Ltd v Mineralogy Pty Ltd [2014] WASC 358), sees the CITIC plaintiffs pursue orders against Mineralogy, to obtain specific performance relief concerning the ordered enforcement of the rights and transactions arising out of CITIC's exercise of its CPOA First Option on 12 April 2012.

2. As now seen, much has emerged and changed across 2020 to bring the disputing parties a lot closer.  Both sides in the end advocate at the trial for the court to issue specific performance orders.  As I explained, Mineralogy's former counterclaim seeking significant loss of CPOA bargain breach damages was taken 'off the table', as a further result of the Mineralogy 22 September 2020 communication.

3. So also to depart the disputation horizon was Mineralogy's former contention that there should be no orders for specific performance by reason of a termination of the CPOA, or as to its contended frustration, or the allied defensive contentions to justify non-performance of the First Option transaction.

4. As now seen, the previously mentioned discord concerning Mineralogy and Mr Palmer putting CITIC and the other plaintiffs to formal proof of their readiness, willingness and ability to perform, is also no longer controversial.  No active submission was put for Mineralogy and Mr Palmer during the trial seeking to advance that contention. 

5. The present action and the earlier 2012 CITIC action as brought in this court over First Option CPOA rights both, in effect, were brought by CITIC, so as to compel Mineralogy and Mr Palmer's adherence to the performance of the sale and transfer obligations arising under the CPOA, as a result of CITIC's exercise of its First Option on 12 April 2012.  Given CITIC's persistent and ongoing litigation to that end, the readiness and willingness of the CITIC plaintiffs to complete and perform all their own CPOA First Option obligations could hardly be challenged.  That leaves only the ability to perform, which, in effect, distils down to the financial ability of the purchaser on that side of the transaction to complete.

6. So, I briefly turn to examine the financial wherewithal of CITIC and its subsidiary, CPRH, to complete on the takeover transaction by purchasing from Mineralogy the shares in Balmoral Iron as the Further Company for the Purchase Consideration.  Upon all the trial evidence, I am well satisfied that the CITIC plaintiffs' financial capability extends to funding as required the completion on the First Option transaction. 

7. Senior counsel for the CITIC plaintiffs, Mr Karkar QC, submitted at trial that the envisaged exercise price payable on a completion (in the realm of $US141,746,916) was, essentially, a mere 'bagatelle' for CITIC (which obviously stands fully behind the purchase obligations of its subsidiary, CPRH) (see ts 427).  The description is not inapt.  

8. As will be seen later, some minor issues have emerged over a challenged requirement for there to be dual deposit tranches payable, prior to completion (arising out of the CPOA applying the template of the Korean [Steel] Takeover Agreement, which in that earlier transaction had required dual tranches of deposit).

9. But such deposit sums, dual or otherwise, only present as a mere financial 'picayune' of a bagatelle - viewed in the overall context of CITIC, an international corporate behemoth of the Hong Kong Stock Exchange.

10. Consequently, the former major issues which divided the parties, spanning from April 2012 and across the course of this matter's extensive 2020 interlocutory history, now find themselves resolved by the time of the trial. 

Formal findings of fact for the trial

1. In resolving remaining issues around the contractual instruments involving Balmoral Iron, there now presents very little, if any, factual disputation as between the parties.

2. Nevertheless, for the purposes of a trial, I had issued the usual CMC List orders, requiring the parties to exchange their proposed chronologies of agreed facts prior to the trial.

3. To that end, there emerged what eventually became trial exhibit 4 and trial exhibit 5.

4. Exhibit 5 highlights (by red) the defendants' proposed factual augmentations to the as submitted trial facts nominated by the CITIC plaintiffs (under exhibit 4).  None of the defendants' suggested augmentations were put in dispute at the trial.  As may be seen, most of the augmentations are directly linked to a documentary source that is identified and to be found in a volume of the duly tendered by agreement seven lever arch files of Trial Bundle (globally, exhibit 2 at the trial).  To that end, see exhibit 3, which an index to the Trial Bundle.

5. Consequently then, my formal findings of fact for the trial can be rendered swiftly, in accord with all the facts as they are found chronologically assembled under Part 1 and Part 2 of exhibit 5.  Those assembled facts are now formally so found.  They stand as available if required in the future for any reason.

6. Having so determined, there is no need to elaborate further upon the contents of exhibit 5.

The Project Agreements and Takeover Agreement

1. So then, what still divides the parties and occasions the need for a trial?  Essentially, what remains distils largely to disputes over drafting details within some surrounding takeover transaction documentation, namely, the various instruments that Balmoral Iron, as the Further Company, is required to become a party and aspects of their content. 

2. The parties remain divided over some express terms of three as required Project Agreements.  There is also disagreement over the terms of an envisaged Takeover Agreement under the court's orders for specific performance.

3. Given the importance of the CPOA's defined meaning of the 'Project Agreements' to the residual issues that currently divide the parties, I will set out that CPOA definition again, but remembering always that the deployed contractual definitions under cl 1.1 of the CPOA are used as a defined meaning 'unless the context otherwise requires'.  Bearing that caveat in mind, the CPOA definition of 'Project Agreement' in cl 1.1 says:

   Project Agreements means the following agreements between Sino Iron and Mineralogy, each as amended from time to time:

   (a)the Sublease dated 25 October 2001 between the Seller and Sino Iron as amended from time to time;

   (b)the Facilities Deed dated 28 November 2001 between Mineralogy and Sino Iron (as amended on or about 21 March 2006);

   (c)the Fortescue Projects Consolidation Agreement between Mineralogy, Austeel Pty Limited, Balmoral Iron, Balmoral Mining Pty Limited, Brunei Steel Pty Limited, International Minerals Pty Limited, Korean Steel Pty Limited and Sino Iron (as amended); and

   (d)the Fortescue Co-ordination Deed.

   and, where the context requires, includes agreements between Mineralogy and a Further Company in the same terms as those agreements.  (my emphasis in bold)

4. I note by reference to the four as identified Project Agreements under (a) - (d), that the template references to other documents uniformly concern Sino Iron (that is, not similar documents for Korean Steel).

5. Beyond the definition for the four Project Agreements, it is then necessary to notice the CPOA's definition of a 'Takeover Agreement' under cl 1.1.  That reads in terms:

   Takeover Agreement means an agreement between CITIC, the Seller and a nominee of CITIC whereby the nominee of CITIC will acquire all of the existing issued ordinary shares of a Further Company.

6. The CPOA's explicitly defined Project Agreements next need to be assimilated with the requirements of cl 3.6(c) of the CPOA.

7. The text of cl 3.6(c)(i) and (iii) address Mineralogy's obligation to ensure, no later than 20 Business Days after the 'Exercise Date' (relevantly here, 13 April 2012), that the Further Company (now relevantly, Balmoral Iron) becomes a party to the 'necessary Project Agreements'.

8. No issue is raised by either side at trial against the issuance of specific performance relief by reason of what is now an expiry of almost nine years beyond that observed '20 Business Days' timeline, as is specified in cl 3.6(c)(i) (beyond 13 April 2012) for the 'necessary' Project Agreements to be perfected.  See also CPOA cl 3.6(c)(iii) and then cl 3.6(f) as to the seven (7) further Business Days period, as is there specified.

9. By cl 3.6(c)(iii), Mineralogy is obliged to give CITIC written notice it 'has satisfied' its obligations (relevantly under CPOA subclause 3.6(c)(i)) 'as soon as possible after those obligations are satisfied'.  However at the trial in December 2020, there were still multiple unresolved issues between the parties over some disputed terms in what remained as still unfinalised proposed Project Agreements concerning Balmoral Iron as the CPOA's Further Company.

10. A CPOA provision of some surrounding interpretive significance in the residual disputes is CPOA Recital 3 vis‑à-vis the content of the as envisaged Project Agreements for the Further Company.  CPOA Recital 3 states:

    3.Seller [relevantly for this case accepted to be Mineralogy, not Mr Palmer] has agreed to grant CITIC options to acquire further allocations of resources or companies who have such allocations of resources subject to the Project Agreements in each case in substantially the same terms as the Project Agreements varied to comply with the Project Qualifications in accordance with the terms and conditions set out in this Agreement.  (my emphasis in bold)

11. There remains a divide between the parties over the contents (ie, express terms) in three of the four Project Agreements for Balmoral Iron and over some terms in the Takeover Agreement, concerning Balmoral Iron.  The divide is reflected in the parties' pleadings.

The CITIC plaintiffs' 2FASOC

1. My third tranche of 2020 interlocutory reasons in this action (CITIC v Mineralogy [No 3]) had allowed some proposed amendments and disallowed others to the pleadings on both sides. 

2. Part of the amendments as then sought by the CITIC plaintiffs were referred to as being undisputed 'Proposed FASOC categories 2 through 6' (see CITIC v Mineralogy [No 3] at [10]).  Those uncontroversial amendments introduced at that time included new pleas seen under par 17(ja) and relevantly, under pars 17B and 17C, as set out below.  The incorporation of those amendments resulted in the 2FASOC.

Paragraph 17(ja)

1. The CITIC plaintiffs' amendments to their 2FASOC pleading read in terms:

   17.The terms of the CPOA include, amongst others, that:

   …

   (ja)The parties will co-operate and do all that is necessary on their part to enable the other parties to have the benefits and perform the obligations conferred and imposed upon them by the CPOA. 

   Particulars

   …

   The term in sub-paragraph (ja) above is implied by law, or arises upon the proper construction of the CPOA.

2. For what is obviously a commercial agreement of 22 October 2008 perfected then between sophisticated and well‑resourced commercial parties, I have no difficulty accepting that as a matter of law, an implied term by law, requiring mutual co‑operation as between the participant CPOA parties, would be found:  see Sir Anthony Mason's classic observations rendered in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596, 607 (Secured Income).  Nevertheless, I also mention Mason J's ensuing observations in those reasons to the effect that the application of the co-operation obligation can sometimes be difficult as regards co-operation required around, in effect, lesser tier terms (see page 607).

Paragraphs 17B and 17C

1. By par 17B of the 2FASOC, the CITIC plaintiffs introduced a further amendment, now raising an issue of construction or alternatively, an implication concerning the contents of Project Agreements to which the Further Company (Balmoral Iron) would become a party.  They pleaded:

   17B.Further, on the proper construction of the CPOA as a whole, or pursuant to an implied term of the CPOA, the necessary Project Agreements to which the Further Company would become a party under cl 3.6(c)(i) of the CPOA are the Project Agreements as defined, but modified so as to adapt them to the state of Project development at the time of entry into those agreements and to the joint operation of the Project by Sino Iron, Korean Steel and the Further Company.

   Particulars

   The term was implied in order to give business efficacy to the CPOA.  (my emphasis in bold)

2. Similarly, as regards the CPOA's cl 3.6(f) envisaged Takeover Agreement for the Further Company, par 17C of the 2FASOC reads:

   17C.Further, on the proper construction of clause 3.6(f) of the CPOA in the context of the whole instrument, or pursuant to an implied term of the CPOA, the relevant parties must enter into a Takeover Agreement in substantially the same form as the Korean Takeover Agreement but modified in the manner described in Schedule 3 to the CPOA and otherwise, so as to adapt it and the transactions contemplated by it to the state of Project development at the time of entry into the Takeover Agreement and to the joint operation of the Project by Sino Iron, Korean Steel and the Further Company.

   Particulars

   The term was implied in order to give business efficacy to the CPOA.  (my emphasis in bold)

3. As seen above, there is a level of structural similarity underlying both pleas.  At the conclusion of par 17B and par 17C, vis-à-vis Project Agreements, and for the Takeover Agreement, the CITIC plaintiffs' contended derivation towards permissible 'adaption and modification' emerges - and reached either as a matter of the contended proper construction of the CPOA under both pleas or, alternatively, as an ad hoc implied term of the CPOA. 

4. Both pleas were denied by Mineralogy and derivatively so, by Mr Palmer:  see Mineralogy's third further amended defence filed 20 November 2020 (3FAD) pars 25D and E respectively.  By his amended defence, Mr Palmer essentially relies on Mineralogy's pleaded defence.

The CPOA construction dispute

1. Disagreements between the parties over the contended proper CPOA construction, or over an alternately contended ad hoc CPOA implied term, present as somewhat conceptually sterile, unless they are traced back to their potential pragmatic rival drafting outcome ramifications. 

2. What emerges is a drafting dispute of degree.  In December 2020 the dispute unfolded in an environment of very considerable mutual suspicion and distrust - raised over almost every different word as proposed by the other side.

3. Ultimately, the rival end points of the parties' contested drafting positions need to be found and then measured against the parties' rival positions vis‑à‑vis differing aspects of rival proposed terms in three (of the four) CPOA required Project Agreements that are 'necessary' for the purpose of any completion by Balmoral Iron upon the First Option transaction.  The same goes for the disagreements over proposed rival terms of the Takeover Agreement.

4. The CITIC plaintiffs accept that the terms of the Project Agreements for Balmoral Iron must be in 'substantially' the same terms as the (Sino Iron) Project Agreements.  But beyond that, they further submit as a matter of either the contended true meaning of the CPOA (alternatively, reaching the same end point by way of an ad hoc implied term they submit can be found in the CPOA), that a modification and adaption of the template Project Agreements (being those of Sino Iron) is necessary in December 2020 in two important, but disputed, respects. 

5. First, the CITIC plaintiffs seek to modify and adapt the Project Agreements, so as to essentially bring them in line with the 'state of Project development' at the time of entry into the Takeover Agreement (see the 2FASOC).

6. Second, the CITIC plaintiffs seek to modify and adapt the template Project Agreements to what is a joint operation of the Project by Sino Iron and Korean Steel (as is currently the position) and with the to be introduced CPOA Further Company (ie, Balmoral Iron) (see 2FASOC).

7. However, the defendants disagree with the breadth of any such contended modification and adaption of the template Project Agreements (see par 43 of the first defendant's opening submissions).  Their rival constructional approach to the CPOA as regards necessary Project Agreements and their content is narrower.  They would limit the scope of any non‑consensual departures away from the Sino Iron Project Agreement templates to a bare minimum.  They submit the word 'substantially' is more referrable to the content of the new Takeover Agreement (not the Project Agreements) and even then, only allows for departures from the chosen takeover template (this time to Korean Steel Takeover Agreement), essentially as found catalogued in the CPOA at Schedule 3 (see cl 3.6(f)).

8. An exercise in contrasting different textual language used under CPOA Recital 3 with cl 3.6(c)(i) and (iii) is extended to further terminology found used in cl 3.6(f) as regards the Takeover Agreement being:

   in substantially the same form as the Korean Steel [sic] Takeover Agreement but modified in the manner described in Schedule 3 and must complete the transactions contemplated by it in accordance with its terms including entering into or varying the Project Agreements.  (my emphasis in bold)

9. As seen, CPOA cl 3.6(f) displays a differently chosen analogue for the purpose of the Takeover Agreement, being in reference to the form of the Korean Steel Takeover Agreement, not to the Sino Iron Takeover Agreement. 

10. As also now seen, the CPOA definition of Project Agreements displays under its concluding proviso the phrase, 'in the same terms'.  So too does the CPOA definition for 'Further Company', after referring to a 'set of agreements'.  By contrast, the envisaged further Takeover Agreement by CPOA cl 3.6(f), displays somewhat wider terminology.  It uses the phrase 'substantially the same form' in reference.  And as seen, the CPOA's Takeover Agreement has a distinctly chosen analogue of the Korean Steel Takeover Agreement. 

11. So what presents is another exercise in the contractual interpretation of the CPOA.

Principles of contractual interpretation

1. The principles concerning the construction of commercial contracts are well established.  Accordingly, I do not find it necessary to address those principles in full yet again.  I canvassed them as between the same protagonists only a short time ago in their Site Remediation Fund (SRF) disputation.  See Mineralogy Pty Ltd v Sino Iron Pty Ltd [2021] WASC 45 at [237] - [240].

2. In Van Duren v Hammond & Roberts Pty Ltd [No 2] [2019] WASC 246 at [56] I observed:

   These days, it is common to see an exercise in contractual interpretation of a written contract framed as a distilled reference to the need for consideration of the 'text, context and purpose' of any contractual term requiring interpretation, and  to be undertaken by applying the objective approach to the interpretation of the textual language deployed by the parties under their written bargain.  A court strives to apply a sensible commercial approach towards the interpretation of what is an underlying commercial bargain.  Of course, the textual language of a contract must be evaluated as a whole.

3. I also refer back to what I said about contractual interpretation principles in Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16] [2017] WASC 340 (Mineralogy [No 16]) at [297] - [306] and in Hughes v St Barbara Mines Ltd [No 4] [2010] WASC 160 at [594] - [595] for a more detailed explanation of such principles.

4. None of these interpretive principles were in any dispute at all as between the parties at the trial.  What arises is merely a dispute over their application to the present drafting disputation circumstances.

The parties' arguments

1. The CITIC plaintiffs submit as a matter of proper construction, the only sensible commercial conclusion is that the 'necessary' CPOA Project Agreements, to be entered into by the Further Company (Balmoral Iron), cannot be in exactly the same terms as the existing template Project Agreements consummated with Sino Iron of many years ago.  Rather, they submit, the agreements' content may be varied in necessary respects such that overall, they are left in substantially the same terms as those nominated Project Agreements (CITIC plaintiffs' closing submissions at pars 73 and 76).  The CITIC plaintiffs primarily invoke and rely on Recital 3 and then, cl 3.6(f) of the CPOA to support their submission.  Such provisions as seen, use the terminology 'substantially the same terms' and 'substantially the same form' respectively.

2. The CITIC plaintiffs contend Recital 3, whilst not overriding the operative provisions of the CPOA, provides a 'strong context' that helps explain the CPOA parties' underlying objective intent, which contextually gives meaning and insight to the phrase 'same terms' -  as being flexible enough to accommodate various drafting changes as advocated by the CITIC plaintiffs to the relevant template agreements (CITIC plaintiffs' closing submissions, par 71).

3. The CITIC plaintiffs submit the defendants' narrower invocation and reliance on the phrase 'in the same terms' found in CPOA cl 3.6(c)(i) and in the definitions of 'Further Company' and 'Project Agreements', is misdirected.  This is, they submit, for several reasons.

4. First, such terminology does not mean the Further Company will enter (project) agreements in exactly the same terms.  Rather, some changes are both necessary and required.  It would not be possible for the Further Company to even become a party to the relevant Project Agreements unless some changes were made (CITIC plaintiffs' closing submissions, par 68).

5. Secondly, the CITIC plaintiffs argue by their closing submissions (at par 69) that undue emphasis of reliance on those 'same terms' terminology is inappropriate.  This is because the definitions are subject to and must vary, depending on context (see CPOA cl 1.1 which states that the definitions apply 'unless the context otherwise requires').

6. On the other hand, Mineralogy and Mr Palmer counter contend that once the very precise variation guidance unlocked from CPOA Schedule 3, as to the departures from the Takeover Agreement template, then the drafting exercise for the (Balmoral Iron) Takeover Agreement is just as tightly controlled and confined as it is for the terms of the necessary Project Agreements to be entered.

7. For the envisaged Takeover Agreement, CPOA Schedule 3 relevantly states:

   The form of the Takeover Agreement to be entered by Mineralogy or Palmer and CITIC or its nominee on exercise of an option involving the acquisition of a Further Company from the Seller will be substantially the same as the form of [the] Korean [Steel] Takeover Agreement, with the following exceptions ...' [followed by subparagraphs (a) through (g)].  (my emphasis in bold)

8. The defendants argue that, viewed objectively, there is a deliberate CPOA drafting distinction as between the language used in respect of the Project Agreements and the language as deployed in respect of the Takeover Agreement.

9. It is pointed out that CPOA Schedule 3 prescribes use of the language 'same ... form', not 'same terms'.  Furthermore, it denotes changes as being 'exceptions', rather than 'amendments'.  This, it is argued, simply displays the parties' objective CPOA intent that the (Balmoral Iron) Takeover Agreement would ultimately adopt the same form and structure as the Korean Steel Takeover Agreement, with only the exceptions as found in Schedule 3 being the limited variations permitted from the template (defendants' closing submissions, par 76).

10. Moreover, it is argued for the defendants that the use of words 'in the same terms' in the definition of 'Project Agreements' communicates a deliberate choice made by the parties seeking to promote consistency and certainty for the contractual relationships sought to be preserved (defendants' closing submissions, par 50).  The defendants submit it would not have been the parties' objective intent to renegotiate (existing) Project Agreements in the future by having regard to uncertain and ambiguous notions such as the 'state of Project development', or the 'joint operation of the Project', as is now contended by the CITIC plaintiffs (defendants' closing submissions, par 50).

11. Specifically towards CPOA Recital 3, the defendants submit that the words 'substantially the same terms', must be read in conjunction with the further language 'varied to comply', which renders it clear that the deployed word 'substantially' is not some free-standing contextual indicator to enable variations that would go beyond those required to comply with the Project Qualifications in CPOA Schedule 2 (see defendants' closing submissions at par 57).

12. Having outlined the parties' rival arguments over an interpretive CPOA divide, I must turn to discuss some of the unique features of this divide.

Some unique features

1. At the outset, I point to a late nomination and the eventual acceptance of Balmoral Iron as the proposed Further Company, to be the subject of the CPOA's First Option.  This is a nomination of a corporation that is, ultimately, fortuitous.  I also note that an earlier nomination of the very same corporation as the Further Company was previously attempted by Mineralogy on 11 July 2012.  But that nomination was not accepted immediately and was then withdrawn on 12 September 2012 by Mineralogy - see the 2FASOC pars 29(b) and 36(a).  Those pleas are admitted under the 3FAD par 37.

2. The corporation, Balmoral Iron, looks to have long been held as a Mineralogy subsidiary in prior years, including at the time the CPOA was perfected, on 22 October 2008. 

3. The corporation Balmoral Iron is seen as explicitly identified under the definition found in the CPOA at cl 1.1, by reference to the name 'Balmoral', as meaning 'Balmoral Iron Pty Limited'.  There is then found (at CPOA cl 2.12 and cl 2.13) some express covenants addressing the corporation Balmoral Iron. 

4. Historically, it had looked for some time that Balmoral Iron might become a subject of the CPOA parties' second Takeover Agreement.  That prospect turned out not to be the case.  In the end, the corporation Korean Steel became that nominated takeover subject in 2007.  But in October 2008, the CPOA, by cl 2.12 and cl 2.13, still afforded to Balmoral Iron (as a Mineralogy subsidiary corporation) some special treatment in respect of its as promised preservation, and its isolation against other dealings.  So this particular corporation was already known to the parties at the time the CPOA was perfected in 2008.

5. Second, Balmoral Iron is expressly referenced under the definition of State Agreement at CPOA cl 1.1.  At 2008, Balmoral Iron was already a subsisting party to the State Agreement the subject of the Iron Ore Processing (Mineralogy Pty Ltd) Agreement Act 2002 (WA). That remains the position.

6. Accordingly, many diverting CPOA pre‑requisite issues for the Further Company that may otherwise have arisen are, as matters transpire for Balmoral Iron, not obstacles to a completion on the First Option.  This includes Mineralogy meeting its promise to have the Further Company become a party to the State Agreement (see cl 3.6(d), cl 3.6(e)(i) and cl  3.6(g)), if it is not.  Balmoral Iron meets that requirement already.

7. Third, it is a historic fact that Balmoral Iron, at the time of the CPOA in October 2008, was already privy to its own separate MRSLA instrument of 21 March 2006, made with Mineralogy (Trial Bundle, vol 4, tab 201) and, as well, party to a Facilities Deed of 26 October 2001 with Mineralogy (Trial Bundle, vol 4, tab 199) and, as well, party to a Fortescue Projects Consolidation Agreement (Trial Bundle, vol 1, tab 3).  These are, of course, equivalent to the genre for three of the four required Project Agreements.

8. These prior perfected agreements (akin to Mineralogy's Project Agreements entered with Sino Iron) have long been in place as between Mineralogy and Balmoral Iron and certainly were all in place at the time of the perfection of the CPOA in October 2008.

9. This is a pragmatic consideration to bear in mind when considering the chosen CPOA terminology of cl 3.6(c)(i) for 'necessary Project Agreements'.  The word 'necessary' is of some significance, viewed vis-à-vis Balmoral Iron.  That is by contrast, say, to another corporate entity nominated as the CPOA's Further Company, but which was not (at October 2008) already privy to such types of genres of agreement with Mineralogy.  [Remembering always, of course, that the CPOA's Project Agreement template is to the Sino Iron Project Agreements.]

10. Where Project Agreements of the CPOA definition genre already exist, as they clearly did, for Balmoral Iron vis-à-vis Mineralogy at the time of the CPOA, is there any need to 'reinvent the wheel'?  There may, of course, be some need for some required alignment of terms in those existing Balmoral Iron agreements - to better perfect the analogue template required by the CPOA to Sino Iron's Project Agreements, if there proves to be any difference of real substance with the Balmoral Iron genre of existing Project Agreement.

11. But otherwise, what is a fortuitous position by an accepted nomination of Balmoral Iron as the Further Company exists in that a CPOA required Project Agreement landscape is already well advanced for Balmoral Iron as a matter of history.

12. Finally, I must identify a specific aspect of the CPOA's required Takeover Agreement.  As seen, CITIC, as the ultimate parent corporation incorporated in Hong Kong, will be indirectly acquiring control of the shares in Balmoral Iron under a Takeover Agreement.  Upon this proposed acquisition, there is, correlatively envisaged and stipulated by the CPOA, a need for the approval of the Foreign Investment Review Board (FIRB) by reason of requirements under the Foreign Acquisitions and Takeover Act 1975 (Cth) (as amended). 

13. As an historical fact for the Cape Preston Project, a consent of the Treasurer of the Commonwealth had to be given for the first takeover transaction - being CITIC's takeover of Sino Iron (see the Sino Iron Takeover Agreement cl 2.1 - Trial Bundle, vol 1, tab 13).  That first takeover was perfected at 6 July 2006.

14. There ensued, of course, what was the second and related takeover of Korean Steel by CITIC in 2008, in relation to the same Cape Preston magnetite ore Project.  Treasury approval took longer for this takeover transaction, but was eventually forthcoming for the Korean Steel Takeover Agreement, executed 1 November 2007 (Trial Bundle, vol 2, tab 17).  The Korean Steel takeover transaction came to be completed the same day as the CPOA was perfected, on 22 October 2008. 

1. The 2007 Korean Steel Takeover Agreement itself displays what is a draft version of the CPOA as Schedule 3.  That Takeover Agreement was perfected almost a year prior to the CPOA's eventual perfection.  That was the same day the Fortescue Coordination Deed was perfected as between Mineralogy, Sino Iron, Korean Steel and CITIC (Trial Bundle, vol 2, tab 24).

2. Thus, what now looms in December 2020 as a third Cape Preston Project takeover transaction, as envisaged under the 2008 terms of the CPOA, was in truth always in prospect by reason of the Korean Steel Takeover Agreement and the envisaged CPOA.

3. With those observations made, I proceed to the contractual dispute in question.

Determinations upon the parties' rival constructions of the CPOA

The CITIC plaintiffs' proposed construction

1. On the proper construction of the CPOA, assessed by having regard to its relevant text, context and its objectively ascertained commercial purpose at 22 October 2008, I cannot accept the constructional outcomes as they are propounded by the CITIC plaintiffs under 2FASOC pars 17B and 17C. 

2. In particular, I have great difficulty with what I respectfully assess as an unduly loose and open-ended notions of a potential future adaption by a modification of terms in the (Sino Iron) template Project Agreements to align them, as CITIC would say, 'to the state of Project development at the time of entry of those agreements' (contended under 2FASOC, par 17B). 

3. I also hold a like conceptual difficulty with the conjoint further element to this suggested interpretation of the CPOA (which is an entire agreement) with a contended adaption and modification to meet the 'joint operation of the Project by Sino Iron, Korean Steel and the Further Company' (2FASOC, par 17C). 

4. All in all, I assess there to be an unacceptably high measure of ambulatory fluidity around the notions of adapting Project Agreements to a 'state of Project development', where such terms are not agreed and where the CPOA and the chosen templates thereunder lay down their content (terms) in very considerable express detail.  There is an inconsistency between the two approaches.  The proposed CITIC plaintiffs' looser formula looks ripe for a generation of subjective disputation.  This is especially so when the as contended CITIC plaintiffs construction must be measured against an observable and very tightly controlled adaptation framework laid down under the text of the CPOA - which explicitly specifies what changes will be permissible or impermissible - even deploying CPOA Schedules 2 and 3 to minutely address such matters.

5. Viewed objectively at October 2008, questions over appropriate Project Agreement modifications, needing to be measured against the state of future Project development at a particular time into the future post 22 October 2008, are porous.  Again, this notion is out of philosophical alignment with an otherwise tightly circumscribed amendment potential to be seen textually addressed by the CPOA.

6. Assessing the envisaged Takeover Agreement for the Further Company (Balmoral Iron), I would reach the same position, as regards the similarly structured 2FASOC par 17C CPOA interpretative outcome concerning modification and adaption of that agreement.  A like negative conclusion must also be reached for the suggested 'joint operation of the Project' outcome adaption and modification.

The CITIC plaintiffs' ad hoc implied term

1. So too, must I reject the contended ad hoc implied term under which the same suggested adaptation and modification permissible outcomes for terms are alternatively advocated for by the CITIC plaintiffs (by reference to an ad hoc implied term in the CPOA under 2FASOC, par 17B). 

2. The legal principles as regards finding ad hoc implied terms of fact in wholly written contracts are, of course, very well settled in Australia.  I mention only Mason J's observations in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 346, where his Honour said:

   For obvious reasons the courts are slow to imply a term.  In many cases, what the parties have actually agreed upon represents the totality of their willingness to agree; each may be prepared to take his chance in relation to an eventuality for which no provision is made.  The more detailed and comprehensive the contract the less ground there is for supposing that the parties have failed to address their minds to the question at issue.

   ...

   Accordingly, the courts have been at pains to emphasise that it is not enough that it is reasonable to imply a term; it must be necessary to do so to give business efficacy to the contract.

3. His Honour went on to explain at page 347:

   The conditions necessary to ground the implication of a term was summarised by the majority in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [(1977) 52 ALJR 20, 26]: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.

4. On my assessment, the ad hoc implied term in the CPOA sought to be advanced by the CITIC plaintiffs will fail to meet at least four of the five stated criteria.

5. While the CITIC plaintiffs' advocated term might be supported here as being reasonable in its concept, the remaining conjoint threshold requirements of necessity, obviousness, clarity of expression, and here, perhaps most importantly, of consistency with the express terms of the written instrument, all present, on my assessment, as being problematic - measured against what is proposed to be achieved by the suggested term arrived at by implication in the CPOA (an entire agreement).

6. Likewise, the 2FASOC par 17C alternate ad hoc implied term to the same end carries the same problematic issues towards its genesis.  They bedevil the proposed par 17C implied term which would seek to allow adaptions and modifications to the template Korean Steel Takeover Agreement as modified beyond the respects as mentioned in CPOA Schedule 3.

The defendants' proposed construction

1. Having regard to the defendants' previously mentioned constructional arguments, the end position I have reached is that their tighter CPOA 'same terms' construction for the content of the necessary Project Agreements, is a closer fit to the approach required than the looser approach proposed by the CITIC plaintiffs.  Ultimately however, what the defendants contend is still, in my view, a shade too rigid to apply to the CPOA, given its text. 

2. In the end, my overall preferred construction as to the suggested adaption and modification of express terms found in necessary template Project Agreements for the Further Company (under CPOA cl 3.6(c)(i)) is that the approach must align with the modification approach used for variations to the Takeover Agreement for the Further Company, when required to be entered by the relevant parties, under CPOA cl 3.6(f). 

3. Evaluated in the overall CPOA commercial instrument context, I would reject the contended constructional differentiation as between the Project Agreements and the Takeover Agreement sought to be advanced by Mineralogy.  The argument is built around a CPOA differentiation in allowable scope for variations away from the Project Agreement designated (Sino Iron) template by reason of the phrase 'the same terms as the Project Agreements' being used within the CPOA.  The differentiation argument was by way of juxtaposition to other CPOA text where say, by cl 3.6(f), a wider phrase 'substantially the same form as', or 'substantially the same form', is used.

4. I recognise, of course, that the defendants' contended distinction is erected around differing CPOA terminology seen deployed across various provisions of the CPOA, as now canvassed. 

5. However, on my preferred interpretive assessment, the contended logically deployed dichotomy of differentiating scope for adaption is undermined, at other places in the CPOA.  First seen is by the terms of CPOA Recital 3.  Here, the chosen phrase 'substantially the same terms' is seen used vis-à-vis Project Agreements.  That terminology provides an objective insight and overall direction as to what will be adaptively permissible for the terms of Project Agreements for a Further Company by the CPOA.

6. I do acknowledge, of course, Mineralogy's opposing argument that as one advances on to Schedule 2 of the CPOA, by reference to the defined term 'Project Qualification(s)', the chapeau at Part A uses a phrase 'will be in the same terms as the Project Agreements' and then identifies the four specific amendment principles. 

7. Nevertheless, and against that, there is later found used within the operative CPOA cl 3.6(f), a following reference to modification in the manner described in Schedule 3, and some key further words vis-à-vis the relevant parties to the Takeover Agreement for the Further Company which '… must complete the transactions contemplated by it [ie, by the Takeover Agreement] in accordance with its terms including entering into or varying the Project Agreements'.  For me, these highlighted operative words are of key significance in the CPOA, as regards finding some permissible scope for adapting terms in the envisaged Project Agreements to which the Further Company will be privy. 

8. A general notion of permissibly 'varying' the Project Agreements as deployed is, I would assess, out of logical alignment with Mineralogy's more rigid 'same terms' versus 'substantially same terms' differentiation - being deliberately chosen as between a narrow range of (same terms) potential adjustment for the Project Agreements.  In contrast to this characterisation is a (slightly) wider permissible adjustment in 'substantially the same form' as the Takeover Agreement - by reference to the template of the Korean Steel Takeover Agreement. 

9. Instead, I would prefer an interpretation that will align with what is still the relatively narrow scope for a substantively similar adoption of the terms of each CPOA template - be it a Sino Iron Project Agreement template, or in the Korean Steel Takeover Agreement template.  A relatively narrow scope for adaptation away from the template will be the same, irrespective of the template chosen by the CPOA.

Conclusions on CPOA proposed construction

1. My preferred construction towards the CPOA is that, objectively assessed as a whole at October 2008, the CPOA envisaged that there may be permitted some level of permissible adjustments away from the template Project Agreements, as defined.  But any such variations ought be modest (absent, of course, mutual agreement upon them between all parties) and they must always respect the basal objective of being in 'substantially the same terms' as articulated by CPOA Recital 3.  A like variation permissibility approach is applicable as well for the Takeover Agreement for a Further Company.  Ultimately, this future agreement to be entered by the Further Company must present as being in 'substantially the same terms' as the Korean Steel Takeover Agreement template and as well, as specified by cl 3.6(f) and as altered by CPOA Schedule 3. 

2. Of course, the end question as to whether an express term is, or is not, in substantially the same terms as the designated template ‑ remains a question of degree.  The implementation exercise of this chosen standard will not always produce bright line designation boundaries.  Instead, grey areas present.  But that is a product of the chosen CPOA criteria.

3. In the end, my constructional view upon this issue is that any variation away from a CPOA template, not mutually accepted, needs to be justified and must remain structurally respectful to the template (ie, kept substantially the same as the template agreements).  Permissible variations or changes need to be in the character of benign, necessary and minimal changes, rather than wider variations - even though they may be said to be reasonable, desirable, or even sensible advocated towards express terms different to the identified template Project Agreements or the Takeover Agreement.

4. It will no doubt be said, as the CITIC plaintiffs have indeed strongly contended at the trial, that the CPOA as a commercial agreement demands a commercial and sensible meaning.  Indeed, they contend that all their suggested modifications adapting the template Project Agreements so as it is put, to align them with a 'joint operation of the Project' (as between Sino Iron, Korean Steel and the Further Company), are a sensible manifestation of required commerciality. 

5. Whilst it is crystal clear a court will strive to afford sensible commercial meanings to the parties' commercial bargain in conducting an exercise in interpretation toward a written instrument, founding textual respect must still be paid to the character of the CPOA as a manifestation of the hard won bargain reached in October 2008 as between well‑resourced and sophisticated parties well versed in complex international business and resources dealings.  The CPOA is, as already mentioned, an entire agreement - perfected at October 2008, as a part of a linked network of surrounding contractual bargains of a commercially complex and interrelated character between the same interests.  See, for instance, the Korean Steel MRSLA, which came then to be varied, to align it with the Sino Iron MRSLA on 22 October 2008 and, as well, the Fortescue Co-ordination Deed also of 22 October 2008. 

6. Therefore, any variations at 2021 away from the chosen CPOA template Project Agreement terms, or away from the template Korean Steel Takeover Agreement terms, must present as being necessary, almost self‑evident and obviously benign as possibly impinging against the parties' perfected underlying bargain (objectively assessed). 

7. Any permissible variations must display that the as adjusted instrument remains as still faithfully presenting in substantially the same terms as the chosen template's terms. 

8. The caution towards permissible term adjustments require, I would suggest, comparison to the ruinous situation of someone casually pulling too hard against the loose thread of a carefully hand woven garment, with an ensuing consequence of wholesale ruination of the sweater.

9. That being so, the scope for adjustments to the underlying chosen templates, is necessarily limited. 

10. Consequently, the drafting content evaluation approach I have sought to oversee hereafter is cautious, albeit it is not quite as narrow as contended for by Mineralogy vis‑à-vis its submission against allowing any alterations at all to the template Project Agreements, even if they left the as modified agreement in substantially similar form to the CPOA template.

11. I turn to the Project Agreements and Takeover Agreement in dispute.

Process to resolving drafting disputes

1. As seen, the four analogue 'Project Agreements' identified by the CPOA's definition of Project Agreements, are described in (a) - (d) by reference to the four (Project) agreements entered between Mineralogy and Sino Iron (not Korean Steel).

2. At trial, there was no dispute over the CPOA subpar (c) Project Agreement, namely the 'Fortescue Projects Consolidation Agreement'.  That Project Agreement for Balmoral Iron is wholly uncontroversial.

3. But aspects of or around express terms in the other three Project Agreements as described at subpars (a), (b) and (d) for the Further Company (Balmoral Iron) are controversial, as to some of their term contents.  The major controversy essentially concerns the terms of Project Agreement (a), which is the as referred 'Sublease of 25 October 2001'.

4. There was also some lesser disputation over proposed terms exchanged in drafts circulated between the parties for a (Balmoral Iron) Takeover Agreement that meet the requirement of CPOA cl 3.6(f).

5. I approach the task of resolving the residual drafting disputes by first addressing the proposed terms of Project Agreement (c), (b) and (d), then moving to the terms of the as proposed Balmoral Iron Takeover Agreement, and last returning to Project Agreement (a), over which there arose the major controversy at the trial.

6. I have assembled and worked through a number of underlying materials for this purpose.  To this end, I mention exhibit 6, being the initial table as submitted by senior counsel for the CITIC plaintiffs at the commencement of the trial.  In turn, Mineralogy submitted its response by way of a table under its exhibit 7 through senior counsel, Mr Dunning QC, identifying areas of agreement and disagreement, particularly in areas identified as 'Category C' where Mineralogy and Mr Palmer's consent was expressly refused.  This occurred on day two of the trial.

7. Not unexpectedly, there was some drafting issue movement during the trial bringing the parties closer over those initially flagged and disputed issues at the time of the trial's closing submissions.  Hence, an exhibit 12 emerged as Annexure C to the CITIC plaintiffs' closing written trial submissions (constituted by pages 59 through 101).  As described at page 2 of exhibit 12, this table is an updated version of exhibit 6.  Rows shaded in orange indicate where the parties were still not agreed at the end of the trial.

Project Agreement (c):  Fortescue Projects Consolidation Agreement

1. This CPOA Project Agreement can be dealt with briefly.  As mentioned, one of the four necessary Project Agreements as identified at subpar (c) is the Fortescue Projects Consolidation Agreement of 26 October 2001 (and later varied on 7 February 2003) as between Mineralogy, Austeel Pty Limited, Balmoral Iron, Balmoral Mining Pty Ltd, Brunei Steel Pty Limited, International Minerals Pty Limited, Korean Steel Pty Ltd and Sino Iron.  No changes at all are required to this existing agreement which has long included Balmoral Iron as a participant party. 

2. Given the ultimately accepted nomination in late 2020 of Balmoral Iron as the Further Company for the purpose of CITIC's completing the First Option, the existing Fortescue Projects Consolidation Agreement with Balmoral Iron meets all the requirements for this necessary Project Agreement. 

3. Essentially, this agreement sees the various parties agreeing to coordinate their operations under the State Agreement to which they are privy and to do everything necessary or desirable on their parts to enable Mineralogy to exercise its rights and powers and to perform its functions and obligations under the State Agreement (see Recital D of the Fortescue Projects Consolidation Agreement). 

Project Agreement (b):  Balmoral Iron Facilities Deed

1. The CPOA Project Agreement (b) is:

   (b)the Facilities Deed dated 28 November 2001 [sic] between Mineralogy and Sino Iron (as amended on or about 21 March 2006).

2. At the trial there was agreement between the parties about an obvious date error in the above clause.  The date of the original Facilities Deed perfected as between Mineralogy and Sino Iron was not 28 November 2001.  Properly identified, the correct Facilities Deed date should be 26 October 2001 (Trial Bundle, vol 1, tab 4).  There is no dispute at all over that fact.  The observed subsequent CPOA reference to an amendment of the Facilities Deed of 21 March 2006, as between the two corporations, is the correct date.

3. A correction of a demonstrable date error as a matter of an exercise in the proper construction of the instrument does not require a formal rectification suit.  Given the obvious error, its summary correction is an example of an interpretive principle as was exemplified by the High Court decision of Fitzgerald v Masters (1956) 95 CLR 420 - one of the authorities referred to and relied upon by senior counsel for the CITIC plaintiffs during argument. The same correctional approach has recently been discussed in a decision of the New South Wales Court of Appeal by Leeming JA in James Adam Pty Ltd v Fobeza Ltd [2020] NSWCA 311 at [34].

1. The excision concern goes beyond mere redundancy.  Production and processing of Product has plainly commenced long ago at the Cape Preston Project. Consequently, this penalty for delays clause, appropriate as it once was for a greenfields project, has long since been overtaken.  Leaving it in place in 2021 only delivers the undesirable potential for it to actively mislead and create chaos or confusion.  Consequently, it should be excised.  Instead, what was the former cl 6.3, will read 'Not used'.

2. Next, item 39 of exhibit 12 addresses MRSLA cl 13 and the issue of 'Accommodation Camps'.  Redundancy is again raised by the CITIC plaintiffs.  But here, it may still be the case one day in the future that a camp licence for an accommodation camp could be needed, say, for further works of an expansionary kind to augment what presently exists and then, to be carried out by a Balmoral Iron construction workforce. 

3. On that basis, consistently with my earlier resolved retention of definitions for 'Accommodation Camps' and 'Occupation Fee', the clause can remain.  If it is redundant as a matter of history, then its redundant retention will do no harm and will simply be inconsequential.  Thus, Mineralogy's proposed version of cl 13.1 and 13.3 (as revised) should be accepted (see exhibit 5.1).

4. A status quo position is likewise appropriate regarding item 40 of exhibit 12 as regards the proposed cl 18.2 (Health and Safety Management Plan). 

5. Likewise for item 41, in terms of environment approvals under proposed cl 20.1(a) and for item 42 concerning cl 20.1(b).  If cl 20.1(b) has been historically overtaken, then what the defendants propose will merely subsist as irrelevantly innocuous in the future.

6. Next, item 43 of exhibit 12 concerns a dispute over MRSLA cl 20.6.  This clause deals with the SRF.  It is, of course, correct that there has now been a trial over which I presided in November 2020 concerning the issues around aspects of the SRF applicable to Sino Iron and Korean Steel under their respective MRSLAs (see my decision Mineralogy Pty Ltd v Sino Iron Pty Ltd [2021] WASC 45).

7. What is proposed by the CITIC plaintiffs by an introduction of a preface to cl 20.6(c), so as to insert words 'Subject to any order of the court to the contrary', is not appropriate. That insertion would significantly diminish the character of the clause by such a proposed subjugation to the court. Conceptually, it cannot be allowed.

8. Subclause 20.1(a) as currently phrased, is consistent with the Sino Iron, and indeed, with the Korean Steel MRSLAs as they now stand. The scope for a court to potentially intervene, as regards trustee issues around cl 20.6(c), by reference to either the court's inherent jurisdiction over trustees or by the force of statutory provisions in the Trustees Act1962 (WA), of course, remain and will not be fettered by the parties' drafting. The words as proposed by the CITIC plaintiffs are not necessary. They will not be allowed.

9. The next item of MRSLA contention is the proposed cl 20.7 and suggested changes by the CITIC plaintiffs (see item 44 of exhibit 12).  In this respect, I can accept a contention by the CITIC plaintiffs that an excision and augmentation adjustment to cl 20.7(a) is necessary, in light of a single Environmental Management Plan for the Project which currently applies for Sino Iron and Korean Steel and should also apply for Balmoral Iron upon completion of this takeover. 

10. I agree it would be commercially absurd to require Balmoral Iron to prepare a separate Environmental Management Plan, given an obvious future joint operation of the Cape Preston Project by Sino Iron, Korean Steel and (on completion) Balmoral Iron. 

11. Consequently, an alteration to cl 20.7(a) as suggested by the CITIC plaintiffs should be accepted.  No violence at all is done to the chosen template of the Sino Iron MRSLA by that change which is, on my view, commercially essential.  This is particularly so bearing in mind the very long time lag since the Balmoral Iron MRSLA was last amended as at 30 March 2006, and the position at the trial in December 2020 vis-à-vis Balmoral Iron as the Further Company as the subject of the First Option rights of CITIC under the CPOA.

12. This adjustment is, effectively, one of the requirements by needing to deal sensibly and commercially with the long time lag of years between the exercise of the First Option under the CPOA at 13 April 2012, and a following almost nine years to a takeover completion.  This required change should be allowed.

13. Further and in consequence, the preface to cl 20.7(b) should replace in exhibit 8.1, the word 'The' by the word 'Any'. 

14. Likewise, for cl 20.7(c), the word 'The' should replace the word 'Any' at the beginning of that subclause. 

15. But further changes beyond that to cl 20.7 would deliver a violence to the residue of the cl 20.7 bargain terms as seen stated.  I would not allow any further changes than as stated above.

16. The next area of disagreement captured under item 45 of exhibit 12 concerns cl 28.2 through to cl 28.4, in reference to the subject of an early termination of the MRSLA.

17. Effectively, this is another redundancy objection by the CITIC plaintiffs, based upon the undoubted historic establishment of the Cape Preston Project. 

18. Clause 28.2 is seen to commence on the basis of a temporal reference 'Prior to the commencement of development activities in the Mine Area or Site Lease Area ...' 

19. Clause 28.3 refers to preparation and submission of a Development Plan by Balmoral Iron.  That was to be within five years after the date of the Balmoral Iron MRSLA agreement (ie, five years post 21 (or 30) March 2006) - a time, in any event, now long expired. 

20. Likewise, cl 28.4 was temporally oriented to a period seven years after the date of the Balmoral Iron MRSLA (ie at March 2013) - again in 2021, to be seen as a time long past.  That is in the context of the reference under cl 28.4 to Balmoral Iron not having 'commenced development operations within the Mine Area and Site Lease Area following its approval as a Mine Participant ...'. 

21. These clauses are not only redundant, but in 2021, are potentially misleading if left in place unaltered.  Where some other potentially now redundant MRSLA clauses present, if left in place, as essentially innocuous in a potential future application, then, taking a minimalistic intrusion approach, they may generally just be left to wither irrelevantly. 

22. But my assessment is to the contrary for the three subclauses concerning potential early termination.  They are clearly well out of place in this Balmoral Iron MRSLA in 2021.  A need for excisional surgery arises, effectively driven again by the almost nine year hiatus between the exercise of the First Option at 13 April 2012 and these reasons after a December 2020 trial - where a necessary Balmoral Takeover Agreement is yet to be completed.  To reinforce the point, the necessary Project Agreements for Balmoral Iron, as was envisaged by the CPOA by cl 3.6(c), have still not been resolved anything close to 20 Business Days under Mineralogy's endeavours. 

23. An adjustment by excision is thus necessary.  It does no violence to the CPOA criteria or underlying bargain.  Thus, cl 28.2, cl 28.3 and cl 28.4 will be removed and instead these subclauses, as per exhibit 9.3, will read 'Not used'.

24. The next area of contention seen in exhibit 12 is item 46 - with reference to cl 32.1(c) of the Balmoral Iron MRSLA. 

25. For this dispute, it appears the version as proffered by the defendants by their exhibit 8.1, does not sufficiently take into account variation amendments to the Sino Iron MRSLA under the Deed of Amendment of 8 January 2008.  Like amendments were reflected in the amended and consolidated version of the Korean Steel MRSLA at 22 October 2008 and in the Balmoral Iron MRSLA Deed of Variation of 30 March 2006 (see cl 2.1(a)). 

26. The CITIC plaintiffs' proposed amendments (seen in exhibit 9.3) would effectively align cl 32.1 to the Sino Iron (and Korean Steel) MRSLAs as they currently read.  That approach appears consistent with the Sino Iron MRSLA template theme of the CPOA, as regards necessary Project Agreements for Balmoral Iron in (a). 

27. Consequently, I prefer the CITIC plaintiffs' version of cl 32.1(c) as regards the issue of encumbrances.

28. The next area of disagreement is item 47 of exhibit 12, relating to the proposed excision of cl 34.2 by the CITIC plaintiffs. 

29. The issue arises, as the CITIC plaintiffs point out, due to an amendment by s 15 of the Mining Amendment Act 1996 (WA), as further amended by s 103(a) of the Mining Amendment Act 2004 (WA), which took effect at February 2006. In essence, the amendment resulted in s 103C of the Mining Act 1978 (WA) from then only permitting the registration of limited types of dealings. The Balmoral Iron MRSLA does not fall within the as revised categories of documents still registrable under the Mining Act as it is now in force.  Still, the defendants oppose the deletion. 

30. Again, however, a need for this revision is a product of over eight and a half years' time elapsed in terms of progressing a 13 April 2012 exercise of the First Option.  In 2021, there is simply no point leaving such a long redundant and potentially misleading provision in the agreement.  It should be excised.  That is wholly benign and does no violence to the substantial form of the underlying bargain.

31. Mineralogy's argument to the contrary in terms of the former regime of registration possibly reviving one day in the future by potential further amendments to the Mining Act, is simply speculative, as the CITIC plaintiffs correctly respond.  A logical excision of cl 34.2 should follow.  That excision does no violence at all to the CPOA regime as regards the template Project Agreements.

32. Item 48 of exhibit 12 identifies disputation over the proposed Schedule to the Balmoral Iron MRSLA.  Item 6 of the Schedule in the Sino Iron MRSLA concerns an Occupation Fee of $US250,000 as stated.  This relates back to the Accommodation Camp and cl 13. 

33. It may be the case that in the future a freshly assembled  Balmoral Iron workforce might then need to be accommodated, depending upon whether expansion work to the existing project facilities is then being undertaken or not. 

34. Given that future potentiality, item 6 of the Sino Iron MRSLA Schedule may possibly be relevant again, if that future contingency were to come to fruition.  If it does not occur, then obviously no such Occupation Fee will be incurred.  Overall, this presents as a relatively benign provision which can remain in the Balmoral Iron MRSLA.

35. By reference to item 49 of exhibit 12 and to the column titled 'CITIC's Response', it would appear the CITIC plaintiffs agree with Mineralogy that a plan which is to be Annexure 1 of the Balmoral Iron MRSLA should be the same as the plan contained in Annexure 1 to the Sino Iron MRSLA.

36. That position seems appropriate.  It would do no violence, obviously, to the CPOA's choice of the Sino Iron MRSLA template for the purposes of the Further Company's Project Agreement (a).  Consequently, the same plan, as so agreed, should be used. 

37. That was the last item of disagreement between the parties concerning the draft MRSLA for Balmoral Iron.

38. Out of the defendants' proposed exhibit 8.1, the further disallowances or adjustments which I have now identified whilst working through exhibit 12 should be made and with all changes clearly made visible by an appropriate annotation. 

39. With all the relevant changes in place there must be prepared for execution a 'clean' and consolidated version of a Balmoral Iron MRSLA (like the current consolidated Sino Iron and Korean Steel MRSLA instruments).  That version can then be appended as well to the final specific performance orders to be issued.  The CITIC plaintiffs' lawyers should attend to that in due course as the moving parties for relief.

Sundries

1. Remaining areas of disagreement between the parties only concern an instrument referred to as the 'Palmer Deed of Guarantee' (as referred to in exhibit 12, page 41, item 63 - 65) and a 'Mineralogy Deed of Indemnity' (as in exhibit 12, page 42, item 66). 

2. Mineralogy's proposed draft versions for these documents can be found as exhibit 8.4 (Deed of Guarantee) and exhibit 8.5 (Deed of Indemnity).  The CITIC plaintiffs' rival version of the Palmer Deed of Guarantee is proposed as exhibit 9.7 and the Mineralogy Deed of Indemnity as exhibit 9.8.  The orange highlighted areas of disagreement as articulated in this section of exhibit 12 look to have emerged late in the piece.  They were not evident from out of exhibit 6 or exhibit 7 ‑ where the position appeared to be that the parties were earlier mutually content over these instruments (see item 63 of exhibit 12).

3. In relation to the Palmer Deed of Guarantee, the CITIC plaintiffs point out, in effect, the defendants' proposed cl 7(a) and cl 7(b) are in identical form (item 63, exhibit 12).  Such proposed clauses therefore unnecessarily replicate each other.  There ought only to be one such clause, which would merely be a standalone cl 7.  Hence, references to subcl (a) and then the entirety of 7(b), should be completely excised. 

4. With that small adjustment, the Deed of Guarantee then presents as being in order for execution by the parties, including by Mr Palmer.

5. As regards the proposed Deed of Indemnity, I accept (for the reasons expressed at item 66 of exhibit 12) that the deed should be in the form of the CITIC plaintiffs' exhibit 9.8 (annotated) and 10.8 (clean version), subject to one change - being a deletion of the clauses titled 'Consideration', 'Giving effect to this deed' and 'Waiver of rights'. 

6. Subject to those changes, the Deed of Indemnity ought to be as per the CITIC plaintiffs' submitted exhibit 10.8.

Conclusions and orders for specific performance

1. The CITIC plaintiffs' minute of proposed final orders at the trial was folio document 186.  The proposed orders 1, 2 and 3 read in terms:

   1.A declaration that the China Project Option Agreement between the first defendant (Mineralogy) the second defendant (Mr Palmer) and the first plaintiff (CITIC) dated 22 October 2008 (the CPOA) remains in full force and effect.

   2.Specific performance of the CPOA.

   3.Mineralogy and Mr Palmer complete the First Option (as defined in the CPOA) by:

   ...

2. The defendants' rival proposed minute of final orders, via folio document 192, was differently phrased.  It proceeds on a basis of orders in terms that (in part) read:

   1.The parties complete the First Option (as defined in the CPOA) by performing the actions in orders in 2 to 8 below.

   2.Within seven days of the date of those orders, Mineralogy Pty Ltd (Mineralogy):

   ...

3. Mineralogy, in effect, opposes, therefore, the forms of orders as sought under par 1 and par 2 of the CITIC plaintiffs' submitted minute.

4. The first issue to resolve is whether or not there should be a declaration that the CPOA remains in full force and effect.  There are three key reasons for me resolving, in the end, not to issue such a standalone declaration as is sought by the CITIC plaintiffs. 

5. First, it is inherent in the final positions of the respective parties as taken at this trial that the CPOA of 22 October 2008 still does remain in full force and effect regarding all of the parties' rights and obligations arising out of and around the 13 April 2012 exercise by CITIC of its First Option, and in respect of all of Mineralogy's and Mr Palmer's CPOA correlatively generated obligations concerning a Further Company - and which the parties in December 2020 ultimately accept will be Balmoral Iron. 

6. Consequently, given an established First Option environment of subsisting enforceable CPOA rights and obligations, some wider generic declaration as to the CPOA simply being in full force and effect is unnecessary.  Clearly, the CPOA remains of full force and effect, in relation to the required performance of all the obligations arising from and following upon CITIC's exercise of its First Option under the CPOA and its eventual unconditional acceptance in 2020 of Balmoral Iron as the Further Company.

7. A second reason for not issuing a general declaration is that the form of the order to issue for specific performance, seen assessed by reference to the forms and precedents as I earlier identified in Seton at chapter L, looks to proceed on the basis that the court will 'declare' a party is entitled to specific performance of a particular agreement.  Ultimately, I would propose here to eventually, as I foreshadow, issue a specific performance order concerning the First Option in such terms.  Anything beyond that is unnecessary.

8. My third reason for not issuing any generic declaration about the CPOA is that there were, as now seen, three further options also granted to CITIC under the CPOA (see cl 3.4).  However, as things now present in 2021, the allowable time under the CPOA for a possible exercise of those Further Options (three more in all), is governed by the CPOA's definition of 'Option Period' and, from there, to the earlier of three as specified events, assembled under subpars (a) through (c) of the CPOA definition, as they are identified. 

9. Subparagraph (a) of the definition of 'Option Period' in the CPOA refers to 'Expiry Date'.  That is another defined term of the CPOA, meaning '120 months from the Commencement Date'.  'Commencement Date' is also a defined CPOA term, identified as 31 March 2006.  Allowing 10 years from 31 March 2006 will extend only to 1 April 2016. 

10. The evidence before the court at the trial is that the only option ever exercised or sought to be exercised by CITIC under the CPOA, is its First Option.  Consequently, the nominated CPOA Option Period as regards any Further Options under the CPOA for the purposes of cl 3.4, when assessed by reference to the existence of a written notice given to the Seller at any time during the Option Period looks, now in 2021, to have long expired.  That position looked to be the case as was contended for under the closing submission by Mr Parmenter QC for the CITIC plaintiffs (ts 585).

11. I was not asked to make any specific declaration concerning a Further Option(s) under the CPOA by reference to cl 3.4. 

12. But if I were to issue the as requested declaration in the bare generic terms as is sought by the CITIC plaintiffs under their order 1, there could then be some potential created for future confusion concerning the live status of the three Further Options afforded under cl 3.4 of the CPOA, but which now would look to have lapsed by the effluxion of time. 

13. Consequently, I prefer to confine the relief to be granted simply to specific performance orders which will be directed at the rights and obligations arising out of the undoubted 13 April 2012 exercise by CITIC of its First Option under the CPOA and to the ensuing takeover completion events under the CPOA which are to follow concerning the accepted Further Company (Balmoral Iron).

14. Nor do I assess it as appropriate to issue a generically expressed declaration order sought by the CITIC plaintiffs under par 2 of their proposed orders. 

15. Equally, however, I am not persuaded that the forms of final orders as submitted by the defendants would be appropriate. 

16. Having regard to the now settled final terms for CPOA Project Agreements that were required to be resolved by this trial, and also to issues over the disputed terms of the Balmoral Iron Takeover Agreement, the as now resolved by me resulting clean consolidated versions of those instruments should be appended to the court's final specific performance orders to be issued.  There should be no room left for even a whiff of future disagreement over matters of detail as I have needed to resolve by these reasons. 

Draft proposed specific performance order

1. Consequently, I would propose to hear the parties, but prima facie eventually suggest that orders issue for specific performance in the following terms:

   This action having been tried between 7 December and 15 December 2020 and upon hearing Mr J H Karkar QC, Mr S Parmenter SC and Mr A Barraclough for the plaintiffs and Mr P J Dunning QC and Mr K S Byrne for the defendants, IT IS ORDERED THAT:

   1.Declare that the plaintiffs are entitled to specific performance of the CPOA of 22 October 2008 (as varied subsequently on 30 March 2012) so far as it remains to be performed in respect of the first plaintiff's exercise of the First Option (as defined by the CPOA) on 13 April 2012 and to that end that within seven days of the date of these orders that the first defendant, Mineralogy Pty Ltd (Mineralogy), shall:

   (a)execute the amendment deed in relation to the Balmoral Iron Mining Right and Site Lease Agreement in the form of annexure 1 to this order;

   (b)execute the variation deed to the Balmoral Iron Facilities Deed in the form of annexure 2 to this order;

   (c)execute the deed of amendment and accession to the Fortescue Co-ordination Deed in the form of annexure 3 to this order;

   (d)cause Balmoral Iron Pty Ltd (Balmoral Iron) to execute the amendment deed in relation to the Balmoral Iron Mining Right and Site Lease Agreement in the form of annexure 1 to this order;

   (e)cause Balmoral Iron to execute the variation deed to the Balmoral Iron facilities deed in the form of annexure 2 to this order; and

   (f)cause Balmoral Iron to execute a counterpart of the deed of amendment and accession to the Fortescue Co‑ordination deed in the form of annexure 3 to this order.

   2.Within seven (7) days of the date of these orders, the first plaintiff, CITIC Ltd (CITIC), the second plaintiff, Sino Iron Pty Ltd (Sino Iron) and the third plaintiff, Korean Steel Pty Ltd (Korean Steel), are to execute a counterpart to the deed of amendment and accession to the Fortescue Co-ordination Deed in the form of annexure 3 to this order.

   3.Within seven (7) days of completing the steps in the preceding order, Mineralogy shall give CITIC written notice that it has satisfied its obligations for the purposes of clauses 3.6(c)(i) and 3.6(c)(ii) of the CPOA.

   4.Within fourteen (14) days of the notice in the preceding order being given by Mineralogy to CITIC:

   (a)Mineralogy shall execute a counterpart of the Takeover Agreement in the form of annexure 4 to this order and provide the signed counterpart to CITIC, Sino Iron, Korean Steel and the fourth plaintiff, Cape Preston Resource Holdings Pty Ltd (CPRH);

   (b)Mineralogy shall cause Balmoral Iron to execute a counterpart of the Takeover Agreement in the form of annexure 4 to this order and provide the signed counterpart to CITIC, Sino Iron, Korean Steel and CPRH;

   (c)CITIC, Sino Iron, Korean Steel and CPRH execute a counterpart of the Takeover Agreement in the form of annexure 4 to this order and provide the executed counterpart to Mineralogy.

   5.No later than the date of Completion (as defined in the Takeover Agreement):

   (a)the second defendant, Mr Clive Palmer, shall execute a deed of guarantee in the form of annexure 5 to this order;

   (b)Mineralogy shall cause Balmoral Iron to execute a Deed of Guarantee in the form of annexure 5 to this order; and

   (c)CITIC and CPRH shall execute a Deed of Guarantee in the form of annexure 5 to this order.

   6.No later than the date of Completion (as defined in the Takeover Agreement):

   (a)Mineralogy shall execute a Deed of Indemnity in the form of annexure 6 to this order;

   (b)Mineralogy shall cause Balmoral Iron to execute a Deed of Indemnity in the form of annexure 6 to this order; and

   (c)CITIC and CPRH shall execute a Deed of Indemnity in the form of annexure 6 to this order.

   7.The parties shall duly perform the Takeover Agreement so as to effect Completion (as defined in the Takeover Agreement).

   8.There is liberty to apply.

   9.All further orders, including as costs or special costs orders, are reserved.

1. These reasons, including the form of the draft proposed orders in the preceding paragraph, will now be provided to the parties.

2. The parties will then have 21 days after the publication of the reasons to then consider their respective positions and to confer over the form of final orders. 

3. The CITIC plaintiffs, as the moving party for relief, ought within that time frame submit to my Associate and to the defendants, draft orders in alignment with these reasons and which will attach to them the resolved final iterations of the various instruments the subject of these reasons and draft order under [480] above.

4. Any residual issues following that conferral period, if they still remain unresolved, may be dealt with by agreement, or otherwise, the parties should contact my Associate to arrange for a special appointment for the purposes of resolving any residual arguments, including over costs issues, if they present.

   SCHEDULE A

   1.Definitions and interpretation

   Definitions

   1.1In this Agreement unless the context otherwise requires the following terms shall have the following meanings:

   Agreement means this agreement.

   Area A means the entire area comprised in Mining Leases 08/123, 08/124 and 08/125 granted under the Mining Act.

   Commencement Date shall be at 31 March 2006.

   CPI Increase means US$200,000,000 x CPI2-CPI1
     CPI1

   Where CPI1 is the last published CPI figure before 1 March 2008 and CPI2 is the last published CPI figure before the date of completion of a Takeover Agreement.

   Drilling Obligation means CITIC's obligation set out in clause 2.4 and Schedule 1.

   Expiry Date shall means [sic] 120 months from the Commencement Date.

   First Option means the option granted under clause 3.1 to acquire 100% of a Further Company which will have entered into Project Agreements with Mineralogy.

   Fortescue Coordination Deed means the deed of that name dated [22 October] 2008 between Mineralogy, CITIC [,] Korean Steel and Sino Iron.

   Further Company means a company:

   (a)incorporated at Palmer's request by CITIC or their lawyers, and nominated by the Seller to the company which will be acquired by CITIC or its nominee on completion of the exercise of an option; or

   (b)if CITIC otherwise agrees, nominated by the Seller and wholly owned by Mineralogy and or Palmer at all times since its incorporation, such company to be acceptable to CITIC in relation to its trading, financial and tax history,

   in either case, which must be party to a set of agreements in the same terms as the Project Agreements.

   Further Option means an option to acquire 100% of the shares in a Further Company which will have entered into the Project Agreements with Mineralogy under clause 3.4.

   Korean Steel Takeover Agreement means the agreement dated on or about 1 November 2007 between Mineralogy, Palmer, CITIC, Balmoral Iron Holdings Pty Limited, Korean Steel and other parties, for the sale of all the issued shares in Korean Steel to Balmoral Iron Holdings Pty Limited.

   Option shall mean the options granted by Seller to CITIC in accordance with clause 2.2.

   Option Notice means a notice issued pursuant to clause 3.1.

   Option Period shall mean the period commencing on completion of the Korean Takeover Agreement and concluding on the earlier of:

   (a)the Expiry Date;

   (b)the date CITIC has exercised all the options granted under this Agreement; and

   (c)five years from the Commencement Date if CITIC has not exercised the First Option.

   Product shall mean the production of final products by any Further Company for export from Australia or sale and may be made up of Iron Ore Concentrate, Pellets, or any other product or any combination or blend thereof produced from iron ore or Magnetite Ore, mined by the Further Company.

   Product Makeup means the amount of annual production or exportable or saleable Product produced by a Further Company which shall not exceed a total of 12,000,000 (twelve million) tonnes (or such greater amount as is permitted under clause 26 of the Fortescue Coordination Deed) per year of Product [sic] for any single Further Company for each 1,000,000,000 (one billion) tonnes of Magnetite Order which may be extracted by that Further Company.

   Project means the development of a mine or mines to mine Magnetite Ore in Area A, and the establishment or obtaining access to, and operation of, further processing and related infrastructure needed to process Magnetite Ore into concentrate, pellets or HBI by the relevant company.

   Project Agreements means the following agreements between Sino Iron and Mineralogy as amended from time to time:

   (a)the Sublease dated 25 October 2001 between the Seller and Sino Iron as amended from time to time;

   (b)the Facilities  Deed dated 28 November 2001 between Mineralogy and Sino Iron (as amended on or about 21 March 2006);

   (c)the Fortescue Projects Consolidation Agreement between Mineralogy, Austeel Pty Limited, Balmoral Iron, Balmoral Mining Pty Limited, Brunei Steel Pty Limited, International Minerals Pty Limited, Korean Steel Pty Limited and Sino Iron (as amended); and

   (d)the Fortescue Co-ordination [sic] Deed.

   and, where the context requires, includes agreements between Mineralogy and a Further Company in the same terms as those agreements.

   Project Approvals means all authorisations of the Western Australian and Australian Government required for a Further Company to build and operate its Project.

   Project Qualification means the qualifications set out in Schedule 2.

   Purchase Consideration shall mean $US200,000,000 (two hundred million US dollars) for each and every Sale Interest, plus the CPI Increase from the 1 March 2005 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 Interests will be reduced by the amount which CITIC spends to comply with the Drilling Obligation.

   Sale Interest shall mean:

   (a)all of the fully paid ordinary shares which are, immediately prior to CITIC issuing an Option Notice in respect of a Further Company, owned by Seller in the Further Company upon receiving the Option Notice; and

   (b)where clause 3.6(a) applies, an increase by one billion tonnes in the total extraction limit for a company already owned by CITIC.

   Seller means Palmer or Mineralogy as the case may be.

   Sino Takeover Agreement means the agreement between CITIC, Mineralogy and ACN 118 791 772 Pty Limited, which has completed and was executed on or about the Commencement Date, whereby ACN 118 791 772 Pty Limited acquired all of the existing issued ordinary shares of Sino Iron.

   State Agreement means the agreement dated 5 December 2001 between Geoffrey Gallop, Mineralogy, Austeel Pty Limited, Balmoral Iron Pty Limited, Sino Iron Pty Limited, Brunei Steel Pty Limited, International Minerals Pty Limited and Korean Steel Pty Limited.

   Takeover Agreement means an agreement between CITIC, the Seller and a nominee of CITIC whereby the nominee of CITIC will acquire all of the existing issued ordinary shares of a Further Company.

   Total Extraction Limit means the total extraction limit permitted for Sino Iron, Korean Steel or a Further Company under the Mining Right/Lease Agreement which that company has signed with Mineralogy and in each case shall be 1,000,000,000 tonnes of Magnetite Ore.

I certify that the preceding paragraphs comprise the reasons for decision of the Supreme Court of Western Australia.

DW

Associate to the Honourable Justice Martin

30 MARCH 2021