Citic Pacific Ltd v Mineralogy Pty Ltd
[2014] WASC 358
•26 September 2014
CITIC PACIFIC LTD -v- MINERALOGY PTY LTD [2014] WASC 358
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 358 | |
| Case No: | CIV:3012/2012 | 26 SEPTEMBER 2014 | |
| Coram: | EDELMAN J | 26/09/14 | |
| 26 | Judgment Part: | 1 of 1 | |
| Result: | Defendants' applications to withdraw admission and strike out paragraphs of the plaintiff's reply dismissed | ||
| B | |||
| PDF Version |
| Parties: | CITIC PACIFIC LTD SINO IRON PTY LTD KOREAN STEEL PTY LTD MINERALOGY PTY LTD CLIVE FREDERICK PALMER |
Catchwords: | Practice and procedure Application to withdraw an admission made on 11 April 2014 History of the defendants' changes of position including in relation to the subject matter of the admission Lack of any evidence about why the admission was made Importance of the admission to the plaintiffs Lack of any case management benefit from the withdrawal of the admission Admission not necessarily inconsistent with other paragraphs of defendants' pleading Application dismissed Practice and procedure Application by the defendants for leave to file a rejoinder Whether there is an inconsistency between proposed rejoinder and admission in defence Practice and procedure Application by the defendants to strike out paragraphs of plaintiffs' reply Application made more than a year after the reply due to misfiling of the reply in the defendants' records Application to strike out pleading of a point of law made in response to an amendment by the defendants, which clarifies the plaintiff's case and which case has always been understood by the defendants Application dismissed |
Legislation: | Nil |
Case References: | 3 Oceans Wine Company Pty Ltd v Heyshott Pty Ltd [2011] WASC 12 Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 Bonney v Ngunytju Tjitji Pirni Aboriginal Corporation [2009] WASC 209 Commodore Homes WA Pty Ltd v Goldenland Australia Property Pty Ltd & Anor [2007] WASC 146 Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303 Fairworld Holdings Pty Ltd v Burrup Fertilisers Pty Ltd (No 2) [2011] WASC 136 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115 Londsdale Investments Pty Ltd v OM (Manganese Ltd) [2009] WASC 188 MacMahon Contractors Pty Ltd v Woodside Energy Ltd [2008] WASC 271 Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 Water Corporation v Cardno BSD Pty Ltd [2009] WASCA 212 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
SINO IRON PTY LTD
Second Plaintiff
KOREAN STEEL PTY LTD
Third Plaintiff
AND
MINERALOGY PTY LTD
First Defendant
CLIVE FREDERICK PALMER
Second Defendant
Catchwords:
Practice and procedure - Application to withdraw an admission made on 11 April 2014 - History of the defendants' changes of position including in relation to the subject matter of the admission - Lack of any evidence about why the admission was made - Importance of the admission to the plaintiffs - Lack of any case management benefit from the withdrawal of the admission - Admission not necessarily inconsistent with other paragraphs of defendants' pleading - Application dismissed
Practice and procedure - Application by the defendants for leave to file a rejoinder - Whether there is an inconsistency between proposed rejoinder and admission in defence
Practice and procedure - Application by the defendants to strike out paragraphs of plaintiffs' reply - Application made more than a year after the reply due to misfiling of the reply in the defendants' records - Application to strike out pleading of a point of law made in response to an amendment by the defendants, which clarifies the plaintiff's case and which case has always been understood by the defendants - Application dismissed
Legislation:
Nil
Result:
Defendants' applications to withdraw admission and strike out paragraphs of the plaintiff's reply dismissed
Category: B
Representation:
Counsel:
First Plaintiff : Mr C M Scerri SC & Mr S H Parmenter
Second Plaintiff : Mr C M Scerri SC & Mr S H Parmenter
Third Plaintiff : Mr C M Scerri SC & Mr S H Parmenter
First Defendant : Ms R J Lee
Second Defendant : Ms R J Lee
Solicitors:
First Plaintiff : Allens
Second Plaintiff : Allens
Third Plaintiff : Allens
First Defendant : Michael John Dunham
Second Defendant : Michael John Dunham
Cases referred to in judgment:
3 Oceans Wine Company Pty Ltd v Heyshott Pty Ltd [2011] WASC 12
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82
Bonney v Ngunytju Tjitji Pirni Aboriginal Corporation [2009] WASC 209
Commodore Homes WA Pty Ltd v Goldenland Australia Property Pty Ltd & Anor [2007] WASC 146
Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303
Fairworld Holdings Pty Ltd v Burrup Fertilisers Pty Ltd (No 2) [2011] WASC 136
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115
Londsdale Investments Pty Ltd v OM (Manganese Ltd) [2009] WASC 188
MacMahon Contractors Pty Ltd v Woodside Energy Ltd [2008] WASC 271
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596
Water Corporation v Cardno BSD Pty Ltd [2009] WASCA 212
- EDELMAN J:
Introduction
1 These reasons concern yet another swathe of applications that have been brought between these parties in this and related proceedings between them. Simply for convenience I will refer to the defendants collectively as the Citic parties and to the plaintiffs collectively as Mineralogy.
2 Mineralogy seeks orders in the following terms.
3 First, leave to amend their defence for the fifth time, to withdraw an admission concerning the entitlement of the Citic parties to a declaration that they seek. On 27 October 2013, Mineralogy first communicated to the Citic parties that the declaration was not opposed. On 4 December 2013, Mineralogy expressly pleaded in a minute filed on that date that they 'waived' a right to rely on a legal argument to the contrary. On 20 January 2014, despite that waiver, Mineralogy pleaded that contrary legal argument. From 12 March 2014, and in a pleading filed on 11 April 2014, Mineralogy admitted that the Citic parties were entitled to seek the declaration. Now Mineralogy and Mr Palmer seek to revoke that admission.
4 Related to this issue is the second application brought by the Citic parties. They seek orders striking out various paragraphs of the fifth defence by Mineralogy and Mr Palmer. The strike out application only arises for consideration if Mineralogy and Mr Palmer are not granted leave to amend their defence.
5 Secondly, Mineralogy seeks leave to file a rejoinder.
6 Thirdly and fourthly, Mineralogy seeks orders (more than a year late) that the Citic parties be denied leave to withdraw an admission that they made in response to an earlier pleading by Mineralogy, and that paragraph 18(aa) of the amended reply by Citic, Sino Iron, and Korean Steel, filed more than a year ago on 26 July 2013 be struck out.
7 From the filing of Mineralogy's first defence on 25 February 2013, it made substantial amendments on 10 June 2013, 25 September 2013, 4 December 2013 (proposed), 20 January 2014, and 11 April 2014. Mineralogy's changes have been substantial on many of these occasions. Mineralogy's position has been constantly shifting. I do not suggest that Mineralogy has intentionally sought to delay the progress of this action. Indeed, Mineralogy's counsel has, on numerous occasions, particularly in the related proceedings, emphasised Mineralogy's desire to move the proceedings to trial, particularly where Mineralogy seeks a hearing to determine its entitlements to various royalties. But the effect of Mineralogy's conduct of this litigation has been to cause remarkable delay and to engender substantial confusion among the Citic parties about whether their claim is to be defended and, if so, the terms on which it is defended.
8 Mineralogy's application to withdraw its admission is dismissed. Although this would have meant that the strike out application fell to be considered, senior counsel for the Citic parties said that he did not press the strike out application if the consequence of refusing the withdrawal of Mineralogy's admission were that Mineralogy will need to apply for leave to amend its defence. As I explain below, that is the consequence that follows from my decision. Mineralogy's application to file a rejoinder in the currently proposed terms must also be adjourned. The application to file a rejoinder will also need to be determined in light of the matters raised in Mineralogy's application to amend its defence.
9 As for the amendments made by the Citic parties, it is not necessary to decide whether the Citic parties required leave to amend their reply in July 2013. They probably did not. The short point is that to the extent that their amendment withdraws any admission (which I do not consider it does) their amendment clarifies a step in their argument on a point of law. Counsel for Mineralogy properly conceded that she had always understood the essential legal submission that the Citic parties made on this point.
Mineralogy and Mr Palmer's application to withdraw an admission
The statement of claim
10 The Citic parties' statement of claim, in very broad outline, is as follows below. Many details have been omitted simply for brevity. It is only the broad outline of this claim that is relevant to the current applications.
11 On 12 March 2005, Mineralogy entered into a Joint Development Agreement with Sino Iron and others.
12 On 21 March 2006, Mineralogy entered into agreements (MRSLAs) with each of Sino Iron and Korean Steel granting them a right to mine for Magnetite Ore (up to an extraction limit) and granting them a Site Lease for construction and operation of their processing facilities.
13 On 22 October 2008, Mineralogy, Mr Palmer, and Citic entered an agreement called the China Project Option Agreement.
14 Under the Option Agreement, Mr Palmer and Mineralogy granted options to Citic, subject to various terms, to acquire companies that have allocations of resources or further allocations of resources. It provided, in broad terms, for Citic to have a First Option, which was defined in cl 1 as an option to acquire a Further Company which will have entered into Project Agreements with Mineralogy.
15 A 'Further Company' was defined to include a company where,
if [Citic] otherwise agrees, nominated by [Mr Palmer or Mineralogy] and wholly owned by Mineralogy and or [Mr] Palmer at all times since its incorporation, such company to be acceptable to [Citic] in relation to its trading, financial and tax history.
16 Although it is not a clause pleaded, by cl 3.7, if Citic did not exercise all options by the expiry of the Option Period then the Option Agreement would automatically terminate. The Option Period is defined in cl 1.1 as the earlier of various dates. One of those dates is five years from the Commencement Date (31 March 2006), if Citic has not exercised the First Option. It is common ground on the pleadings that this period was extended by written variation to six years (ie to 31 March 2012).1
17 By cl 3.2, the First Option could be exercised until 5:00 pm on 31 March 2012, but Mineralogy pleads that by a written variation this was extended to 14 April 2012.2 It appears that this is accepted by the Citic parties although, clearly by omission, the Citic parties did not expressly admit this in their reply.
18 On 22 October 2008, Mineralogy, Sino Iron, Korean Steel, and Citic entered into the Fortescue Co-ordination Deed. The Fortescue Co-ordination Deed co-ordinated various activities between the parties and provided that the Joint Development Agreement would be suspended while the Fortescue Co-ordination Deed was in operation unless (i) the Citic Option lapses or (ii) Sino Iron and Korean Steel cease to be a Mining Right holder.
19 On 13 April 2012, Citic exercised the First Option.
20 On 2 May 2012, Mineralogy nominated a Further Company (Anshan Resources. Anshan Resources had not been wholly owned by Mineralogy or Mr Palmer since incorporation. Mineralogy did not seek Citic's approval for nomination of Anshan Resources. Anshan Resources was not a party to all of the Project Agreements or agreements in the same terms as the Project Agreements. Citic did not agree to Anshan Resources.
21 On 8 June 2012, Citic notified Mineralogy of the identity of the proposed purchaser of the Further Company, Cape Preston Resource Holdings.
22 On 11 July 2012, Mineralogy withdrew its nomination of Anshan Resources and nominated instead Balmoral Iron as the Further Company. Balmoral Iron had not been wholly owned by Mineralogy or Mr Palmer since incorporation. Mineralogy did not seek Citic's approval for nomination of Balmoral Iron. Balmoral Iron was not a party to all of the Project Agreements or agreements in the same terms as the Project Agreements. Citic did not agree to Balmoral Iron.
23 On 12 September 2012, Mineralogy withdrew its nomination of Balmoral Iron and nominated instead World Resources Group as the Further Company. Mineralogy did not seek Citic's approval for nomination of World Resources Group. World Resources Group was not a party to all of the Project Agreements or agreements in the same terms as the Project Agreements. World Resources Group was not a party to the State Agreement. Citic did not agree to World Resources Group.
24 In October 2012, Mineralogy and Mr Palmer both purported to terminate the Option Agreement. Mineralogy and Mr Palmer said that Citic had repudiated the Option Agreement by not accepting World Resources Group and that Mineralogy had accepted that repudiation.
25 Consequent upon this alleged termination, Mineralogy said that the Joint Development Agreement had been reinstated and the Fortescue Co-ordination Deed had been terminated.
26 The Citic parties dispute the termination and they dispute that the JDA had been reinstated and the Fortescue Co-ordination Deed had been terminated. They seek declarations that:
(i) Citic has not repudiated the Option Agreement;
(ii) the purported termination of the Option Agreement by Mineralogy and Mr Palmer is invalid;
(iii) Mineralogy and Mr Palmer are not entitled to terminate the Option Agreement;
(iv) the Option Agreement remains in full force and effect;
(v) the Joint Development Agreement continues to be suspended; and
(vi) the Fortescue Co-ordination Deed remains in full force and effect.
Mineralogy's first defence and counterclaim
27 Mineralogy and Mr Palmer filed their defence to this action, and a counterclaim, on 25 February 2013. Their defence was that Citic had repudiated, in the sense of renounced,3 the Option Agreement and that Mineralogy and Mr Palmer had accepted this repudiation. They also counterclaimed for a declaration that the Option Agreement has been terminated, that the Joint Development Agreement has been reinstated, and that the Fortescue Co-ordination Deed has been terminated.
Mineralogy's first change of position
28 On 4 June 2013, a little more than three months after the first defence, Mineralogy and Mr Palmer filed a second defence. Now they alleged that the Option Agreement had been terminated on 14 April 2012 because Citic had failed to acquire shares in a further company by that date.
29 On 24 June 2013, the Citic parties then made amendments to their reply, including a denial of the claim by Mineralogy and Mr Palmer in par 16(a) of their defence. On 26 July 2013, the Citic parties amended their reply again to plead that Mineralogy and Mr Palmer are estopped from denying a mutual assumption that Citic's issue of an option notice was an exercise of the First Option under the Option Agreement.
Mineralogy's second change of position
30 On 25 September 2013, Mineralogy filed another defence and counterclaim. Mineralogy removed from its counterclaim the claim for a declaration that the Fortescue Co-ordination Deed had been terminated.
Mineralogy's third change of position
31 On 27 October 2013, Mineralogy wrote to the Court saying that Mineralogy and Mr Palmer wished to withdraw their defence and counterclaim. In the email, the solicitor for Mineralogy said:4
The action is principally about the right of [Citic] to exercise an option under the [Option Agreement] ... and the defendants no longer wish to deny the first defendant [sic: Citic] such a right ... The defendants do not oppose declarations as to the rights of the plaintiffs being made ...
Mineralogy's fourth change of position
32 On 4 December 2013, Mineralogy and Mr Palmer filed a minute of Further Re-Amended Defence and Counterclaim. The Citic parties were informed by this minute that Mineralogy:
(i) admitted that the purported termination of the Option Agreement was invalid (par 41),
(ii) admitted that the Citic parties are entitled to a declaration that Citic had not repudiated the Option Agreement by rejecting the nominated companies (par 45(a)),
(iii) pleaded that they 'waive[d] their 'right' to rely on the term pleaded at par 16(a) to assert that the Option Agreement had been terminated because Citic had not acquired shares in a Further Company by 14 April 2012 (par 20(c)),
(iv) introduced a new plea that the Option Agreement was terminated by frustration of related agreements.
33 The counterclaim was confined to a plea for a declaration that if the MRSLAs were terminated by frustration then the Option Agreement was terminated by frustration on 14 October 2013.
Mineralogy's fifth change of position
34 On 10 December 2013, I granted leave to Mineralogy and Mr Palmer to withdraw their counterclaim.
35 On 23 December 2013, Mineralogy and Mr Palmer filed an application to amend their defence by removing the plea of frustration that had been introduced about three weeks earlier.
Mineralogy's sixth change of position
36 On 20 January 2014, Mineralogy and Mr Palmer again amended their defence. This time, they
(i) reinstated their claim that the Option Agreement had been repudiated and terminated, including the claim that it terminated on 14 April 2012 because Citic had failed to purchase all of the shares in a Further Company by 14 April 2012, and
(ii) reintroduced the claim that the Option Agreement and related agreements had been terminated by frustration.
Mineralogy's seventh change of position
37 On 12 March 2014, Mineralogy wrote to the solicitors for the Citic parties. Mineralogy explained that Mr Palmer and Mineralogy intended to concede that the Option Agreement had not been repudiated and intended to remove the frustration claim.
38 On 20 March 2014, I ordered that after the amendments, which comprised the Third Further Amended Defence, there should be no further amendments by Mineralogy and Mr Palmer without leave.
39 On 11 April 2014, Mineralogy and Mr Palmer provided this Third Further Amended Defence to the solicitors for the Citic parties. In it they made various admissions which I describe below. The effect of the admissions was to abandon any opposition to any of Citic's substantive relief. They also no longer alleged frustration.
40 On 30 April 2014, the Citic parties made an application for indemnity costs, or alternatively for special costs orders. The basis of that application was that after 15 months of proceedings, and numerous changes of case, Mineralogy and Mr Palmer had eventually conceded that the Citic parties were entitled to the substantial declaratory relief that they sought.
41 On 1 May 2014, the legal counsel for Mineralogy emailed the Court saying that Citic's costs application should be dealt with at a later stage. Citic did not object to this proposal. In circumstances in which the substantive matter was no longer opposed, it made sense for all costs orders to be dealt with at the conclusion of the matter.
42 On 20 May 2014, I made orders that the Third Further Amended Defence stand as the defence of Mineralogy and Mr Palmer. I also made orders for the filing of affidavit evidence by the parties.
Summary of Mineralogy's changes of position
43 In relation to the substantive declarations sought by the Citic parties, Mineralogy's position has been as follows:
(i) from 25 February 2013, the claims were denied;
(ii) from 27 October 2013, Mineralogy did not wish to oppose declarations as to the rights of the plaintiffs being made;
(iii) from 4 December 2013, the claims were not admitted, other than the claim to a declaration that Citic had not repudiated the Option Agreement by its rejection of Anshan Resources, Balmoral Iron, and WRG;
(iv) from 23 December 2013, it appeared that the claims might be admitted or not opposed;
(v) from 20 January 2014, the claims were denied; and
(vi) from 12 March 2014, the claims were admitted or not opposed.
44 If Mineralogy were now given leave to withdraw its admissions, in an eighth change of position, then this would mean that the claims would be denied again.
45 In relation to the specific admission that the Option Agreement remains in force, the following represents the changes of position by Mineralogy.
(i) The lack of opposition to the Citic parties' declarations was first communicated to the Citic parties on 27 October 2013.
(ii) This lack of opposition, and any admission, was not included in the minute of the 4 December 2013 defence but the only reason that either was not included appears to be because of the frustration defence. In particular, Mineralogy and Mr Palmer pleaded that they would not assert (in the proposed pleading they said they 'waived' a right to assert) that the Option Agreement had been terminated because Citic had not acquired shares in a Further Company by 14 April 2012. It is not necessary to consider whether, as a matter of law, this waiver could be effective to deprive Mineralogy and Mr Palmer from acting inconsistently by asserting that the Option Agreement had terminated in this manner.5
(iii) Notwithstanding Mineralogy's expression of a 'waiver' of their right to assert that the Option Agreement had been terminated by Citic's acquisition of shares in a Further Company, that claim was reinstated in Mineralogy and Mr Palmer's defence on 20 January 2014.
(iv) But an express admission was reinstated, and the claim removed again, on 11 April 2014 in the Third Further Amended Defence.
46 If Mineralogy were now given leave to remove the admission the effect would be that an admission or non-opposition to the declaration about the Option Agreement would have been made, removed, made, and removed again.
Mineralogy's attempted eighth change of position and application for leave
47 On 20 June 2014, the solicitors for the Citic parties wrote to Mineralogy.6 The solicitors for the Citic parties pointed to the admissions by Mineralogy and Mr Palmer of par 45 of their defence. Paragraph 45 of their defence said that Mineralogy and Mr Palmer
(i) admit that Citic is entitled to a declaration that Citic had not repudiated the Option Agreement by rejecting Anshan Resources, Balmoral Iron, and World Resources Group,
(ii) admit that the purported termination of the Option Agreement by Mineralogy on 4 October 2012, and by Mr Palmer on 17 October 2012, was invalid, and
(iii) admit that the Citic parties are entitled to a declaration that the Option Agreement and Fortescue Co-ordination Deed remain in full force and effect, and that the Joint Development Agreement continues to be suspended.
48 The solicitors for the Citic parties then said that in light of the admission that the Citic parties were entitled to a declaration that the Option Agreement remains in full force and effect, other paragraphs of the Third Further Amended Defence raised false issues: pars 16(a), 16(b), 16(c), 16(i), 20(a), and 20(b).
49 The strike out application concerns three of those paragraphs: 16(a), 16(i), and 20(b). Each of those paragraphs relates to the question whether the First Option could be exercised by 14 April 2012 by the issue of a notice rather than by Mineralogy or Mr Palmer acquiring the fully paid ordinary shares in a company owned by either Mineralogy or Mr Palmer.
50 In the 20 June 2014 letter, the solicitors for the Citic parties said that they considered that the Court should only address the issues arising on the pleadings to the extent that it is necessary to do so in order to determine whether the Citic parties are entitled to the relief that they seek. After setting out the reasons why the admissions by Mineralogy and Mr Palmer mean that the question concerning whether the First Option could be exercised by issue of a notice, they said:7
[W]e think it desirable that the TFAD [Third Further Amended Defence] be amended to make it clear what truly remains in issue, having regard to the admissions made in paragraph 45 of the TFAD. We therefore invite your clients to amend the TFAD to remove all allegations which are no longer relevant, in light of the admissions made in paragraph 45.
51 The solicitors for the Citic parties foreshadowed a strike out application if Mineralogy were not willing to make amendments to remove the issue which they said was irrelevant in light of the concession.
52 In the reply to this letter on behalf of Mineralogy, its solicitor said that the Citic parties should amend their pleading first because 'Mineralogy is no longer clear what the [Citic parties'] position is in relation to what the [Option Agreement] on its proper construction required them to do to exercise the option' and why an estoppel would arise if par 16(h) is an accurate description of the terms of the Option Agreement. He then continued:8
We confirm neither Mineralogy nor Mr Palmer is seeking a declaration that your clients did not exercise the option in time. The parties have to consider [whether] a middle ground may exist, where the court either makes only the declaration in paragraph 45(a) of the TFAD or makes no declarations at all.
53 This did not address the point about inconsistency. The solicitor for Mineralogy addressed the inconsistency by a proposal for commercial resolution of the matter or, alternatively, he proposed that Mineralogy withdraw par 45(b) or amend it.
54 On 24 July 2014, the solicitors for the Citic parties then responded by saying that the inconsistency needed to be addressed either by amending the paragraphs concerned with whether the Option Agreement remains in full force and effect, or by Mineralogy seeking leave to withdraw its admission that the Option Agreement remains in full force and effect.9
55 It does not appear whether Mineralogy contacted the Citic parties to ask whether an application for leave to withdraw the admission would be opposed. Counsel for Mineralogy said that she understood from the 24 July 2014 letter that the application would not be opposed. Nevertheless, the application was not made in the form of a minute of proposed consent orders. Instead, Mineralogy filed a chamber summons on 1 August 2014 (one week after the 24 July 2014 letter). It would have been clear, at least, very shortly after the filing of the chamber summons that it would be opposed.
The correspondence about inconsistency in Mineralogy's pleading
56 In oral submissions, counsel for Mineralogy suggested that the application to withdraw their admission involved taking up the offer made by the solicitors for the Citic parties either to withdraw the admission or to amend pars 16(a), 16(i), and 20(b) and others.10 This is not an accurate description of the correspondence. Mineralogy was the party that had first suggested withdrawal of the admission in response to the allegation of inconsistency by the Citic parties and the request by the Citic parties that Mineralogy amend those paragraphs. The 24 July 2014 letter from the solicitors for the Citic parties merely reflected these two options as the courses for Mineralogy to take to remove the alleged inconsistency.
57 Mineralogy says, and I accept, that there is no necessary inconsistency.
58 The potential inconsistency alleged by the Citic parties is between, on the one hand, Mineralogy's admission in par 45(b) that the Option Agreement and Fortescue Co-ordination Deed remain in full force and effect and, on the other hand, pleadings by Mineralogy in pars 16(a), 16(i), and 20(b).
59 The allegation of inconsistency by the Citic parties is as follows.
60 The Citic parties say that they could issue an Option Notice to exercise the First Option at any time before 5.00pm on 14 April 2012. They say that the Option Agreement contemplates a two stage process: (1) exercise of the First Option, and (2) completion of the Option by performance of the matters that follow exercise of the option, including the notification to the Citic parties of the name and details of the Further Company that is nominated as the vehicle for completion of the option. As counsel for Mineralogy point out, the Citic parties' case does not plead these legal points in precisely this way. Putting to one side arid points about pleading of matters of law, it must have been clear to all parties that this (or something similar) would be the argument that would be made by the Citic parties, long before the Citic parties expressed this argument in correspondence.
61 In contrast, the Citic parties apprehend that the pleading by Mineralogy in pars 16(a), 16(i), and 20(b) is effectively a plea that the First Option could only be exercised by Citic acquiring the shares in a Further Company. On this view of the pleading, Citic could not exercise the First Option by the Option Notice.
62 It is necessary to set out Mineralogy's pleading in each of these paragraphs in full.
63 Paragraph 16(a) of Mineralogy's Third Further Amended Defence pleads that the Option Agreement, on its proper construction provided that:
[Citic] was granted an option subject to the terms of the [Option Agreement] to purchase all of the fully paid ordinary shares in a company owned by either Mineralogy or [Mr] Palmer, or alternatively an increase by one billion tonnes in the total extracted limit for Sino Iron or Korean Steel, by and only by 31 March 2012 (cl 1.1 definition 'First Option', 'Option Period', 'Sale Interest', cl 2.2, cl 3.5, cl 3.7).
64 This is denied in the Citic parties' reply.11
65 Paragraph 16(i) of Mineralogy's Third Further Amended Defence pleads that the Option Agreement, on its proper construction provided that:
[Citic] must acquire all of the fully paid shares which are owned by either Mineralogy or [Mr] Palmer in the company, if the company is within the terms pleaded at paragraph 16(e)(i) or (ii) above, to exercise the option.
66 This is denied in the Citic parties' reply.12
67 Paragraph 20(b) of Mineralogy's Third Further Amended Defence pleads that Citic has not acquired the fully paid ordinary shares in a company that is owned either by Mineralogy or Mr Palmer by 14 April 2012, or at all. This is admitted in the Citic parties' reply.13
68 There are a host of possible reasons on the current pleadings why there might be no necessary inconsistency between the pleading of these paragraphs by Mineralogy, and Mineralogy's admission in par 45(b) that the Option Agreement remains in full force and effect.
69 First, although Mineralogy admits that Citic is entitled to a declaration that the Option Agreement remains in full force and effect, the making of a declaration and the resolution of questions of law is ultimately a matter for the Court, not for Mineralogy. It is possible, although for reasons I explain below it is difficult, to read the pleadings in pars 16(a), 16(i), and 20(b) consistently with the admission as leaving the legal construction to the Court and raising all relevant matters to that construction.
(i) Mineralogy's pleas in par 16(a) and 16(i) concern relevant terms of the Option Agreement. By Order 20 r 8(2) of the Rules of the Supreme Court 1971 (WA), Mineralogy is required to plead the effect of words contained in the Option Agreement.
(ii) Mineralogy's plea in 16(a) says nothing of the manner in which the First Option must be exercised.
(iii) Mineralogy's plea in 16(i) reproduces part of the terms of cl 3.5. It does not include the words in italics 'the First Option ... may only be exercised in the form of the acquisition' of all the fully paid shares in a Further Company. It is unclear whether the omission of these words is intended to mean that they do not affect the meaning of cl 3.5.
(iv) Mineralogy's plea in par 20 is more difficult to reconcile with its admission in par 45(b). The par 20 plea responds to Citic's claim that Citic exercised the First Option on 13 April 2012 by an Option Notice.
(a) In par 20(a), Mineralogy admits that the notice that Citic intended to exercise the option was issued and that (by reference to par 16(b)) Citic may issue a notice to Mineralogy and Mr Palmer that it intends to exercise the option to acquire another company. One difficulty with this paragraph is that it is not an accurate reflection of the words of cl 3.1. That clause does not describe a notice of intention to exercise an option. Instead it describes 'an option to acquire a Further Company'. An Option Notice is defined as a notice issued pursuant to cl 3.1. The different words used by Mineralogy in its pleading suggests that there is importance in Mineralogy's proposed construction, namely that cl 3.1 should not be interpreted as permitting the exercise of an option by a notice of intention to exercise an option.
(b) In par 20(b), Mineralogy says that Citic has not acquired the fully paid ordinary shares in a company owned by either Mineralogy or Mr Palmer or at all.
(c) In par 20(c), Mineralogy otherwise does not admit that Citic exercised the First Option on 13 April 2012 by an Option Notice.
71 It is not currently necessary to deal with these conundra for three reasons. The first reason is that there is no application to strike out par 20(c). The second reason is that there are, at least, two other possible reconciliations of Mineralogy's non-admission in par 20(c) and Mineralogy's admission that the Option Agreement remains in full force and effect. The third reason is that senior counsel for the Citic parties accepted that if leave to withdraw the admission is refused (as I consider it should be) and if Mineralogy is required apply to amend its pleading to clarify the basis for its admission (as I consider it should be) then the strike out application is not pressed.
72 The three other reasons why I accept Mineralogy's submission that its admission is not necessarily inconsistent with the pars 16(a), 16(i), and 20(b) concern Mineralogy's position in relation to matters beyond its pleading.
73 Secondly, if as a matter of construction of Mineralogy's pleading, Mineralogy is contending that the effect of provisions such as cl 3.1 is that the Option Agreement terminated when a Further Company was not acquired, then a possible reconciliation is on the basis that Mineralogy accepts that, as it expressly pleaded in its 4 December 2013 defence, it has waived its rights to rely on the term pleaded at par 16(a). Mineralogy expressly made this waiver on 4 December 2013, and it has never explained whether that waiver is revoked, or why.
74 Thirdly, independent of the 4 December 2013 waiver, it may be the case that Mineralogy now waives any right to rely upon the par 16(a) argument to assert that the Option Agreement has terminated for the purposes of these proceedings. That might be the most natural reading of Mineralogy's Third Further Amended Defence. In other words, it may be that Mineralogy rejects the construction proposed by the Citic parties (which might have relevance in relation to different matters in the future) but accepts that, for the present, a declaration in the present proceedings can be made that the Option Agreement remains in full force and effect.
75 A submission made orally by counsel for Mineralogy suggested that this might have been her intention. I do not act on this submission from the bar table in the absence of any evidence from counsel or her client on this point. But the point does illustrate this third possibility as a real basis for the admission. In other words, counsel referred to the admission as being related to the Mineralogy's earlier admission that the Citic parties did not repudiate the Option Agreement by rejecting Mineralogy's proposals of Anshan Resources, Balmoral Iron, and WRG. An admission might have sensibly been made on this basis to avoid further issues arising concerning whether there was an implied obligation on Mineralogy to do all that was reasonably necessary to secure performance of the contract, and whether Mineralogy performed that obligation.14
76 Fourthly,another possible reconciliation between the admission in par 45(b) and the pleadings of the terms of the Option Agreement might be that Mineralogy accepts the plea made in reply by the Citic parties that an estoppel by convention precludes the departure by Mineralogy from a mutual assumption that the issue of an Option Notice on 13 April 2012 was a valid exercise of the First Option.15 That possibility is open on the construction of the current pleadings although it seems very unlikely since Mineralogy now seeks to file a rejoinder in opposition to this plea.
The reasons why Mineralogy's application is refused
77 In Water Corporation v Cardno BSD Pty Ltd,16 Wheeler and Newnes JJA set out the general principles concerning whether a party should be permitted to withdraw an admission in a pleading. The ultimate question is whether the withdrawal is in the interests of justice in the circumstances of the case. However, their Honours also referred to it being a 'serious matter' to make an admission and that 'ordinarily a party should not be permitted to withdraw an admission in a pleading without good cause'. Factors to consider include:
(i) the circumstances in which the admission was made;
(ii) the reason it is sought to be withdrawn;
(iii) the significance of the admission;
(iv) the time for which it has stood on the record; and
(v) any prejudice that is likely to be suffered by the other side that cannot appropriately be compensated by an order for costs.
78 By reference to some of the factors mentioned by Wheeler and Newnes JJA in Water Corporation, I do not consider that it is in the interests of justice to grant leave for Mineralogy to withdraw its admission for the following reasons.
(i) The manner in which Mineralogy has conducted this proceeding has caused real prejudice to the Citic parties' understanding of the case that is put against them. Amendments are common in litigation and they are to be expected as a case develops. This is why they are generally permitted without leave until shortly before trial. But the number, extent, and nature of the amendments in this case places it in a very exceptional category, which required the orders that I made (by consent) requiring that Mineralogy could not make any further amendment without leave. An award of costs is not always a sufficient panacea for any amendment, even where companies are involved.17 In the circumstances I have described, Mineralogy's many amendments have caused such delay, disruption, and confusion to the orderly progress of this litigation that to allow the revocation of its amendment would be inconsistent with principles of modern case management.
(ii) No reason is given by Mineralogy for why the admission was made. On no view on the materials before me could this admission be said to have been a slip or an error. The history and context of the manner in which it was made highlights that the decision was a conscious and deliberate decision that had been made after considerable reflection (and a number of changes of mind).
(iii) The admission concerns a matter of great importance to the Citic parties. If the Option Agreement is no longer on foot, then the Fortescue Co-ordination Deed is terminated. This could mean that the Citic parties could lose the exclusive right to key project facilities18 and could lose the sole responsibility for planning and conduct of mining operations in a project on which they have spent more than $7 billion.19
(iv) It must have been apparent to Mineralogy very quickly that the reason it gave for withdrawal of its admission (to avoid a strike out hearing) was likely to be self-defeating. Mineralogy said that its application was brought in a desire to avoid a strike out hearing following the 24 July 2014 letter from the solicitors for the Citic parties. But Mineralogy filed its chamber summons to withdraw its admission only one week later, on 1 August 2014. It is not clear whether Mineralogy asked the Citic parties whether the application would be opposed. In oral submissions counsel for Mineralogy said that she assumed that it would not be opposed, and hence the Court's time on a strike out application would be spared. It is unclear why, with that assumption, she did not invite the Citic parties to agree to a proposed minute of consent orders permitting Mineralogy to withdraw its admission. In any event, a chamber summons was brought one week after the letter from the Citic parties, and it must have been clear very soon after that chamber summons was brought that it would be opposed and that the desire to avoid unnecessary interlocutory proceedings would be in vain. Mineralogy persisted in the application nevertheless.
(v) The admission that Mineralogy seeks to revoke, in its current version, has been extant since 11 April 2014. The Citic parties have provided their evidence on the basis of that admission.20 The Citic parties limited discovery sought from Mineralogy, and did not raise any concerns about discovery from Mineralogy, as a consequence of Mineralogy telling them and the Court on 27 October 2013 that the declarations would not be opposed.21 On 29 April 2014, as a consequence of the admission, Citic also made the costs application I have described.22
(vi) The admission is not necessarily inconsistent with other parts of Mineralogy's pleading. Mineralogy's pleading is incomplete because the precise basis for the admission has not been pleaded. But it is not necessarily the case that Mineralogy's admission is limited to a matter of law that the Court will need to determine in any event.
79 Mineralogy's application to withdraw its admission is refused.
The application by the Citic parties to strike out paragraphs of Mineralogy's defence
80 As I have explained above, there is no necessary inconsistency between pars 16(a), 16(i), and 20(b) of Mineralogy's pleading and Mineralogy's admission in par 45(b).
81 Senior counsel for the Citic parties said in oral submissions that the Citic parties did not press their strike out application pending an amendment (which must be with leave) by Mineralogy of its defence. This is an appropriate approach. Mineralogy should amend its pleading to set out accurately the basis upon which the admission is made.
Mineralogy's application for leave to file a rejoinder.
82 Mineralogy seeks leave to file a rejoinder. The application to file a rejoinder is supported by an affidavit from Mineralogy's solicitor. He says that when the Citic parties filed their reply on 26 July 2013 he misfiled it and overlooked it.23 He says that he only noticed the reply when the Citic parties served an amended reply on 30 May 2014.24
83 The purpose of Mineralogy's rejoinder appears to be a desire to respond to, and deny, the plea of estoppel by convention in the Citic parties' defence. The Citic parties do not oppose leave for Mineralogy to file a rejoinder on the basis of the delay of more than a year. Nor, as I understand their position, do they necessarily object to Mineralogy filing a rejoinder opposing the plea of estoppel by convention. The concern of the Citic parties, properly, is that Mineralogy should not file a rejoinder if Mineralogy does not oppose the legal issue concerning construction of the Option Agreement. This would mean that the rejoinder application should await determination of an application by Mineralogy to amend its defence.
84 On the other hand, Mineralogy's proposed rejoinder appears to be, in some parts, flatly inconsistent with its admission in par 45(b).
85 The proposed par 1(d) of the rejoinder says that the Option Agreement 'as amended further provided, on its proper construction, that if [Citic] did not exercise the First Option by 14 April 2012, then the [Option Agreement] automatically terminated and neither party has any claim or right of action against the other (clause 3.7)'.
86 In par 3(c) of the proposed rejoinder, Mineralogy then says
by reason of the term pleaded in par 1(d) above and the failure by [Citic] or its nominee to acquire all of the shares in a Further Company by 14 April 2012, the [Option Agreement] automatically terminated on 14 April 2012.
87 This is directly inconsistent with the admission in par 45(b) of Mineralogy's defence. I have not heard submissions from counsel for Mineralogy or from counsel for the Citic parties concerning whether leave to file the rejoinder should be refused in light of the dismissal of Mineralogy's application to withdraw its admission. It may be that there is still scope for a rejoinder to be filed opposing the estoppel by convention point, but that a current obstacle to the rejoinder is that it is inconsistent with Mineralogy's admission in par 45(b). I will hear from counsel on this point.
Mineralogy's application to refuse leave for the Citic parties to amend and to strike out par 18(aa) of the Citic parties' statement of claim
88 In Barclay Mowlem Construction Ltd v Dampier Port Authority,25the Chief Justice made the following observations, which have had to be repeated again, and again, over the last decade:26
[6] Pleadings today can be approached in [the context of contemporary case management techniques and pretrial directions] and therefore in a rather more robust manner, than was historically the case; confident in the knowledge that other systems of pretrial case management will exist and be implemented to aid in defining the issues and appraising the parties to the proceedings of the case that has to be met.
[7] In my view, it follows that providing a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action or defence, as the case may be, and appraising the parties of the case that has to be met, the Court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the Court to be spent extensively debating the application of technical pleadings rules that evolved in and derive from a very different case management environment.
[8] The advent of contemporary case management techniques in the pretrial directions, to which I have referred, should result in the Court adopting an approach to pleading disputes to the effect that only where the criticisms of a pleading significantly impact upon the proper preparation of the case and its presentation at trial should those criticisms be seriously entertained.
89 It is important to assess Mineralogy's application to strike out par 18(aa) of the Citic parties' reply in light of these principles. Mineralogy's associated application seeking to deny leave to the Citic parties to withdraw an admission is closely related to this point.
90 Basically, Mineralogy's submission has the effect that although the Citic parties had sought a declaration that the Option Agreement was in full force and effect, the Citic parties' pleading should be understood as having admitted a construction that meant that the Option Agreement had necessarily terminated. But counsel for Mineralogy accepted in oral submissions that she always understood that the legal argument of the Citic parties would be (as the Citic parties have pleaded in par 20 of their statement of claim since 13 December 2012) that they exercised the First Option by a 13 April 2012 notice in writing (the Option Notice).
91 In par 16(a) of Mineralogy's first defence, Mineralogy initially pleaded as follows:
[Citic] was granted an option subject to the terms of the [Option Agreement] to purchase all of the fully paid ordinary shares in a company owned either by Mineralogy or [Mr] Palmer, or alternatively an increase by one billion tonnes in the total extraction limit for Sino Iron or Korean Steel, by and only by 31 March 2012 (cl 1.1.1 definition 'First Option', 'Option Period', 'Sale Interest'; cl 2.2; cl 3.5; cl 3.7).
92 In par 18(a) of the Citic parties' reply on 15 March 2013 they said:
Subject to the production of the [Option Agreement] at trial and reference to its full terms and effect, they admit the allegation in sub-paragraphs [16] (a), (d), (f)(i)(2), (g) and (h).
93 Mineralogy says that this reply in par 18(a) amounted to an admission. The immediate question is what is admitted? In par 18(a), the Citic parties admit the terms of the various clauses of the Option Agreement pleaded by Mineralogy but they also say that this is subject to reference to the full terms and effect of the Option Agreement at trial. It is no more than an admission that the Option Agreement needs to be construed by reference to all its terms.
94 Although the Citic parties do not expressly plead the legal argument that the exercise of the First Option is a different matter from the acquisition of the shares in a Further Company, this is a matter of law that is plain from their pleading, especially par 20. As I have explained, par 20 of the Citic parties' statement of claim pleads that the First Option was exercised by the 13 April 2012 Option Notice. Plainly, the Citic parties do not seek, on the one hand, a declaration that the Option Agreement is in full force and, on the other hand and at the same time, say that the Option Agreement terminated because they failed to acquire the shares in a further company.
95 On 4 June 2013, Mineralogy amended its defence and counterclaim. It introduced what the Citic parties described as a suite of new allegations which made it clear that Mineralogy's argument was that the Option Agreement should be construed so that Citic was required to acquire the shares in a Further Company prior to 14 April 2012. In particular, Mineralogy included the words 'and only by' in its amended pleading of par 16(a) of the defence. The inclusion of these words by Mineralogy must have been, at least, to remove doubt about the effect of its earlier pleading. The amended par 16(a) was as follows:
[Citic] was granted an option subject to the terms of the [Option Agreement] to purchase all of the fully paid ordinary shares in a company owned by either Mineralogy or [Mr] Palmer, or alternatively an increase by one billion tonnes in the total extraction limit for Sino Iron or Korean Steel, by and only by 31 March 2012 (cl.1.1 definition 'First Option', 'Option Period', 'Sale Interest'; c.2.2; cl.3.5; cl.3.7)
(Underlined words indicate marked up amendments)
96 On 24 June 2013 the Citic parties amended their reply in response, to amend par 18(a) and introduce par 18(aa) as follows:
(a) Subject to production of the [Option Agreement] at trial and reference to its full terms and effect, they admit the allegations in subparagraphs
(aa) They deny the allegations in sub-paragraph (a), refer to and repeat the matters pleaded in paragraph 16 of the statement of claim, and say further as set out in paragraphs 19(a) and (b) below [a month later in July 2013 the words 'and 44B and 44J below' were added to incorporate a pleading of estoppel by convention].
97 After the delay attributable to the misfiling of this reply by Mineralogy's solicitor, Mineralogy now says that these amendments should be struck out. Counsel for Mineralogy accepts that this is a point of law. She accepts that Mineralogy understands the nature of the legal case which has always been made by the Citic parties on this point. But she says that the strike out application has been 'brought to the attention of the Court because of the context in which the current applications are made'. I do not consider that any admission has been revoked by the Citic parties. But, to the extent that it has, the amendments by the Citic parties a year ago were a reasonable response to amendments by Mineralogy and the amendments clarify further the legal case which the Citic parties have always advanced on this point.
98 Mineralogy's applications to strike out the pleading of the Citic parties must be dismissed.
Conclusion
99 Save for Mineralogy's application to file a rejoinder, all of Mineralogy's applications must be dismissed. I will hear further from Mineralogy concerning its application to file a rejoinder. The application by the Citic parties to strike out paragraphs has not been pressed, although Mineralogy will need to apply to amend its pleading to make plain the basis for its admissions.
100 I will hear from the parties concerning the costs of these applications.
1 Third Further Amended Defence [15(b)]. Admitted in the Citic parties' reply [17].
2 Third further amended defence [19].
3Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115, 135 - 136 [44] (Gleeson CJ, Gummow, Heydon & Crennan JJ).
4 Affidavit of Mr McKenna, sworn 30 April 2014, MTM 2.
5Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303, 315 - 316 [30] - [31] (French CJ, Kiefel, Bell, Gageler & Keane JJ).
6 Affidavit of Mr Dunham, affirmed 13 August 2014, MJD 3, pages 14 - 15; Affidavit of Mr McKenna sworn 25 August 2014, MTM 11, pages 143 - 144.
7 Affidavit of Mr Dunham, affirmed 13 August 2014, MJD 3, page 15; Affidavit of Mr McKenna sworn 25 August 2014, MTM 11, page 144.
8 Affidavit of Mr Dunham, affirmed 13 August 2014, MJD 3, page 19; Affidavit of Mr McKenna sworn 25 August 2014, MTM 14, page 151.
9 Affidavit of Mr Dunham, affirmed 13 August 2014, MJD 7, page 22; Affidavit of Mr McKenna sworn 25 August 2014, MTM 15, page153.
10 Written submissions for Mineralogy, 5 September 2014 [5].
11 Reply to Third Further Amended Defence par 18(aa).
12 Reply to Third Further Amended Defence par 18(f).
13 Reply to Third Further Amended Defence par 23(b).
14 See Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596.
15 Reply to the Third Further Amended Defence [44B] - [44J].
16Water Corporation v Cardno BSD Pty Ltd [2009] WASCA 212 [19].
17 See, in particular, Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175, 214 [101] (Gummow, Hayne, Crennan, Kiefel & Bell JJ).
18 Fortescue Co-ordination Deed, cl 7.1.
19 Fortescue Co-ordination Deed, cl 2.4.
20 Affidavit of Mr McKenna sworn 25 August 2014, [60].
21 Affidavit of Mr McKenna sworn 25 August 2014, [59].
22 Affidavit of Mr McKenna sworn 25 August 2014, [61].
23 Affidavit of Mr Dunham, affirmed 13 August 2014 [8].
24 Affidavit of Mr Dunham, affirmed 13 August 2014 [8].
25Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82, 84.
263 Oceans Wine Company Pty Ltd v Heyshott Pty Ltd [2011] WASC 12 [40] (Allanson J); Fairworld Holdings Pty Ltd v Burrup Fertilisers Pty Ltd (No 2) [2011] WASC 136 [14] (Allanson J); Bonney v Ngunytju Tjitji Pirni Aboriginal Corporation [2009] WASC 209[11] - [14] (Beech J); Londsdale Investments Pty Ltd v OM (Manganese Ltd) [2009] WASC 188 [2] (Beech J); MacMahon Contractors Pty Ltd v Woodside Energy Ltd [2008] WASC 271 [19] - [20] (Templeman J); Commodore Homes WA Pty Ltd v Goldenland Australia Property Pty Ltd & Anor [2007] WASC 146 [24] - [25] (Beech J).
3
13
1