EMR Capital Investment (No. 6B) Pte Ltd v Carl Hallion

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

COMMERCIAL LIST

S ECI 2021 02140

EMR CAPITAL INVESTMENT (NO. 6B) PTE LTD	First Plaintiff
29METALS LIMITED (ACN 650 096 094)	Second Plaintiff
v
CARL HALLION (AS THE ‘AGENT’ OF EACH ‘SECURED PARTY’ UNDER THE DEED OF MORTGAGE DATED 17 SEPTEMBER 2018) & ORS (according to the Schedule)	First Defendant

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JUDGE:	Lyons JA
WHERE HELD:	Melbourne
DATE OF HEARING:	23, 25–27, 30–31 October and 6 December 2023
DATE OF JUDGMENT:	19 December 2024
CASE MAY BE CITED AS:	EMR Capital Investment (No. 6B) Pte Ltd v Carl Hallion
MEDIUM NEUTRAL CITATION:	[2024] VSC 805

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CONTRACT – Construction – Interpretation – Agreement for sale of shares – Determination of earnout payment payable to vendor based on returns received by buyer of the shares in non-binding terms sheet – Share sale agreement contained definition which expanded the nature of the returns on which earnout payment based – Whether court should read words into definition in share sale agreement so that basis upon which returns calculated accorded with terms sheet – Relevance of ‘commercially unlikely consequences’ or ‘business common sense’ when interpreting commercial contract – Whether regard can be had to drafts of share sale agreement introducing relevant definition – No claim for ‘rectification by construction’ or rectification in equity – No words read into definition.

CONTRACT – Construction – Interpretation – Share mortgage to secure performance of obligations under share sale agreement – Undertaking not to transfer security without consent unless purchaser/mortgagor paid in an specified escrow account ‘an amount equal to the Secured Money (including any Secured Money that would reasonable foreseeably being owing in future)’ – Earnout payment was ‘Secured Money’ or ‘Secured Money that would reasonably foreseeably be owing in the future’ – Meaning of ‘reasonably foreseeably be owing in the future’ in relevant clause – Earnout payment ‘reasonably foreseeably be owing in the future’ – Transfer of security without paying earnout amount into specified escrow account under the share mortgage was an Event of Default – Appointment of receiver by purchaser/mortgagor valid.

Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; J & P Marlow (No 2) Pty Ltd v Hayes (2023) 112 NSWLR 29; Apple and Pear Australia Ltd v Pink Lady America LLC (2016) 343 ALR 112.

TORTS – Inducing breach of contract – Breach of share mortgage by entering into various agreements – Whether knowledge of existence of agreements sufficient to ground knowledge or intention to induce where complex contractual arrangements – Where relevant breach not in contemplation of the parties at time of breach – Nature of inducement required – No liability established.

State Street Global Advisors Trust Company v Maurice Blackburn Pt Ltd (t/as Maurice Blackburn Lawyers) (No 2) (2021) 164 IPR 420; Daebo Shipping Company Ltd v The Ship Go Star (2012) 207 FCR 220; Short v City Bank of Sydney (1912) 12 SR (NSW) 186; Allstate Life Insurance v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26.

EVIDENCE – Evidence Act 2008, s 135 – Evidence excluded as defendant not aware of its relevance to claim – Prejudice as defendant was denied opportunity to call evidence or cross‑examine.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr S Maiden KC with Mr S Rosewarne KC and Ms S Weinberg	King & Wood Mallesons
For the Defendants	Mr J Evans KC with Ms B Slocum	HFW Australia

TABLE OF CONTENTS

1... INTRODUCTION AND SUMMARY...................................................................................... 1

2... ISSUES AND EVIDENCE.......................................................................................................... 6

2.1.... Issues..................................................................................................................................... 6
2.2.... The evidence......................................................................................................................... 9

3... BACKGROUND......................................................................................................................... 13

3.1.... EMR Capital....................................................................................................................... 13
3.2.... Negotiating the agreements............................................................................................. 15
3.3.... Drafting cl 6.1(a) of the 2018 SSA.................................................................................... 18

4... TERMS OF THE 2018 SSA....................................................................................................... 21

4.1.... Purchase price.................................................................................................................... 21
4.2.... Relevant definitions........................................................................................................... 22
4.3.... Earnout Payment............................................................................................................... 24
4.4.... Other relevant clauses....................................................................................................... 26

5... TERMS OF THE SHARE MORTGAGE................................................................................ 27

5.1.... Collateral............................................................................................................................. 27
5.2.... Events of Default............................................................................................................... 30
5.3.... Other relevant clauses....................................................................................................... 31

6... GENESIS OF THE RESTRUCTURE AND IPO................................................................... 32

6.1.... Financial position of Capricorn Copper and the proposed IPO................................. 32
6.2.... Deciding upon the proposed Restructure and IPO...................................................... 36
6.3.... Negotiations between EMR Capital and the Agent..................................................... 38
6.4.... The Restructure on 7 June 2021....................................................................................... 41
6.5.... The IPO and transfer of non-CCH assets to 29Metals.................................................. 44
6.6.... The appointment of receivers.......................................................................................... 45
6.7.... This proceeding.................................................................................................................. 45
6.8.... Relationship between the EMR parties.......................................................................... 47

7... ISSUES 1 & 2: CONSTRUCTION OF CL 6.1 OF THE 2018 SSA..................................... 48

7.1.... Issues 1 and 2...................................................................................................................... 48
7.2.... The plaintiffs’ submissions............................................................................................... 49
7.2.1... EMR Investors construction issue....................................................................... 50
7.2.2... Cash returns construction issue.......................................................................... 52

7.3.... The Sellers’ submissions................................................................................................... 53
7.3.1... EMR Investors construction issue....................................................................... 54
7.3.2... Cash returns construction issue.......................................................................... 57

7.4.... The plaintiffs’ reply submissions.................................................................................... 58
7.4.1... EMR Investors construction issue....................................................................... 58

7.5.... Relevant legal principles.................................................................................................. 59
7.5.1... Contractual construction...................................................................................... 59
7.5.2... Rectification by construction................................................................................ 62
7.5.3... Admissibility and use of contractual negotiations........................................... 63

7.6.... Consideration..................................................................................................................... 65
7.6.1... The EMR Investors construction issue............................................................... 67
7.6.2... The cash returns construction issue.................................................................... 77

7.7.... Answer to issue 2............................................................................................................... 78

8... ISSUES 3, 4(1), & 4(2)(a): SHARE MORTGAGE................................................................. 78

8.1.... The plaintiffs’ submissions............................................................................................... 80
8.1.1... 2018 SSA and the Share Mortgage...................................................................... 81
8.1.2... Plaintiffs’ primary construction: Secured Money and the parenthesised words 83
Release clause........................................................................................................ 84
Escrow clause........................................................................................................ 86

8.1.3... Alternative construction....................................................................................... 87

8.2.... The Sellers’ submissions................................................................................................... 88
8.2.1... Response to the plaintiffs’ construction............................................................. 89
8.2.2... Escrow clause......................................................................................................... 90
8.2.3... Release clause......................................................................................................... 93

8.3.... The plaintiffs’ reply submissions.................................................................................... 93
8.4.... Consideration..................................................................................................................... 94
8.4.1... Background, purpose and context..................................................................... 94
8.4.2... The release clause.................................................................................................. 98
8.4.3... The escrow clause.................................................................................................. 99
‘Secured Money (including any Secured Money that would reasonable foreseeably be owing in future)’............................................................................. 99
The nature of the assessment required by the parenthesised words.......... 103

8.5.... Answers to issues 4(1), and 4(2)(a)................................................................................ 108

9... ISSUES 4(2)(b), 5 & 6: SCENARIO ANALYSIS................................................................. 108

9.1.... Construction of cl 6.1(b): Calculation of the target return......................................... 109
9.2.... The three scenarios.......................................................................................................... 111
9.3.... The 1^st scenario: Issue 4(2)(b)(ii).................................................................................... 113
9.3.1... Based on the proper construction of the EMR Investors construction issue 113
9.3.2... Based on the plaintiffs’ construction of the EMR Investors construction issue 115

9.4.... The 2^nd scenario: Issues 4(2)(b)(ii) and 6...................................................................... 116
9.4.1... Based on the proper construction of the EMR Investors construction issue 116
9.4.2... Based on the plaintiffs’ construction of the EMR Investors construction issue 120
Relevant knowledge........................................................................................... 121
Mr Chomley’s analysis...................................................................................... 122
Deloitte Relative Valuation report and Credit Suisse report....................... 126
Investment Committee papers......................................................................... 128

9.5.... The 3^rd scenario: Issues 4(2)(b)(i) and 5........................................................................ 134
9.5.1... Mr Chomley’s analysis....................................................................................... 135
9.5.2... Mr Green’s evidence........................................................................................... 137
Facts supporting Mr Green’s opinion............................................................. 137
Challenges to Mr Green’s assumptions and whether he was provided with adequate information......................................................................................... 139
Challenges to Mr Green’s ‘significant adverse factors’................................ 142

9.5.3... Only a sale was reasonably foreseeable as at 7 June 2021............................. 143
9.5.4... Submissions on whether Earnout Payment reasonably foreseeably owing 144
9.5.5... Consideration....................................................................................................... 147
Documents relied upon by the Sellers............................................................. 147
Discount to be applied....................................................................................... 150

9.5.6... Issue 5.................................................................................................................... 159
9.5.7... Expert valuation evidence.................................................................................. 159
Valuation methodology..................................................................................... 160
Trade Creditors................................................................................................... 161
Specific discount rate issue............................................................................... 162
(i)............ Mineral resources and ore reserves................................................ 163
(ii)........... Specific risk premium....................................................................... 165
Tax loss issue....................................................................................................... 170

9.6.... Answers to issues 4(2)(b) 5, and 6................................................................................. 173
9.7.... Answers to 1 and 3.......................................................................................................... 174

10. ISSUES 7–11.............................................................................................................................. 174

11. ISSUE 12: TORT OF INDUCING BREACH OF CONTRACT....................................... 177

11.1 . The nature of the tort and the pleaded case................................................................ 178
11.2 . The submissions............................................................................................................... 180
11.3.. Consideration................................................................................................................... 186

12. INDEMNIFICATION OF AGENT’S COSTS TO ENFORCE SHARE MORTGAGE 191

13. RELIEF AND ORDERS.......................................................................................................... 192

HIS HONOUR:

1. INTRODUCTION AND SUMMARY

This proceeding relates to a share sale agreement (2018 SSA) and a related share mortgage (Share Mortgage) entered into on 17 September 2018, concerning ownership of the Capricorn Copper mine located in North West Queensland, approximately 125km north of Mt Isa (Capricorn Copper mine). The parties to the 2018 SSA were the first plaintiff (EMR6B) as purchaser and the sellers listed in Schedule 1 to the statement of claim (the Sellers).

Before the 2018 SSA was entered into, EMR6B owned approximately 96.5 per cent of the shares in Capricorn Copper Holdings Pty Ltd (CCH). CCH owned all of the shares in Capricorn Copper Pty Ltd (CCPL) which, in turn, owned the Capricorn Copper mine. EMR6B was a special purpose holding vehicle managed by ‘EMR Capital’, a private equity firm specialising in managing and advising funds with investments in mining operations. The Sellers owned the remaining shares in CCH (approximately 3.5 per cent) via a company called Lighthouse Minerals Pty Ltd (Lighthouse). I will refer to the shares owned by the Sellers in Lighthouse (which in turn held the shares in CCH), as the Shares.

Under the 2018 SSA, EMR6B agreed to purchase the Shares from the Sellers, with the result that EMR6B owned all of the shares in CCH which, through CCPL, owned the Capricorn Copper mine.

The purchase price under the 2018 SSA was an Upfront Payment (paid in four tranches) of AUD$7,285,000 million with the possibility of an additional payment (called an ‘Earnout Payment’) of approximately AUD$12.5 million. Payment of the Earnout Payment depended upon satisfaction of one of two circumstances or conditions in cll 6.1(a) and 6.1(c) and (d) respectively. In summary:[1]

(a) the first condition, in cl 6.1(a) of the 2018 SSA, concerns the happening of a ‘Liquidity Event’ (relevantly, including an initial public offering), where the aggregate of all cash returns paid or available to be paid to the ‘EMR Investors’, as a result of the Liquidity Event (and any previous Liquidity Events), is at least twice ‘its Invested Capital’ immediately before the Liquidity Event; and

(b) the second condition or circumstance, in cll 6.1(c) and (d), concerns the fifth anniversary and ‘End Date’ of the 2018 SSA where the Earnout Payment has not fallen due for payment, and an independent valuer is commissioned to determine the then present value of the aggregate in the ‘CC Group’, and whether it is at least equal to twice ‘the Invested Capital’.

[1]The terms in quotations in this introduction are terms defined or words used in the 2018 SSA: I will address the relevant definitions further below.

Further, under the Share Mortgage, EMR6B mortgaged 10 per cent of its shares in CCH (the Collateral) to the Sellers (who were referred to as the ‘Secured Parties’ in the Share Mortgage) to secure payment of the ‘Secured Money’. In very broad terms, Secured Money means the balance of moneys owing from time to time under the 2018 SSA. Under cl 5.1(c)(ii) of the Share Mortgage, EMR6B was not allowed to transfer the Collateral without the consent of the Secured Parties’ nominated Agent, unless EMR6B had paid ‘an amount equal to the Secured Money (including any Secured Money that would reasonably foreseeably be owing in future)’ into an escrow account with arrangements to release the funds to the Secured Parties immediately upon completion of a ‘Relevant Transaction’. For convenience, I will refer to the Secured Parties as the Sellers unless indicated to the contrary.

Mr Carl Hallion (first defendant), who is one of the Sellers, is the nominated ‘Seller Representative’ under the 2018 SSA, and the nominated ‘Agent’ of the Secured Parties under the Share Mortgage. The first defendant is sued as the Seller Representative and/or Agent of the Secured Parties. Given that the Sellers participated in this proceeding through the first defendant, unless indicated to the contrary, I will also refer to the first defendant as (one of) the Sellers.

This proceeding primarily relates to whether the Sellers are entitled to the Earnout Payment from EMR6B, at the time of an agreed Relevant Transaction on 7 June 2021. This is in circumstances where:

(a) on 7 June 2021, EMR6B transferred all of its shares in CCH and Lighthouse (including the Collateral) to a new entity, 29Metals Ltd (29Metals) (the second plaintiff), without the consent of the Agent so that the Capricorn Copper mine could participate in an IPO of shares in 29Metals (the IPO);

(b) the IPO successfully completed on 5 July 2021; and

(c) as the intended consequence of the IPO, on 5 July 2021, other assets unrelated to the Capricorn Copper mine owned by entities within EMR Capital were transferred to 29Metals (the non-CCH assets); namely, the Redhill exploration project (Redhill or the Redhill project) and the Golden Grove mine (Golden Grove or the Golden Grove mine).

For convenience, I will refer to the EMR6B and the 29Metals collectively as the plaintiffs unless indicated to the contrary.

The Sellers’ entitlement to the Earnout Payment depends upon the construction of relevant clauses in the SSA and Share Mortgage, in particular:

(a) clause 6.1(a) of the 2018 SSA, and whether the value of the non-CCH assets in 29Metals should be taken into account in determining the Earnout Payment; and

(b) clause 5.1(c)(ii) of the Share Mortgage, and the meaning of the phrase ‘an amount equal to the Secured Money (including any Secured Money that would reasonably foreseeably be owing in future)’.

In summary:

(a) the plaintiffs submit that, for the purposes of the Earnout Payment under cl 6.1 of the 2018 SSA, the value of the non-CCH assets in 29Metals (acquired as part of the IPO) should not be taken into account at the relevant time (namely, 7 June 2021) with the result that the Earnout Payment was not payable at that time. By contrast, the Sellers submit that the non-CCH assets of 29Metals should be taken into account with the result that the Earnout Payment was payable; and

(b) the Sellers contend that the Earnout Payment was payable under cl 5.1(c)(ii) of the Share Mortgage, because ‘Secured Money’ under the Share Mortgage included the Earnout Payment; or alternatively, because the Earnout Payment was reasonably foreseeably owing in the future, as at 7 June 2021. The plaintiffs dispute this position and contend that the Earnout Payment did not fall within the definition of Secured Money; and further, that the Earnout Payment was reasonably foreseeably owing in the future at that time.

Based on its construction of these provisions, EMR6B formed the view as at 7 June 2021 that the Earnout Payment:

(a) was not payable under cl 6.1(a) of the 2018 SSA;

(b) did not form part of the Secured Money; and

(c) was not reasonably foreseeably owing in the future, pursuant to cl 5.1(c)(ii) of the Share Mortgage.

As a result, EMR6B did not pay the Earnout Payment into an escrow account in accordance with cl 5.1(c)(ii) of the Share Mortgage. Further, without the consent of the Agent, EMR6B transferred the Collateral to 29Metals on 7 June 2021, in the lead up to the IPO. In addition, without the agreement of the Agent, EMR6B entered into a voluntary escrow arrangement to hold its shares in 29Metals following the IPO, until about February 2022 (the Consideration shares). Based on their construction of these provisions, the Sellers contend that the failure to pay the amount of the Earnout Payment into escrow, and the transfer of the Collateral to 29Metals without the consent of the Agent, each constituted an Event of Default under the Share Mortgage rendering the Earnout Payment immediately payable.

Relying upon these alleged Events of Default, the Agent (ie the first defendant) appointed the second and third defendants as receivers over the Consideration shares, pursuant to the Share Mortgage. The plaintiffs have denied any breach of the Share Mortgage (based upon the matters set out in [11] above), and allege in this proceeding that the appointment of receivers was invalid. The receivers did not play an active part in these proceedings. The third defendant is no longer a party. The Sellers, however, dispute that the appointment of receivers was invalid and seek the costs of receivership from EMR6B in this proceeding.

Finally, the Sellers allege that 29Metals induced EMR6B to breach the terms of the 2018 SSA and the Share Mortgage, because it had knowledge of the terms of those agreements.

For the reasons that follow, I have concluded that:

(a) on the proper construction of cl 6.1(a) of the 2018 SSA, the value of the non-CCH assets in 29Metals should be taken into account in determining the Earnout Payment;

(b) on the evidence before me, at the time of the sale of CCH shares to 29Metals, the Earnout Payment would ‘reasonably foreseeably be owing in future’, under cl 5.1(c)(ii) of the Share Mortgage.

As a result, by transferring the Collateral to 29Metals on 7 June 2021 without paying the Earnout Payment into an escrow account in accordance with the Share Mortgage, EMR6B breached cl 5.1(c) of the Share Mortgage which constituted an Event of Default. This rendered the Earnout Payment payable to the Sellers and also entitled the Sellers to appoint receivers under the Share Mortgage. As a result, subject to hearing further from the parties, the Sellers are entitled to the substance of the relief sought in this proceeding against EMR6B. However, I have concluded that the claim against 29Metals has not been established.

2. ISSUES AND EVIDENCE
2.1 Issues

The parties agreed a list of issues to be determined in this proceeding.

The issues for determination are:

1. Upon a proper construction of clause 6.1(a) of the 2018 SSA, did EMR6B have to pay the Earnout Payment to the Agent upon the completion of the IPO on 5 July 2021?

2. In considering Question 1:

(1) did clause 6.1(a) of the 2018 SSA include, in calculating the Reported Multiple, the returns paid or available to be paid to Fund 0 and the limited partners of Fund II; and

(2) did clause 6.1(a) of the 2018 SSA require, in calculating the Reported Multiple, account to be taken of both the cash and the shares in 29Metals following the IPO?

(3) was the effect of clause 6.1(a) of the 2018 SSA such that the Earnout Payment was not payable until the date on which EMR6B received the proceeds that resulted in the Reported Multiple being realised?

3. Properly construed, did clause 5.1(c)(ii)(A) of the Share Mortgage require EMR6B to pay an amount equal to the Earnout Payment into an escrow account prior to completion of the CCH Share Sale and Purchase Agreement on 7 June 2021?

4. In considering Question 3:

(1) Was the Earnout Payment part of the Secured Money regardless of whether the Earnout Payment was ‘any Secured Money that would reasonably foreseeably be owing in future’ as at 7 June 2021?

(2) If not, then:

(a) what is the proper meaning of the words ‘any Secured Money that would reasonably foreseeably be owing in future’; and

(b) as a matter of fact, immediately before completion of the CCH Share Sale and Purchase Agreement on 7 June 2021, was the Earnout Payment ‘any Secured Money that would reasonably foreseeably be owing in future’:

(i) if the IPO did not proceed? or

(ii) if the IPO did proceed?

5. In considering Question 4(2)(b)(i), what were the reasonably foreseeable circumstances regarding:

(1) the occurrence of one or more Liquidity Events between 7 June 2021 and 17 September 2023 in respect of EMR6B’s holding of 107,199,052 ordinary shares in 29Metals or in respect of 29Metals’ 100% shareholding in CCH;

(2) the cash returns paid or available to be paid to EMR6B as a result of those Liquidity Events; and

(3) the value of EMR6B’s shareholding in 29Metals (if any) at 17 September 2023?

6. In considering Question 4(2)(b)(ii), what were the reasonably foreseeable circumstances regarding:

(1) the future sale by EMR6B of its 64,812,484 ordinary shares in 29Metals on or before 17 September 2023, and the price which would be realised on any sale;

(2) the value of EMR6B’s shareholding in 29Metals (if any) at 17 September 2023?

7. If the answer to Question 3 is yes, did the fact that EMR6B did not pay an amount equal to the Earnout Payment into an escrow account prior to completion of the CCH Share Sale and Purchase Agreement on 7 June 2021 constitute an Event of Default under clause 6.1(b) of the Share Mortgage?

8. If the answer to Question 7 is yes, then upon demand being made by the Agent on 18 June 2021, did the Earnout Payment become immediately due and payable?

9. If the answer to Question 3 is yes, but the answer to question 7 is no, did EMR6B’s failure to comply with clause 5.1(c)(ii)(A) of the Share Mortgage give rise to a right in damages against EMR6B for an amount equal to the Earnout Payment, upon the proper construction of clause 5.1(c)(ii)(B) of the Share Mortgage?

10. Did the Consideration [s]hares[2] form part of the Collateral under the Share Mortgage, from 7 June 2021?
[2]The term ‘Consideration shares’ is not defined in the 2018 SSA or the Share Mortgage, but is used by the parties to this proceeding to describe the 10 per cent of shares in 29Metals (ie 10,719,906 shares), which were issued to EMR6B on the Restructure. I will adopt that term in these reasons.

11. Did the failure by EMR6B to deliver up title to the Consideration [s]hares immediately after 7 June 2021 constitute an Event of Default under clause 6.2(b) of the Share Mortgage by reason of a breach by EMR6B of clause 5.2(g) or 5.2(h) of the Share Mortgage?

12. In entering and completing the CCH Share Sale and Purchase Agreement on 7 June 2021, did 29Metals intentionally induce the breach of clause 5.1(c)(ii)(A) of the Share Mortgage by EMR6B?

13. Does the Agent have an entitlement to be indemnified for his costs of enforcement of the Share Mortgage under clause 11.6 of the Share Mortgage, and if so on what basis?

14. What relief, if any, sought in the proceeding is each of the parties entitled to?

The agreed list of issues poses a number of complex questions, many involved mixed question of law and fact. I address these issues to the extent the evidence and submissions of the parties allow.

First, while issues 1 and 2 involve questions of construction arising from cl 6.1(a) of the 2018 SSA, issue 1 is a mixed question of fact and law.

Second, while issues 3, 4(1), and 4(2)(a) raise the question of construction arising from cl 5.1(c) of the Share Mortgage, issue 3 is also a mixed question of fact and law.

Third, issues 4(2)(b), 5, and 6 relate to matters of fact regarding whether any Secured Money ‘would reasonably foreseeably be owing in future’ if the IPO did or did not proceed. In deciding these issues, in addition to considering the meaning of that phrase, it is also necessary to consider — as at 7 June 2021 — the events which occurred in mid-2021, and the events which might have occurred after that time and prior to the End Date; and whether the Earnout Payment could ‘reasonably foreseeably be owing in future’ as a result of those events. This was the subject of much expert evidence to which I will refer below.

Fourth, issues 7 to 13 are only relevant in the event that I determine cl 5.1(c) required EMR6B to pay an amount equal to the Earnout Payment into escrow on 7 June 2021. However, whilst some of those issues are distinct, others are related:

(a) Issues 7 to 9 concern whether the failure to pay an amount equal to the Earnout Payment into escrow meant that that amount became immediately due and payable (because it was an Event of Default under the Share Mortgage) or gave rise to a right to damages;

(b) Issues 10 and 11 concern the fact that the Collateral under the Share Mortgage was, in fact, transferred by EMR6B to 29Metals as part of the plan to transfer the Capricorn Copper assets (the CCH assets) to 29Metals in June 2021 (the Restructure), without the consent of the Agent. The issues relate to whether this constituted an Event of Default under the Share Mortgage, and whether the 10 per cent of 29Metals shares issued to EMR6B on the Restructure formed part of the Collateral under the Share Mortgage from 7 June 2021;

(c) Issue 12 concerns whether 29Metals intentionally induced EMR6B to breach cl 5.1(c) of the Share Mortgage; and

(d) Issue 13 relates to the Agent’s entitlement to costs for enforcing EMR6B’s breach of the Share Mortgage, including by appointing receivers.

Finally, issue 14 deals with the issue of the relief to be granted.

2.2 The evidence

EMR6B and the Sellers each relied upon the evidence of two lay witnesses. EMR6B relied upon the evidence of Peter Herbert and John Chomley. The Sellers relied upon the evidence of Carl Hallion and Jeremy Nipps.

EMR6B tendered the witness statement of Mr Peter Herbert by consent. Mr Herbert has a Bachelor of Commerce degree, and a Graduate Diploma of Applied Finance and Investment. He is also a chartered accountant. Relevantly, from 1 July 2018 until 2 July 2021, Mr Herbert was an investment director employed by EMR Capital Pty Ltd (EMR Capital), with responsibility for corporate financing and strategic initiatives. Since 2 July 2021, Mr Herbert has been the Chief Financial Officer of 29Metals. Mr Herbert’s evidence concerned: the corporate structure of the Capricorn Copper mine prior to September 2018; EMR6B’s acquisition of the Shares; and preparation of the IPO and prospectus for 29Metals. Mr Herbert has been a director of CCPL since 4 February 2019, and a director of CCH since 3 August 2021. Mr Herbert was not cross-examined.

EMR6B also called John Chomley, an investment director employed by EMR Capital, since 2015. Mr Chomley has a Bachelor of Chemical Engineering from the University of Melbourne. He has been working in the resources industry since 1991: until 2017, he worked in operational, technical business improvement, and management roles in base metal processing operations; after that time, in an investment and merger and acquisitions role.

As an investment director at EMR Capital, Mr Chomley is responsible for technical and commercial oversight of part of the investment opportunities and portfolio companies for the private equity funds managed or advised by EMR Capital. From September 2015 to 7 June 2021, when EMR6B transferred its shareholding in CCH to 29Metals, Mr Chomley’s responsibilities included oversight of the investment in CCH. Mr Chomley was a director of CCH from 15 September 2015 to 3 August 2021; and of Golden Grove Holdings No 2 Pty Ltd, from 19 December 2016 to 3 August 2021.

Mr Chomley gave evidence in relation to: (1) the structure of EMR Capital, EMR6B, and the Capricorn Copper mine; (2) the Restructure; (3) the subsequent IPO of 29Metals in early July 2021 and the transfer of non-CCH assets (ie the Redhill project and Golden Grove mine) to 29Metals; and (4) the allegations of breach, and the release of funds. Further, he gave evidence of his opinion, as at 7 June 2021, that no Earnout Payment was reasonably foreseeably owing in the future.

Mr Chomley was cross-examined. He was a cautious witness, who gave each question careful consideration, often providing qualified answers. However, I considered him to be a credible and reliable witness.

The Sellers relied upon two affidavits of the first defendant, Mr Carl Hallion, affirmed 20 May 2022 and 26 October 2022. As noted above, Mr Hallion is the Sellers Representative under the 2018 SSA, and the Agent of the Secured Parties under the Share Mortgage. Until December 2018, Mr Hallion was the Chief Executive Officer and Managing Director of Lighthouse. He gave evidence in relation to: (1) the 2018 transaction; (2) his dealings with EMR6B in relation to the Restructure and IPO; (3) and the appointment of Jeremy Nipps and Clifford Rocke (the second and third defendants), on 21 June 2021, as receivers and managers of the Collateral, based upon an 11 June 2021 notice of default. Mr Hallion was not cross-examined.

The Sellers also relied upon the affidavit of Mr Nipps affirmed 20 May 2022. Mr Nipps deposed to the background of his appointment, and its validity. He produced the correspondence exchanged since his appointment as one of the receivers and managers. Mr Nipps was not cross-examined.

Much of the time at trial was spent on expert evidence. This was called to address the issue of whether the Earnout Payment was payable ie whether it formed part of the Secured Money, as at 7 June 2021, which would reasonably foreseeably be owing in the future. The evidence related to three scenarios or hypotheticals: the first two of which were based on successful completion of the IPO (with 29Metals comprising the Capricorn Copper, Golden Grove, and Redhill assets); and the last of which was based on the IPO not being successful (ie with 29Metals solely comprised of the Capricorn Copper assets).

In summary, the scenarios concerned whether, as at 7 June 2021, the Earnout Payment was reasonably foreseeably owing within the meaning of the Share Mortgage:

(a) assuming successful completion of the IPO, by the actual returns under cl 6.1(a) of the 2018 SSA, reaching, or exceeding twice the ‘Invested Capital’ (the ‘target return’) on successful completion of the IPO, being a Liquidity Event (the 1^stscenario);

(b) assuming successful completion of the IPO, by the actual returns (including any valuation in accordance with cl 6.1(c)) reaching or exceeding the target return at or before the ‘End Date’ of the 2018 SSA, being 17 September 2023 (the 2^ndscenario);

(c) if the planned IPO did not successfully complete, by the actual returns (including any valuation in accordance with cl 6.1(c)) reaching or exceeding the target return at or before the End Date (the 3^rd scenario).

Given that consideration of this evidence depends upon the view that I form as to construction of cl 6.1 of the 2018 SSA and cl 5.1(c)(ii) of the Share Mortgage, I will address this evidence in detail below. However, in summary, Mr Chomley gave evidence that as at 7 June 2021 no Earnout Payment would reasonably foreseeably be owing in the future based on each scenario. Further, different kinds of expert evidence was called. It is appropriate that I address briefly the nature of that evidence as this stage.

First, there was the expert evidence as to whether CCH would have been able to obtain refinance of the liabilities in existence immediately before the Restructure and IPO. This was directly relevant to 3^rd scenario. EMR6B called Geoff Green who holds a Bachelor of Economics majoring in Accounting and is a Chartered Accountant. Mr Green had extensive experience working for large banks between 1997 and 2018, including NAB and ANZ. In that time, he acquired extensive credit risk experience including eight years managing a portfolio of large corporate and institutional loans in NAB’s Strategic Business Services department. Mr Green left NAB in 2018 and became a partner of Harbourside Advisory Pty Ltd, acquiring significant experience in post-approval review of lending decisions. That role has involved Mr Green undertaking debt advisory work for listed and private companies involving bilateral and multi-bank structures (including dealing with bank and non-bank lenders in Australia and internationally). Mr Green gave evidence to the effect that CCH would not have been able to refinance senior debt by 31 December 2021, the deadline set by CCH’s financiers, because prospective lenders would conclude that the entity posed an unacceptable credit risk regardless of security structure.

Second, there was expert evidence as to the fair market value of CCH on 7 June 2021. That was directly relevant to the 3^rd scenario. The Sellers called John Dawson of KordaMentha who filed reports dated 8 December 2022, 18 May 2023 and 25 May 2023. Mr Dawson is an executive director of KordaMentha and has over 38 years’ experience in providing financial and valuation advice, having undertaken numerous valuations of mining project and companies. EMR6B called Dawna Wright of FTI Consulting who filed a report dated 31 March 2023. Ms Wright is a chartered accountant and holds a Bachelor of Commerce from the University of Manitoba in Canada. She is the head of the Forensic and Litigation practice at FTI Consulting. She has 30 years’ experience in accounting with significant experience in providing accounting and valuation evidence, including in relation to mining projects. Mr Dawson and Ms Wright filed a joint report dated 9 June 2023. Mr Dawson valued CCH as at 7 June 2021 on a controlling and fully marketable basis at between AUD$325 million and AUD$375 million. By contrast, Ms Wright valued it at between AUD$137 million and AUD$174.2 million as at that date.

Third, there was evidence as to the discount that should be applied to the fair market value of CCH given the financial circumstances of the business as at 7 June 2021. This was also directly relevant to the 3^rd scenario. The Sellers called Mr Justin Audcent who filed a report dated 7 June 2021. Mr Audcent has over 30 years’ experience in corporate finance. He is a qualified chartered accountant and since 2003 has been a partner with large and multi-tiered accounting firms in Australia. He joined RSM Australia in 2017 and is currently an equity partner. He has had experience in accounting, valuations, financial due diligence, investigations, mergers and acquisitions, and capital market transactions. EMR6B called Liam Twigger who filed an expert report dated 31 March 2023 and a supplementary report dated 20 October 2023. Mr Twigger holds a Bachelor of Economics from the University of Western Australia and is a certified practising accountant. Mr Twigger is the deputy chairman and executive director of Argonaut Limited, a financial advisory and investment banking firm which specialises in the metals and mining, oil and gas, and agribusiness sectors. Mr Twigger has over 30 years’ experience in investment banking and corporate finance. He was previously head of Macquarie Bank in Western Australia (1994–7) and head of Bankers Trust in Western Australia (1997–9). Mr Audcent and Mr Twigger filed a joint report dated 6 June 2023. Mr Twigger’s expert opinion was that the discount that should be applied to the fair market value of CCH was in the order of 50 to70 per cent percent. Mr Audcent’s expert opinion was that little or no discount should be applied.

3. BACKGROUND
3.1 EMR Capital

The full nature of the EMR Capital Group structure was not made plain in this proceeding. Nevertheless, it is clear that a private equity firm known as ‘EMR Capital’ specialises in managing and advising funds with investments in mining operations, mining development, and mining exploration projects with a focus on copper, gold, hard coking coal, and potash. EMR Capital advises and manages a number of different funds and, relevantly for this proceeding, Fund 1, Fund 0, and Fund II (as defined in [40]—[42] below).

As noted earlier, EMR6B directly and via its shareholding in Lighthouse effectively owned all of the shares in CCH, the holding company that owned all of the shares in CCPL, which in turn owned the Capricorn Copper mine. EMR6B was incorporated in Singapore. It is a special purpose holding vehicle which is ultimately owned by a fund called the EMR Capital Resources Fund 1, LP (Fund 1). It had a 10-year term which expired in December 2023. At all relevant times:

(a) Fund 1 was an exempt limited liability partnership constituted under the laws of the Cayman Islands which operates as an investment vehicle;

(b) the general partner of Fund 1 was EMR Capital GP 1 Ltd; and

(c) EMR Capital Management Limited and EMR Capital Advisors Pty Ltd advised and/or managed Fund 1.

Other EMR Capital funds owned two of the assets relevant to this proceeding; ie the non-CCH assets. First, there is the Redhill project which, prior to the IPO, was owned by:

(a) EMR Capital Investments (No. 4B) Pte Ltd (EMR4B) (an EMR Capital entity that, like EMR6B, is ultimately owned by Fund 1); and

(b) EMR Capital Resources, LP (Fund 0).

Second, there is the Golden Grove mine which, prior to the IPO was ultimately owned by the limited partners of EMR Capital II, LP in their individual capacities (Fund II and the limited partners of Fund II).

On the evidence before me, the Redhill project was an exploration project in Chile: there had been no recent development studies on the project and, from about 2020, EMR Capital was considering its options to exit this project. Further, the Golden Grove mine was a profitable copper, gold, silver, zinc and lead mine in Western Australia which commenced commercial production in 1990 and had a life of mine in 2021 of at least 10 years.

As for the Capricorn Copper mine, from 2013, mining activities at the Capricorn Copper mine ceased, and the mine was placed into ‘care and maintenance’ (ie the mine was not operational or producing copper but was maintained to enable a return to production on short notice). In 2015, EMR6B acquired a majority interest in the Capricorn Copper mine, with the result that:

(a) the Capricorn Copper mine was owned by CCPL, with all shares in CCPL owned by CCH; and

(b) the shares in CCH were owned by EMR6B (approximately 96.5 per cent) and Lighthouse (approximately 3.5 per cent).

Lighthouse operated the Capricorn Copper mine under a management agreement dated 19 September 2015. Mr Hallion (the first defendant) and Mr Greg Watson were shareholders in Lighthouse, and were employed by Lighthouse to operate the Capricorn Copper mine. However, it was not until 2017 that commercial mining operations recommenced at the Capricorn Copper mine. Following a dispute or series of disputes between Lighthouse and EMR6B regarding operation of the mine, EMR6B entered into the 2018 SSA and the Share Mortgage on 17 September 2018.

As set out below, it was agreed that certain EMR Capital Funds and/or investors in those funds fell within relevant definitions, for the purposes of cl 6.1(a) of the 2018 SSA. I will address this further below.

3.2 Negotiating the agreements

In late August and early September 2018, EMR6B commenced negotiations with the Sellers to acquire the Shares. In early September 2018, Mr Hallion (acting for the Sellers) and Mr Herbert of EMR exchanged several versions of a terms sheet for the proposed acquisition. In the draft and final versions of the terms sheet, reference is made to ‘EMR’; however, it is clear that the parties understood this to be a reference to ‘EMR6B’ (the entity that owned approximately 96.5 per cent of the CCH shares).

On 7 September 2018, following these negotiations, EMR6B, Lighthouse, Mr Hallion, and Mr Watson each signed a terms sheet setting out the commercial terms on which EMR6B would acquire the Shares (the Terms Sheet).

The Terms Sheet contained the following terms in relation to the purchase price:

(a) ‘EMR’ (EMR6B) would acquire 100 per cent of the Lighthouse Shares in exchange for a purchase price comprising an ‘upfront, certain, payment plus a contingent payment on realisation of a Liquidity Event, subject to EMR[6B] achieving a minimum return’;

(b) An upfront payment totalling AUD$7.5 million to be paid in four tranches;

(c) A further conditional payment of AUD$12.5 million payable as follows:

·If, on a Liquidity Event, EMR[6B] reports to its Fund 1 investors that it has achieved a net outcome (after payment of the Contingent Payment) of 2.0x or greater multiple on its invested capital (adjusted to reflect the terms of the July 2018 equity raising) in the CCH Group (after accounting for the percentage of the EMR interest that is divested), a further payment of A$12.5m[.]
·The Shareholders [Sellers] will be provided with visibility and access to the multiple on invested capital disclosed by EMR[6B] to its investors for the purposes of reporting and claiming a payment under the terms EMR[6B]’s mandate[.]

(d) A Liquidity Event described as ’any cash distribution to the EMR Fund I investors in connection with CCH Group’.

The Terms Sheet contained the following terms in relation to security:

·A security deed to be executed granting the sellers security over 10% of the total issued share capital of CCH and CCM to secure payment of the Upfront Payment and Contingent Payment[.]
·LMH Shareholders [Sellers] must not use their rights under the security deed to obstruct any proposed Liquidity Event and must provide reasonable assistance to EMR[6B] in connection with releasing their security as required to facilitate the Liquidity Event[.]

From the Terms Sheet, I have inferred that the parties knew Fund 1 owned EMR6B. The parties made submissions on this basis.

The terms of the 2018 SSA and Share Mortgage (the contract documents), and other documents, including an agreement ending management of the mine by Lighthouse (collectively defined in the 2018 SSA as the Transaction Documents), were negotiated between 12 September 2018 and their execution on 17 September 2018. The negotiations and drafting were conducted by Clayton Utz on behalf of EMR6B (instructed by Mr Herbert), and Allen & Overy on behalf of Mr Hallion and the Sellers/Secured Parties (instructed by Mr Hallion).

During arguments, in support of their differing construction of cl 6.1 of the 2018 SSA and cl 5.1(c) of the Share Mortgage, the parties sought to rely upon a number of emails and/or drafts of the term sheet and of the contract documents. This is because the parties maintained that these documents were relevant to the negotiation and evolution of the clauses in the contract documents. In summary, the plaintiffs submit that comments in a number of emails on the meaning or purpose of various clauses in the 2018 SSA and, in particular, the Share Mortgage were admissible and relevant; but submit that reference to the different drafts and changes in them (which did no more than demonstrate steps in the negotiation ultimately overtaken by the agreed terms of the contract documents) were not admissible. In contrast, the Sellers objected to the use of comments in emails on the meaning or purpose of various clauses in the contract documents, but submit that reference to different drafts of contract documents and changes made in the course of those drafts were admissible and relevant.

I will address the principles to be applied in relation to the admissibility and use of these documents, and the application of those principles to this case later in these reasons. To the extent that it might later become relevant, I accept as accurate the chronology of the drafting of the relevant clauses in the contract documents as set out in Attachment A to the written closing submissions of the Sellers. The plaintiffs did not contend to the contrary: rather they submit that the drafts recorded subjective motivation and were irrelevant. Given that the Sellers relied, in particular, upon amendments to the early drafts of cl 6.1 of the 2018 SSA, it is appropriate that I set out those changes briefly now.

3.3 Drafting cl 6.1(a) of the 2018 SSA

The first draft of the 2018 SSA dated 11 September 2018 was prepared by Clayton Utz (first draft SSA). I pause to note that it was generally in accordance with the Terms Sheet. Clause 6 related to the Conditional Payment (or Earnout Payment), as follows:

6. Contingent Payment
(a) If a Liquidity Event has occurred and the Buyer [defined to mean EMR6B] has reported to the Fund 1 Investors that the cash return available to be paid to the Fund 1 investors after deducting all Taxes, costs and expenses reasonably incurred in connection with the Liquidity Event (including the Contingent Payment) is equal to or more than 2 times its Invested Capital, then the Buyer [defined as EMR6B] must pay to the Seller Representative the Contingent Payment within 10 Business Days of the date on which the Buyer [EMR6B] receives all proceeds of the relevant Liquidity Event.
(b) The Buyer [EMR6B] must provide to the Seller Representative such documentation as is reasonably requested by the Seller Representative in relation to the calculation of cash return available to the Fund 1 Investors.

In the 2018 SSA and the all drafts of it, the Buyer was defined as EMR6B. As a result, in these reasons any reference to the Buyer should be read as a reference to EMR6B. Further, Liquidity Event was defined to mean:

[A]ny cash distribution to the Fund 1 Investors in connection with CCH or CCPL as a result of:
(a) an initial public offering of the securities in CCH or CCPL, or any special purpose vehicle which becomes the holding company of either of them;
(b) a winding up of CCH or CCPL;
(c) a return of capital or share buy-back by CCH or CCPL;
(d) a sale of all or substantially all of the shares in CCH or CCPL; or
(e)the sale of all or substantially all of the assets of CCH or CCPL.

On 13 September 2018, Allen & Overy sent proposed amendments to the first draft 2018 SSA (second draft SSA). Clause 6 was substantially amended, and additional cll 6.1(b)–(c), 6.2, and 6.3 were inserted. Clause 6.1 provided:[3]
[3]Without the drafting notes included by Allen & Overy for the Sellers.

6.Earnout Payment
6.1Payment of Earnout Payment
(a)If a Liquidity Event occurs and any EMR Shareholder or any Affiliate of an EMR Shareholder reports (or is in a position to report) to EMR Investors that the aggregate of all returns paid or available to be paid to EMR Investors as a result of that Liquidity Event and any previous Liquidity Events (after deducting the Earnout Payment) (Reported Multiple) is equal to or more than 2 times its Invested Capital, then the Buyer must pay to the Seller Representative the Earnout Payment within 10 Business Days of the date on which the Buyer [EMR6B] receives the proceeds that result in the Reported Multiple being realised.
(b)If a Liquidity Event occurs and:
(i) a Reported Multiple is less than 2 times; and
(ii)but for the Earnout Payment, that Reported Multiple would have been equal to or more than 2 times,

then the Buyer must pay to the Seller Representative such amount as will result in the Reported Multiple, after accounting for such payment, equalling 2 times.
(c)If, on the fifth anniversary of the date of this agreement, the Earnout Payment (or part thereof) has not fallen due for payment to the Sellers under the foregoing provisions of this clause 6.1:
(i)the Buyer and the Seller Representative will commission an independent valuation of the then present value of the Company [defined to mean Lighthouse] (including its future cash flows) and any returns generated by Liquidity Events (End Date Value) in accordance with the foregoeing [sic] provisions of this clause 6.1 in accordance with the procedure set out in Attachment [X];
(ii)within 10 Business Days of the date on which the End Date Value is determined in accordance with sub-clause (i) above and Attachment [X], provided the End Date Value is equal to or more than 2 times the Invested Capital, the Buyer must pay to the Seller Representative the amount of the Earnout Payment; and
(iii)upon payment by the Buyer of the amount of the Earnout Payment in accordance with sub-clause (ii) about, the Buyer shall have no further obligation to pay the Sellers the Earnout Payment.

Definitions of the EMR Investors, EMR Shareholders, and Affiliate were added at this time. Further, the definition of ‘CC Group’ was expanded to include ‘any new holding company of CCH that may be established from time to time’; and of ‘Liquidity Event’ to include ‘an initial public offering of the securities in any member of the CC Group’. As is evident, these aspects were different from the terms of the Terms Sheet.

On 15 September 2018, Clayton Utz sent amendments made to the second draft SSA (third draft SSA) to Allen & Overy (subject to instructions) and EMR Capital respectively. Relevantly, Clayton Utz accepted the definitions added to the second draft SSA of Earnout Payment, EMR Shareholders, Affiliate, and EMR Investors (save for the replacement of ‘EMR Capital Resources 1, LLP’ with ‘Fund 1’). Clayton Utz made changes to the revised cl 6.1(a) as follows:[4]
[4]Without the drafting notes included by Clayton Utz for EMR6B.
6.1 Payment of Earnout Payment
(a)If a Liquidity Event occurs and any EMR Shareholder or any Affiliate of an EMR Shareholder reports (or is ~~in a position~~ obliged to report) to EMR Investors that the aggregate of all cash returns paid or available to be paid to EMR Investors as a result of that Liquidity Event and any previous Liquidity Events (after deducting all Taxes, costs and expenses reasonably incurred in connection with the Liquidity Event and the Earnout Payment) (Reported Multiple) is equal to or more than 2 times the amount of its Invested Capital immediately prior to the Liquidity Event, then the Buyer must pay to the Seller Representative the Earnout Payment within 10 Business Days of the date on which the Buyer receives the proceeds that result in the Reported Multiple being realised.
Clauses 6.1(b) and (c) were retained but amended. As to cl 6.1(c):

(a) the relevant valuation from ‘the then present value of the Company [defined to mean Lighthouse] (including its future cash flows)’, in accordance with cl 6.1, to ‘the then present value of the Buyer’s [defined to mean EMR6B’s] interest in CCH as at that time in accordance with the procedure set out in Attachment 4’;

(b) changing the numerator of the return calculation from the relevant valuation, to the relevant valuation plus any returns to EMR Investors generated by Liquidity Events prior to the End Date (see amendments to cl 6.1(d)).

I have not found it necessary to set out the various drafts of the Share Mortgage. It suffices to say that, whilst the terms of cl 5.1(c)(ii) were altered in the various drafts, the definitions of ‘Secured Money’ and ‘Obligations’ contained in the first draft did not change.

4. TERMS OF THE 2018 SSA
4.1 Purchase price

As stated above, pursuant to the 2018 SSA, EMR6B (referred to in the 2018 SSA as the ‘Buyer’) bought the Shares, with the effect that EMR6B wholly owned CCH. Clause 2.1 provided that, upon ‘Completion’, the Sellers must sell and EMR6B must buy the Shares for the ‘Purchase Price’, free from all Encumbrances. The Purchase Price was defined in cl 3.1 to mean ‘[t]he aggregate purchase price payable for the Shares is the sum of: (a) the Upfront Payment; and (b) the amount of the Earnout Payment (if payable)’.

The ‘Upfront Payment’ (totalling AUD$7,285,000) was defined in cl 1.1 to mean the sum of:

(a) the Tranche 1 Payment [AUD$285,000];

(b) the Tranche 2 Payment [AUD$2,000,000];

(c) the Tranche 3 Payment [AUD$2,500,000]; and

(d) the Tranche 4 Payment [AUD$2,500,000].

The time for payment of the Tranches is set out in cl 3.2 of the 2018 SSA. The date for payment of Tranches 1–3 outlined in cll 3.2(a)–(c). The time for payment of the Tranche 4 (cl 3.2(d)) was dependent upon EMR6B having received ‘the first proceeds of the first Liquidity Event … after the date of this agreement’.

Relatedly, cl 3.3 provides that if a Liquidity Event occurs (other than as a consequence of an Insolvency Event), prior to the date on which any portion of the Upfront Payment is payable, EMR6B must pay the outstanding portion or portions of the Upfront Payment, 10 business days after that Liquidity Event. As set out below, the occurrence of a Liquidity Event was also relevant to whether an Earnout Payment was payable, and the amount of any such payment.

The ‘Earnout Payment’ is defined in cl 1.1 to mean ‘the sum of [AUD]$12,500,000’. Clause 3.2(e) of the 2018 SSA provides that the ‘Buyer must pay the Earnout Payment (if applicable) to the Seller Representative in accordance with clauses 6 and 15’.

As noted above, the Earnout Payment was payable if either of the two contingencies were satisfied, pursuant to cl 6.1 of the 2018 SSA. Before considering these contingencies, it is first necessary to outline the definitions relevant to determining their satisfaction.

4.2 Relevant definitions

The relevant definitions for the purposes of cl 6.1(a), and cl 6 more generally, contained in cl 1.1 of the 2018 SSA are as follows:
Liquidity Event means:
(a)an initial public offering of the securities in any member of the CC Group;
(b)a change of Control of any member of the CC Group;
(c)a winding up of any member of the CC Group;
(d)a dividend or other distribution, return of capital or share buy-back by any member of the CC Group;
(e)a Disposal of shares in any member of the CC Group; or
(f)a Disposal of:
(i)for the purposes of clause 3.2(d) and clause 3.3, all or substantially all of the assets of any member of the CC Group; and
(ii)for all other purposes, any assets of any member of the CC Group,
other than as a consequence of a bona fide reorganisation or restructure undertaken with the consent of the Seller Representative (not to be unreasonably withheld).
CC Group means, together, CCH, CCPL, any entity that is a subsidiary of CCPL from time to time by virtue of section 46 of the Corporations Act and any new holding company of CCH that may be established from time to time.
EMR Shareholders means the Buyer [defined to mean EMR6B] and any Affiliate of the Buyer that holds shares in any member of the CC Group from time to time.
Affiliate means in respect of a person (Primary Person), a person:
(a)Controlled directly or indirectly by the Primary Person;
(b)Controlling directly or indirectly the Primary Person;
(c)directly or indirectly Controlled by a person who Controls the Primary Person (whether alone or with any of its Associates); or
(d)directly or indirectly under the common Control of the Primary Person and any of the Primary Person’s Associates,
and Control as used in this definition with respect to any person (other than an individual) means the possession, directly or indirectly, of the power to direct or cause the direction of the financial and operating policies of such person, whether through the ownership of voting securities, by agreement or otherwise, and includes the following:
(a)direct or indirect ownership of more than 50% of the voting rights of such person; or
(b)the right (whether alone or with any of its Associates) to appoint the majority of the members of the board of directors of such person (or similar governing body) or to manage on a discretionary basis the assets of such person,
and, for the avoidance of doubt, a general partner is deemed to Control a limited partnership of which it is the general partner and, solely for the purposes of this agreement, a fund advised or managed directly or indirectly by a person will also be deemed to be Controlled by such person.
EMR Investors means any investors in:
(a)Fund 1;
(b)any entity, collective investment vehicle or fund (including an annex fund) managed or advised by the Buyer or its Affiliates (or any of their successors, replacements, assigns or co-appointees as manager or adviser);
(c)each entity forming part of, or which is owned by, any of the above; and/or
(d)any Affiliate of any of the entities described in paragraphs (a) to (c) of this definition that acquires a direct or indirect interest in the CC Group from any of the above.
Invested Capital means, at any time, the aggregate cash amount paid by the Buyer in acquiring ordinary shares in CCH that it holds at that time (including any portion of the Purchase Price already paid under this agreement), and, counting only the US$4.5 million invested July 2018 twice, and after accounting for any shares in CCH that the Buyer has divested prior to that date. For the avoidance of doubt, the Invested Capital immediately prior to execution of this agreement is US$81,818,766.

I note the interrelationship between the terms, particularly in respect of the definitions for CC Group and Liquidity Event, and EMR Shareholder and Affiliate.

4.3 Earnout Payment

Returning to cl 6.1, and the two contingencies relevant to whether the Earnout Payment was payable.

The first circumstance or condition upon which the Earnout Payment would become payable is outlined in cl 6.1(a) as follows:

(a) If a Liquidity Event occurs and any EMR Shareholder or any Affiliate of an EMR Shareholder reports (or is in a position to report) to EMR Investors that the aggregate of all cash returns paid or available to be paid to EMR Investors as a result of that Liquidity Event and any previous Liquidity Events (prior to the application of any Taxes payable, or otherwise withheld as a consequence of that Liquidity Event, by the EMR Investors) (Reported Multiple) is equal to or more than 2 times the amount of its Invested Capital immediately prior to the Liquidity Event, then the Buyer [ie EMR6B] must pay to the Seller Representative the Earnout Payment within 10 Business Days of the date on which the Buyer receives the proceeds that result in the Reported Multiple being realised.

As noted above at [34], I will refer to the target of ‘2 times the amount of its Invested Capital immediately prior to the Liquidity Event’ as the target return. Thus, in substance, the parties agreed that if the Reported Multiple was equal to or more than the target return, the Earnout Payment would be payable.

Further, the parties agreed in cl 6.1(b) that an Earnout Payment would still be payable if, but for the Earnout Payment, the ‘Reported Multiple’ would have been equal to or more than the target return (as required by the cl 6.1(a) contingency). Clause 6.1(b) provides that:

(b) If a Liquidity Event occurs and:
(i) a Reported Multiple is less than 2 times; and
(ii)but for the Earnout Payment, that Reported Multiple would have been equal to or more than 2 times,

then the Earnout Payment will be reduced by such amount as will result in the Reported Multiple, after accounting for the payment of the reduced Earnout Payment, equalling 2 times.

Thus in these circumstances, the Earnout Payment would be reduced by such amount as would cause the Reported Multiple to reach the target return.

The second circumstance or condition upon which the Earnout Payment will be become payable is set out in cll 6.1(c)–(d):

(c)Subject to clause 6.1(f), if, on the fifth anniversary of the date of this agreement, the Earnout Payment (or part thereof) has not fallen due for payment to the Sellers under the foregoing provisions of this clause 6.1, the Buyer and the Seller Representative will commission an independent valuation of the then present value of the aggregate of the Buyer and its Affiliate's interest in the CC Group as at that time in accordance with the procedure set out in Attachment 4.
(d)If the amount determined by the independent valuation under clause 6.1(c) less an estimate of reasonable costs in realising a Liquidity Event, plus any returns to the EMR Investors generated by Liquidity Events that have occurred prior to the fifth anniversary of the date of this agreement (End Date Value) is equal to or more than 2 times the Invested Capital, the Buyer must pay to the Seller Representative the amount of the Earnout Payment within 10 Business Days of the date on which the End Date Value has been determined.

The valuation procedure is set out in Attachment 4 of the 2018 SSA. Clause 2 of Attachment 4 obliges the valuer to conduct, as at that time, a ‘valuation of the present value of the Buyer’s [EMR6B’s] interest in the CC Group’, ‘assuming a willing but not anxious buyer and a willing but not anxious seller’, ‘on the basis of an ongoing, fully funded business’. Further, cl 7 requires EMR6B and the Seller’s Representative to ‘provide the Valuer with any information and assistance reasonably required by the Valuer to make its determination’.

For completeness, cl 6.1(f) of the 2018 SSA enables EMR6B to extend the five-year deadline in cl 6.1(c), in circumstances where the termination date of Fund 1 has been similarly extended. It provides:

(f)If the Buyer provides the Seller Representative with evidence satisfactory to the Seller Representative (acting reasonably) that the termination date of Fund 1 has been extended to a date that is after the date of the fifth anniversary of this agreement (Extended Termination Date), the Buyer’s obligations to make the Earnout Payment in accordance with clauses [sic] 6.1(c) shall be taken to be deferred until the Business Day prior to Extended Termination Date, and such that each reference in this clause 6.1 to ‘the fifth anniversary of the date of this agreement’ shall be taken to be a reference to ‘the Business Day prior to the Extended Termination Date’. …

I pause to note that, under the regime of the 2018 SSA, there can be multiple Liquidity Events. If one (or multiple) Liquidity Events fails to satisfy the target return in cl 6.1(a), the Sellers can still become entitled to the Earnout Payment based on other Liquidity Events under cl 6.1(a) and/or under cll 6.1(c)–(d).

4.4 Other relevant clauses

It is convenient at this point to set out several other relevant clauses from the 2018 SSA.

Under cl 6.2, the parties ‘agree[d] and acknowledge[d]’ that:

(a)it is not reasonably ascertainable at the date of this agreement whether the Earnout Payment will be payable; and
(b)the payment of the Earnout Payment is contingent on, and the amount of the Earnout Payment reasonably relates to, the economic performance of the Shares.

Under cl 6.4, EMR6B made several undertakings to the Sellers, including that it would:

(a)procure that no non-cash distributions in respect of EMR Investors’ direct or indirect interests in the CC Group are made to EMR Investors (directly or indirectly) without the prior written consent of the Seller Representative;
…
(d)not to act in bad faith towards and without regard for the interests of the Sellers in relation to the Earnout Payment.

Thus, the plaintiffs submit, and I accept, that the first three tranches of the Upfront Payment were to be paid in fixed amounts at fixed times, subject to an acceleration if a Liquidity Event occurred before those times. The Tranche 4 Payment was for a fixed amount, but was not payable at any certain time, and would fall due at the time of the first Liquidity Event. By contrast, the Earnout Payment was only to be paid under cl 6.1(a) or cl 6.1(d), if — and to the extent that — the target return had been reached. The target return was to be measured at the time of each Liquidity Event, and again at the fifth anniversary of the 2018 SSA, being 17 September 2023 (ie the End Date).

5. TERMS OF THE SHARE MORTGAGE
5.1 Collateral

Completion of the 2018 SSA was conditional upon the Sellers and EMR6B entering into the Share Mortgage. Pursuant to cll 2.1 and 2.2 of the Share Mortgage, the Sellers were provided with a first ranking security over the Collateral to secure performance of EMR6B’s Obligations under the 2018 SSA, including payment of the ‘Secured Money’.

Collateral was defined in cl 1.1 to mean all of EMR6B’s ‘rights and interests and all entitlements (including damages), dividends, proceeds, rights and other benefits payable, accruing or at any time to or in favour of [EMR6B], in each case in respect of’:

(a) Relevant Security — defined in cl 1.1 to mean, in summary, 10 per cent of all shares held by EMR6B or its Affiliate in CCH from time to time; and

(b) each Additional Right — defined in cl 1.1 to mean, in summary, EMR6B’s title, right, or interest (whether present or future) to take up shares in another corporation, trust, or entity (sub-cl (a)), or resulting from any consolidation (sub-cl (b)), in connection with the Collateral.

Further, cl 2.3(b) entitled the Sellers to the proceeds of any dealings with the Collateral.

The Share Mortgage contains restrictions on EMR6B’s ability to deal with the Collateral. Clause 5.1 provides:

5. Additional undertakings concerning the Collateral
5.1 Restrictions in relation to the Collateral
[EMR6B] will not without the Agent’s prior written consent or as expressly permitted in any other Transaction Document [being the 2018 SSA and the deed of release in respect of the management agreement]:
…
(c)(No sale etc) sell, convey, assign, transfer, lease, licence or otherwise dispose of, part with possession of, make any bailment, or grant any option over or create or permit to exist any other interest in any part of the Collateral (each a Relevant Transaction), unless:
(i)and until the Obligations are fully discharged and the Secured Money has been unconditionally and irrevocably paid and discharged in full and it is not reasonably foreseeable that any Secured Money could be owing in the future; or
(ii)the Relevant Transaction is reasonably required to facilitate a Liquidity Event, provided that, prior to completion of the Relevant Transaction:
A.[EMR6B] has paid an amount equal to the Secured Money (including any Secured Money that would reasonably foreseeably be owing in future) into an escrow account located in Australia with an escrow bank acceptable to the Agent (acting reasonably);
B.[EMR6B], the Secured Parties and the relevant escrow bank have entered into escrow or similar arrangements providing for the release of the funds in the escrow account to the Secured Parties immediately upon completion of the Relevant Transaction, in form and substance satisfactory to the Agent (acting reasonably); and
C.the Secured Parties have the benefit of a duly perfected Security Interest over the escrow account pursuant to a security agreement in form and subject satisfactory to the Agent (acting reasonably)[.]

…

Clause 10.6 requires the Sellers to grant release of the Collateral, if EMR6B has complied with the requirements of either cl 5.1(c)(i) or cl 5.1(c)(ii). It provides that:

10.6 Release of Collateral
The Secured Parties must grant a release of the Collateral from this mortgage at the request of [EMR6B]:
(a)when the Obligations have been discharged in full and the Secured Money has been unconditionally and irrevocably paid and discharged in full and it is not reasonably foreseeable that any Secured Money could be owing in the future; or
(b)when reasonably required to facilitate a Liquidity Event, provided that, prior to the date of the release:
(i)[EMR6B] has paid an amount equal to the Secured Money (including any Secured Money that would reasonably foreseeably be owing in future) into an escrow account located in Australia with an escrow bank acceptable to the Agent (acting reasonably);
(ii)[EMR6B], the Secured Parties and the relevant escrow bank have entered into escrow or similar arrangements providing for the release of the funds in the escrow account to the Secured Parties immediately upon completion of the Relevant Transaction, in form and substance satisfactory to the Agent (acting reasonably); and
(iii)the Secured Parties have the benefit of a duly perfected Security Interest over the escrow account pursuant to a security agreement in form and subject satisfactory to the Agent (acting reasonably).

The relevant definitions from cl 1.1 of the Share Mortgage are set out below:
Obligations means all the liabilities and obligations of [EMR6B] to a Secured Party (whether alone or not) under or by reason of any Transaction Documents to which it is a party and includes any liabilities or obligations which:
(a)       are liquidated or unliquidated;
(b)       are present, prospective or contingent;
(c)arise from the making of any advance on or before the date of this mortgage or from any future advances;
(d)are in existence before or come into existence on or after the date of this mortgage and whether or not currently contemplated;
(e)relate to the payment of money or the performance or omission of any act;
(f)       sound in damages only;
(g)       accrue as a result of any Event of Default; or
(h)      would exist but for an Event of Insolvency affecting any person,
and irrespective of:
(i)whether [EMR6B] is liable or obligated solely, jointly or jointly and severally with another person;
(j)the circumstances in which a Secured Party comes to be owed each liability or obligation and in which each liability or obligation comes to be secured by this mortgage, including any assignment of any liability or obligation or of this mortgage; or
(k)the capacity in which [EMR6B] and a Secured Party comes to owe or to be owed that liability or obligation.
Secured Money means all money the payment or repayment of which from time to time forms part of the Obligations.

It is significant that the definition of Obligations includes ‘all the liabilities’ of EMR6B payable under the 2018 SSA, including not only present liabilities, but also ‘prospective or contingent’ liabilities.

5.2 Events of Default

Clause 6 of the Share Mortgage provides for Events of Default, and relevantly states:

6. Events of Default
6.1 Events of Default
Each of the events set out in this clause 6.1 is an Event of Default (whether or not the cause is beyond the control of [EMR6B] or any other person):
(a)(Failure to pay) [EMR6B] does not pay any amount payable by it at or before the due time on the due date and in accordance with the [2018 SSA] (unless that default is caused by a technical or administrative error by a bank or financial institution in the transmission of funds and is remedied within 2 Business Days of its occurrence);
(b)(Breach of undertaking) [EMR6B] breaches any written undertaking given at any time to any Secured Party or fails to comply with any condition imposed by the Agent in agreeing to any waiver and has not remedied such breach or failure within 5 Business Days after the earlier of the date on which [EMR6B] becomes aware of such breach or failure and the date on which [EMR6B] is given written notice of such breach or failure;
…
6.2Rights on an Event of Default

The Encumbrance created by this mortgage will become immediately enforceable if an Event of Default occurs. If any Event of Default occurs then, during the period it subsists, at the option of the Agent and despite any delay or previous waiver of the right to exercise that option:
(a)the Secured Money becomes immediately due and payable on demand from any Secured Party;

(b) all Powers not previously exercisable become exercisable; and
(c)any rights of [EMR6B] to deal with the Collateral (other than through a Receiver appointed under this mortgage) immediately cease.

Thus, an Event of Default includes a breach of cl 5.1 of the Share Mortgage (which is the breach of an undertaking under cl 6.1(b)). If an Event of Default is not remedied, amongst other things, the Secured Money becomes immediately due and payable.

Further, cl 7.1 provides that, if an Event of Default occurs, a Secured Party may appoint a person or persons to be a receiver, or a receiver and manager, of the Collateral. Clause 7.4 provides that each Receiver (as defined in cl 1.1) will be the agent of EMR6B, and EMR6B ‘will be solely responsible for all acts and omissions by, and the remuneration of, each Receiver’.

5.3 Other relevant clauses

There are three other relevant clauses of the Share Mortgage relating to the Collateral relied upon by the Sellers, namely:

(a) clauses 3.1(a) and 3.3, which together provide a continuing warranty by EMR6B that it has good title to the Collateral, and that ‘the Collateral is free of all Encumbrances other than in favour of the Secured Parties or as otherwise expressly permitted by a Transaction Document’;

(b) clause 5.2(g), which provides that EMR6B undertakes to deliver to the Agent, on the date of the Share Mortgage (or in respect of any Collateral which becomes subject to the Share Mortgage), ‘all share certificates and other documents of title in respect of any Collateral’; and

(c) clause 5.2(h), which provides that EMR6B undertakes to provide the Secured Parties with Control ‘over the Collateral in the manner requested by the Agent, including by providing a transfer of any certified Marketable Securities, executed by [EMR6B] in blank and otherwise in a form satisfactory to the Agent’.

At this stage, it is appropriate to record that, on 19 September 2018, following execution of the 2018 SSA and the Share Mortgage, a security interest was entered on the Personal Property Securities Register (PPSR) in favour of the Sellers as secured parties. Further, on 18 September 2018, EMR6B made the Tranche 1 payment to the Sellers. Subsequently, on 28 June 2019 and 28 February 2020 respectively, the Tranche 2 and Tranche 3 payments were made to the Sellers.

6. GENESIS OF THE RESTRUCTURE AND IPO
6.1 Financial position of Capricorn Copper and the proposed IPO

As noted above, Mr Herbert and Mr Chomley gave evidence in relation to the genesis for, decision to proceed with, and implementation of the Restructure and IPO. For the most part, their evidence was not contentious and was supported by contemporaneous documents.

In summary, from late 2018, EMR Capital commenced detailed consideration of a proposed IPO involving the consolidation of Capricorn Copper assets with those of two other EMR Capital assets; ie the non-CCH assets, namely, the Golden Grove mine (ultimately owned by Fund II) and the Redhill project (ultimately owned by Fund 1 and Fund 0). Work streams for the IPO (to consolidate these assets for a listing on the ASX) commenced in or around October 2019, but were interrupted by the COVID-19 pandemic and did not resume until early 2021.

In addition, from 2018, CCH, CCPL, and the Capricorn Copper mine faced a number of financial difficulties. The extent of these difficulties is evidenced by the fact that the CCH group financial statements (including CCH and CCPL) posted losses (before income tax expenses) for FY2017 to FY2020 of: AUD$9.127 million for FY17; AUD$68.567 million for FY18; AUD$27.67 million for FY19; and AUD$37.530 million for FY20.

The financial difficulties had an effect on the finance facilities. CCPL entered a syndicated facility agreement with BNP Paribas (BNP), originally dated 4 July 2017, and varied on 30 September 2019. CCH was the guarantor of CCPL’s obligations. However, from 9 March 2020, CCPL and CCH were parties to an amended syndicated facility agreement with BNP and Natixis (amended syndicated facility agreement). The effect of the amendment was a transition from BNP as a sole lender to a new syndicate structure with an additional lender, being Natixis.

Pursuant to the amended syndicated facility agreement:

(a) 50 per cent of the outstanding term loan (at that time approximately AUD$31.052 million)[5] and 50 per cent of CCH’s hedging facilities were transferred to Natixis;

(b) CCPL received an additional USD$7.2 million, by way of a ‘revolving credit facility’ (a line of credit); and

(c) the term loan, the hedging facilities, and the revolving credit facility were each ranked equally.

[5]The total liability of the syndicated loan facility agreement was AUD$31.052 million, comprising AUD$3.491 million (current liability) plus AUD$27.561 million (non-current liability) according to the audited accounts for CCH (year ended 31 December 2019).

CCPL was subject to the following financial covenants:

(a) to repay its revolving credit facility in full and leave it undrawn for five days (clean down obligation); and

(b) that its ‘debt service cover ratio’ was not to exceed 1:2, where the first number represents net change in cash at bank over the period; and the second represents the amount of principal and interest for the same period (DSCR covenant).

I note that the plaintiffs concede that if the answer to issues 1 and 3 are yes, such that EMR6B was not entitled to release of the Collateral, the failure of EMR6B to deliver up the Consideration shares constituted an Event of Default. However, in light of the uncertainty regarding the issue 11, which in my view is related to issue 10, I will not answer issue 11 until hearing further from the parties.

(a) As a result, the answers to issues 7–11 are as follows: issue 7: Yes;

(b) issue 8: The Earnout Payment became due and payable on about 17 June 2021;

(c) issue 9: Unnecessary to decide; and

(d) issues 10 and 11: I will not answer until hearing further from the parties.

11. ISSUE 12: TORT OF INDUCING BREACH OF CONTRACT

Issue 12 for determination concerns whether, by entering into the CCH SSPA and the 29Metals Escrow Deed on 7 June 2021, 29Metals intentionally induced EMR6B to the breach of the Share Mortgage. As set out in section 6.4:

(a) under the CCH SSPA, EMR6B transferred its shares in CCH (owned in its own name or via Lighthouse) to 29Metals; and

(b) under the 29Metal Escrow Deed, 29Metals agreed to hold the shares on 29Metals owned by EMR6B immediately following the IPO until early February 2022.

As a result, the Sellers contend that 29Metals is liable to pay damages (being the equivalent of the Earnout Payment, interest and costs) arising from its conduct in inducing and procuring EMR6B to enter into the CCH SSPA in breach of the Share Mortgage.

At the outset, it is appropriate to record that the alleged liability which forms the basis of issue 12 received little attention at trial.

I have concluded that EMR6B breached cl 5.1(c) of the Share Mortgage by dealing with the Collateral in circumstances where it failed to pay an amount equivalent to the Earnout Payment into an escrow account in accordance with that clause. As these reasons disclose, that breach was based upon the proper construction of EMR Investors in cl 6.1(a) of the 2018 SSA which affected the matters to be taken into account under the escrow clause. As a result, I will consider issue 12 in this context.

11.1 The nature of the tort and the pleaded case

Before addressing the submission of the parties, I wish to record that the parties do not dispute the general principles to be applied in claims for knowingly inducing a breach of contract, as set out in Daebo Shipping Co Ltd v The Ship Go Star (‘Daebo’):[115]
[115](2012) 207 FCR 220, 240 [88] (Keane CJ, Rares and Besanko JJ); [2012] FCAFC 156 (‘Daebo’).

(1)there must be a contract between the plaintiff (or applicant) and a third party;

(2) the defendant (or respondent) must know that such a contract exists;
(3)the defendant must know that if the third party does, or fails to do, a particular act, that conduct of the third party would be a breach of the contract;
(4)the defendant must intend to induce or procure the third party to breach the contract by doing or failing to do that particular act;

(5) the breach must cause loss or damage to the plaintiff.

It is the application of these principles to facts of this case that was in dispute between the parties. It is to the facts of this case that I now turn.

The Sellers alleged in their FADCC that, as at 7 June 2021:

(a) 29Metals had knowledge of the existence and the terms of the contract documents;[116]
[116]FADCC, [67]–[68].

(b) 29Metals knew that entry into and completion of the sale under the CCH SSPA would result in a breach of the Share Mortgage and that entry into the 29Metals Escrow Deed was in breach of the Share Mortgage;[117]

(c) 29Metals intended to induce and procure EMR6B to commit these breaches;[118] and

(d) as a consequence of the above breaches, the Sellers suffered loss and damage.[119]

[117]ARD&DC, [68].

[118]FADCC, [70].

[119]Ibid [71].

The particulars in support of the allegation in (a), (b) and (c) above were the same, focusing on knowledge held by individuals within 29Metals, namely:

Particulars
29Metals’ knowledge is to be inferred from the following matters:
A. At the time of entry into the [CCH SSPA]:
i.Mr Owen Hegarty was an EMR Capital nominee non-executive director and Chair of 29Metals;
ii.Mr Hegarty had knowledge of the existence and the terms of the [contract documents] because he was, at all material times, the Executive Chairman of EMR Capital Management Limited;
iii.Mr Peter Albert was the Managing Director and Chief Executive Officer of 29Metals;
iv.Mr Albert had knowledge of the existence and the terms of the [contract documents] because he was, at all material times, the Operations Director of CCH;
v.Mr Peter Herbert was the Chief Financial Officer of 29Metals;
vi.Mr Herbert had knowledge of the existence and the terms of the [contract documents] because he was, at all material times, an Investment Director at EMR Capital and was directly involved in the negotiation of the 2018 SSA and the Share Mortgage.[120]

[120]Ibid [67].

In their ARD&DC, the plaintiffs:

(a) admit that 29Metals had knowledge of the existence and the terms of the contract documents;[121]
[121]ARD&DC, [43].

(b) deny that 29Metals knew that entry into and completion of the CCH SSPA and/or the entry into the 29Metals Escrow Deed resulted or would have resulted in a breach of the Share Mortgage, and further they:

(iii) deny that entry into either of these agreements was or would have resulted in a breach of the Share Mortgage;

(iv) allege that no proper particulars had been provided of these allegations;[122]

(c) deny that 29Metals intended to induce and procure EMR6B to commit these breaches and allege that no proper particulars had been provided of the alleged inducement;[123] and

(d) deny that as a consequence of the above breaches, the Sellers suffered loss and damage.[124]

[122]Ibid [44]–[45].

[123]Ibid [46].

[124]Ibid [71].

11.2 The submissions

The Sellers contend that they adequately pleaded the elements of the tort of intentionally inducing breach of contract. In short, they submit that entering into the CCH SSPA constituted a breach of the Share Mortgage as the transfer to 29Metals was a dealing with the Collateral in contravention of cl 5.1(c) of the Share Mortgage. The Sellers submit that, for liability to attach, all that was required was that 29Metals know there was a breach of the Share Mortgage (including being wilfully blind or recklessly indifferent as to whether there was a breach) and that 29Metals had an intention to cause that breach.

The Sellers contend that knowledge of the Share Mortgage is sufficient to ground an intention to interfere with the Sellers' contractual rights. They relied upon the comments of the Court outlined in Daebo to the effect that:

(a) the ‘gravamen of the tort is the defendant’s intention to induce or procure the breach in the knowledge that such a breach will interfere with the plaintiff’s contractual rights’; and

(b) ‘knowledge of the contract may be sufficient for the purpose of grounding the necessary intention to interfere with contractual rights … Reckless indifference or wilful blindness can amount to knowledge for this purpose’.[125]

[125]Daebo (2012) 207 FCR 220, 240 [89] (Keane CJ, Rares and Besanko JJ); [2012] FCAFC 156 (citations omitted). ~~referred to in defendants’ written outline of closing submissions dated 14 November 2023, [167].~~

The Sellers submitted that, in this case, having regard to the Share Mortgage, including the definition of Secured Money, the Court should be satisfied that there was a ‘sufficient likelihood’ of breach evident to 29Metals, from which the Court could infer requisite knowledge and intention. That is to say, 29Metals’ knowledge of the Share Mortgage is ‘sufficient to ground an intention to interfere with the Sellers’ contractual rights’.

In closing oral argument they also relied upon entry into the Indemnity Deed to establish intention. As set out in section 6.4 above, under that Deed, EMR6B undertook to retain AUD$13 million of proceeds of the IPO owing to EMR6B. This was to be held pending the resolution of the dispute between EMR6B and the Sellers as to whether an amount equal to the Earnout Payment should have been paid by EMR6B into an escrow account in accordance with cl 5.1(c) of the Share Mortgage. Under the Indemnity Deed, EMR6B also agreed to indemnify 29Metals in respect of any claims by or liability incurred by 29Metals in relation to that dispute.

To the extent necessary, the Sellers submit the Court may a draw an inference with respect to such an intention where 29Metals failed to lead evidence-in-chief to the contrary from: (a) Mr Herbert or Mr Chomley who gave evidence on behalf of EMR6B and 29Metals; and/or (b) ‘any other person who may have provided such evidence’, for example Mr Hegarty was, as at 7 June 2021, a member of the Investment Committee and chair of 29Metals.

Further, for the first time in closing submissions, the Sellers relied upon the comments of Mr Tuck (who they assert was the legal counsel for EMR Capital) referred to in the affidavit of Mr Hallion which was tendered by consent. Mr Hallion deposed to a Zoom conference on 6 May 2021 between Mr Chomley, Mr Herbert and Mr Tuck on the one hand, and Mr Hallion and Mr Watson on the other. Mr Hallion deposed that in that Zoom conference Mr Tuck said words to the effect that Mr Tuck had read the Share Mortgage from ‘cover to cover … and he was a smart lawyer and he could make an agreement read the way he wanted it to read but that the proposed IPO could not proceed or fit under the terms of the existing agreements’ (the Tuck statement). The Sellers submit that this statement was made in the context of a discussion as to why the sale of the shares in CCH to 29Metals and the obligation to pay funds into escrow must occur before the completion of the IPO.

The plaintiffs dispute any liability for this tort on a number of bases.

First, the plaintiffs contend that the Sellers have not pleaded, or provided necessary particulars of, the essential elements of the tort of intentionally inducing breach of contract, most relevantly that 29Metals in fact ‘induced’ the breach of the Share Mortgage by EMR6B. The plaintiffs submit that cases prior to and following Daebo have demonstrated a need to prove a causal link between the act of the defendant and the breach of contract in question. They rely upon the comments of Street J in Short v City Bank of Sydney (‘Short v City Bank’),[126] that:

The words ‘induce’ and ‘procure’ in their ordinary significance, I think, convey the idea of persuasion or contrivance, and I think that a person complaining of a breach of contractual relations brought about by these means must show that the person whose actions are complained of did something in the nature of effectually persuading or prevailing upon the other party to the contract to violate [their] obligations under it. The persuasion may take the form of advice or friendly solicitation, or it may take the form of intimidation or molestation, but in every case I think that it must be shown that the defendant deliberately intervened between the contracting parties, either with the express design of depriving the plaintiff of the benefit of [their] contract, or under such circumstances that [they] must have known that the effect of [their] intervention would be to deprive the plaintiff of that benefit.[127]

[126]Short v City Bank of Sydney (1912) 12 SR (NSW) 186 (‘Short v City Bank’).

[127]Ibid 202–3 (Street J) (plaintiffs’ emphasis).

They also rely upon the comments of Beach J in the more recent decision of State Street Global Advisors Trust Company v Maurice Blackburn Pt Ltd (t/as Maurice Blackburn Lawyers) (No 2) (‘State Street’),[128] that:

[421] Merely facilitating a breach, or entering into a transaction that is inconsistent with the contracting party’s obligations, is insufficient. It must be established that the relevant impugned conduct operated on the will of the contracting party. If the contracting party has already decided to commit a breach, no liability attaches to the mere acceptance of the benefit of that breach.
[422] The element of inducement or procurement represents a high bar. It is not enough for the alleged wrongdoer to know that a breach may well happen or is the natural and probable consequence of the alleged wrongdoer’s activities; he must take some step which manifests an intention to induce the breach. What must be shown is some persuasion, encouragement, assistance or pressure that is aimed at the contract such that there is a clear causal link between the respondent’s conduct and the breach.[129]

[128]State Street Global Advisors Trust Company v Maurice Blackburn Pt Ltd (t/as Maurice Blackburn Lawyers) (No 2) (2021) 164 IPR 420 (‘State Street’).

[129]Ibid 496 [421]–[422], (plaintiffs’ emphasis).

As a result, the plaintiffs submit that the Sellers are prevented from asking the Court to draw a Jones v Dunkel inference from the plaintiffs’ failure to ‘call evidence in response to an incompletely pleaded cause of action’.[130]
[130]Plaintiffs’ written outline of reply submissions, [85].

Second, as to the Sellers submission that intention could be inferred, the plaintiffs contend that nothing beyond knowledge was particularised as intention. In any event, the plaintiffs reject the notion that intention could be inferred from knowledge in the facts of this case for the following reasons:

(a) the ambiguity in the documents;

(b) the warranties in the transaction documents that were given by the parties to one another;

(c) the fact that it has never been put that those warranties were false, not to any of the witnesses or any of the people who signed those documents; and

(d) the extent to which EMR6B, through Mr Chomley, went to analyse the operation of the agreements, determine the facts and apply those facts to the circumstances, first in their correspondence with Mr Hallion leading up to June 2021, and secondly in Mr Chomley’s analysis.

Further, the plaintiffs refer to the agreed fact that 29Metals was incorporated for the purpose of acting as the new holding company, submitting that the Sellers’ argument ‘puts the cart before the horse in saying that 29Metals induced EMR6B to do that which 29Metals had been incorporated by EMR6B for the purpose of doing’.[131]
[131]Transcript of Proceedings, 6 December 2023, 997.20–23.

Third, the plaintiffs contend that the material relied upon in the Sellers’ written closing submissions went far beyond their opening submissions — which were based only on the agreed fact that 29Metals knew the terms of the 2018 SSA and the Share Mortgage. By contrast, in closing submissions, the Sellers relied upon the Tuck statement and the failure to call relevant witnesses in response to the Tuck statement.

As to the Sellers’ reliance on the Tuck statement, the plaintiffs seek an order that this evidence be excluded or its use limited under ss 135 or 136 of the Evidence Act 2008, respectively. In summary, this is because the Sellers did not indicate they would rely on the Tuck statement prior to written closing submissions. The plaintiffs refer to a number of matters. First, Mr Hallion’s affidavit was tendered by consent and without being cross-examined in circumstance where the plaintiffs were unaware that the Tuck statement formed any part of the Sellers case. If the Sellers intended to rely upon the Tuck statement as evidence of 29Metals knowledge or intent, the Sellers were under an obligation to put the plaintiffs on notice of this under r 13.10(3)(b) of the Supreme Court (General Civil Procedure) Rules 2015: they did not do so. Senior counsel submitted in substance that, if he was on notice of the significance of the Tuck statement, he would have called Mr Tuck and other witnesses and also cross-examined Mr Hallion. I accept this submission. Thus, the plaintiffs’ failure to cross-examine Mr Hallion or call other evidence to contradict the Tuck statement ought not be used against them: rather the Tuck statement must be excluded.

Fourth, if the Seller’s submissions in closing address were to be considered by the Court, the following objective facts demonstrate that 29Metals lacked the requisite intention to induce EMR6B to breach the Share Mortgage:

(a) clause 2.3(a) of the CCH SSPA includes an express acknowledgement that the CCH shares were sold to 29Metals subject to the Share Mortgage;

(b) clause 2.3(b) of the CCH SSPA includes an express undertaking by 29Metals to comply with the Share Mortgage; and

(c) clause 5.1(c)(i) of the CCH SSPA includes a warranty by EMR6B that the execution, delivery and performance of that agreement did not constitute a breach of any agreement to which it is a party, namely the Share Mortgage.

Finally, if the Tuck statement is not excluded, the plaintiffs submit that the Tuck statement is inadequate to support an inference of intention on the part of 29Metals to induce EMR6B to breach the Share Mortgage. This is because the Tuck statement was made at a time when Mr Tuck was a consultant at EMR6B (not legal counsel as asserted by the Sellers) and before he had a role with 29Metals, which was incorporated on 27 May 2021. Further, the plaintiffs note that Mr Tuck was never a director of 29Metals so his intention is not relevant. In any event, the Tuck statement was overridden by cl 5.1(c)(i) of the CCH SSPA as set out above.

The Sellers opposed any application to exclude the Tuck statement contending that the plaintiffs had not demonstrated any prejudice as they had the opportunity to file evidence for Mr Herbert to agree or disagree with the Tuck statement in Mr Hallion’s affidavit. Ultimately, the Sellers did not seek to rely on what Mr Tuck said but on the fact that Mr Herbert was present when the Tuck statement was made and failed to give evidence about it. Senior counsel for the plaintiffs responded that this was first time they became aware that the Sellers put their case on this basis.

11.3 Consideration

In my view, the Sellers have not established their claim against 29Metals.

First, I acknowledge that knowledge of the contract alone may be sufficient for the purpose of grounding the necessary intention to interfere with contractual rights. This is because knowledge and intention are often inter-related. I also acknowledge that wilful blindness or reckless indifference may contribute to a finding of knowledge. But whether such knowledge may ground the necessary intention to induce another to breach its contract very much depends on the facts of each case. That is to say, while knowledge of the precise term which is breached is not always necessary because knowledge of the effect of the term will suffice, it will depend on the facts of each case.[132]
[132]See, eg Allstate Life Insurance v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 [43] (Lindgren J, Lockhardt JJ agreeing at 27).

I am not satisfied that 29Metals had requisite knowledge that, by entering into the CCH SSPA and the 29Metals Escrow Deed, EMR6B was in breach of the Share Mortgage. This is because, as these reasons disclose, the contractual provisions of the 2018 SSA and the Share Mortgage are complex and far from clear. With respect, I would adopt the following observations of Beach J in State Street on the question of knowledge of the contract:

Further, let me say something more on the question of knowledge of the contract, if it be said that that is the foundation from which intention can be established by inference. In some cases, where the contract is of a standard type or a standard class of contract, it may not be necessary for the tortfeasor to have precise knowledge of its terms for intention to be inferred. But where one is not dealing with such standard scenarios, in order for the claimant to establish intention by inference from knowledge, it may be necessary to establish knowledge of more precise aspects or terms of the contract. This will all depend on the nature of the case being advanced and the type of breach being asserted.[133]

[133]State Street (2021) 164 IPR 420, 495 [418] (Beach J); [2021] FCA 137.

The Sellers did not address the content of the nature of the ‘breach’ for the purpose of its claim against 29Metals. In my view, it is significant that, pursuant to my earlier conclusions, the breach that I have found is based upon the construction of the term ‘EMR Investors’ used in cl 6.1(a) of the 2018 SSA. As these reasons demonstrate, that term is relevant to the determination of whether money ought be paid in accordance with the escrow clause. But for the construction of EMR Investors I have adopted, I would have concluded that EMR6B was not in a breach of the escrow clause by failing to pay the equivalent of the Earnout Amount into escrow in accordance with that clause on the basis that the Earnout Amount ‘was reasonably foreseeably owing in future’. Indeed, I have accepted the evidence of Mr Chomley, based on what I have called the plaintiffs’ construction of the escrow clause in the context of cl 6.1(a) of the 2018 SSA contended for at the time, that there was no requirement to pay an amount equivalent to the Earnout Payment into escrow in accordance with the Share Mortgage.

It is true that the parties were in dispute before 7 June 2021 as to whether the Earnout Payment fell within the escrow clause. However, on my reading of the relevant correspondence between the parties up to 7 June 2021 (ie prior to entering into the CCH SSPA), that construction of EMR Investors was not raised at any time by the Sellers. Certainly, the Sellers did not suggest during this proceeding that it was raised in correspondence. Rather, the issues related to the likely returns to EM6RB arise from its interest in the Capricorn Copper mine alone, from the Relevant Transaction or from the IPO.

Thus, on the evidence before me, it appears that the construction of EMR Investors which I have adopted was not raised and was not a basis upon which the Sellers asserted the Earnout Payment fell within the escrow clause. Given the complexity of these contract documents and their definitions, in order for knowledge supporting an intention to induce to be established, it would be necessary to establish that 29Metals knew, turned a blind eye or was recklessly indifferent to the nature of the breach that occurred.

In my view this approach is also consistent with observations of Isaacs J in Short v City Bank, in its appeal to the High Court, who stated that:

[If the defendant] reasonably believed [the contract] did not require a certain act to be performed, [the defendant’s] inducing a party to the contract to do something inconsistent with it could not be regarded as an inducement or procurement knowingly to break the contract … the terms of an agreement and its true construction, for it may be very complicated, and the acts of the parties in relation to it are circumstances without knowledge of which reasonably brought home to the mind no [person] can be said to intend consequences regarding the breach of the agreement.[134]

[134]Short v City Bank (1912) 15 CLR 148, 160 (Isaacs J); [1912] HCA 54.

In reaching this view, I am conscious of the contents of the CCH SSPA and the 29Metals Escrow Agreement. I have also had regard to the terms of the Indemnity Deed although it was only relied upon on oral argument. These agreements informed 29Metals of a dispute as to whether the Earnout Payment was payable under the escrow clause based upon likely returns to EMR6B.

I accept that if 29Metals as at 7 June 2021 knew, turned a blind eye or was recklessly indifferent to the substance or gist of the proper construction I have found, that might be a basis to infer intention to induce a breach of contract. But the Sellers have not put forward evidence that any relevant person within 29Metals was aware of the possibility of the construction of EMR Investors.

In these circumstances, I do not consider that I am able to form any adverse inference against 29Metals based on the rule in Jones v Dunkel.[135] The rule in Jones v Dunkel entitles the trier of fact to take the failure to call a witness into account in deciding whether to accept any particular evidence which relates to a matter on which the absent witness could have spoken.[136] In my view, the failure of the plaintiffs to call relevant witness cannot support an inference that the uncalled evidence would not have assisted the plaintiffs in circumstances where the Sellers have not put forward any evidence that 29Metals was aware of the possibility of the construction of EMR Investors which formed the basis of the relevant breach. As Dixon J said in a slightly different context in Insurance Commissioner v Joyce,[137] the failure to call a witness ‘does not authorize [sic] the court to substitute suspicion for inference’.
[135](1959) 101 CLR 298, 308 (Kitto J) (see also Menzies J at 312 and Windeyer J at 320–1); [1959] HCA 8.
[136]O’Donnell v Reichard [1975] VR 916, 929 (Newton and Norris JJ, Gillard J agreeing at 919).
[137](1948) 77 CLR 39, 61 (Dixon J).

I would only add that the acknowledgements and warranties in the Share Mortgage relied upon by the plaintiffs in cl 2.3(a), 2.3(b) and 5.1(c)(i) suggest that there was no such knowledge on the part of 29Metals. Further the plaintiffs were correct to submit that it was not put to the any of the plaintiffs’ witnesses that these were false in any way.

In these circumstances, I am unable to conclude that 29Metals had requisite knowledge that there was a breach – or even a sufficient likelihood of a breach, as submitted by the Sellers – of the Share Mortgage, by EMR6B entering into the CCH SSPA or the 29Metals Escrow Deed.

In this context, I note that Sellers relied upon the common personnel of EMR6B/EMR Capital and 29Metals to establish knowledge. But there was only limited evidence of common personnel. On the evidence before me, Mr Herbert was not such a person: he was from 1 July 2018 until 2 July 2021 the Investment Director employed by EMR Capital. Mr Herbert commenced as Chief Financial Officer of 29Metals on 2 July 2021, after the CCH SSPA and 29Metals Escrow Deed had been entered into, under an employment contract dated 7 June 2021. In any event, I note that the Sellers did not seek to challenge Mr Herbert about these matters. Each of Mr Albert and Mr Hegarty became a director of 29Metals on its incorporation on 27 May 2021. However, the Sellers did not rely upon any evidence as to any previous role of Mr Albert. Mr Chomley gave evidence that Mr Hegarty was on the Investment Committee. The Sellers did not rely upon any evidence as to any other role of Mr Hegarty within EMR6B or EMR Capital from which he might have been aware of a breach of the terms of the 2018 SSA and the Share Mortgage by the sale of the shares in CCH to 29Metals on 7 June 2021.

Second, it follows from my conclusions on knowledge that I am unable to conclude that 29Metals ‘intended’ to induce or procure EMR6B to breach of the Share Mortgage by entering into the CCH SSPA or the 29Metals Escrow Deed.

Third, I am not satisfied that 29Metals ‘induced’ or ‘procured’ EMR6B to enter into the CCH SSPA and the 29Metals Escrow Deed. The Sellers made a bald allegation of inducement in the FADCC. But turning to the merits, I agree with the views expressed by Beach J in State Street that some persuasion, encouragement, assistance or pressure is required before any inducement can be found. There was no evidence of such conduct in this case. Rather, I agree with submissions of the plaintiffs that in this transaction it was EMR6B that arranged or procured for 29Metals to be incorporated for the purpose of acting as the new holding company under these agreements, not the other way around.

As to the Tuck statement, as noted above, the plaintiffs submit that the Tuck statement should be excluded pursuant to s 135 of the Evidence Act 2008, or otherwise its use should be limited pursuant to s 136. Under s 135, the Court has a general discretion relevantly to admit evidence if its probative value is substantially outweighed by the danger that the evidence might be unfairly prejudicial to a party or be misleading or confusing. Under s 136, the Court has a general discretion to limit the use of evidence may if there is a danger that a particular use of the evidence might be unfairly prejudicial to a party be misleading or confusing.

It is not entirely clear how the Sellers rely upon the Tuck statement. In their written closing submissions, the Tuck statement was put on the basis that in the absence of evidence to the contrary, Mr Tuck (presumably as a representative of 29Metals) remained of the view recorded in the Tuck statement. That was sensibly abandoned in oral argument where the Sellers appeared to rely upon the Tuck statement to found a Jones v Dunkel inference against Mr Hegarty.

However, I am satisfied that the plaintiffs were not put on notice that the Sellers intended to rely upon Tuck statement in support of the claim against 29Metals until the Sellers’ written closing submissions. In my view, this meant that the plaintiffs were denied the opportunity to appropriately defend the claim by cross examining Mr Hallion about the Tuck statement and by having the opportunity to call further evidence relating to the Tuck statement including from the existing witnesses: Mr Herbert and Mr Chomley. I reject any suggestion that it was incumbent upon the plaintiffs to ensure that those two existing witnesses responded to or addressed the Tuck statement when the plaintiffs and their advisors were not aware of the relevance, let alone the significance, of the Tuck statement to the claim against 29Metals. This was unfairly prejudicial to them.

In these circumstances, I consider that the probative value of the Tuck statement is substantially outweighed by this unfair prejudice, with the result that I would exclude the Tuck statement under s 135(a).

Even if I had not determined to exclude the Tuck statement, I would place little or no weight on it. I repeat that, but for the construction of EMR Investors which I have adopted (which was not raised before 7 June 2021), I would have concluded EMR6B was in breach of the Share Mortgage. The Tuck statement is insufficiently probative to establish sufficient knowledge to ground an intention to interfere with contractual rights, and in my view is not of assistance in my determination of the inducement claim.

As a result, the answer to issue 12 is ‘No’.

12.INDEMNIFICATION OF AGENT’S COSTS TO ENFORCE SHARE MORTGAGE

In substance, issue 13 concerns whether the Sellers are entitled to be indemnified under cl 11.6 of the Share Mortgage for the costs of enforcing EMR6B’s breach, including by appointing receivers.

Relevantly, cl 11.6 of the Share Mortgage provides:

The Grantor will on demand indemnify and keep the Secured Parties indemnified in respect of all Taxes and reasonable Costs incurred by any Secured Party or any Receiver:
(a) in the exercise or attempted exercise of any Power;
(b) as a consequence of the occurrence or subsistence of any Event of Default;
[…]
and the Grantor will be entitled to defend all actions, proceedings, claims or demands brought by any person in relation to any matter the subject of this indemnity.

The Sellers submit that the costs of enforcement, including the costs of this proceeding are payable and form part of the Secured Money. As a result, the Sellers contend that the correct construction of cl 11.6 of the Share Mortgage is that EMR6B indemnified the Sellers for their reasonable costs, including for their legal costs, on the standard basis. While conceding that the award of costs is ultimately at the discretion of the Court, the Sellers contend that it is appropriate to make orders consistent with the ‘plain and unambiguous’ meaning of the contractual provisions in this regard, relying on Vickery J in Taree Pty Ltd v Bob Jane Corporation Pty Ltd.[138]
[138][2008] VSC 228, [38] (Vickery J).

The plaintiffs submit that the question of Costs ought to be reserved until after delivery of the Court’s reasons. Nonetheless, if Costs were to be determined, the plaintiffs submit that it is well-established that the Court is not restrained in its discretion to award Costs by an agreement of the parties.[139]
[139]Chen and Xu v Kevin McNamara & Son Pty Ltd (No 2) [2012] VSCA 229, [8], [10] (Redlich JA, Maxwell P agreeing at [1] and Robson AJA agreeing at [22]).

Further, the plaintiffs submit that the appointment of receivers was not reasonable, such that any costs incurred by appointing receivers do not fall within the purview of ‘reasonable Costs’ for the purposes of cl 11.6 of the Share Mortgage. The plaintiffs otherwise submit that determination of what is or is not reasonable should properly be the subject of further submissions after the judgment is handed down.

In my view, it is appropriate to reserve this issue until the parties have had the opportunity to consider my findings in this case. As concluded above at [562], I find that the relevant Event of Default under cl 6.1(b) is EMR6B’s failure to pay an amount equal to the Earnout Payment into an escrow account on 7 June 2021. It was as a consequence of this Event of Default and in view of enforcing their rights under the Share Mortgage that the Sellers appointed receivers.

13. RELIEF AND ORDERS

Issues 13 and 14 relate to the form of relief and orders. In my view, it is appropriate that this issue be reserved until the parties have had the opportunity to consider my findings in this case.

As a result, I will give the parties an opportunity to consider my reasons in this case before resolving issues 10–11, and 13–14, and the costs of the proceeding.

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SCHEDULE OF PARTIES

EMR CAPITAL INVESTMENT (NO.6B) PTE LTD First Plaintiff

29 METALS LIMITED (ACN 650 096 094) Second Plaintiff

and

CARL HALLION (AS THE ‘AGENT’ OF EACH ‘SECURED PARTY’ UNDER THE DEED OF MORTGAGE DATED 17 SEPTEMBER 2018) First defendant

JEREMY JOSEPH NIPPS Second defendant

CLIFFORD STUART ROCKE Third defendant

EMR CAPITAL INVESTMENT (NO.6B) PTE LTD	First Plaintiff
29 METALS LIMITED (ACN 650 096 094)	Second Plaintiff
and
CARL HALLION (AS THE ‘AGENT’ OF EACH ‘SECURED PARTY’ UNDER THE DEED OF MORTGAGE DATED 17 SEPTEMBER 2018)	First defendant
JEREMY JOSEPH NIPPS	Second defendant
CLIFFORD STUART ROCKE	Third defendant

[2024] VSC 805

19 December 2024