Flint v Sorna Pty Ltd
[2002] WASC 172
FLINT & ANOR -v- SORNA PTY LTD [2002] WASC 172
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASC 172 | |
| Case No: | CIV:1479/2002 | 13 MAY 2002 | |
| Coram: | MASTER BREDMEYER | 27/06/02 | |
| 27 | Judgment Part: | 1 of 1 | |
| Result: | Applications allowed in part | ||
| B | |||
| PDF Version |
| Parties: | WARWICK JOHN FLINT NEELTJE ELISABETH RENES SORNA PTY LTD |
Catchwords: | Pleading Strike-out application of a statement of claim Mining tenements held on trust Interpretation of Mining Warden's orders and reasons |
Legislation: | Mining Act 1978 (WA), s 51, s 102, s 119(2) Mining Regulations 1981, reg 16, reg 75(a) Property Law Act 1969 (WA), s 34(2) |
Case References: | Flint & Anor v Sorna Pty Ltd, unreported; SCt of WA (Scott J); Library No 990157; 31 March 1999 Henderson v Henderson (1843) 3 Hare 115 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Sorna Pty Ltd v Flint & Anor [2000] WASCA 22 Terrex Resources NL v Magnet Petroleum Pty Ltd (1988) 1 WAR 144 Accident Compensation Commission v Baltica General Insurance Co Ltd [1993] 1 VR 467 Armitage v Nurse [1998] Ch 241 Bartlett v Barclay's Bank Trust Co (No 1) [1980] 1 Ch 515 Cowan v Scargill [1985] 1 Ch 270 Davis v The Commonwealth (1986) 61 ALJR 32 Dyson v Attorney-General [1911] 1 KB 410 Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (1993) 115 ALR 376 Finesky Holdings Pty Ltd v Minister for Transport for Western Australia [2001] WASC 87 Fluor Australia Pty Ltd v SEC & Ors, unreported; SCt of WA; Library No 6244; 15 April 1986 Forgeard v Shanahan (1994) 35 NSWLR 206 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Lindon v Commonwealth of Australia (No 2) (1996) 70 ALJR 541 Lonrho plc v Fayed (No 2) [1992] 1 WLR 1 Metall und Rohstaff AG v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391 Muschinski v Dodds (1985) 160 CLR 583 Nagle v Fielden [1066] 2 QB 633 Speight v Gaunt (1882) 9 App Cas 1 Sun Earth Homes Pty Ltd v Australian Broadcasting Corporation (1990) 19 IPR 201 Thorpe v The Commonwealth (No 3) (1997) 71 ALJR 767 Walker v Stones [2001] 2 WLR 623 Webster v Lampard (1993) 177 CLR 598 Wenlock v Maloney [1965] 2 All ER 871 Westdeutsche Landesbank Girozentrale v Islington London BC [1996] AC 669 Wheatley v Bower & Ors [2001] WASCA 293 Wilson v Union Insurance Co (1992) 112 FLR 166 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- NEELTJE ELISABETH RENES
Plaintiffs
AND
SORNA PTY LTD
Defendant
Catchwords:
Pleading - Strike-out application of a statement of claim - Mining tenements held on trust - Interpretation of Mining Warden's orders and reasons
Legislation:
Mining Act 1978 (WA), s 51, s 102, s 119(2)
Mining Regulations 1981, reg 16, reg 75(a)
Property Law Act 1969 (WA), s 34(2)
Result:
Applications allowed in part
(Page 2)
Category: B
Representation:
Counsel:
Plaintiffs : Mr A J Goldfinch
Defendant : Mr M S Macdonald
Solicitors:
Plaintiffs : Goldfinch & Co
Defendant : Macdonald Rudder
Case(s) referred to in judgment(s):
Flint & Anor v Sorna Pty Ltd, unreported; SCt of WA (Scott J); Library No 990157; 31 March 1999
Henderson v Henderson (1843) 3 Hare 115
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Sorna Pty Ltd v Flint & Anor [2000] WASCA 22
Terrex Resources NL v Magnet Petroleum Pty Ltd (1988) 1 WAR 144
Case(s) also cited:
Accident Compensation Commission v Baltica General Insurance Co Ltd [1993] 1 VR 467
Armitage v Nurse [1998] Ch 241
Bartlett v Barclay's Bank Trust Co (No 1) [1980] 1 Ch 515
Cowan v Scargill [1985] 1 Ch 270
Davis v The Commonwealth (1986) 61 ALJR 32
Dyson v Attorney-General [1911] 1 KB 410
Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (1993) 115 ALR 376
Finesky Holdings Pty Ltd v Minister for Transport for Western Australia [2001] WASC 87
Fluor Australia Pty Ltd v SEC & Ors, unreported; SCt of WA; Library No 6244; 15 April 1986
(Page 3)
Forgeard v Shanahan (1994) 35 NSWLR 206
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Lindon v Commonwealth of Australia (No 2) (1996) 70 ALJR 541
Lonrho plc v Fayed (No 2) [1992] 1 WLR 1
Metall und Rohstaff AG v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391
Muschinski v Dodds (1985) 160 CLR 583
Nagle v Fielden [1066] 2 QB 633
Speight v Gaunt (1882) 9 App Cas 1
Sun Earth Homes Pty Ltd v Australian Broadcasting Corporation (1990) 19 IPR 201
Thorpe v The Commonwealth (No 3) (1997) 71 ALJR 767
Walker v Stones [2001] 2 WLR 623
Webster v Lampard (1993) 177 CLR 598
Wenlock v Maloney [1965] 2 All ER 871
Westdeutsche Landesbank Girozentrale v Islington London BC [1996] AC 669
Wheatley v Bower & Ors [2001] WASCA 293
Wilson v Union Insurance Co (1992) 112 FLR 166
(Page 4)
1 MASTER BREDMEYER: I have before me an application dated 21 December 2001 by the plaintiffs for leave to amend the writ of summons and statement of claim. I also have before me an application dated 18 January 2002 by the defendant for leave to apply for summary judgment under O 16, summary judgment, or alternatively, to strike out certain paragraphs of the statement of claim.
2 I will consider the defendant's application first. For the purposes of the application, I will regard the plaintiffs' further minute of amended statement of claim of 12 March 2002 as the statement of claim. The defendant has filed an affidavit of Ms S Yen in support and the plaintiffs have filed an affidavit of Mr Flint in opposition.
3 The defendant was the registered holder of Prospecting Licences 52/832-833, 52/839-840, 52/869-875 and Exploration Licence 59/952 ("the tenements"). The plaintiffs brought a case against the defendant in the Mining Warden's Court in plaint number 12/978 seeking declarations that the defendant held those tenements as trustee for the plaintiffs. In that action, the defendant in its defence admitted that the plaintiffs were entitled to an 80 per cent beneficial interest in the tenements. The plaintiffs were not content with that admission. They continued the case because they claimed they were entitled to 100 per cent beneficial interest in the tenements. The action came on for hearing before Mining Warden J R Packington in the Mining Warden's Court sitting at Meekatharra. The hearing was held on 25 February 1998. The Mining Warden's reasons for judgment were published on 18 September 1998 and are annexed to the affidavit of Ms Yen. The reasons cover 22 pages. I will quote a few extracts from those reasons, to give some factual background to the legal arguments which follow:
"That the Tenements and Applications are in the name of the Defendant is by all accounts due to an agreement made between Flint and Mr Emilo Pietro Del Fante ('Del Fante'), a director of the Defendant and principal of a firm called Corporate Tenement Services ('CTS').
Flint and Del Fante first met in 1993, at a time when both were involved with Mr Peter Steven Kestel ('Kestel') in what Kestel described as a 'joint venture arrangement' pursuant to which a syndicate put together by Kestel (and including Del Fante) would provide money to Flint so that he could be maintained in the practice of identifying and plainting tenements in respect of which prescribed expenditure conditions had not been complied
(Page 5)
- with. The syndicate would receive 70% of the proceeds of successful plaints.
Late in 1993, or early in 1994, depending on whose evidence one prefers, Flint had become concerned about his ability to look after tenements held by the First Plaintiffs. He had plainted so many tenements pursuant to the apparently champertous arrangement described above, in particular tenements held by one Nicaelenko and associated parties, that be feared that his own tenements would be plainted in retaliation.
Flint discussed his concerns with Del Fante, and an arrangement was made whereby tenements which would otherwise have been applied for in the name of, and granted to, the First Plaintiffs would be held in the name of the Defendant. There was some conflict of evidence about how this arrangement was arrived at, and what alternatives were considered. It is clear, however, that Flint could have had incorporated his own 'shelf company' to hold tenements, as indeed Del Fante had brought into existence the Defendant, and that Flint could have had drawn up a proper deed of trust evidencing the fact that whoever the registered tenement holder might be, the beneficial owners would be the First Plaintiffs. Had the latter course of action been followed there would have been no need for these proceedings, and no obstacle to the First Plaintiffs' claim would have arisen from Section 119(2) of the Act.
Be that as it may, Flint chose to use the Defendant as the vehicle by which tenements to be acquired by the First Plaintiffs could be hidden from the attention of potential predators and through which he could have all the tenement management formalities required by the Act attended to by Del Fante (through CTS).
Flint's need for the Defendant's services was exacerbated by his admission to hospital in March, 1995. An operation was followed by a course of chemo-therapy, two heart attacks and, finally, major heart surgery in June, 1996.
…
In 1996, according to Flint, he dispensed with Del Fante's services and expected the Tenements to be returned to him,
(Page 6)
- Flint's evidence was that from the outset the agreement was that he would pay all application fees, rents and rates, and undertake all necessary work on tenements to be held by the Defendant, while the Defendant, by Del Fante, would provide tenement management services. The Defendant's reward for holding tenements and providing management services in respect of those tenements would be 20% of the net proceeds of the sale of any tenements 'introduced' (ie identified as tenements worthy of acquisition, or ground worth marking out and applying for) by Del Fante. Tenements introduced by Flint - 'the Flint - Renes tenements' as he called them - would provide no reward for the Defendant. According to Flint, this arrangement was discussed by him with Del Fante in November 1993 at Del Fante's office.
Flint's evidence was that when the time came for him to undergo chemo-therapy, he was able to rely on arrangements with Del Fante 'which were quite clearly spelled out'. Flint gave no evidence, apart from that relating to his discussion with Del Fante in November 1993, of any specific time or place at which the terms of their arrangement were settled. His manner of giving evidence was discursive and on some points evasive. It demonstrated in my view a tendency on Flint's part to assume that the Court was already familiar with various aspects of his career as a prospector and some of the personalities involved it. It certainly demonstrated an assumption that at all times since November 1993 his agreement with Del Fante was in the terms described above and that all parties involved in dealings with the Tenements, the Applications and the Mining Lease knew and understood that to be the case.
Del Fante's evidence, to the contrary, was that the terms of the agreement between Flint and the Defendant were not settled until March or April of 1995, during a discussion of various matters between Del Fante and Flint at Del Fante's house. Del Fante's evidence as to that discussion was as follows:
.... 'Mr Flint came to my house. We were discussing various matters. I can't remember exactly what the matters were, but during the course of the discussion I wanted to put to bed this interest (sic) of this agreement and I said, 'John, we need to formalise and put this in black and white,' which we hadn't done up until that point.
(Page 7)
- And ... the exact wording I'm not absolutely sure of. It was agreed. It was agreed. We both agreed to 80 per cent Flint, 20 per cent Sorna on all of the tenements within this report, and because up until that point I had raised this issue of interest being put on paper with Mr Flint, and it had been avoided, I then called my wife, who was in the laundry - I called her down into the kitchen and family area to verify and confirm this interest that we had agreed on. And called Sheri down .... and I said 'Sheri, John and I have finally agreed on an 80/20 split across the board on all the tenements, isn't that right, John?' And John said 'Yes'.
- Del Fante's evidence, then, was that the reward for the Defendant arising out of the Agreement with Flint was not to be restricted to the proceeds of the sale of tenements introduced by Del Fante, but was to be a 20 per cent interest in all the tenements, whether introduced by Del Fante or Flint.
By reason of Flint's demeanour in the witness box, I felt some sympathy for Del Fante's desire to pin Flint down to specific details, but I found the account given by Del Fante and his wife of how the agreement was eventually settled unconvincing; it was in any event stoutly denied by Flint.
To discover what, if any, agreement existed between Flint and the Defendant, it is necessary therefore to examine the actions of the parties, such documentation as was presented to the Court and the surrounding circumstances, including the coming into existence of the report referred to by Del Fante, which is the 'Preliminary Geological and Exploration Report for Mining Projects held by Sorna Pty Ltd' prepared by one D L Hughes and completed in June, 1995 ('the Hughes Report').
4 At the end of his reasons, the learned Mining Warden published his findings at pages 21 to 23. I quote the first five or six paragraphs of those findings:
"FINDINGS
As a matter of fact I find that there existed a loose, undocumented agreement between the First Plaintiffs and the Defendant. The terms of that agreement do not admit of certain resolution. Having had the benefit of hearing (at great length) evidence from Flint, I have no doubt that by nature and
(Page 8)
- temperament he would have preferred it that way. That is to say, he struck me as one who prefers to keep his options open. I also have no doubt that Del Fante had raised the question of recording their respective interests in writing, and that it had been avoided.
On the evidence, I find that even if Flint and Del Fante had clearly in their own minds the terms of their agreement (and it seems to me that both were prepared to shift their ground to take advantage of particular circumstances) there was no meeting of minds at any particular point in time which could be taken as establishing a definite agreement.
On the evidence, the Defendant might have:
(a) a beneficial interest in the Tenements and Applications;
(b) a contractual right to a percentage of the proceeds of the sale of any interest in the Tenements and Applications;
(c) a right, in the nature of a quantum meruit, to be paid for tenement management services provided in respect of the Tenements and Applications, or possibly
(d) some combination or variation of any of the above.
The First Plaintiff's case is that whatever the Defendant is entitled to, it is not a beneficial interest (as to 20%) in the Tenements and in its interest in the Applications.
With regard to the Tenements and the Applications, in light of the Defendant's admission, there should be declarations:
1. That the defendant holds the Tenements (to the extent of an 80% beneficial interest) as trustee for the First Plaintiffs; and
2. That the Defendant holds its interest in the Applications (to the extent of an 80% beneficial interest) as trustee for the First Plaintiffs.
(Page 9)
- The First Plaintiffs have not, on the balance of probabilities, established that they, rather than the Defendant, are entitled to the remaining 20% of the beneficial interest in the Tenements and the Defendant's interest in the Applications; I am unable to come to any conclusion with regard to the nature of the Defendant's interest in them."
5 As I have said, the Warden's reasons were published on 18 September 1998. The formal orders were extracted on 19 November 1998. I quote from those orders:
"THE Court adjudges and declares that -
(c)(i) The Defendant holds Prospecting Licences 52/832-833, 52/839-840, 52/869-875, (all inclusive) and Exploration Licence 52/951, each to the extent of 80%, as trustee for the First Plaintiffs.
(ii) The Defendant holds its interests in Applications for Exploration Licences 52/965-966 (inclusive) to the extent of 80%, as trustee for the First Plaintiffs.
(iii) The Defendant has no interest in Mining Lease 52/211.
AND the Court orders -
(d)(i) The first named First Plaintiff withdraw caveats 1124H/967 to 1135H/967 (inclusive) within 14 days of the date of service of this order.
(ii) The Mining Registrar, Meekatharra, be authorised to execute and register withdrawals of caveats 1124H/967 to 1135H/967 (inclusive) on behalf of the first named First Plaintiff should the first named First Plaintiff fail to execute and register withdrawals within 14 days of the date of service of this order.
(iii) The Defendant execute transfers of 80% of the Defendant's interests in each of Prospecting Licences 52/832-833, 52/839-840, 52/869-875 (all inclusive) and in Exploration Licence 52/951 to the First Plaintiffs in such proportions as may be directed in writing by the First Plaintiffs or failing such direction in equal shares within 14 days of the date of service of this order.
(Page 10)
- (iv) Within 14 days of notification by the First Plaintiffs to the Defendant of:
(a) the grant of Exploration Licence 521965; and
(b) the written consent of the Minister for Mines to the transfer of 80% of the Defendant's interest in Exploration Licence 52/965 to the First Plaintiffs in such proportions as may be directed in writing by the First Plaintiffs, or failing such direction in equal shares,
the Defendant execute such a transfer.
(v) Within 14 days of notification by the First Plaintiffs to the Defendant of the written consent of the Minister for Mines to the transfer of 80% of the Defendant's interest in Exploration Licence 52/966 to the First Plaintiffs in such proportions as may be directed in writing by the First Plaintiffs, or failing such direction in equal shares, the Defendant execute such a transfer.
(vi) The Defendant withdraw caveat 1245H/967 within 14 days of the date of service of this order.
(vii) The Mining Registrar, Meekatharra, be authorised to execute and register the withdrawal of caveat 1245H/967 on behalf of the Defendant should the Defendant fail to execute and register a withdrawal within 14 days of the service of this order.
(viii) The First Plaintiffs pay the Defendant's costs of the Plaint incurred after 12th February 1998 to be taxed on Division 2 of the Non Routine scale of the Local Court Scale of costs, if not agreed, and the maximum of the Defendant's discretionary costs of the Plaint be increased by 50%, pursuant to Order 37, Rule 6A(1) of the Local Court Rules, 1901.
(ix) The First Plaintiffs pay to the Defendant a special counsel fee fixed in the sum of $500.00, pursuant to regulation 128(3)(i) of the Mining Regulations, 1981.
(Page 11)
- (x) The Defendant pay the Second Plaintiffs costs of the Plaint and the Counter-Claim to be taxed on Division 2 of the Non Routine scale of the Local Court Scale of costs, if not agreed.
DATED at Meekatharra
this 19th day of November 1998
(Sgd) J.R.Packington Warden"
7 The Mining Warden, Scott J and the Judges of the Full Court had to grapple with s 119(2) of the Mining Act1978 (WA) which provides:
"A legal or equitable interest in or affecting a mining tenement is not capable of being created, assigned, effected or dealt with, whether directly or indirectly, except by an instrument in writing signed by the person creating, assigning or otherwise dealing with the interest."
8 Ipp J, who chaired the Full Court, discussed whether the tenements could be held by the defendant on trust for the plaintiffs' 80 per cent beneficial interest, despite the lack of writing, in the face of s 119(2). One possible section to assist the plaintiffs was s 34(2) of the Property Law Act 1969 (WA) which provides that:
"This section does not affect the creation or operation of resulting, implied or constructive trusts."
(Page 12)
9 Ipp J considered that that section was irrelevant to the circumstances in the present case. I quote from pars 11 to 15 of his reasons:
"11 The question, then, is whether s 119(2) precludes the creation of a constructive trust created by the oral contract as contended for by the respondents. In my opinion, the answer is apparent from the remarks of Kennedy J in Terrex Resources NL v Magnet Petroleum Pty Ltd (1988) 1 WAR 144 at 162. His Honour was dealing with s 80 of the Petroleum (Submerged Lands) Act 1967 (WA), which is in terms similar to s 119(2). Kennedy J said:
'The purpose of s 80 is to prevent legal or equitable interests in permits from being created, assigned, affected or dealt with, whether directly or indirectly, except by an instrument in writing. It does not provide that oral agreements shall be of no force: cf s 81(2). Accordingly, although an oral agreement may not, for example, assign an interest in a permit, this is not to say that it does not create a personal right in contract. I consider that it does.'
12 I would adopt, with respect, his Honour's approach. Section 119(2) prevents legal or equitable interests in permits from being created, assigned, affected or dealt with, whether directly or indirectly, except by an instrument in writing. Accordingly, the section prevents the creation of the express trust orally agreed upon by the parties. It also prevents the creation of any equitable interest being created by construing a trust.
13 Additionally, as s 119(2) does not apply to contracts, the parties' personal rights in contract remain. The respondents' legitimate interests are protected adequately by their contractual rights. There is, therefore, in any event, no reason for equity to require the existence of a constructive trust: cf Daly v The Sydney Stock Exchange Ltd (1986) 160 CLR 371 per Gibbs CJ at 379 - 380.
14 In the circumstances I consider that the respondents' claim for a constructive trust fails.
15 I agree with the orders proposed by Murray J. The order that the respondents are entitled to an 80 per cent
(Page 13)
- equitable interest in the tenements should be made in the light of the appellant's agreement that, should the appeal succeed, an order in such terms should be made."
10 With the greatest of respect to the learned Judge, I have a problem understanding these reasons. I can understand that the section precludes the Court finding an orally-agreed express trust. I can also understand the finding that the plaintiffs do not have a constructive trust. I can understand the finding that the parties have contractual rights against each other and that the plaintiffs' legitimate interests can be protected adequately by those contractual rights. What puzzles me, in the light of these findings, is that the orders of the Mining Warden were reinstated. Instead of the Full Court refashioning those orders to refer to contractual rights, the Court simply affirmed those orders stating that the defendant holds those tenements to the extent of 80 per cent "as trustee" for the plaintiffs. The use of the phrase "as trustee" implies the normal duties of trustees; eg, to act at all times in the best interests of the plaintiffs, to avoid any conflict of interest, and to avoid acting in any way which would damage or harm the plaintiffs' interest in the trust property.
11 The judgment of Murray J adopted similar reasoning. He, too, at par 45, adopted with approval the same passage from Kennedy J in Terrex Resources NL v Magnet Petroleum Pty Ltd (1988) 1 WAR 144. Like Ipp J, he, too, considered that reasoning applicable to s 119(2) of the Mining Act, meaning, in summary, that that section precludes the recognition of an orally-created trust in a mining tenement, but does not preclude the parties having contractual rights against each other. Murray J, too, affirmed the Mining Warden's orders at pars 47 and 57.
12 I quote the reasons of Templeman J in full:
"69 TEMPLEMAN J: I have had the advantage of reading in draft the reasons which have been published by Ipp and Murray JJ. I agree that s 119(2) of the Mining Act 1979 precludes the respondents from claiming any beneficial interest in the subject tenements arising out of the oral agreement on which they rely.
70 I also agree with Murray J in relation to the costs issue.
71 Having regard to the facts found by the learned Mining Warden and to the concession made by the appellant that it held the tenements to the extent of an 80 per cent beneficial interest upon trust for the first respondents, the
(Page 14)
- learned Warden was correct to make a declaration in those terms.
- 72 I would therefore allow the appeal to the extent proposed by Murray J. The cross-appeal should be dismissed."
Costs of defending plaints for forfeiture
13 The plaintiffs' statement of claim pleads various breaches of trust by the defendant. These breaches include the following. The Warden's orders were extracted on 19 November 1998 and they declared that the defendant held the tenements as to the extent of 80 per cent as trustee for the plaintiffs. The order further required the defendant to execute transfers to the plaintiffs of their 80 per cent interest in the tenements within 14 days of service of the extracted judgment. The plaintiffs say that this was not done promptly. The defendant refused to prepare the transfers and then delayed the signing of security documents which had to be signed in order to enable registration of those transfers under the Mining Act. The defendant also failed to lodge the original licence documents to enable registration. Meanwhile, in relation to several of the prospecting licences, the anniversary date of each licence was 17 October. Section 51 of the Mining Act requires the holder of the prospecting licence to file a report on form 5 of the first schedule to the regulations within 60 days after each anniversary date. The holder of the licence states in the form what moneys have been spent on prospecting in the year past. The form has to be lodged within 60 days of the anniversary date. Thus, these should have been lodged in relation to these licences within 60 days of 16 October 1998, namely, by 15 December 1998. The defendant did not do this. As an alternative to lodging the form 5 stating the licensee's compliance with the expenditure conditions, the licensee could make an application for exemption. In the case of these tenements, the defendant neither filled in the forms nor made the applications for exemption. On 14 December 1998, Allan Neville Brosnan lodged plaints 122/989-127/1989 seeking forfeiture of each of the prospecting licences. The plaintiffs could not defend these attacks because they were not the registered holder of the licences. The defendant took no step to defend the plaints for forfeiture and did not advise the plaintiffs of the existence of the plaints for forfeiture. In those circumstances, it is pleaded in par 39 that the defendant's failure to do all these things amounts to various breaches of trust.
14 The defendant argues, in its summary judgment and strike-out application, that none of these breaches of trust are arguable. The
(Page 15)
- defendant says that the trust was created by the judgment of Mining Warden Packington and, as the reasons of the learned Warden and the Full Court on appeal make clear, the declaration of trust amounted to a bare trust only; that is, the only duty of the defendant as trustee was to sign the necessary transfers required to transfer legal title in the 80 per cent to the plaintiffs. I do not agree with that submission. The defendant's duty was to transfer 80 per cent of its interest in the tenements to the plaintiffs. But that was not the defendant's only duty. I consider it arguable that, until such time as 80 per cent interest was transferred to the plaintiffs, the defendant held the plaintiffs' 80 per cent share of the tenements on trust for the plaintiffs - with all the normal duties of a trustee; eg, to protect the trust assets, to act in good faith, and to avoid any conflict of interest. So, I consider the pleas of those duties in pars 2A to 2E and elsewhere, are in order.
15 I also consider it arguable, and I elaborate this later in the second section of these reasons, that the Warden's finding that the defendant held the tenements (to the extent of 80 per cent) as trustee for the plaintiffs, dates back to 1994 when the first tenement was put in the defendant's name.
16 Those paragraphs set out the defendant's trustee's duties in general terms; eg, to act at all times in the best interests of the plaintiffs, at all times to maintain and protect the plaintiffs' interests. It is the later paragraphs, par 12 and following, which plead the breaches of those duties. I quote par 12:
"12. The plaintiffs advised the defendant in accordance with the order of the extracted judgment pleaded in paragraph 11 hereof but the defendant delayed registration of the transfers of the 80% interest in the tenements by:
(a) refusing to prepare transfers on the alleged ground that the extracted judgment did not oblige the defendant to prepare transfers;
(b) delaying the signing of security documents to enable registration of the transfer on the grounds that the defendant was not obliged to sign the security documents.
(c) failing to provide the original licence documents to enable registration."
(Page 16)
17 The plaintiffs refer in par 11 to the extracted judgment of the Warden's Court and the order that the defendant had to execute transfers of 80 per cent of the defendant's interest in the tenements to the plaintiffs within 14 days of the date of service of the extracted judgment. Paragraph 12, which I have quoted, refers to certain delays. To establish that, it is necessary, to plead when the extracted order was served on the plaintiffs. I have no evidence on that. The order itself, which is attached to Ms Yen's affidavit is dated 19 November 1998. I do not know when it was served, but if perchance it was served on the same day, then the defendant had 14 days after that to execute transfers. The defendant, in the form of Ms Yen's affidavit, has led evidence that the signed transfers were collected by the plaintiffs' solicitors from the defendant's solicitors (ie, Macdonald Rudder's) offices on 27 November 1998. That is within the prescribed period.
18 The first complaint in par 12(a) is that the defendant refused to prepare transfers on the alleged ground that the extracted judgment did not oblige the defendant to prepare transfers. I do not consider that plea is tenable. There is nothing in the orders requiring the defendant to prepare the transfers. The defendant is ordered to execute the transfers. Because the orders are silent on who should prepare them, I think the normal conveyancing rule would apply that the transferee should prepare the transfers and that is what eventually happened in this case. I will strike out par 12(a).
19 The complaint in 12(b) is that the defendant delayed the signing of "security documents" to enable registration of the transfer on the ground that the defendant was not obliged to sign the security documents. The complaint in par 12(c) is that the defendant failed to provide the original licence documents to enable registration to take place. I can consider those two matters together. I note that in the next plea, par 13, it is stated that the transfers of the 80 per cent interest in the tenements to the plaintiffs were registered on or about 15 February 1999.
20 I consider that pars 12(b) and 12(c) are arguable. The orders of the Mining Warden make no mention of security documents, but I think it could be arguably implied into the orders that, in addition to signing the transfer documents of the plaintiffs' 80 per cent interest, the defendant is to do all other things reasonably necessary to give the plaintiffs the benefit of that order. That could well include signing security documents. The Full Court, in the passages I have cited from Ipp and Murray JJ, in affirming the Warden's orders, were concerned to enforce the plaintiffs' contractual rights. It can readily be implied into any contract, as a matter
(Page 17)
- of law, that each party will do all things necessary to give the other the benefit of the contract. For example, see Cheshire & Fifoots's Law of Contract, 5th Australian ed, par 425.
21 The implication is helped by reg 75(a) of the Mining Regulations 1981 dealing with transfer of a tenement which provides:
"(a) every transfer shall be accompanied by the instrument of lease or licence (if issued) and, where applicable, a security similar to that required under sections 26, 52, 60 or 70F of the Act."
22 On the facts, and this is a summary judgment application by the defendant, the security documents were sent to the defendant's solicitor on 11 January 1999 for completion. They had not been signed and returned by 8 February 1999. On that date, Mr Goldfinch, for the plaintiffs, wrote to Messrs Macdonald Rudder seeking the return of the completed security documents. The plaintiffs had also, at some unstated date, requested the defendant to send the original licence documents to the Department of Mines and Energy, so that the transfers could be registered. These too, apparently, had not been sent promptly and Mr Goldfinch's letter of 8 February 1999 asks for this to be done. Both things were probably done soon after 8 February, because I note that the transfers were registered on 15 February 1999. A delay in doing these two tasks between about 11 January and, say, 11 February 1999 is arguably a longish delay.
23 The statement of claim at par 14 and following goes on to say that the anniversary date for each of the prospecting licences 51/870-52/870-52/875 (the prospecting licences) was 17 October in each year of the licence (the anniversary date). The holder of a prospecting licence, by reg 16 of the Mining Regulations 1981, was required, within 60 days after each anniversary date, to file a report to the Department of Minerals and Energies in form 5 in the first schedule to the regulations. Accordingly, the form 5 for each of these prospecting licences should have been lodged by 15 December 1998. The form 5 sets out the expenditure spent on prospecting in the past year. By s 50 of the Mining Act, the holder of a prospecting licence has to comply with the prescribed expenditure conditions relating to the licence unless as exemption has been granted. By s 102 of the Mining Act, the holder of a mining tenement can apply for an exemption for expenditure conditions within 60 days of the anniversary date. In summary, the holder of the prospecting licence has to file a form 5, showing that it has complied with
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- the expenditure conditions, or it has to apply for an exemption under s 102 of the Act, in each case within 60 days of the anniversary date.
24 It is pleaded in relation to these prospecting licences that the defendant neither filed a form 5 nor sought an exemption within the 60-day period of the anniversary dates. 60 days from 17 October 1998 comes to 17 December 1998. Thus, it is pleaded that by 15 December 1998 the defendant should have lodged its form 5s or its application for exemption from the expenditure conditions. Had the transfer documents been signed and registered within 14 days of the Warden's orders of 19 November 1998, they would have been registered on or about 3 December. That is, prior to the expiration of the 60-day period on 15 December 1998 already mentioned.
25 What loss or damage flowed from the lateness of the registration of the transfers and the defendant's failure to file the form 5s or to apply for exemption? According to the pleading at par 36 and following, on 14 December 1998 Allan Neville Brosnan lodged plaints 122-127/989 seeking forfeiture of each of the prospecting licences. Because the transfers had not been registered, the plaints were notified to the defendant as the registered holder of the licences and not to the plaintiffs. The defendant took no steps to defend the plaints for forfeiture and did not advise the plaintiffs of the existence of those plaints for forfeiture.
26 Paragraph 39 of the statement of claim summarises the defendant's breaches of trust as follows:
"39. The conduct of the defendant pleaded in paragraph 12 hereof and/or each and/or all of the matters pleaded in subparagraphs (a)-(g) hereof were a breach of trust by the defendant.
The defendant's failure to:
(a) lodge a form 5 in respect of the prospecting licences;
(b) file an application for exemption from the expenditure conditions;
(c) use the expenditure details provided by Anaconda Nickel Ltd;
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- (d) advise the plaintiffs of the expenditure details provided by Anaconda Nickel Ltd;
(e) otherwise comply with the expenditure conditions;
(f) defend the plaints for forfeiture, or
(g) advise the plaintiffs of the existence of plaints for forfeiture."
- I consider that plea is arguable.
27 The defendant also attacked the pleas in pars 39A, 39B and 39C which read as follows:
"39A. Further, or in the alternative, the defendant breached the duties pleaded in paragraph 2D and 2E hereof.
39B. Further, or in the alternative, the defendant breached the duties pleaded in paragraph 2D and 2E hereof.
39C. Further, or in the alternative, the matters referred to in paragraph 39 hereof amounted to wilful default by the defendant."
- I consider those pleas can stand. Clearly, they refer to the factual matters pleaded in pars 3 to 39 for their content.
28 As to loss and damage, that is pleaded in par 40 and par 44. It is there pleaded, in summary, that, when Mr Flint became aware of the defendant's failures set out in par 39, he filed notices of defence and took steps to defend the plaints for forfeiture and filed applications for exemption in relation to the prospecting licences.
29 Paragraph 42 pleads the costs and expenses incurred by Mr Flint in taking these steps. For example, the application fees for the exemption from the expenditure conditions totalled $600. The filing fee for the notices of defence to the plaints for forfeiture totalled $180.50. In par 43, the total costs are said to come to $10,733. Paragraph 45 pleads that the plaintiffs are entitled to compensation in the sum of $10,733, or such other sum as the court might fix, for these breaches of trust.
30 I do not know if exemptions were later obtained and if that prevented the forfeiture of the tenements. I think that the plea that the plaintiffs suffered some loss or damage as a result of the defendant's faults, is
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- arguable. The timeous filing of a form 5 would not necessarily avoid a plaint, and the cost of defending the plaint. But the timeous filing of an application for exemption, and the grant of that application, would have prevented Mr Brosnan, or anyone else, causing that tenement to be forfeited.
31 The quantum of damage for these breaches of duty is in dispute. The $600 fees for applications for exemption would have to have been spent whether the defendant was in breach or not.
32 I will strike the pleas out in pars 41, 42, 43, 44 and 45, with leave to replead. If, as I suspect, each of the applications for exemption was successful, this needs to be pleaded. If so, then it means that, although Mr Brosnan's plaints might have been brought, he would not have been successful. That being so, the pleas of damage (apart from the $600) can be reinstated.
33 The defendant, in par 7 of its written submissions, made a number of attacks on the pleading as embarrassing. For example, its counsel said that the phrase "the anniversary date" mentioned in pars 14, 26 and 33 is meaningless and embarrassing. I think it is not. I think it is sufficiently explained in par 14. Likewise, the expression "expenditure year" is attacked in pars 27 and 30 as not defined or explained and it is said to be embarrassing. Again, I think the meaning is clear enough, that the expenditure year is the year for expending money on the tenement expiring on the anniversary date.
34 As previously stated, I consider pars 2A and 2B are arguable. The defendant was more than a bare trustee. As stated previously, until such time as it transferred the plaintiffs' 80 per cent interest to them, it owed normal fiduciary and trustee duties to the plaintiffs. That is arguable.
35 Again, as previously explained, I consider it arguable that the defendant, as the licence holder, and as trustee for the plaintiffs' 80 per cent interest had the duty of complying with the expenditure conditions, filling in the form 5s or applying for exemption. On the incurring of expenditure, the defendant may not have had the duty to pay all the money but, arguably, as the licence holder and trustee, had the duty to call on the plaintiffs to pay the money or the share of the money.
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Claim for 20 per cent of the cost of applying for and maintaining tenements as co-owner
36 Paragraphs 46 to 54 of the statement of claim allege that, as a 20 per cent owner of the tenements, the defendant is liable to pay to the plaintiffs 20 per cent of all costs incurred by them in relation to the tenements.
37 The defendant says that this is an abuse of the process of the court. It contradicts Mr Flint's sworn testimony at the trial in the Warden's Court, and it contradicts the findings of the Warden that the plaintiffs agreed to pay for all costs in relation to the tenements. On appeal to the Full Court, Murray J, with whom Ipp and Templeman JJ agreed, found at par 23 of his judgment that:
"The warden was able to find on the evidence that the loose undocumented arrangement between the parties was such that Flint found it desirable, for the reasons expressed above and also because he became gravely ill, that although the respondents would fund the process of acquiring and holding the tenements using Sorna as the vehicle, Del Fante, the principal of Sorna, would in effect hold the tenements and provide management services in respect of them through a business he operated known as Corporate Tenement Services. Such work as was required to be done in respect of the tenements would be paid for by the respondent. [emphasis added].
38 Paragraphs 46 and 51 claim that the defendant is liable to pay 20 per cent of the costs of maintaining the tenements. The costs incurred by the plaintiffs in maintaining the tenements from 1994 to 2000 are set out in the schedule and they total $129,372. The plaintiffs claim that that the defendant should pay 20 per cent of this sum, namely, $25,874.40.
39 The defendant says this plea discloses no cause of action. I quote from the defendant's written outline of argument:
"11. A mining tenement under the Mining Act1978 constitutes an interest in land. Roberts-Smith J in Finesky Holdings Pty Ltd v Minister for Transport for Western Australia [2001] WASC 87 said at paragraph 157:
'I think it clear however that the sublease does give an interest in the land. As Murray J pointed out in Sorna Pty
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- Ltd v Flint (2000) 21 WAR 563, at 571,whatever the form of a tenement under the Mining Act 1978 it "includes the specified piece of land in respect of which the mining tenement is so granted or required" (s 8(1)). A mining tenement is a right to exclusive possession of land for mining purposes: see s 7 Property Law Act 1969 (WA); s 85(2) and (3) of the Mining Act; Adamson v Hayes (1972-1973) 130 CLR 276.'
- 12. Being an interest in land, the question of contribution to maintenance and improvement of the tenements is to be determined by reference to the common law.
13. Co-owners do not have a right of contribution until the whole of the land is sold. Pending sale they have an interest in the nature of an equitable lien for maintaining and improving the land. In the case of improvements, a co-owner must be able to demonstrate that they have led to an increase in the value of the tenement. This equitable lien will pass to the co-owner's successors in title.
14. Until the tenements are sold, the plaintiffs have no cause of action to recover any part of their expenditure on the tenements."
40 I do not agree with that submission. I do not think the plaintiffs and the defendant are co-owners in the sense of tenants in common at common law. At least until such time as the Warden's orders were implemented, it is arguable that the defendant was the trustee as to the plaintiffs' 80 per cent beneficial interest in the tenements. If the defendant is the beneficial owner of the other 20 per cent interest, then the trustee (which is itself) can call upon it (as beneficiary) to contribute 20 per cent to the upkeep of the trust property.
41 I consider the pleas in the statement of claim relating to 20 per cent of costs from the defendant are arguable. The defendant relies on the passage just quoted from the judgment of Murray J in the Full Court at par 23 that the plaintiffs were to pay for all of the costs of maintaining the tenements. That passage is also supported by another passage at page 6 of the Warden's findings:
"Flint's evidence was that from the outset the agreement was that he would pay all application fees, rents and rates, and
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- undertake all necessary work on tenements to be held by the defendant, while the defendant, by Del Fante would provide tenement management services. The defendant's reward for holding tenements and providing management services in respect of those tenements would be 20 per cent of the net proceeds of sale of any tenements 'introduced' (ie identified as tenements worthy of acquisition, or ground worth marking out and applying for) by Del Fante."
42 But contrary views are also expressed in the Warden's reasons. At page 17 of the reasons he quotes from the evidence of Del Fante:
"'We both agreed to 80 per cent Flint, 20 per cent Sorna on all of the tenements within this report … '
Del Fante's evidence, then, was that the reward for the defendant arising out of the agreement with Flint was not to be restricted to the proceeds of the sale of tenements introduced by Del Fante, but was to be 20% interest in all the tenements, whether introduced by Del Fante or Flint.
By reason of Flint's demeanour in the witness box, I felt some sympathy for Del Fante's desire to pin Flint down to specific details, but I found the account given by Del Fante and his wife of how the agreement was eventually settled unconvincing; it was, in any event, stoutly denied by Flint.
To discover what, if any, agreement existed between Flint and the defendant, it is necessary therefore to examine the actions of the parties, such documentation as was presented to the court and the surrounding circumstances … "
43 At page 21 of the reasons under the heading "Findings" the Warden said:
"As a matter of fact I find that there existed a loose, undocumented agreement between the first plaintiffs and the defendant. The terms of that agreement do not admit of certain resolution …
On the evidence, I find that even if Flint and del Fante had clearly in their own minds the terms of their agreement (and it seems to me that both were prepared to shift their ground to take advantage of particular circumstances) there was no
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- meeting of minds at any particular point in time which could be taken as establishing a definite agreement." [Emphasis mine.]
44 At page 32 of the reasons, the Warden states:
"The First Plaintiff's case is that whatever the Defendant is entitled to, it is not a beneficial interest (as to 20%) in the Tenements and in its interest in the Applications.
With regard to the Tenements and the Applications, in light of the Defendant's admission, there should be declarations:
1. That the defendant holds the Tenements (to the extent of an 80% beneficial interest) as trustee for the First Plaintiffs; and
2. That the Defendant holds its interest in the Applications (to the extent of an 80% beneficial interest) as trustee for the First Plaintiffs.
The First Plaintiff s have not, on the balance of probabilities, established that they, rather than the Defendant, are entitled to the remaining 20% of the beneficial interest in the Tenements and the Defendant's interest in the Applications; I am unable to come to any conclusion with regard to the nature of the Defendant's interest in them."
45 In summary, I consider that the learned Warden found that the defendant held the tenements to the extent of an 80 per cent beneficial interest as trustee for the plaintiffs. He also held that the plaintiffs had not established that they were entitled to the remaining 20 per cent of the beneficial interest in the tenements. Neither did he find that the defendant owned the beneficial interest in that 20 per cent. The learned Warden was undecided as to who was the beneficial owner of that other 20 per cent. I note that the orders made by the learned Warden on 19 November 1998 reflect those reasons. The orders state that the plaintiffs are the beneficial owners of certain tenements to the extent of 80 per cent. It makes no order as to the beneficial ownership of the other 20 per cent.
46 I consider that the Warden made no clear findings, and certainly no orders, on who was to pay for the upkeep of the tenements. Were the costs to be split 80 per cent/20 per cent from day one, as the plaintiffs maintain, or was the defendant to get its 20 per cent beneficial interest
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- free because it was managing the tenements? That question is clearly undecided in the reasons of the Warden.
47 I consider that uncertain position as to the beneficial ownership of the 20 per cent interest was not resolved by the reasons or orders of the Full Court. It was not necessary for the Full Court to make hard findings of fact where the learned Warden had not. The passage quoted above from the judgment of Murray J at par 23 does not represent a hard finding of fact. It was not necessary for the Supreme Court to decide that, as the case turned on legal points. In my view, the orders made by the Full Court affirming the plaintiffs' 80 per cent beneficial ownership in the tenements is based on the admission made by the defendant. I quote from par 47 of the judgment of Murray J:
" … but as neither party seeks to upset Sorna's concession of an 80 per cent interest in the tenements to the respondents [plaintiffs] the substantive orders made by the Warden may remain in place."
48 I therefore consider the plaintiffs' claim in this pleading is arguable; that 80 per cent of the costs are to be borne by the plaintiffs and 20 per cent by the defendant. No doubt, the defendant will plead in response to this that it was entitled to its 20 per cent share in the tenements as a result of it agreeing to provide tenement management services. That plea is also open to it. Neither pleas are excluded by the express findings of the Warden or of the Full Court. I consider that is arguably the position for the whole of the period from 1994 to the year 2000. I think it is arguable that the Warden's findings that the defendant held the tenements, to the extent of an 80 per cent beneficial interest, as trustee for the plaintiffs applies from the date that the first tenement was put in the name of the defendant; not simply from the date of the order.
Claims for account
49 The plaintiffs make three claims for the defendant to account to it for small sums kept by the defendant. These pleas are in pars 52 to 62. They all arose prior to the plaintiffs commencing the proceedings in the Warden's Court.
50 The defendant relies on the extended principle of res judicata expressed by Sir James Wigram VC in Henderson v Henderson (1843) 3 Hare 115 (67 ER at 319) and also on the passage quoted with approval in
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- Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 602:
"… res judicata for this purpose is not confined to the issues which the court is actually asked to decide, but … it covers issues or facts which are so clearly part of the subject-matter of the litigation and so clearly could have been raised that it would be an abuse of process of the court to allow a new proceeding to be started in respect of them."
52 I consider it reasonable for the plaintiffs in that action to have claimed that relief. The plaintiffs concentrated, as it were, on the big picture. They were seeking to get a court determination as to the beneficial ownership of these tenements. That was akin to seeking a trial on a preliminary issue. Once the ownership was determined, the plaintiffs' claim for refund of expenses and refund of moneys held by the defendant could, I think, reasonably be brought in a separate action. I do not consider that the matter is clearly covered by Anshun estoppel. Of course, the defendant can raise that in its defence, but it is not an argument which is so plainly obvious that this part of the defendant's summary judgment application and strike-out application should succeed.
53 The first of these three small claims found at pars 52 to 55 of the statement of claim is a claim for $400 received by the defendant in or about 2 May 1995. The plea is that Mr Flint gave the defendant $500 to
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- pay an application fee for an exemption from expenditure in relation to mining lease 52/211. That was in October 1994. On 2 May 1995, a certificate exemption was granted for the year ended 10 September 1994 and a refund of $400 was received by the defendant. The plea is that the defendant failed to pay to or account to the plaintiffs for that $400. The plaintiffs' from the defendant is for the payment of that sum "as money had and received" to the plaintiffs' use. It would appear to be statute-barred. The limitation period is six years. The money was received on 2 May 1995. The writ should have been issued on or before 2 May 2001. The writ was, in fact, issued on 3 October 2001. I will not strike out the claim. It was not argued before me and if raised as a defence, the plaintiff may be able to plead an act of acknowledgement to defeat the defence.
54 In summary, I will strike out pars 12(a) and 41 to 45 of the further minute of amended statement of claim of 12 March 2002. I will give leave to amend pars 41 to 45.
55 On the plaintiffs' application for leave to amend the statement of claim, I will give leave to the plaintiffs in the form of the minute as amended above. I will give further leave to the plaintiffs to amend the plea of loss and damage resulting from the breaches of duty pleaded in par 39.
56 I will hear counsel on the precise orders which should follow and on the question of costs.
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