Hallmark Consolidated Ltd v Centaur Mining and Exploration Ltd (Administrators Appointed) (Receivers and Managers Appointed)
[2001] WASC 190
HALLMARK CONSOLIDATED LTD & ANOR -v- CENTAUR MINING AND EXPLORATION LTD (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) & ORS [2001] WASC 190
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASC 190 | |
| Case No: | CIV:1947/2001 | 9 & 16 JULY 2001 | |
| Coram: | McLURE J | 20/07/01 | |
| 22 | Judgment Part: | 1 of 1 | |
| Result: | Leave granted to commence and proceed with CIV 1947 of 2001 Injunction application successful in part | ||
| PDF Version |
| Parties: | HALLMARK CONSOLIDATED LTD (ACN 000 817 023) HALLMARK EXPLORATION NL (ACN 009 225 558) CENTAUR MINING AND EXPLORATION LTD (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) CENTAUR NICKEL PTY LTD (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) DAVID LAURENCE McEVOY ALLAN JOHN WATSON CENTAUR MINING AND EXPLORATION LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) (ACN 004 805 145) CENTAUR NICKEL PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) (ACN 079 092 194) |
Catchwords: | Application for mandatory injunction Joint venture Fiduciary duties Whether obligation to disclose information Turns on its own facts Corporations Law s 440D of the Law Application for leave nunc pro tunc to bring action |
Legislation: | Corporations Law, s 440D(1) Partnership Act, s 6 |
Case References: | Breen v Williams (1996) 186 CLR 71 Cash Converters Pty Ltd v Hila Pty Ltd (1993) 9 WAR 471 Mott and Anor v Mount Eden Goldmines (Aust) Ltd (1994) 12 ACSR 658 Mount Isa Mine Ltd v Seltrust Mining Corporation Pty Ltd, unreported; SCt of WA (Rowland J); Library No 6151; 5 July 1985 News Ltd & Ors v Australian Rugby Football League Ltd & Ors (1996) 139 ALR 193 Re Gordon Grant and Grant Pty Ltd (1982) 1 ACLC 196 Temwood Holdings Pty Ltd v Asean Australian Assets Pty Ltd [2000] WASC 84 United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 Connell v Bond Corporation (1992) 8 WAR 352 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- HALLMARK EXPLORATION NL (ACN 009 225 558)
Plaintiffs
AND
CENTAUR MINING AND EXPLORATION LTD (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED)
First Defendant
CENTAUR NICKEL PTY LTD (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED)
Second Defendant
DAVID LAURENCE McEVOY
ALLAN JOHN WATSON
Third Defendants
(Page 2)
FILE NO/S : COR 232 of 2001 MATTER : Section 440D of the Corporations Law
and
CENTAUR MINING AND EXPLORATION LTD (Receivers and Managers Appointed) (Administrators Appointed) (ACN 004 805 145) and CENTAUR NICKEL PTY LTD (Receivers and Managers appointed) (Administrators Appointed) (ACN 079 092 194)
- HALLMARK EXPLORATION NL (ACN 009 225 558)
Plaintiffs
AND
CENTAUR MINING AND EXPLORATION LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) (ACN 004 805 145)
CENTAUR NICKEL PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) (ACN 079 092 194)
Defendants
Catchwords:
Application for mandatory injunction - Joint venture - Fiduciary duties - Whether obligation to disclose information - Turns on its own facts
Corporations Law - s 440D of the Law - Application for leave nunc pro tunc to bring action
(Page 3)
Legislation:
Corporations Law, s 440D(1)
Partnership Act, s 6
Result:
Leave granted to commence and proceed with CIV 1947 of 2001
Injunction application successful in part
Representation:
CIV 1947 of 2001
Counsel:
Plaintiffs : Mr M J McCusker QC & Mr N P Gentilli
First Defendant : Mr M D Howard
Second Defendant : Mr M D Howard
Third Defendants : Mr M D Howard
Solicitors:
Plaintiffs : Jackson McDonald
First Defendant : Minter Ellison
Second Defendant : Minter Ellison
Third Defendants : Minter Ellison
COR 232 of 2001
Counsel:
Plaintiffs : Mr M J McCusker QC & Mr N P Gentilli
Defendants : Mr M D Howard
Solicitors:
Plaintiffs : Jackson McDonald
Defendants : Minter Ellison
(Page 4)
Case(s) referred to in judgment(s):
Breen v Williams (1996) 186 CLR 71
Cash Converters Pty Ltd v Hila Pty Ltd (1993) 9 WAR 471
Mott and Anor v Mount Eden Goldmines (Aust) Ltd (1994) 12 ACSR 658
Mount Isa Mine Ltd v Seltrust Mining Corporation Pty Ltd, unreported; SCt of WA (Rowland J); Library No 6151; 5 July 1985
News Ltd & Ors v Australian Rugby Football League Ltd & Ors (1996) 139 ALR 193
Re Gordon Grant and Grant Pty Ltd (1982) 1 ACLC 196
Temwood Holdings Pty Ltd v Asean Australian Assets Pty Ltd [2000] WASC 84
United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1
Case(s) also cited:
Connell v Bond Corporation (1992) 8 WAR 352
(Page 5)
1 McLURE J: There are two matters before me. The first is action COR 232 of 2001 which is an application under s 440D of the Corporations Law ("Law") for an order that the plaintiffs (Hallmark Consolidated Ltd and Hallmark Exploration NL) have leave nunc pro tunc to bring action CIV 1947 of 2001 against the defendants, Centaur Mining and Exploration Ltd (Administrators Appointed) (Receivers and Managers Appointed) and Centaur Nickel Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed). Action CIV 1947 was commenced without leave on 5 July 2001 by Hallmark Consolidated and Hallmark Exploration. Action COR 232 of 2001 was commenced on 10 July 2001.
2 The second matter (albeit the first in time) is the plaintiffs' application in action CIV 1947 against Centaur Mining, Centaur Nickel and their Receivers and Managers, Messrs McEvoy and Watson, for an interlocutory injunction:
"2. Requiring the defendants to provide the plaintiffs all information which the defendants have in their possession, custody or power relating to exploration licence 24/71 and mining leases 24/547 and 24/548;
3. Restraining the third defendants from taking any further steps to offer for sale the assets of the first and second defendants the subject of the information memorandum being annexure ARVN35 to the affidavit of Allan Robert Van Noort filed herein until 21 days after the defendants have complied with any injunction granted pursuant to paragraph 2 above."
3 Both matters were listed and part-heard on 9 July 2001. On that date, senior counsel for the plaintiffs informed the Court that the papers in action CIV 1947 of 2001 had been served on the administrators of the first and second defendants and the administrators had indicated they did not wish to be heard on the application. A ruling on the leave application was deferred until after submissions had been made on the merits of the substantive application for an interlocutory injunction.
Background Facts
4 Hallmark Exploration is the registered holder of exploration licence 24/71 ("Exploration Licence"). On 8 December 1994, Hallmark Exploration entered into a Heads of Agreement with Centaur Mining. The Heads of Agreement materially provide:
(Page 6)
- "1. CME [Centaur Mining] agreed to pay HLME [Hallmark Exploration] $250,000 within seven days from the date of signing of this Agreement and a further $250,000 within seven days of the first anniversary of the date of signing this Agreement.
2. In consideration of the payments described in clause 1 above CME shall have the right to carry out mineral exploration on the Tenement (exploration licence EL24/71) for a period of up to 18 months from the date of signing of this agreement ("the Exploration Period").
3. During the Exploration Period CME must spend a minimum of $500,000 in exploration on the tenements.
4. During and up to the date being 18 months of signing this Agreement CME shall have the right to acquire a 51 per cent interest in the tenement by the payment of $3,000,000 to HLME.
5. After exercising their right in clause 4 above and up to the date being 48 months from the date of exercising their right in clause 4 above CME are required to carry out sufficient exploration to enable Banking Mining Feasibility Stage to be reached.
6. After exercising their right in clause 4 above CME shall free carry HLME's 49 per cent interest to production.
7. After exercising their right in clause 4 above and during and up to the date being 24 months from the date of exercising their right in clause 4 above CME have the right to acquire an additional 29 per cent interest in the tenement, increasing their interest to 80 per cent, by the payment of $7,000,000 to HLME.
8. After exercising their right in clause 7 above CME shall free carry HLME's 20 per cent interest to production.
9. At any stage after CME has acquired its additional 29% interest in accordance with clause 7 above, HLME, at its election, may convert its 20% free carried interest into a 2% net smelter return from ore mined from the tenement.
(Page 7)
- 12. CME will be the Manager and Operator of the JV during the term of the JV.
...
16. A formal joint venture agreement to reflect the relationship between CME and HLME will be prepared as soon as possible by CME at CME's expense and executed by CME and HLME.
This Heads of Agreement shall be binding on the Parties until it is replaced by a formal Joint Venture agreement."
5 Centaur Mining made the payments referred to in clauses 1, 2, 3 and 4 of the Heads of Agreement. The Heads of Agreement has not been replaced by a formal joint venture agreement. The Heads of Agreement is silent on what, if any, obligations Centaur Mining has as manager and operator of the JV as distinct from a participant and does not deal expressly with the question of Hallmark Exploration's entitlement to information and documentation relating to the tenement. By a Deed of Assignment entered into in December 1997, Centaur Mining assigned its rights under the Heads of Agreement to Centaur Nickel.
6 In 1997 Hallmark Exploration applied for mining leases 24/547 and 24/548 to be granted from part of the land the subject of the Exploration Licence. Hallmark Exploration is currently registered as the holder of 49/100th shares and Centaur Mining is registered as the holder of 51/100th shares in the mining leases. Centaur Mining claims an entitlement to an 80 per cent interest of each of the tenements. This claim is disputed by Hallmark Exploration. The Exploration Licence and mining leases are together referred to as the Cawse Extended tenements.
7 In response to a request by Hallmark Exploration for information about the Cawse Extended tenements, Centaur sent a letter dated 15 June 2000 referring to up to date provisional resource figures and enclosed an attachment (Attachment 1) which prima facie shows the ore reserves on the Cawse Extended tenements to be significantly greater than the resource information which had been available since 1996.
8 On 25 July 2000 Centaur advised Hallmark in writing that pursuant to clause 5 of the Heads of Agreement, "Centaur hereby notifies Hallmark that sufficient exploration has been carried out to enable a Bankable Mining Feasibility Stage to be reached". By letter dated 27 July 2000 Hallmark requested copies of all documents, reports and resource
(Page 8)
- estimates used to enable Centaur to arrive at that opinion. On 4 August 2000, Centaur responded to Hallmark's July request for information in the following terms:
"I refer to your letter dated 27 July 2000 requesting more documentation in respect of Centaur's notification under Clause 5.
Please find attached a list of information available for your perusal. We are happy to provide any of the listed information for your consideration. Please indicate whether you require all of the information or just specific items.
Please note that before we can release any of the listed information we require you to complete and return a signed copy of the following Deed of Confidentiality."
10 In mid-December 2000, Hallmark provided to Centaur a duly executed copy of the Deed of Confidentiality required by Centaur in August 2000 before it would supply the information in Table 1. The Deed of Confidentiality stated that the confidential information was disclosed only for "the specified purpose" which is defined in the deed as meaning "the technical due diligence review of the business and assets of the Discloser (Centaur Mining) by the Recipient (Hallmark Exploration) for the purpose of determining the terms of a joint venture with the Discloser".
11 On 14 March 2001, administrators were appointed to the first and second defendant and on 16 March 2001 the third defendants were appointed receivers and managers of the first and second defendant.
12 At a meeting in April 2001 between representatives of the plaintiffs and the defendants, the plaintiffs identified with an asterisk the documents in Table 1 which had not at that stage been supplied. The documents were:
Resource Model - 1996 version
Pit Optimisation - 1996 version
Unicorn Prospect Model (2000)
(Page 9)
- Upgrade Study Summary
Operations Data/Resource Reconciliations
SG Revision
Resource Model 2
Pit Optimisation 2
13 In May 2001 the receivers published an Information Memorandum seeking non-binding bids for the first and second defendants' assets ("Cawse Nickel") from recipients of the Memorandum. The Memorandum stated, inter alia, that:
(a) the Memorandum did not purport to contain all of the information which a prospective purchaser may require;
(b) the information in the Memorandum is of a preliminary nature and subject to clarification and change;
(c) the proposed timetable for the sale was:
final date for submission of non-binding offers - 29 June 2001.
shortlisted parties notified to perform detailed due diligence - 13 July 2001.
access to data room commences - 16 July 2001.
due diligence, mine visits and management presentations 16 July - 17 August 2001.
submission of final binding offers - 24 August 2001;
(d) the receivers would advise each recipient of the Memorandum
whether they had been shortlisted. At that time shortlisted parties
would be provided access to a data room that contains the due
diligence materials;
(e) Cawse Nickel comprises three principal groups of tenements
being Cawse Central, Cawse Extended and Siberia;
(f) the Cawse Extended tenements had an inferred resource of
85.6Mt of .7 % Ni and .03 % Co.
(Page 10)
14 The Information Memorandum also states that in about November 1999 Anaconda Nickel Ltd and Centaur Mining entered into an agreement ("Preliminary Agreement") under which Anaconda was required to conduct a Pre-Feasibility Study and Feasibility Study to determine the optimal plant expansion of the Cawse Nickel Stage II Expansion.
15 In June 2001 the plaintiffs' request for information broadened and the basis of its entitlement to the information was said to rest on fiduciary duties. The plaintiffs' solicitors by letter dated 14 June 2001 requested from Centaur all information which it had in relation to the tenements the subject of the joint venture. The stated reason for the request was to enable Hallmark to be in a position to maximise the value to its shareholders from the sale process then being undertaken by the receivers of Centaur's interest in the Cawse Extended tenements. Thus, the scope and purpose of the request for information in June 2001 was different from the requests in the preceding 12 months in relation to which Hallmark had bound itself by a confidentiality agreement to limit the use to which the information could be put.
16 In a letter dated 15 June 2001 from the receiver's solicitors (Minter Ellison) to Hallmark's solicitors (Jackson McDonald) reference is made by the receivers to the need to assess whether any of the information in Table 1 requested by Hallmark was subject to a claim for confidentiality by Anaconda. Minter Ellison wrote to Anaconda about this matter on 20 June 2001 which letter records that Mr Van Noort (on behalf of the plaintiffs) had already been in contact with Anaconda about consenting to the release of the information. Minter Ellison's letter identified each category of document from Table 1 requested by the plaintiffs and continued:
"Although the receivers and managers have not personally adopted the agreement with Hallmark, they are willing to produce these documents recognising CME's obligations to carry out sufficient exploration work under the agreement with Hallmark. However, it is also apparent that some of the information which has been requested has in turn been extracted from drilling and exploration work conducted by Anaconda, in accordance with the Preliminary Agreement between Anaconda and CME dated 1 November 1999.
In light of the previous assertions that Anaconda has made concerning confidentiality in connection with its pre-feasibility study, we therefore ask that you confirm that Anaconda has no
(Page 11)
- objection to the abovementioned documents being produced to Hallmark under the Hallmark agreement."
17 Thus the request for Anaconda's consent related to information obtained in the course of Anaconda's Pre-Feasibility Study.
18 The evidence suggested that Anaconda subsequently informed Mr Van Noort that it agreed to the release of the documents. However, Minter Ellison wrote to Anaconda requesting written confirmation of its consent. Written confirmation was not forthcoming from Anaconda. Further, the evidence before the Court on 9 July 2001 was that the receivers had failed in an application against Anaconda in the Supreme Court of Victoria for the provision by the receivers of Anaconda's Pre-Feasibility Study to potential purchasers of the assets of the first and second defendants.
19 On 29 June 2001, Hallmark Consolidated put in a non-binding offer to purchase the first and second defendants' assets. In its offer Hallmark Consolidated stated:
"Since the issue of the Information Memorandum for the sale of the Cawse operations, Hallmark has been approached by various parties soliciting Hallmark's participation in strategic alliances to facilitate a joint bid.
Hallmark also has had detailed in principle discussions with two international investment banks and a large investment fund based in Europe.
It is Hallmark's objective to complete the funding arrangements for the acquisition through the issue of equity and/or debt to be facilitated by the international banks and/or the investment fund.
It is currently not possible to proceed further with these parties (or indeed any other interested parties) until:
(i) Hallmark is placed on the shortlist;
(ii) Hallmark has undertaken (or, at least, commenced) the due diligence; and
(iii) Hallmark has received all information from Centaur relating to the Cawse Extended Project and thereafter assessed and analysed the information to evidence the
(Page 12)
- fact that the resource position presently is sufficient to provide an ore supply with a total likely feeder of at least 28 million tonnes which currently equates to a 34-year project life."
The Leave Application
20 Section 440D(1) of the Law prohibits, during the administration of a company, a proceeding in a court against the company or its property being begun or proceeded with except, inter alia, with the leave of the court in accordance with such terms (if any) as the court imposes.
21 It can be seen from the background facts and the nature of the dispute that at this stage the real contradictors in the proceedings are the receivers. The administrators have had no active involvement in the lead up to or defence of the injunction application. Further, the plaintiffs do not seek to reduce the property available to the first and second defendants and their creditors, but to enhance it by ensuring the jointly owned assets, being the Cawse Extended tenements, are not sold at an undervalue. Having regard to these factors and the prejudice to the plaintiffs if leave were refused, a grant of leave is appropriate in the circumstances. As to the power to make an order under s 440D(1) of the Law after the commencement of proceedings, see Re Gordon Grant and Grant Pty Ltd (1982) 1 ACLC 196. However, the order granting leave to proceed should be in terms which precludes the plaintiffs from proceeding further than the current application for interlocutory relief.
The First Hearing
22 At the first hearing on 9 July 2001, the third defendants had not filed any affidavit evidence in opposition. However, at that hearing they sought and obtained leave to rely upon part of an affidavit sworn by a Mr McEvoy in proceedings commenced by the receivers against Anaconda in the Supreme Court of Western Australia for the removal of caveats over the Cawse tenements. Mr McEvoy deposed to the significant financial consequences to the secured creditor in the event the sale was delayed and the fact that delay may jeopardise the receivers' ability to keep the first and second defendants' management team and staff in place.
23 During the hearing senior counsel for the plaintiffs identified the information required by the plaintiffs for their stated purpose as that relating to the estimation and evaluation of the ore resource on the Cawse
(Page 13)
- Extended tenements and the source data in relation to that evaluation or estimate being drilling results and metallurgical data.
24 Counsel for the third defendants advised the Court that the receivers had supplied further information to the plaintiffs on the morning of the hearing which (together with information previously provided) was, on his instructions, all the information the plaintiffs required for their stated purpose. The third defendants had not had time to depose to these matters.
25 I adjourned the hearing to 16 July 2001 to enable the third defendants to file an affidavit. I ordered the third defendants to file and serve on the plaintiffs an affidavit stating whether they had supplied to the plaintiffs all documents relating to the estimation and evaluation of the resource on the Cawse Extended tenements, drilling results and metallurgical data.
26 I declined to make an order restraining the sale of the first and second defendants' assets on the grounds that I was not at that stage satisfied the plaintiffs would be prejudiced if the third defendants' timetable in the Information Memorandum was followed and Mr McEvoy's evidence established the possibility of significant prejudice to the defendants and the secured creditor in the event of delay. However, I left it open to the plaintiffs to renew their application at a later date.
The Adjourned Hearing
27 At the adjourned hearing on 16 July 2001, I had before me affidavits filed on behalf of the defendants including an affidavit from the first and second defendants' chief geologist, Mr Stephen Denn, and an affidavit of one of the receivers, Mr Watson, to which was annexed a copy of the reasons for decision in the Supreme Court of Victoria action against Anaconda. In the Victorian Supreme Court proceedings the receivers sought a determination under s 424 of the Law that the Pre-Feasibility Study the subject of the Preliminary Agreement could be released in whole or in part to prospective purchasers of Centaur's interest in Cawse. Anaconda opposed the application. The Court refused to make the order. The receivers have filed a notice of appeal from the decision.
28 Further, Mr Watson stated that due to matters unrelated to this action, he had decided to postpone the opening of the data room to prospective purchasers of Cawse Nickel, and thus the sale, for approximately four weeks. In light of that extension, the plaintiffs did not seek an order in terms of par 3 of the summons deferring the sale of the
(Page 14)
- first and second defendants' assets. However, the plaintiffs pressed for an order in terms of par 2 of the summons.
29 Mr Denn's affidavit details the information and documents which have not been provided to the plaintiffs. First is the Pre-Feasibility Study conducted by Anaconda. It has not been disclosed because Anaconda had previously refused to consent to the study being disclosed to prospective purchasers of Cawse Nickel.
30 Second, in relation to metallurgical results, Mr Denn says to the best of his knowledge Centaur has not conducted any metallurgical studies at Cawse Extended. He also swears to his belief that Anaconda has conducted metallurgical studies for Cawse Extended but the studies are not in the possession, custody or power of Centaur.
31 Third is the document referred to in Table 1 as "Pit Optimisation - 1996 version". Mr Denn says he has no knowledge of this item being in existence in a CD ROM format or a hard copy format and has found no other reference to it other than in Table 1.
32 Fourth, Mr Denn refers to the item in Table 1 described as "Upgrade Study Summary". He says the information in that document relating to Centaur's mining processes is not relevant to Cawse Extended and I assume for that reason has not been provided to the plaintiffs.
33 Fifth, Mr Denn swears that the item in Table 1 described as "Operations Data - Resource Reconciliations" contains information relating to mining operations and is not relevant to the Cawse Extended tenements.
34 Sixth is the "S.G. Revision" item in Table 1. Mr Denn says the specific gravity used by Centaur is based on information derived from Cawse Central not Cawse Extended and the assumptions and calculations standing behind the S.G. revision figures are confidential.
35 Finally, Mr Denn refers to the "Resource Model 2" and "Pit Optimisation 2" items in Table 1. He swears the information was prepared by Anaconda and Centaur does not have the material. By letter dated 12 July 2001 from the receivers to Anaconda, the receivers have advised Anaconda that the first and second defendant are not in possession of those two items and inquire whether Anaconda has the information and, if so, whether it would be prepared to release the information to Hallmark. Anaconda had not responded to the letter by the time Mr Denn swore his affidavit.
(Page 15)
36 Mr Denn also swears that the defendants are in the process of completing a resource report that will cover all project areas of Cawse Nickel including the Cause Extended tenements and the report will be completed in approximately seven days. The draft index to the report reveals that it goes into considerable detail on matters relating to the resources. The receivers propose to provide Hallmark with those parts of the report relating to the Cawse Extended tenements subject to it executing a confidentiality agreement.
37 According to Mr Denn, the resource data relating to the Cawse Extended tenements contained in the Information Memorandum is also the information contained in the latest annual report of Centaur Mining for the year 2000. Further, a resource model recently completed by Centaur Mining and already provided to the plaintiff discloses resource results essentially the same as those in the annual report save that there is now a measured resource for 4 million tonnes out of 84 million tonnes as compared to the previous model which only had an inferred resource. As to Attachment 1 (entitled "Life of Ore Supply") to Centaur Mining's letter dated 15 June 2000, Mr Denn says Centaur had not completed any update to the resource model for Cawse Extended until March 2001. The only other update for the Cawse Extended tenements was undertaken by Anaconda pursuant to the Pre-Feasibility Study. Mr Denn's assessment of the Life of Ore Supply table is that it was based on a provisional Anaconda resource number that had not been verified. Finally, Mr Denn swears that:
"Save for the Pre-Feasibility Study, Resource Model 2 and Pit Optimisation 2 (which are documents provided by Anaconda) and the resource report soon to be completed by Centaur ..., I believe that:
(a) Centaur does not have any other relevant documents in its possession, custody or power which would preclude Hallmark from undertaking a resource data estimate of Cawse Extended;
(b) Centaur has provided to Hallmark all drilling results, resource evaluations and metallurgical results which are relevant to Hallmark or the tenements in which Hallmark has an interest."
38 Mr Denn's belief appears to be incorrect. The plaintiffs filed a responsive affidavit from Mr John Barr sworn on 14 July 2001 annexing a
(Page 16)
- report from Snowden Mining Industry Consultants. Following Snowden's consideration of the information referred to in Mr Denn's affidavit, it was said the following information had not been provided (and was necessary):
2. A full description of the techniques used to generate the March 2001 resource models, including information on geological interpretation assumptions, variography and modelling parameters, preferred modelling methods, resource classification criteria, generation of upgrade factors and data used in the estimates.
3. The geological solids used for block modelling at the Unicorn, Jed Bob and Yowie prospects and identified in the respective block models.
...
6. Copies of all figures referred to in the supplied Unicorn memorandum but not provided.
...
8. Details of any geomechanical test work relating specifically to Cawse Extended material.
Interlocutory Mandatory Injunction Principles
40 The principles applicable to the grant of an interlocutory mandatory injunction were considered by Kennedy J in Cash Converters Pty Ltd v Hila Pty Ltd (1993) 9 WAR 471 at 483. He said:
"In Shepherd Homes Ltd v Sandham [1971] Ch 340 at 351, Megarry J, in a passage which was approved by the Court of Appeal in Locabail International Finance Ltd v Agroexport (The Seahawk) [1986] 1 WLR 657 at 664, said:
(Page 17)
- 'Third, on motion, as contrasted with the trial, the court is far more reluctant to grant a mandatory injunction than it would be to grant a comparable prohibitory injunction. In a normal case the court must, inter alia, feel a high degree of assurance that at the trial it would appear that the injunction was rightly granted; this is a higher standard than is required for a prohibitory injunction.'
- This statement was accepted by Hoffman J in Films Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670 at 680 - 681; [1986] 3 All ER 772 at 781, as being another way of saying that the features which justify describing an injunction as 'mandatory' will usually also have the consequence of creating a greater risk of injustice if it is granted rather than withheld at the interlocutory stage unless the court feels a 'high degree of assurance' that the plaintiff would be able to establish his right at a trial."
41 Spry in his book Equitable Remedies, 5th Ed, emphasises the balance of convenience and what the justice of the case requires. He states [at page 572]:
"…. On all interlocutory applications the hardship or prejudice that may ensue if relief is granted or if conversely it is refused is weighed with other relevant considerations, including the strength of the plaintiff's case (see generally American Cynamid Co v Ethicon Ltd [1975] AC 396 ….); and although the court acts with caution, a mandatory order is made if the balance of justice so requires. But when the plaintiff is seeking on an interlocutory application an order for the specific performance of part or all of the defendant's obligations under a contract, being relief that is ordinarily granted only at the final hearing, that relief is, at least in the absence of special circumstances, granted only if its refusal would give rise to disproportionate prejudice or hardship to the plaintiff, as against the prejudice or hardship that its grant will cause the defendant (Films Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670). Since account is taken of the strength of the plaintiff's case, the more probable it appears that he will succeed at the final hearing or in other relevant proceedings, the less reluctance to intervene will be shown by the court (Locabail InternationalFinance Ltd v Agroexport [1986] 1 WLR 657)."
(Page 18)
42 However, it is the case that whether an injunction is mandatory or prohibitory, the test is the same, namely, whether there is a serious question to be tried and if so, whether the balance of convenience favours the grant of the injunction: Temwood Holdings Pty Ltd v Asean Australian Assets Pty Ltd [2000] WASC 84 at [21] to [23]. The two elements of the test are not independent of each other: Mott and Anor v Mount Eden Goldmines (Aust) Ltd (1994) 12 ACSR 658.
43 As the plaintiffs seek, in effect, final relief for which there can be no effective restitutio in integrum in the event they are ultimately unsuccessful, they must establish that refusal to grant order 2 would give rise to disproportionate prejudice or hardship to them as against the prejudice or hardship caused to the defendants.
Serious Question to be Tried
44 The plaintiffs say the Heads of Agreement create a joint venture and a partnership and that the relationship between Hallmark Exploration and Centaur is a fiduciary one by reason of s 6 of the Partnership Act and the general law. The plaintiff also relies on the role of Centaur as manager and operator of the joint venture in support of its claim of a fiduciary relationship.
45 The relationship between a joint venture and a partnership was considered by the High Court in United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1. Mason, Brennan and Deane JJ said [at page 10]:
"The term 'joint venture' is not a technical one with a settled common law meaning. As a matter of ordinary language, it connotes an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit, with each participant usually (but not necessarily) contributing money, property or skills. Such a joint venture (or under Scott's law, 'adventure') will often be a partnership. The term is, however, apposite to refer to a joint undertaking or activity carried out through a medium other than a partnership: such as a company, a trust, an agency or joint ownership. The borderline between what can properly be described as a 'joint venture' and what should more properly be seen as no more than a simple contractual relationship may on occasion be blurred. Thus, when one party contributes only money or other property,
(Page 19)
- it may sometimes be difficult to determine whether a relationship is a joint venture in which both parties are entitled to a share of profits or a simple contract of loan or a lease under which the interest or rent payable to the party providing the money or property is determined by reference to the profits made by the other. One would need a more confined and precise notion of what constitutes a 'joint venture' than that which the term bears as a matter of ordinary language before it could be said by way of general proposition that the relationship between joint venturers is necessarily a fiduciary one: ... The most that can be said is that whether or not the relationship between joint venturers is fiduciary will depend upon the form which the particular joint venture takes and upon the content of the obligations which the parties to it have undertaken."
46 Dawson J also makes the point that a joint venture may not be a partnership but the relationship may nevertheless be a fiduciary one. He said [at page 16]:
"Although the relationship between participants in a joint venture which is not a partnership will be governed by the particular contract rather than extrinsic principles of law, the relationship may nevertheless be a fiduciary one if the necessary confidence is reposed by the participants in one another."
47 Even if fiduciary duties arise (whether because the parties are in partnership or otherwise) their nature and extent are not set (or settled): see Mount Isa Mine Ltd v Seltrust Mining Corporation Pty Ltd, unreported; SCt of WA (Rowland J); Library No 6151; 5 July 1985; News Ltd & Ors v Australian Rugby Football League Ltd & Ors (1996) 139 ALR 193 at 312. In Breen v Williams (1996) 186 CLR 71 those members of the High Court who regarded the relationship between a medical practitioner and his or her client as fiduciary held there was no fiduciary duty on the medical practitioner to supply to the patient documents or information contained in the documents concerning the patient. That case draws a distinction between negative and positive fiduciary duties: Breen v Williams per Brennan CJ at 83, Dawson and Toohey JJ at 93 - 94 and Gaudron and McHugh JJ at 109 - 113.
48 Further, it is to be accepted that there may well be a distinction between the duties which arise by virtue of a person's status as a participant in a joint venture and any role it undertakes as manager and operator. To the extent that a participant is a manager and operator and as
(Page 20)
- such acts as agent for all joint venture participants, the usual fiduciary duties are likely to apply.
49 The evidence in this application concerning the relationship between the joint venture parties is skeletal. It is, in effect, limited to the terms of the Heads of Agreement. It is not clear what role, if any, Hallmark Exploration had in the exploration (pre-production) stage of the joint venture and what, if any, duties Centaur exercised as manager and operator of the JV in the pre-production phase. However, even on the limited evidence before the Court there is a serious question to be tried as to whether Centaur has a fiduciary duty to Hallmark Exploration to provide the latter with information in Centaur's possession, custody or power arising from, or necessary for, the performance by the parties of their obligations in the Heads of Agreement. So much was conceded by the third defendants.
Balance of Convenience
50 With some exceptions, the balance of justice and convenience clearly favours disclosure. The commercial interests of both the plaintiffs and the defendants is in maximising the value of jointly owned assets and this is reflected in the receivers' conduct (albeit tardy) in meeting the plaintiffs' demands where possible. The parameters of the dispute are reasonably clear. Based on Mr Denn's evidence, there are three categories of information or documentation which have not been provided to the plaintiffs. They are:
(a) information and documentation the subject of a confidentiality claim by Anaconda pursuant to the Preliminary Agreement which includes the Pre-Feasibility Study, Resource Model 2, Pit Optimisation 2 and the metallurgical studies for Cawse Extended (and in relation to the last three items Mr Denn says they are not in the defendants possession);
(b) information in Table 1 which the third respondents say does not relate to the Cawse Extended tenements (being parts of the Upgrade Study Summary, all the information under the heading "Operations Data - Resource Reconciliations" and the SG revision);
(c) information which is relevant but not yet supplied (being the information referred to in items 2, 3 and 6 of the
(Page 21)
- Snowden Mining report) and relevant parts of the soon to be completed resource report.
51 As to the first category of information, the evidence establishes that the performance of any disclosure obligation which Centaur owes to Hallmark Exploration arising out of the relationship the subject of the Heads of Agreement may place the first and second defendants, or either of them, in breach of an obligation of confidentiality owed to Anaconda. I am not in a position to, and need not, make any assessment of the merits of Anaconda's claim (although the defendants' legal position against Anaconda for the release of the information to Hallmark is likely to be stronger than that for the release to other prospective purchasers). In the circumstances the balance of justice and the respective prejudice to the plaintiffs and the defendants does not justify the grant of an interlocutory mandatory order which may put Centaur in breach of an obligation to a third party. Further, as the requested order may directly affect Anaconda's rights, questions arise concerning the need for notice to or joinder of Anaconda: see News v ARL at 297 - 300. In any event, it appears from Mr Denn's affidavit that the yet to be completed resource report for Cawse Extended is the third defendants' attempt to provide the plaintiffs and other prospective purchasers with all relevant resource information.
52 The plaintiffs say at a minimum, the third defendants should be ordered to expressly request Anaconda's consent to release the information to the plaintiffs. In my opinion, Anaconda by its conduct has made its position sufficiently clear. Even before the appointment of the receivers and administrators and before Hallmark Consolidated became a potential competitor for the purchase of the first and second defendants' assets, Anaconda, despite repeated requests, failed to supply its consent in writing to the release to the plaintiffs of the Table 1 information.
53 Further, the receivers wrote to Anaconda again on 12 July 2001 in relation to Resource Model 2 and Pit Optimisation 2. No response has been received. Although there is no evidence that the receivers have expressly requested Anaconda to consent to the defendants releasing to Hallmark the parts of the Pre-Feasibility Study relating to the Cawse Extended tenements, the relevant Table 1 information requested in December 2000 was from the Pre-Feasibility Study. Further Anaconda's stated rationale in the Victorian Supreme Court proceedings for refusing its consent to release of the Pre-Feasibility Study was that it wanted to protect its confidential information from prospective purchasers. That rationale is applicable to Hallmark who requires the information in order to compete with Anaconda as a prospective purchaser of Cawse Nickel.
(Page 22)
54 The second category of information is the items (or parts thereof) in Table 1 which Mr Denn has sworn contains material that is not relevant to the Cawse Extended tenements. I understand this to mean not directly relevant. No doubt a great deal of information in the possession of the defendants relating to their other assets may be of economic or indirect significance to the Cawse Extended tenements. Further, it may be that in certain circumstances and for limited purposes an obligation to disclose may arise. However, I do not regard the balance of justice or convenience in the circumstances of this application to be such as to warrant an order that information of this character be disclosed. Further, Mr Denn's evidence is that the plaintiffs have the necessary data to do their own calculation of the specific gravity figures for the Cawse Extended tenements.
55 The only remaining information is that referred to items 2, 3 and 6 of the Snowden report. The receivers have volunteered to provide that information and the relevant parts of the proposed resource report. As the relief sought by the plaintiffs is interlocutory, I see no prejudice to them in executing a deed of confidentiality in relation to the information in the proposed resource report.
56 Finally, the plaintiffs submitted that the third defendants had not acted with the care and diligence to be expected in relation to the supply of the requested information and in those circumstances it was appropriate to make an order in terms of par 2 of the summons. I disagree. Although there has been delay and some mistakes by the receivers, it is to be expected that they would face difficulties in identifying all relevant information and what had (and had not) been communicated to the plaintiffs. The plaintiffs have now had the opportunity to examine all the information supplied by the receivers and have identified further information which they require for their purposes. Having identified that information, the receivers volunteered to supply it. I see no need for an order in terms of par 2 of the summons (which, in any event, is unjustifiably broad in scope).
57 If the defendants do not give an undertaking concerning the supply to Hallmark of the information in items 2, 3 and 6 of the Snowden report and all relevant parts of the resource report, I propose to make an order that the information be provided. If the undertaking is provided, I propose to dismiss the application.
4
8
0