Kingstream Steel Ltd (Subject to Deed of Company Arrangement) v St Barbara Mines Ltd
[2003] WASC 108
KINGSTREAM STEEL LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) -v- ST BARBARA MINES LTD & ANOR [2003] WASC 108
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASC 108 | |
| Case No: | CIV:1913/2002 | 26 MAY 2003 | |
| Coram: | MASTER NEWNES | 11/06/03 | |
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Application successful in part | ||
| B | |||
| PDF Version |
| Parties: | KINGSTREAM STEEL LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 009 224 800) ST BARBARA MINES LTD (ACN 009 165 066) ZYGOT LTD (ACN 009 115 664) |
Catchwords: | Practice and procedure Application to strike out statement of claim Adequacy of plea as to state of mind Turns on own facts |
Legislation: | Rules of the Supreme Court, O 20 r 19 |
Case References: | Dey v Victorian Railways Commissioners (1949) 78 CLR 62 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Ariss v Express Interiors Pty Ltd (1996) 2 VR 507 Black v Brockley Investments Ltd, unreported; SCt of WA; Library No 930039; 27 January 1993 Brambles Holdings v Trade Practices Commission (1979) 28 ALR 191 Burton v President of the Shire of Bairnsdale (1908) 7 CLR 76 FFE Minerals Australia v Mining Australia (2000) 22 WAR 241 Harpur v Ariadne Australia Limited (No 2) (1984) 2 Qd R 523 Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365 Howden v Truth & Sportsman Ltd (1937) 58 CLR 416 Lawrance v Lord Norreys (1890) 15 App Cas 210 Lee v Clarkson (1915) 17 WALR 189 Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 Niven v Grant (1903) 29 VLR 102 Pukallus v Cameron (1982) 56 ALJR 907 Sydmir Pty Ltd v Statewide Developments Pty Ltd (1987) 5 ACLC 480 Walton v Gardiner (1993) 177 CLR 378 Wenlock v Moloney [1965] 1 WLR 1238 Wests Process Engineering Pty Ltd v Westralian Sands Ltd (1998) 16 ACLC 1020 Young v Holloway [1895] P 87 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
ST BARBARA MINES LTD (ACN 009 165 066)
First Defendant
ZYGOT LTD (ACN 009 115 664)
Second Defendant
Catchwords:
Practice and procedure - Application to strike out statement of claim - Adequacy of plea as to state of mind - Turns on own facts
Legislation:
Rules of the Supreme Court, O 20 r 19
(Page 2)
Result:
Application successful in part
Category: B
Representation:
Counsel:
Plaintiff : Ms N Johnson QC
First Defendant : Mr A R Beech
Second Defendant : Mr A R Beech
Solicitors:
Plaintiff : Phillips Fox
First Defendant : Tottle Christensen
Second Defendant : Tottle Christensen
Case(s) referred to in judgment(s):
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Case(s) also cited:
Ariss v Express Interiors Pty Ltd (1996) 2 VR 507
Black v Brockley Investments Ltd, unreported; SCt of WA; Library No 930039; 27 January 1993
Brambles Holdings v Trade Practices Commission (1979) 28 ALR 191
Burton v President of the Shire of Bairnsdale (1908) 7 CLR 76
FFE Minerals Australia v Mining Australia (2000) 22 WAR 241
Harpur v Ariadne Australia Limited (No 2) (1984) 2 Qd R 523
Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365
Howden v Truth & Sportsman Ltd (1937) 58 CLR 416
Lawrance v Lord Norreys (1890) 15 App Cas 210
Lee v Clarkson (1915) 17 WALR 189
(Page 3)
Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336
Niven v Grant (1903) 29 VLR 102
Pukallus v Cameron (1982) 56 ALJR 907
Sydmir Pty Ltd v Statewide Developments Pty Ltd (1987) 5 ACLC 480
Walton v Gardiner (1993) 177 CLR 378
Wenlock v Moloney [1965] 1 WLR 1238
Wests Process Engineering Pty Ltd v Westralian Sands Ltd (1998) 16 ACLC 1020
Young v Holloway [1895] P 87
(Page 4)
1 MASTER NEWNES: This is an application by the defendants to strike out the substituted statement of claim on the grounds that it is frivolous or vexatious or is an abuse of the process of the Court, alternatively, to strike out pars 4, 9, 11, 13, and 14 on the ground that they do not disclose any arguable cause of action.
2 Paragraphs 4 to 14 of the statement of claim plead the matters relied upon by the plaintiff for a claim that an Option Deed and a Supplementary Deed entered into between the plaintiff and the first defendant be rectified, it being contended by the plaintiff that, by reason of a common mistake, those documents do not reflect the common intention of the parties.
3 Those paragraphs are as follows:
"4 In or about late 1996, Nik Zuks, for and on behalf of the Plaintiff, and Neil Roberts and Bruce Tomich, both for and on behalf of the First Defendant, verbally agreed that the First Defendant would grant the Plaintiff an option to purchase certain mining interests which were stated to be held by the First Defendant. The terms of the verbal agreement, were, inter alia:
4.1 the First Defendant would grant the Plaintiff an option to purchase:
4.1.1 the mining and exploration tenements known as TR3902H, and exploration licences EL 20/176, being tenements relating to the site known as 'Weld Range'; and
4.1.2 all mining interests relating to the site known as the 'Jack Hills Range'.
4.2 the Plaintiff would pay the First Defendant the sum of $1 million on execution of an option deed; and
4.3 the Plaintiff would pay the First Defendant the sum of $3.2 million if the Plaintiff chose to exercise the option.
('the verbal agreement')
(Page 5)
- 5 At the time of the verbal agreement the mining interests relating to the site known as the 'Jack Hills Range' consisted of exploration licence EL 20/209.
6 At the time of the verbal agreement, but unknown to the Plaintiff, EL 20/209 was held by the Second Defendant.
7 On 1 October 1996 the Second Defendant lodged mining applications M 51/841, M 20/343 and M 20/344 ('the Applications') with respect to certain areas within EL 20/209.
8 On 8 October 1996 the Second Defendant surrendered those areas of EL 20/209 to which the Applications related.
9 On or about 27 March 1997, the Plaintiff and the First Defendant entered into a written option agreement ('the Option Deed') which was intended to embody the verbal agreement.
Particulars
- 9.1 The Option Deed is dated 27 March 1997 made between St Barbara Mines Limited and Kingstream Resources NL (now known as Kingstream Steel Limited).
10 Under the Option Deed the First Defendant granted the Plaintiff an option to purchase certain mining and exploration tenements, the title to which were stated to be held by the First Defendant, at and for the consideration and on the terms and conditions contained in the Option Deed.
11 The Option Deed was drawn up and executed by the Plaintiff and the First Defendant under a common mistake of fact that the Applications were included in the definition of 'the Tenements' in recital A of the Option Deed.
Particulars of Common Mistake of Fact
- 11.1 The definition of 'the Tenements' in recital A to the option deed incorrectly defined 'the
(Page 6)
- Tenements' as being TR3902H, EL 20/176 and EL 20/209;
- 11.2 The maps annexed to the option deed disclosed that certain areas of EL 20/209 were the subject of the Applications; and
11.3 Letter from Clayton Utz Solicitors, acting on behalf of the first defendant, to Solomon Brothers Solicitors, acting on behalf of the plaintiff, dated 29 January 1999.
- 12 On or about 20 January 1998, the Option Deed was varied by a further written agreement between the Plaintiff and the First Defendant which purported to extend the definition of 'the Tenements' in Recital A of the Option Deed to include other mining or exploration licences, leases or other interests acquired or applied for pursuant to the Mining Act 1978.
Particulars
- 12.1 The variation was constituted by a document headed 'Supplemental Deed' and dated 20 January 1998.
13 The Supplemental Deed was drawn up and executed by the Plaintiff and the First Defendant under a common mistake of fact that the Applications were included in the definition 'of the Tenements' in recital A of the Option Deed and in the definition of 'the Tenements' substituted by clause 2(e) of the Supplemental Deed.
Particulars of Common Mistake of Fact
- 13.1 Clause 2(e) of the Supplemental Deed incorrectly defined 'the Tenements' as 'including all other mining or exploration licences, lease or other interests acquired or applied for by either party pursuant to the Mining Act in addition to, or substitution for all or part of TR3902H, EL 20/176 and EL 20/209 or any of them over or in respect of all or part of the area included within
(Page 7)
- the outer perimeter or of TR3902H, EL 20/176 and EL 20/209 as at 26 March 1997';
- 13.2 The Applications were dated prior to 26 March 1997; and
13.3 Letter from Clayton Utz Solicitors, acting on behalf of the first defendant, to Solomon Brothers Solicitors, acting on behalf of the Plaintiff, dated 29 January 1999.
- 14 Together, the Option Deed and the Supplemental Deed constituted an agreement between the Plaintiff and the First Defendant ('the Option Agreement'), pursuant to which the First Defendant granted the Plaintiff an option to purchase the following mining and exploration tenements:
14.1 the mining and exploration tenements known as TR3902H, and exploration licences EL 20/176, being tenements relating to the site known as 'Weld Range' (clause 1 of the option deed);
14.2 exploration licence EL 20/209, relating to the site known as the 'Jack Hills Range' (clause 1 of the option deed);
14.3 by reason of the matters pleaded in paragraphs 4 to 13 herein, the Applications; and
14.4 the mining leases known as M20/402 and M20/403, relating to the site known as the 'the Weld Range'.
(collectively, the 'agreed Tenements')"
5 The defendants rely for that contention upon an affidavit of Damian Anthony Creedon sworn 20 March 2003 and, in particular, on two letters annexed to that affidavit. As the terms of those letters are central to the defendants' argument, it is necessary to set them out.
(Page 8)
6 The first letter is from the plaintiff to the first defendant and is dated 20 January 1987, some three months or more after the oral agreement alleged by the plaintiff in par 4 of the statement of claim. The relevant part of the letter is in the following terms:
"The following is a modified proposal for the purchase of the Weld Range leases.
The terms are:
1. $1.0M 12 month option fee.
2. $3.0M in shares to be exercisable at the price when the option is exercised.
3. Any non-ferrous metals discovered on the leases we suggest be shared at 50% to St Barbara Mines and 50% to An Feng Kingstream Steel, with St Barbara being manager of the development and with the mining of the iron ore to take precedent.
It is also acknowledged that the State Agreement Act does not provide for the exploitation of metals other than iron ore and as such in the event that other minerals in economic quantities are discovered, An Feng Kingstream Steel will use it's [sic] best endeavours to secure the rights to exploit the resource.
The agreement is conditional on the Government giving approval for the transfer of the rights under the Murchison Iron Ore Agreement Act from St Barbara Mines to An Feng Kingstream Steel.
I hope that the terms are acceptable to you and look forward to concluding the matter as soon as possible."
7 The reply, from the chairman of the first defendant, is dated 31 January 1997 and the relevant part is in the following terms:
"I advise that earlier today the St Barbara Mines Limited ('SBM') Board considered the proposal set out in your letter to Bruce Tomich of 20 January 1997, pursuant to which Kingstream Resources NL ('Kingstream') would acquire an option to purchase SBM's Weld Range Temporary Reserves.
(Page 9)
- The SBM Board agreed in principle to the proposal set out in your letter, however, given the complexities of the issues, a more formal and detailed agreement is needed.
We have already spoken with representatives of government concerning the assignment of the Temporary Reserves to Kingstream on a basis which addresses the matter of non ferrous metals.
We would wish to advance these discussions further before final commitment but, if you agree, we should exchange the names of lawyers, so that work can commence on the details associated with the agreement."
8 The defendants say it is apparent from that correspondence that, even as late as January 1997, no concluded agreement had been reached between the parties with respect to the tenements. It is evident, they say, that by January 1997 the parties were still only at the stage of discussing proposals for the sale of the tenements. Accordingly, the allegation that there was a concluded oral agreement before October 1996 in respect of the tenements, which the written agreement in March 1997 was intended to embody, is simply untenable.
9 The plaintiff has not sought to adduce any evidence in respect of that correspondence. The plaintiff says that is because it is simply not appropriate on an application of this sort to seek to determine, by reference to isolated exchanges of correspondence, whether, as a matter of fact, an oral agreement was previously made between the parties. That can only properly be determined at trial when all the relevant oral and documentary evidence is adduced so that, among other things, the correspondence referred to by the defendants can be seen in its proper context and the circumstances in which it came to be written can be understood.
10 The plaintiff says that, in these circumstances, it is not incumbent upon it to put on evidence to explain this correspondence and, indeed, to do so would effectively require it to put substantial amounts of its case on affidavit for the purposes of this application. That would be neither appropriate nor necessary, given the nature of the application. No inference can therefore be drawn from the fact that the plaintiff has not put on evidence of that nature.
11 The onus of establishing that the plaintiff has no arguable case lies, of course, on the defendants. It was common ground that it is a heavy
(Page 10)
- onus, and the power to strike out a pleaded claim at an interlocutory stage must be exercised with exceptional caution: Dey v Victorian Railways Commissioners (1949) 78 CLR 62; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129.
12 In my view, the defendants have not discharged that onus. Itis apparent that the correspondence is simply one link in a chain of, at this stage, unexplained events. The letter of 20 January 1997 from the plaintiff begins by describing what follows as "a modified proposal for the purchase of the Weld Range leases". What it seeks to modify, and the circumstances in which it came to be written, are not apparent. The response from the first defendant does not make that any clearer. That is, it is not apparent how, or why, the negotiations referred to in these letters came about or what was the ultimate outcome of them. Accordingly, it is not clear how (if at all) they bear upon the oral agreement alleged by the plaintiff. The uncertainty is highlighted by the fact that they refer only to the "Weld Range" leases and not at all to the "Jack Hills Range" tenements, the latter being the specific subject of the plaintiff's claim for rectification.
13 On the evidence before me, the letters, in my view, are not necessarily inconsistent with an antecedent oral agreement, as pleaded by the plaintiff, and a subsequent written agreement that was intended to embody the oral agreement. I do not consider that any firm conclusions can be drawn from what is, on its face, a desultory exchange of correspondence, the context and circumstances of which are unexplained and the effect of which is unclear.
14 It is true that the plaintiff has not put on evidence to demonstrate that the correspondence can be reconciled with the case pleaded, but, equally, nor have the defendants, on whom the onus on this application lies, put on sufficient evidence to demonstrate that the correspondence is necessarily irreconcilable with that case.
15 I do not, therefore, consider that the defendants have established that the plaintiff's case is unarguable and, accordingly, that part of the application must fail.
16 It is, accordingly, necessary to turn to the defendants' objections to particular paragraphs of the statement of claim. They are as follows.
17 The defendants complain that par 4 is objectionable because of the vagueness of the date "late 1996". As I understand it, the defendants' concerns would be overcome if it were apparent from the pleading
(Page 11)
- whether it is alleged that the oral agreement was made before or after 8 October 1996. I think it is to be inferred from the plea in par 5 of the statement of claim that the plaintiff alleges the oral agreement was made at a time earlier than 8 October 1996 but, whatever is said to be the case, in my view, it should be expressly pleaded. I understood counsel for the defendants to accept that that must be done.
18 I would, therefore, uphold the defendants' objection to par 4 as it stands.
19 The next attack was on par 9, which the defendants say is objectionable because it fails properly to particularise the allegation that it was the common intention of the parties that the Option Deed embody the oral agreement. It is simply pleaded that there was an oral agreement made at some time prior to October 1996 in relation to the tenements and then a written agreement executed by the parties at least six months later which, it is asserted, was intended to embody the oral agreement. But nowhere does the plaintiff plead the facts upon which it relies for the allegation that it was intention of the parties that the written agreement was to embody the oral agreement, as opposed to constituting a fresh agreement between them.
20 The plaintiff says that the intention is sufficiently pleaded and, moreover, it is self-evident when regard is had to the matters pleaded in pars 21 and 22 of the statement of claim, in which it is alleged that, following the exercise of the option by the plaintiff, the first defendant tendered executed transfers of the Applications pursuant to the Option Deed. The plaintiff says that, of itself, evidences the common intention.
21 I do not consider that the facts relied upon for the contention there was such a common intention at the time the Option Deed was entered into are self-evident and, in my view, the defendants' objection is made out. Particulars of the facts relied upon by the plaintiff for the alleged common intention should be provided. The plea goes to the heart of the plaintiff's case and I accept the defendants' submission that the particulars are essential so that the defendants may know the case they have to meet.
Paragraph 11
22 A similar objection was taken to par 11 of the statement of claim. The defendants say that particulars should be provided of the facts relied upon for the allegation that at the time the Option Deed was entered into
(Page 12)
- the parties were of a common mind that the Applications were included in the definition of "Tenement" in the Option Deed.
23 I consider that objection is also made out and I would uphold the objection on the same basis.
Paragraph 13
24 The defendants' attack on par 13 of the statement of claim is to the same effect and I would uphold the objection on the same basis.
Paragraph 14
25 The other paragraph that was attacked by the defendants was par 14. That paragraph pleads, in effect, that together the Option Deed and the Supplemental Deed constituted an agreement by which the first defendant granted to the plaintiff an option to purchase certain mining and exploration tenements, including the Applications. The defendants say that the paragraph is objectionable because it is elsewhere alleged in the substituted statement of claim that the Option Deed and the Supplemental Deed did not comprise an option agreement with respect to the Applications; indeed, that is the very reason the plaintiff seeks rectification of those documents.
26 In my view, however, it appears sufficiently from par 14.3 that the plea in par 14, so far as it relates to the Applications, and the pleas which flow from it, are pleaded upon the basis that the documents are rectified as sought. It may be that the plea could have been expressed differently, but I do not consider that it should be struck out.
27 It follows, in my view, that par 4 of the statement of claim should be struck out with leave to the plaintiff to replead. In relation to pars 9, 11 and 13, I have, with some hesitation, reached the view that the defendants' objections would be sufficiently overcome by requiring the plaintiff to provide in each case proper particulars of the state of mind alleged, before defence.
28 I will hear the parties on the form of orders and on costs.
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