Madan v Mineralogy Pty Ltd [No 3] - [2023] WASC 227

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   MADAN -v- MINERALOGY PTY LTD [No 3] [2023] WASC 227
CORAM:   KENNETH MARTIN J
HEARD:   13 FEBRUARY 2023 & 17 MARCH 2023
DELIVERED          :   22 JUNE 2023
FILE NO/S:   CIV 1292 of 2021
BETWEEN:   HEM SHANKER MADAN
Plaintiff
AND
MINERALOGY PTY LTD
Defendant

Catchwords:

Practice and procedure - Application to separate civil trial determinations and defer quantum issues - Various breach of contract causes of action under plaintiff's claim advanced as written, alternatively oral, contracts - Agreement potentially void for uncertainty of meaning - Problems with brief passages in letter communication of 1985 - Defendant's pre-incorporation offer of '1% of net profits' of a 'Balmoral Project' - Commencing issue of contractual interpretation towards meaning of the phrase 'net profits' - Absence of any specific accounts prepared for a 'Balmoral Project'

Limitation of action - No accrual of potential cause of action for breach of contract until commencement of an obligation to pay some amount of money to plaintiff when net profit position actually matures - Uncertainties of fact around maturity of obligation to pay percentage of net profits - Context of mining tenements - Balmoral Project - Descriptive term - Plaintiff's pending further application to extend expired limitation periods if necessary at trial

Legislation:

Limitation Act 2005 (WA)

Result:

Orders for a primary trial of all issues other than quantum issues

Category: B

Representation:

Counsel:

Plaintiff	:	M Blandford
Defendant	:	P Dunning KC, E Robinson & T Pagliano

Solicitors:

Plaintiff	:	Butcher Paull & Calder
Defendant	:	Thomas Browning

Cases referred to in decision:

Australian Electrical Electronics Foundry & Engineering Union (WA Branch) v Hamersley Iron Pty Ltd (1998) 19 WAR 145
Barker v Furlong [1891] 2 Chancery 172
BCBC Singapore Pte Ltd v PT Bayan Resources TBK [No 2] [2012] WASC 321
Betts v Wittingslow [No 1] [1944] SASR 163
Building Corporation WA Pty Ltd v Marshall [2021] WASC 242
Carlo Nobili SpA Rubinetterie v Militaire Nominees Pty Ltd [2004] WASC 47
Codelfa Constructions Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 349
Computer Accounting and Tax Pty Ltd v Professional Services of Australia [No 4] [2011] WASC 284
Devenish v Devenish [2011] WASC 129
Gaskin v Ollerenshaw [2010] NSWSC 788
Hughes v Hill [1937] SASR 285
Inpex Operations Australia Pty Ltd v AIG Australia Ltd [No 2] [2023] WASC 61.
Iwankiw v Boord as executrix of the will of the late Roman Iwankiw [2022] WASC 186
Jaddcal Pty Ltd v Minson [2011] WASC 28
Joyce v GIO (NSW) (Unreported, NSWSC, Sheppard J, 21 July 1976)
Koolan Iron Ore Pty Ltd v GHD Pty Ltd [2018] WASC 215
Landsdale Pty Ltd v Moore [2009] WASCA 176
Madan v Mineralogy Pty Ltd [2022] WASC 33
Madan v Mineralogy Pty Ltd [No 2] [2022] WASC 470
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2013] WASC 194
Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16] [2017] WASC 340
Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 17] [2018] WASC 8
Murray v Figg (1974) 4 ALR 612
Osborne v Landpower Developments Pty Ltd (in liq) [2003] WASCA 117
Palmer v CITIC Ltd [No 2] [2019] WASC 14
Prenn v Simmonds [1971] 1 WLR 1381
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80; (2019) 55 WAR 89
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2020] HCATrans 10
Smith v New South Wales Bar Association (1992) 176 CLR 256
St Barbara Ltd v Hockley [2013] WASC 283
Venus Metals Corporation Ltd v DJ Carmichael Pty Ltd [2019] WASC 455
Watson v Metropolitan (Perth) Transport Trust [1965] WAR 88

TABLE OF CONTENTS

Introduction

Mineralogy's application for a separation of trial issues

Mr Madan's opposition stance to a separation of trial issues

Onus on Mineralogy to show that a separation of trial issues is the appropriate course of action

The state of the law concerning a separation of trial issues

Relevant authorities

Three touchstones of principle

Evidentiary materials initially relied upon by the parties

Materials relied upon by Mineralogy

Materials relied upon by Mr Madan

Resolving Mr Madan's admissibility objections to the Sixth Browning Affidavit

Paragraph 22

Paragraph 23

Paragraph 24

Contents of Mr Browning's evidence

Sixth Browning Affidavit and Seventh Browning Affidavit

Eighth Browning Affidavit

Procedural history

The contractual dispute

Mr Madan's claim to annually receive 1% of the net profits of Mineralogy's Balmoral Project, paid to him by not later than 30 days after the end of each financial year

Mineralogy's defences against Mr Madan's breach of contract claims

Materials relied upon by Mr Madan in resisting Mineralogy's application for a separation of issues hearing

Potential difficulties in Mr Madan's action for breach of contract

Uncertainties around the deployed notion of annual 'net profits'

Mineralogy's position on the uncertainties presented by the term 'net profits'
Mr Madan's position on the term 'net profits'
A Primary Trial would assist in clarifying uncertainties about the true meaning of 'net profit'

The lack of any financial statements and accounts of Mineralogy prepared specifically for a Balmoral Project

Repercussions of $US215 million received by Mineralogy being assessed as income or otherwise

Predicted duration of any Primary Trial

Four more matters to weigh

Mr Madan's pleaded opposition to a separation and deferment of quantum of damages issues at a trial

The unhelpfulness of the further expenditure information sought to be relied upon by Mr Madan

Evaluation on Mineralogy's separation of trial issues application

The feasibility of separation: first thoughts

Is a separation of issues as 'illusory' as Mr Madan contends?

A separation of issues could help resolve the initial interpretative uncertainties

Relationship between any limitation of action issues and a separation of issues

Potential limitation of action issues

Limitation of action issues could be case managed at the end of a Primary Trial

Mr Madan's communication foreshadowing leave to re-open and to adduce further evidence

The communication of 16 February 2023

Misconceptions in the 16 February 2023 communication

Arguments and evidentiary materials relied upon at the second hearing

Materials relied upon by Mr Madan

Materials relied upon by Mineralogy

Relevant principles to an application to re-open and adduce further evidence

The materiality threshold to be applied to the further evidence that the party seeks to adduce

The 'less stringent test' for applications for leave to re-open before reasons are delivered

Disposition of Mr Madan's application seeking leave to re-open

Conclusions and orders

Costs

KENNETH MARTIN J:

Introduction

These reasons are to be read with my prior interlocutory reasons in Madan v Mineralogy Pty Ltd [2022] WASC 33 and Madan v Mineralogy Pty Ltd [No 2] [2022] WASC 470, which together provide background to the present application.
I am now dealing with the application of the defendant (Mineralogy) by its chamber summons of 11 November 2022 (folio 67) seeking orders pursuant to O 32 r 4 under the Rules of the Supreme Court 1971 (WA) ('RSC'). RSC O 32 r 4 reads in the following terms:
The Court may order that any question or issue arising in a cause or matter whether of law or fact or partly of law and partly of fact, and whether raised by the pleadings or by agreement of the parties or otherwise be tried separately from any other question or issue whether before at or after the trial or further trial of the proceedings, and may direct that a case and the question or issue for decision be stated.
The application is made within what is essentially the breach of contract action commenced by the plaintiff (Mr Hem Shanker Madan), seeking damages against Mineralogy (with many augmentations).

Mineralogy's application for a separation of trial issues

Mineralogy's application seeks, in effect, that the court conduct a first-stage trial ‑ on a basis of it deferring until necessary (and Mineralogy submits that it will not be necessary) any further required exercise in regard to the quantification of Mr Madan's breach damages ‑ as a subject of prayers 2 to 8 in Mr Madan's re‑amended statement of claim of 3 June 2022 (folio 45) ('FREASOC').
I will explain the action's pleading history (so far) a little later.
Mineralogy's application therefore seeks to defer all component aspects around the trial (including for discovery) that would be concerned with quantifying Mr Madan's breach damages (assuming he is successful at a first-stage trial on liability issues).
Mineralogy also says that a quantification of damages exercise would only become necessary (assuming liability were to be established) if resulting quantum of damages issues could not otherwise be resolved consensually. Only then would there need to follow a completion of the further and last aspect of a trial, by reference to resolving any disputed quantum of damages issues.
The proposed deferment of a trial on quantum ascertainment would then deliver, says Mineralogy, the benefit of that following exercise being conducted upon the platform of the established determinations reached upon liability issues.
There would also present at that stage an enhanced potential for aspects of any remaining dispute over a quantum of damages ascertainment to be referred to an assessor for their resolution - if they were not otherwise agreed upon by the parties.
Mineralogy refers to the proposed first component of a trial that essentially would deal just with liability issues (and limitation of action issues, as I discuss later), as a 'Primary Trial'.
To assist any such Primary Trial, Mineralogy's present application has identified a series of specific questions that would be addressed and answered by the court in that Primary Trial.
To that end, four questions identified by Mineralogy, in accord with RSC O 32 r 4, are seen in par 2 of Mineralogy's chamber summons application of 11 November 2022, seeking that the Court make those orders.
The four liability-phase questions as proposed by Mineralogy are:
(a)Pursuant to each of:
(i)the alleged pre-incorporation oral agreement pleaded in paragraphs 4 to 7B of the [FREASOC];
(ii)the alleged agreement pleaded in paragraphs 7C to 7D of the [FREASOC];
(iii)the alleged pre-incorporation written agreement pleaded in paragraphs 17 to 20C of the [FREASOC];
(iv)the alleged post-incorporation written agreement pleaded in paragraphs 20D and 20E of the [FREASOC]; and
(v)the alleged agreement pleaded in paragraphs 20F to 20G of the [FREASOC]
(Alleged Agreements),
if in a given financial year the defendant's expenditure in respect of the Balmoral Project exceeds its revenue from the Balmoral Project, is the surplus expenditure required to be carried over to the following financial year and taken into account in determining the amount (if any) payable by the defendant to the plaintiff in respect of the latter financial year pursuant to the relevant agreement?
(b)Pursuant to each of the Alleged Agreements, what are the variables to be considered in assessing the defendant's 'net profits' as that term is used in paragraphs 4(d) and 19 of the [FREASOC] and what is the formula by which those variables are applied to assess such 'net profits'?
(c)In particular, in respect of each of the Alleged Agreements, are the following sums amounts which are required to be taken into account in determining the amount (if any) payable by the defendant to the plaintiff under the relevant agreement:
(i)the sum of US$215 million pleaded in paragraph 45 of the [FREASOC];
(ii)the sum of US$40,000 pleaded in paragraph 46 of the [FREASOC]; and
(iii)the sum of US$200 million pleaded in paragraph 50 of the [FREASOC].
(d)Pursuant to each of the Alleged Agreements, in ascertaining the 'net profits' (as that term is used in paragraphs 4(d) and 19 of the [FREASOC]) in a given financial year, should a deduction be made in respect of any taxation, royalty or other statutory imposition payable by the defendant upon revenue obtained from the Balmoral Project?
Unlike for a common law tort action, the sustaining of damage by a plaintiff is not an essential ingredient of a breach of contract action. A contract breach cause of action will accrue at the time of the relevant breach ‑ albeit that the damage suffered (if any) by a plaintiff may only be nominal at the time of breach.
Essentially then, in what here are basically Mr Madan's various breach of contract actions, Mineralogy's application would seek to defer all quantum of damage determination exercises until they become necessary (if ever) - ie, the quantification exercise, if required, would be conducted in the aftermath of the Primary Trial's liability determinations.
On Mineralogy's arguments, Mr Madan is exposed to a serious risk that his breach of contract action could fail completely. That, says Mineralogy, is because the variety of alternative contracts or agreements upon which Mr Madan relies are likely to be ultimately ascertained by the court as so devoid of essential terms that they remained incomplete and uncertain and so will be found void in law.
Hence, this application is brought in circumstances whereby Mineralogy submits that the outcomes of a Primary Trial conducted upon resolving merely liability issues (including all limitation of action issues) have a real potential to be fully determinative ‑ assessed on a one-way basis and negatively in the end against Mr Madan's action. Mineralogy submits that considerable private and public resource savings would follow in that event.
Mineralogy also submits that if, contrary to its expectations, Mr Madan does succeed at a Primary Trial, then a further quantum phase of trial hearing would only be necessary absent a settlement or agreement being reached upon such quantum issues. The reaching of a consensus over damages issues would then emerge, it says, as a more realistic outcome if there was an achievement of certainty upon the difficult underlying issues around liability.

Mr Madan's opposition stance to a separation of trial issues

Mineralogy's proposed separation of trial issues is strongly opposed by Mr Madan for a number of reasons.
In particular, Mr Madan contends that Mineralogy's proposal is wholly unworkable. That is so, he says, notwithstanding this is indeed a breach of contract action where damage is not part of the cause of action. It is just not possible, Mr Madan says, to viably separate off or defer a hearing of liability issues away from issues of damage quantification.
Considerations of limitation periods, including Mr Madan's pending application seeking an extension of time, also intrude, says Mr Madan, as inseparable obstacles. First is a need to ascertain whether or not some components of Mr Madan's claims suffer from a limitation of action time bar. If so, then, second, Mr Madan has made an application (that is pending and is sought to be determined at the trial) seeking that the court extend any otherwise applicable limitation periods found to have been exceeded. The extension application of Mr Madan is advanced under s 38 of the Limitation Act 2005 (WA) ('Limitation Act').
In very general terms, the pending 'extension to any expired limitation period' application by Mr Madan foreshadows blaming Mineralogy for Mr Madan not commencing his suit(s) earlier and so within any applicable limitation period. This is foreshadowed to be by reason of Mineralogy's alleged failure(s) to comply with various other contractual obligations, including (as is put against Mineralogy as the party who would know) to timeously inform Mr Madan that a situation of 'net profits' had been reached for its 'Balmoral Project' for a particular financial year ended 30 June - when a net profit outcome was known to Mineralogy, but could not be known by Mr Madan unless informed by Mineralogy.

Onus on Mineralogy to show that a separation of trial issues is the appropriate course of action

I will proceed to conduct the ensuing analysis of Mineralogy's application seeking separate trials from a starting perspective that requires Mineralogy, as applicant, to convincingly displace what otherwise is the usual status quo or orthodox position for civil trial - namely, that a plaintiff is ordinarily entitled to proceed with a full civil trial that will determine all issues raised, rather than by a split hearing.
Nevertheless, as I will also endeavour to explain, I have ultimately been persuaded, as a matter of discretion, that in the prevailing circumstances it is overall more sensible, and pragmatically more workable, to proceed by a separation and deferment of any required quantum of damages trial hearing until required (if ever).
To commence the analysis, I turn first to the legal principles governing such separation of issues applications.

The state of the law concerning a separation of trial issues

Relevant authorities

My reasons for decision in Palmer v CITIC Ltd [No 2] [2019] WASC 14 collected and reviewed a number of the leading case authorities addressing applications seeking that trials proceed upon the basis of a separation of issues for hearing. In particular, I refer, without repeating, to [4] ‑ [6] of those reasons. But at [7], I observed:
At the end of the day, it is abundantly clear that the path of ordering a pre-trial determination of a preliminary question or issue must be approached with some caution. Embarking upon such an exercise will always remain a question of discretion for the court bespokenly undertaken in each individual case. Venturing down the pre-trial issue or questions path requires an evaluation that necessarily requires an evaluative assessment of the potential utility of such an exercise in the invariably unique circumstances underlying each civil action.
I would supplement those observations made in Palmer v CITIC [No 2] by mentioning some further case authorities in the area and decided within this court ‑ as illustrations of diverse applications of these legal principles on a day‑to‑day basis. The principles have not changed. I add that, as between the current parties on the present separation of issues application made by Mineralogy, the law in this particular area was not really a subject of any serious disagreement.
In Koolan Iron Ore Pty Ltd v GHD Pty Ltd [2018] WASC 215, Allanson J referred to and relied upon earlier observations by Pritchard J in BCBC Singapore Pte Ltd v PT Bayan Resources TBK [No 2] [2012] WASC 321 [26] ‑ [27] in refusing a separation of issues application (see his Honour's reasons in Koolan Iron Ore v GHD Pty Ltd at [17] ‑ [20]).
In Venus Metals Corporation Ltd v DJ Carmichael Pty Ltd [2019] WASC 455, Le Miere J upheld an application for a separate hearing, observing at [10] - [11]:
In the ordinary course, all of the issues in a proceeding should be determined together at one time. Notwithstanding this, in some cases the conduct of the proceeding may be more efficient by determining some issues before other issues. The court may order that any question or issue in the proceedings be decided before, at or after any trial or further trial in the proceedings - that is, as a separate question or issue.
The party seeking an order that the issue of liability and a constructive trust be determined separately from the issues of loss and damage, equitable compensation, account of profits or damages, the Spectrum defendants, must satisfy the court that it is desirable for these issues to be bifurcated. An application for separate trials is to be approached with caution for the reasons explained by Kirby and Callinan JJ in Tepko Pty Ltd v Water Board and by Newnes JA in Landsdale Pty Ltd v Moore. Nevertheless, the court's power to direct separate trials of issues cannot be fettered and must be exercised judicially on a discretionary basis. The court is to exercise the power to order the trial of separate questions so as best to promote the just determination of the litigation, dispose efficiently of the business of the court, maximise the efficient use of judicial resources and facilitate the timely disposal of business. (footnotes omitted)

His Honour concluded at [14]:
The parties seeking the bifurcation of issues must show that bifurcation is more likely than not to result in the just, expeditious and least expensive determination of the proceeding on its merits.
In St Barbara Ltd v Hockley [2013] WASC 283, Beech J (as his Honour then was), after discussing the well‑known observations by Newnes JA in Landsdale Pty Ltd v Moore [2009] WASCA 176, then observed at [6]:
The specific observations in Landsdale about the need for caution before separating issues of liability and damage in tort cases do not apply with the same force to the present case. In tort, damage is an element of the cause of action. In this case, there is a clear demarcation between the question of whether withholding consent to an assignment was unreasonable, and the question of whether that withholding gave rise to any, and if so what, damage. Indeed, there is a question as to whether the unreasonable withholding of consent is a breach of contract giving rise to any damages.
See also his Honour's observations at [7] - [10].
I also mention the reasons of Curthoys J in Iwankiw v Boord as executrix of the will of the late Roman Iwankiw [2022] WASC 186. In particular, I would respectfully agree with his Honour's observations on the distillation of principles by McKechnie J in Carlo Nobili SpA Rubinetterie v Militaire Nominees Pty Ltd [2004] WASC 47 ‑ identifying an error at [16] of those reasons and clarifying that the ordering of separate trials is usually inappropriate where the result depends upon complex issues of fact.
Last, I would also mention, with respect:
(a)Tottle J's observations concerning another separation of issues application in Building Corporation WA Pty Ltd v Marshall [2021] WASC 242, which canvass again the leading authorities at [23] ‑ [28]; and
(b)Lundberg J's recent and very comprehensive discussion of these principles in Inpex Operations Australia Pty Ltd v AIG Australia Ltd [No 2] [2023] WASC 61, especially at [57] ‑ [87].

Three touchstones of principle

From all those case authorities, at least three significant touchstones may be distilled (non-exclusively). On my analysis, these are:
(a)Courts need to be cautious before departing from the orthodoxy of upholding a plaintiff's entitlement to a full trial upon all issues. The potential for things to go wrong - or even for the whole process to be derailed by appeals leading to increased delays and inordinate waste - must never be lost sight of.
(b)Nevertheless, all cases are different. A bespoken evaluation of the unique facts and circumstances underlying each potential civil action must always be discretely conducted. The applicant for a separation of issues hearing carries the onus of showing a convincing rationale to support the advocated position that a separation is the more efficient, just, expeditious and least expensive methodology for determining a civil action.
(c)At the end of the day, the court's discretion upon directing a hearing of separate trials of issues or otherwise is to be exercised judicially, whilst applying modern case flow management principles in that process.

Evidentiary materials initially relied upon by the parties

The separation of issues application of Mineralogy was first argued on the basis of exchanged rival affidavit materials.

Materials relied upon by Mineralogy

For Mineralogy, three affidavits were read and relied upon. These were all affidavits made by Mineralogy's lawyer of record, Mr Thomas Browning ‑ who has also sworn many prior interlocutory affidavits for the purposes of this same proceeding (numbered sequentially as sworn).
Relevantly, the affidavits read and relied upon from Mr Browning on behalf of Mineralogy as the evidence for the purposes of the present application, were:
(1)a sixth affidavit of Mr Browning, sworn 6 February 2023 (folio 76) ('Sixth Browning Affidavit');
(2)a seventh affidavit of Mr Browning, sworn 7 February 2023 (folio 77) ('Seventh Browning Affidavit'); and
(3)an eighth affidavit of Mr Browning, affirmed 12 February 2023 (folio 81) ('Eighth Browning Affidavit').
Mr Madan raised a handful of objections at the first hearing against components of some paragraphs within the Sixth Browning Affidavit. Specifically, objections were raised against the last sentence in par 22, the last sentence in par 23 and against par 24(b) (the consequence being that if that objection were to be upheld, that would render the entirety of par 24 inadmissible).

Materials relied upon by Mr Madan

Resisting Mineralogy's separation of issues application at the first hearing, Mr Madan read and relied upon an affidavit made by a solicitor employee of Mr Madan's lawyers of record, Mr Thomas George Camp, sworn 9 February 2023 (folio 84) ('Camp Affidavit'). Developments emerged later as to the end state of Mr Madan's evidence sought to be relied upon in resisting the application, as I explain later in the reasons.
At the hearing, I issued some specific confidentiality orders in respect of parts of what were unredacted annexures found within TGC‑2 and TGC‑3 to the Camp Affidavit. That annexure material comprised parts of tax returns filed by Mineralogy in respect of the financial years ended 30 June 2003, 2004 and 2005.
That tax return material had been provided to Mr Madan's lawyers by Mineralogy's lawyers in the leadup to the hearing. However, those materials had initially been redacted as to their monetary amount details, as seen in annexures TVB-32 and TVB-33 to the Seventh Browning Affidavit. Mr Madan, however, pressed for wholly unredacted copies of those tax returns ‑ which it eventually received. They were then duly annexed in unredacted form to the Camp Affidavit.
The forensic point first sought to be made by Mineralogy by regard to those tax return materials annexed to the Seventh Browning Affidavit (redacted in part) was - as is evident, even from a brief viewing of those redacted tax return documents - that the corporation Mineralogy Pty Ltd, over those financial years, did not within those tax returns ever identify a specific project source for the input income or expenditure components - such as a project reference for their derivation, or some other discernible linkage information back to a specific activity or project of Mineralogy in each financial year (eg, from or concerning a revenue or expenditure input identified as sourced from or related to an X or Y Project).
Instead, those tax returns only display (as might be expected) the aggregate input income or expenditure amounts ‑ presenting in those returns as wholly unsourced lump sum income or expense information concerning all of Mineralogy's activities in that financial year. So much is clear as to that negative feature from the face of the return documents themselves, without needing to see actual dollar input amounts. That was the forensic point sought to be made by Mineralogy.
Nevertheless, Mr Madan's counsel at the first hearing sought to make various nondisclosure arguments by regard to these redacted tax returns. It was said further that from the exposed monetary amounts there may be deduced, by working backwards from the numerical components in the tax returns, certain inferences that favoured Mr Madan's case about precisely when an achievement of a portion of 'net profit' was reached by Mineralogy for its Balmoral Project.
That, of course, was not Mineralogy's purpose by putting the tax return material before the court under the Seventh Browning Affidavit. Rather, its purpose was to expose a lack of any attributed project source to the income or expense information found in each tax return. That is established.
As I observed during the first hearing, the tax return materials themselves look to be of little relative help to Mr Madan ‑ concerning any mooted exercise in identification of specific revenue or expenditure that is sourced to, from and for any Balmoral Project conducted by Mineralogy at the time ‑ without also seeing Mineralogy's underlying financial statements from which these lodged tax returns would have been prepared.
But such accounts may have only been generically prepared for gross income and expenditure (ie, across all activities of the entity), rather than being transparently sourced back to a particular project of Mineralogy conducted in any financial year. That has proven to be the case.
Evidence adduced through the Sixth Browning Affidavit came to address the financial accounts of Mineralogy, either for it alone as a corporation, or as a part of a consolidated group of related corporations. That accounting information did not source, by reference back to a particular project, any revenues or expenditures identifiable in those formal statements and accounts - such as, for instance, revenue or expenditure that could be seen as sourced back to a Balmoral Project conducted then by Mineralogy.
It is convenient next to rule on Mr Madan's objections taken against the three paragraphs identified within the Sixth Browning Affidavit.

Resolving Mr Madan's admissibility objections to the Sixth Browning Affidavit

Paragraph 22

The basis of the objections raised by Mr Madan against pars 22, 23 and 24(b) of the Sixth Browning Affidavit, was an admissibility objection that is identified under par 7 of Mr Madan's written submissions of 9 February 2023 (folio 80). The (common) objection put against par 22 of the Sixth Browning Affidavit was as follows:
This is hearsay on documentary hearsay. Hearsay is admissible in interlocutory matters under Order 37 Rule 6 of the Rules of the Supreme Court 1971 based on information and belief. That rule does not permit hearsay to be given on documentary hearsay.
To resolve this objection, I need to set out the content of par 22 from the Sixth Browning Affidavit in full. It reads:
I have spoken with Mr Graham Sorensen, who has been involved in the tax affairs of the Mineralogy group since 2007/8. Mr Sorensen was formerly a Global Tax Partner of PwC for 29 years and continues to provide services to the Mineralogy Group in his position as Director of GSPN. Mr Sorensen has told me, and I believe, that Mineralogy's tax returns lodged with the ATO for the consolidated tax group do not provide a separate account for the revenue, costs and expenses associated with distinct projects, parcels of land, investments or any other business activities conducted by each of the entities within the consolidated tax group. (bolded sentence is the subject of the objection)
Paragraph 22 in the Sixth Browning Affidavit is found in a section headed 'B.3 Tax Returns'. Contextually, it is also necessary to appreciate par 20, also found within section B.3 of that affidavit, which says:
It is also not possible to discern the profit, revenue or costs derived from the Balmoral Project from Mineralogy's tax returns.
That content from par 20 was not objected to by Mr Madan. On my assessment, par 20 seeks to make the same forensic point sought to be made under the last sentence of par 22 - by regard to the content of Mr Browning's negative statement as to what was relayed to him through Mr Sorensen about what is not able to be discerned regarding revenue cost or profit amounts linked to a Balmoral Project from such documents, being the tax returns for the Mineralogy group since 2007/2008.
Evaluated in overall context, I must reject the admissibility objection that is put against the last sentence in par 22 above. The statement attributed to Mr Sorensen, on my assessment, does not seek to prove the truth of the content of any document (ie, the content of the Mineralogy group's tax returns). Rather, the force of the negative statement attributed to Mr Sorensen addresses the issue of sources of input information for cost, revenue or profit not being discretely discernible as inputs in the tax returns prepared and lodged for the Mineralogy consolidated tax group. Mr Sorensen was manifestly a person likely involved in, and therefore in a position to have reliable and direct knowledge as to, the preparation of those documents. Mr Sorensen was thereby in a position to reliably give that negative information to Mr Browning.
Assessed in context, this evidence would not be hearsay upon the content of the document. It is hearsay upon how the document was prepared and what it does not contain - by someone with direct knowledge of the document's assembly.
It is also a negative statement that is in full alignment with the unobjectionable content seen within the earlier par 20 of the Sixth Browning Affidavit.
Assessed fairly in overall context, I must reject this objection.

Paragraph 23

Likewise, objection was taken in respect of the last sentence of par 23 in the Sixth Browning Affidavit. That sentence reads:
Further, assuming it is possible to compile a complete set out [sic] such tax returns, that would not enable an assessment of the profit, revenue, or costs of the Balmoral Project for the reasons I have discussed above.
Formal objection is taken against this sentence as to relevance and further, that it is hearsay upon hearsay by reference to a document. That objection is not made out, essentially for the same reasons I have given in respect of the last sentence of par 22.
A more viable basis for objection, however, would be that the par 23 sentence is essentially a stated conclusion, argument or is in the character of submission - rather than being, as it should be in an affidavit, a pure statement of fact. Although that was not the formal basis for the objection, I am cognisant of the evidentiary character of what was sought to be provided by this sentence. Towards it, I proceed on the basis that I will afford no weight factually to what is seen in the concluding sentence of par 23.

Paragraph 24

Last, an objection is similarly raised against par 24(b) and if that is successful, thereby against the whole of par 24. This component in the Sixth Browning Affidavit appears at a further section 'B.4 Other accounting records'. The whole paragraph reads:
Given that:
(a)there are no 'project accounts' or similar for the Balmoral Project; and
(b)Mineralogy's annual financial statements and tax returns do not allow one to discern the profits, revenue or cost derived from the Balmoral Project,
any attempt to ascertain Mineralogy's 'net profits' derived from the Balmoral Project since 1985 would require a forensic reconstruction of Mineralogy's revenue and costs associated with that project since that time.
Again, what is seen under par 24(b) does not, in my view, manifest as a hearsay on hearsay inadmissibility deficiency. Rather, what will be observed towards par 24(b), again, is something more in the character of an argument or stated conclusion - rather than a pure statement of fact. Given the character of what is presented under par 24(b), once again I would afford it no weight factually. As to the balance of par 24, the same problem manifests.
The content of par 24 therefore must essentially be treated as submission, rather than as factual evidence.

Contents of Mr Browning's evidence

Sixth Browning Affidavit and Seventh Browning Affidavit

Evaluating the present separation of issues application of Mineralogy, it is useful to view the entirety of section 'B. Accounting Records' in the Sixth Browning Affidavit in context.
The evidence assembled under the Sixth Browning Affidavit, persuades me in the end that the application is to be approached on the established factual platform that there are presently no identifiable accounts of Mineralogy which are specific to, or are confined to showing its revenues or expenditures by Mineralogy for a Balmoral Project.
By par 11 of the Sixth Browning Affidavit, he relates:
I am informed by Mr Bernard Wong, Acting Chief Financial Officer of Mineralogy, and I believe, that Mineralogy does not maintain a 'Project Account', 'Management Account' (annualised or otherwise), or any other account in relation to the profit and losses in respect of separate parcels of land and/or projects. This includes the 'Balmoral Project'. Accordingly, there is no Project Account or similar which identifies Mineralogy's profit, revenue and/or expenses specifically related to the Balmoral Project.
Further components in this section of the Sixth Browning Affidavit then establish factually that, since 2008, Mineralogy has prepared and lodged annual consolidated special purpose financial reports with the Australian Securities and Investments Commission ('ASIC') at the end of each financial year. At par 12 it is further explained:
… The Consolidated Accounts are not reduced to the level of granularity required to calculate the costs and expenses (and therefore net profit) of the Balmoral Project or any other project, or business undertaking.
By par 14, Mr Browning relates:
… Mineralogy has various and diverse business operations, not limited to the land the subject of the 'Balmoral Project'. There are numerous expenses and revenues derived from those business operations.
At pars 16 and 17, Mr Browning says:
Many of these tenements are entirely unrelated to the 'Balmoral Project', and related to the exploration of bauxite, copper, manganese, coal, iron, uranium, heavy minerals, as well as magnetite (which is the resource extracted from the 'Balmoral Project').
This exploration report also lists a further 69 granted tenements and 34 additional pending tenements. Some of these relate to the 'Balmoral Project', while others do not.
The Sixth Browning Affidavit proceeds to canvass, at section 'C. Costs Related to the Balmoral Project', a variety of potential costs and expenses that might be said to have been incurred by Mineralogy in relation to or arising out of a Balmoral Project, picking up Mineralogy's past involvements in what presents under par 33(a) and (b) as expenditures incurred by Mineralogy in a host of civil litigation involving the State and other parties.
The predicted magnitude for the discovery tasks arising in the context of a full-blown trial, with all quantum hearing issues being determined, is then canvassed in section 'D. The Proposed Separate Trials' by Mr Browning, particularly at section 'D.2 Quantum Hearing' from pars 46 to 58.
Mr Browning provides at par 64 a best estimate, in very broad terms, for the suggested cost of preparing and conducting a full trial - being at least $1.5 million plus GST. That is so albeit he also expresses a view that costs might be considerably higher by reference to a potentiality of locating further documents relevant to ascertaining the net profits for the Balmoral Project in the 38-year period between 1985 to now, and in any subsequent use of those documents to forensically attempt to retrospectively reconstruct the revenue and expenses for the Balmoral Project across that period.
As explained earlier, the Seventh Browning Affidavit stimulated initial controversy over its redactions to the tax returns filed for Mineralogy in the financial years ended 30 June 2003, 2004 and 2005.
By my assessment, these criticisms of the redactions made by Mr Madan were not to the point. The point of the affidavit was as to showing a lack of utility in that generic information towards identifying revenue or expenses specifically attributable or identifiable to a Balmoral Project of Mineralogy. That feature, as to their unhelpfulness towards any such task, was well-established.

Eighth Browning Affidavit

The day before the first hearing of this application on 13 February 2023 saw a filing of the Eighth Browning Affidavit. It contained a historic ASIC search for the Mineralogy corporation (ie, Mineralogy Pty Ltd). This was essentially uncontroversial. It also disclosed some further inquiries about Mineralogy's financial records made by Mr Browning at 10 February 2023 - made with a Mr Geoff Smith and with Mr Clive Palmer himself.
The late inquiries by Mr Browning were heavily criticised by counsel for Mr Madan as being too little, too late - particularly the late information obtained from Mr Palmer concerning the existence and location of some hard copy financial records from the 1980s and 1990s which were explained as stored at an archiving facility on the Gold Coast in an estimated 100 filing cabinets.

Mr Browning came to depose at par 14 of the Eighth Browning Affidavit:
The estimated 100 filing cabinets are in addition to the 500 boxes of financial records identified in paragraph [26](d) of the Sixth Browning Affidavit.
This evidence was directed at showing the likely magnitude of a discovery task around a required exercise in deriving specific Balmoral Project revenue and expenditure information or, as Mr Madan would describe it (as I explain later), the 'inflows and outflows' linked back to the Balmoral Project.
Mr Browning's affidavits persuade me that the level of preparatory work that is involved with a full determination of all the issues in the action - including any discovery on quantum issues if required - is vast.
On my assessment, the preparations for such a full-issues trial, and then the determination of all these issues, would likely exceed by a margin of multiple weeks the lesser amounts of preparatory work (say six to eight days) associated with preparing for a Primary Trial.
That is my broad assessment of the likely times involved - based on a lifetime's experience of civil litigation actions in this State.
A separation question must weigh the parties' relative resources and their likely consumption of limited public resources (eg, court hearing time) available to civil litigants.
The approach of Mineralogy would assist in clarifying some presently challenging interpretive uncertainties. It could scarcely be denied that better focussing any later required quantum hearing phase ‑ if that became necessary (even viewed in the context of a potential appeal following a Primary Trial) - would narrow issues and thus be of utility in the quantification exercise.
A separation of liability issues for their prior resolution does present as being of considerable attraction here, especially weighed in the context of a contract breach case where proving damage is not a necessary component of the cause of action.
Weighed against that approach, however, is the orthodoxy of a plaintiff's prima facie right to a full hearing on all issues - and this plaintiff's primary contention that the suggested separation exercise is simply not achievable.
I will discuss that aspect of Mr Madan's resistance arguments a little later. Before that, however, I must first provide some greater procedural history as background to this application.

Procedural history

As seen, Mr Madan's action has already given rise to two sets of interlocutory disputes and to my reserved reasons resolving these disputes. The first reserved reasons in Madan v MineralogyPty Ltd, determined aspects of Mineralogy's successful pleading strikeout application taken against Mr Madan's writ and against an earlier iteration of his statement of claim.
There followed the reasons in Madan v Minerology Pty Ltd [No 2], concerning, in principle, discovery-related concerns arising between the parties.
The suggested deferment raised by the present application of quantum issues (until ever necessary) had been foreshadowed by senior counsel at a previous directions hearing - see [10] of the reasons in Madan v Minerology Pty Ltd [No 2].
Consequent on the first Madan reasons, Mr Madan's lawyers circulated a minute of proposed revised statement of claim, taking account of my earlier interlocutory strikeout reasons. As a result, there came to be filed a minute of proposed further pleading by Mr Madan on 8 June 2022, although dated 3 June 2022 on its face (folio 45).
Under my orders of 10 June 2022 (folio 46), which by then were essentially unopposed, leave was granted for Mr Madan to proceed in this action ‑ on the pleaded foundation of his minute of 8 June 2022, which by then was a much-revised statement of claim pleading.
The revised pleading had been labelled by Mr Madan's lawyers as a minute of re‑amended statement of claim. More correctly, in the wake of Mineralogy's largely successful strikeout challenges raised against his prior pleading, that later minute of pleading - in respect of which leave to amend was eventually obtained on 10 June 2022 - ought more properly to be identified as Mr Madan's further re-amended statement of claim pleading.
Consequently, within these reasons I have used the designation 'FREASOC' to describe this most contemporary iteration of Mr Madan's statement of claim pleading (at this stage).
The parties' exchanged pleadings in this action are closed - at least for now. Mineralogy's pleaded defence came to be filed pursuant to order 3 of my 10 June 2022 orders and directions, on 28 July 2022 (folio 52).
Mr Madan then filed a short reply to that defence on 7 October 2022 (folio 58).
A possibility of even further amendments to Mr Madan's statement of claim came to be canvassed by counsel for Mr Madan during verbal submissions made at the first hearing of this application.
The current position concerning the parties providing mutual discovery is that Mr Madan has now provided discovery ‑ by reference to categories. Mineralogy says that it ought to have completed the provision of discovery by the end of February 2023 (ts 106). Hence, preparations for the trial, or at least a trial upon all issues other than quantum of damages issues as Mineralogy seeks, is now reasonably advanced ‑ by reference to the ostensible completion of pleadings and, almost, of discovery.
That progress is relevant as another factor in my ultimate task of assessing the overall fairness, utility and likely case management efficiency of Mineralogy's separation of issues application.
If, of course, Mr Madan fails on liability in that first phase, then the need for any subsequent hearing over damages ascertainment would be eliminated. On that hypothesis, a separation of issues would achieve a significant saving of both public and private resources.
Next, I turn to direct some greater level of focus at aspects of the underlying contract breach dispute bearing upon the efficacy of what Mineralogy seeks.

The contractual dispute

Mr Madan's claim to annually receive 1% of the net profits of Mineralogy's Balmoral Project, paid to him by not later than 30 days after the end of each financial year

Paragraph 2(a) of Mineralogy's application proceeds on a basis that there are separate genres of pleaded agreements between Mr Madan and Mineralogy, which are alternately relied upon under Mr Madan's FREASOC - being various alleged agreements said to be either written or oral and, further, entered into prior to the incorporation of Mineralogy or post-incorporation, as the case may be.
Nevertheless, on further analysis, all these potential agreements relied upon by Mr Madan display a common feature by their deployment of like contractual terminology. In particular, I am referring to references to the term 'net profits' ‑ seen in the various contexts of Mr Madan's claimed 1% share and annual payment entitlement out of such net profits - and the descriptive term, 'Balmoral Project', used vis-à-vis Mineralogy.
The origin of these common terms can be discerned from an examination of the written content of a so‑called letter of offer of 14 June 1985 that was sent to Mr Madan, purportedly for and on behalf of Mineralogy (then Mineralogy Ltd) by Mr Palmer ‑ albeit that corporation was then still some four days away from being legally brought into existence as a corporate entity.
The entirety of that 14 June 1985 letter is found annexed as Schedule 1 to my earlier reasons in Madan v Mineralogy Pty Ltd.
Relevantly, it may be seen at the end of the second page of that letter that what was offered to Mr Madan looks later to have been accepted ‑ under the applied signature of Mr Madan at 21 June 1985 seen at the bottom ‑ by which time Mineralogy Ltd had been incorporated.
Issues of disputation arise over Mr Madan's claimed annual entitlement to 1% of 'net profits' derived from the as-referenced 'Balmoral Project' of Mineralogy Ltd.
The subject heading of the 14 June 1985 letter read 'Re: Appointment Consulting Geologist and Appointment for Negotiation Balmoral Project, Australian Hanna Ltd' (my emphasis in bold).
The subject matter of the first paragraph in the 14 June 1985 letter addressed Mr Madan's appointment as a consulting geologist to Mineralogy Ltd, at the rate of $225 per full day.
Material to the present action, however, is the following subject matter under the second paragraph. This presents as the critical text bearing upon all questions raised as to Mr Madan's claimed breach of an annual payment obligation of net profits by Mineralogy.
The second paragraph of the 14 June 1985 letter reads:
We also agree in relation to the Balmoral project in the event of our company obtaining and exercising an option on the above project to pay you 1% of the net profits derived by our company from any source during the course of our company involvement. Such sum to be paid annually within 30 days of the 30th June, for the end of the previous financial year. (my emphasis in bold)
On my preliminary view, the above words present as difficult to evaluate. What is the true meaning of the term 'net profits', when assessed objectively, in overall context? Unlocking a true meaning for 'net profits' - in relation to the suggested offer to pay a 1% entitlement to Mr Madan within 30 days of 30 June each year ‑ is at the very heart of the current uncertainty of meaning. An allied, but perhaps less difficult, interpretive task arises by reference to the unlocking of a reliable meaning for the descriptive term 'Balmoral Project'.

Mineralogy's defences against Mr Madan's breach of contract claims

By its currently pleaded defence, Mineralogy, broadly speaking, raises a host of defences against Mr Madan's contractual breach claims. It says specifically, as one of those key defences, that there was never any perfected binding legal agreement - written, oral or otherwise - concluded with Mr Madan.
Beyond that, however, it also pleads that the efforts to perfect an agreement failed in any event, for a lack of certainty due to a failure of those communications to set down the essential terms required for perfecting such an agreement.
Mineralogy then goes further to plead that, even if it is wrong about all of that, still there was never any factual engagement with any such agreements to trigger such causative criteria ‑ by reason of Mineralogy never obtaining any option over a Balmoral Project sufficient to engage with and trigger the 1% net profit payment obligation to Mr Madan.
The pleaded defences, on my assessment, raise what look to be difficult legal and factual questions for trial. These defences obviously need to be taken seriously. If resolved in Mineralogy's favour, any of those defences would destroy Mr Madan's action.
I do not assess those foreshadowed and pleaded defence arguments as being weak or frivolous. That is particularly so around the legal issue of contractual uncertainty - which if shown would see any attempted agreement the parties might otherwise have aspired to achieve, when objectively assessed, being evaluated as deficient in its essential terms by a lack of required content and, thus, void.
Given such positions, I am of the view that there would be an undoubted level of utility for all concerned (including for the court's limited public resources) resulting from an earlier resolution of those plenary defence issues ‑ before otherwise going much further to undertake what would undoubtedly be a lengthy quantification of damages trial exercise, proceeding on a potentially ill‑founded assumption of ultimate liability success for Mr Madan.
But if those plenary defence arguments were all ultimately rejected, and so there was to issue a determination of a legally binding and enforceable written or verbal agreement (or a like result reached by holding the parties to an estoppel by convention), still then Mineralogy on the present application would submit that a separation of issues path is preferred. It would submit that there is still a strong benefit to all concerned in the process from the resultant clarity - towards gaining a correct understanding of what in context the parties meant by their use of the terms 'net profits' and 'Balmoral Project'.
True meanings for these key component terms must first be reliably established, says Mineralogy, before advancing to embark on what could be a long, but possibly misdirected and therefore wasteful, quantum assessment exercise.
A quantum assessment of damages exercise would likely (if litigated) call for the commissioning of forensic accounting reports ‑ prepared by reference to a great deal of underlying documentary financial information. That information would have to be assembled to identify expenses and revenues uniquely connected to what is ascertained to be Mineralogy's Balmoral Project.
An initial ascertainment of the true meanings of the critical terms 'net profits' and 'Balmoral Project' could, of course, after a Primary Trial give rise to an appeal by the loser on such issues. This must be accepted as a foreseeable potentiality. But the scope of any such appeal would look to be relatively confined to issues of true meaning.
Mineralogy says that the overriding need for interpretive certainty, by obtaining a reliable understanding of the true meanings of these key agreement terms, is fundamental to this action by Mr Madan. Until the position as to the true meaning of 'net profits' becomes solidified, in effect, Mineralogy says that conducting a quantum of damages assessment exercise ‑ on the hypothesis of success assumed in a full trial on one or other of Mr Madan's alternative breach of contract liability cases - is very likely to prove unreliable, unnecessarily difficult and potentially wasteful in the longer term. There is force in that submission as to waste, in my assessment.
Correlatively, Mineralogy says further that once those bedrock disputes over the true meaning of 'net profits' and 'Balmoral Project' are settled, then other remaining matters in dispute should become easier to assess. At that point, subsequent quantification of damages tasks, if needed, would necessarily be pursued more reliably given the settled foundations for that task ‑ allied to a prospect of less potential wastage in that quantification process.
Mineralogy puts its resource efficiency submission, notwithstanding it also recognises that if quantum of damages issues do need to be litigated, that will probably take some time.
Likewise, submits Mineralogy, reaching a position of settled clarity over the correct meanings of 'net profits' and 'Balmoral Project' would undoubtedly facilitate a prospective settlement, albeit that could never be guaranteed. But even if there were to be no settlement at that point (ie, on a quantum of damages ascertainment exercise) it may then be feasible to refer discrete accounting aspects of the revenue and expenditure compilation and assessment tasks to an assessor, particularly concerning a verification of whether those expenses and revenues were linked to a Balmoral Project of Mineralogy (if that linkage was still in issue).

Materials relied upon by Mr Madan in resisting Mineralogy's application for a separation of issues hearing

It is necessary to mention again Mr Camp's evidence for Mr Madan in opposing the present application. As explained earlier, that evidence is found in the Camp Affidavit, provided by email correspondence from Mr Madan's solicitors to my Associate on 9 February 2023.
The content of the Camp Affidavit is somewhat bare. It seeks chiefly to annex the relevant tax returns, being TGC‑2 and TGC‑3.
Mr Madan did not address TGC-2 or TGC-3 in its written submissions of 9 February 2023. Instead, it was merely indicated at par 8 of those submissions that these documents would be addressed in oral submissions. Counsel for Mr Madan came to address the documents at the 13 February 2023 hearing.
TGC-2 is concerned solely with the tax status of Mineralogy for the financial year ending 30 June 2003. It shows, relevantly, gross interest, rent and hire income, total dividends, other gross income and total income for Mineralogy for that financial year.
TGC-3 displays tax accounts for all of the Mineralogy group companies - not just for Mineralogy ‑ for the 2004/2005 financial years.
Mr Madan duly relies on these annexures in seeking to rebut Mineralogy's arguments that an assessment of quantum would be difficult and require a large deployment of resources.
Rather, Mr Madan argues that Mineralogy has not even undertaken 'the most fundamental and basic inquiries' into Mineralogy's financial position from 1985 to 2022. This, he argues, is demonstrated by the fact Mineralogy provided TGC‑2 and TGC‑3 to Mr Madan within a day of the Sixth Browning Affidavit, despite that earlier affidavit claiming at par 23 that such tax records were unlikely to be obtainable from the Australian Taxation Office (see ts 154).
According to Mr Madan, Mineralogy has therefore failed to discharge its onus to show that a separate trial would be the most utile, economic and fair course by avoiding the need for time-consuming and wasteful discovery expeditions into evidence of quantum.
It was further argued by Mr Madan that TGC‑2 and TGC‑3 demonstrate that the task of determining Mineralogy's net financial position would not, in fact, be onerous. He argues that Mineralogy's ability to find and provide these tax returns demonstrates that the discovery process will not be as difficult as Mineralogy claims.
Further, Mr Madan submits that the contents of the unredacted tax returns can be used to determine Mineralogy's income and expenses, by inference. I refer to the submissions of counsel for Mr Madan concerning TGC‑2, at ts 138:
BLANDFORD, MR: … This document is logically probative of the fact that the asserted difficulty by the defendant in determining what its income was or expenses were relating to the [Balmoral Project] will not be as substantial as it asserts.
And at ts 141:
BLANDFORD, MR: The defendant says that one of the reasons why it wishes to hive off quantum from liability is because of difficulties associated in arriving at the revenues and expenses solely from the Balmoral Project because it has diversified its business beyond the Balmoral Project. [It d]oesn't say when that happened but on the face of these tax returns, in particular the 2003 tax return[, t]he process of determining the revenue and expenses of the Balmoral Project will not be as difficult as the defendant asserts. Especially in light of the fact that now there is a warehouse of documents - some of which relate to this period which we only found out existed on Friday.
Counsel also submitted that Mineralogy could apply a 'process of exclusion' to the tax returns and figure out Mineralogy's income and expenses by, essentially, working backwards.
But that process of exclusion would require a good deal of inference.

Potential difficulties in Mr Madan's action for breach of contract

Uncertainties around the deployed notion of annual 'net profits'

Mineralogy's position on the uncertainties presented by the term 'net profits'

As an illustration of the uncertainties around ascertaining the true meaning for the term 'net profits', Mineralogy points to the last line of the second paragraph in the 14 June 1985 letter and to that annual payment text ‑ referring to 1% of net profits to be made to Mr Madan within 30 days of the end of a preceding financial year.
A concept of a Balmoral Project net profit computation ‑ conducted annually after 30 June each year ‑ can be detected. In other words, relevant revenue and expenditure would be accounted for and allocated to a particular financial year, and that financial year closed off.
On the other hand, the detectable notion of a long-term 'project' and the word 'net' applied against the word 'profits' - weighed in a context of anticipated future efforts of Mineralogy Ltd in acquiring an option over Balmoral Project mining tenements assisted by Mr Madan - carries something of a counter‑sentiment of fiscal accumulation over multiple years. This would present along the lines of an accumulation of revenues measured against expenditures for the Balmoral Project not annually, but aggregated over multiple financial years, thereby embracing all of Mineralogy's outlaid expenses incurred in advancing this project ‑ tallied to be measured against project revenues (if any) each year until a calculated arithmetic result of overall 'net profit' is eventually reached, whenever that may be.

A start-up iron ore mining and processing project notoriously can take years to establish. The establishment phase may see ongoing capital expenditures for such a project to evolve from nothing to eventually become revenue (net) positive. Early sunken capital expenditures must usually be incurred across multiple financial years before the achieving of levels of viable saleable commodity production and thus revenue (in the early stages with little or no revenues to offset capital outlays). That broader perspective must extend beyond the temporal limits of a single financial year with its annual 30 June cut‑off timeline for revenue and expenditure attributable to that 12-month period.
Mineralogy submits that this action displays an early foundational uncertainty around ascertaining when, as between the parties and (otherwise assuming a binding agreement obligation) those fiscal events did deliver a position of reaching a Balmoral Project net profit ‑ let alone finding out when any 'net' Balmoral Project profit was reached. Is the assessment for only one annual financial year? Or is there an accumulation approach to be used by measuring project expenses against revenues conducted across multiple financial years - especially in the context of a 'start-up from nothing' iron ore project?
Mineralogy says a temporal discernment exercise towards detecting the point of reaching a 'net profit' for a particular financial year of the Balmoral Project would require at least two stages. First, a settled understanding upon the net profit concept in context, as an issue of true meaning (and thus, of law). Second, proceeding then to apply that concept towards ascertaining the time that a temporal 'net profit' was reached (ie, the relevant financial year) as an issue of fact.

Mr Madan's position on the term 'net profits'

Mr Madan's FREASOC pleading does not, at least at this time, offer any indicated position as to the actual contended meaning for 'net profits', as that term is used in all the alternative versions of an alleged agreement that Mr Madan contends for with Mineralogy. It is trite, of course, that a plaintiff does not need to plead law. Contractual meaning is a question of law. Even so, to know the true meaning suggested would better enlighten everyone as to what this fight is about. Currently, there is too much darkness.
In the course of the first hearing's verbal arguments submissions, the following exchange with counsel for Mr Madan occurred (see ts 131):
KENNETH MARTIN J: … You're going about it negatively by - it's not limited to accounting concepts. So tell me the affirmative in terms of what you say that sentence, one percent of net profits, means.
BLANDFORD, MR: Inflows against outflows. If an amount of inflows is greater than the amount of outflows, that is a net profit. Doesn't matter how the inflow arose, whether it's a capital account, revenue account, it's an inflow. That's what we say the net profit is to be determined.
That explanation provided by counsel for Mr Madan at the time at least provides some greater insight towards Mr Madan's contended true meaning of 'net profits' in context.
Nevertheless, it is still not sufficiently clear whether Mr Madan will be contending that the strict bounds of a financial year confine his suggested 'inflow and outflow' hypothesis exclusively to Balmoral Project revenue inflows measured only against expense outflows across one particular financial year - or whether an accumulation of expenses over multiple financial years is permissible?
In other words, it is not yet clear whether Mr Madan accepts or rejects the notion that there could be a permissible accumulation of all of Mineralogy's start-up Balmoral Project expenditures incurred over multiple financial years. Circumstances here present a 'start-up from nothing' project which eventually (when run by CITIC Ltd as operator) became commercially operative. At that time, mining operations began to generate revenue from the production and exportation of saleable magnetite commodity. At some later point, royalty revenues began to reach Mineralogy. The ongoing quarterly royalty streams paid to Mineralogy (after litigation) are likely to have delivered a result of 'net profit' for it at some point.
But, as seen, the 'net profit' term used between these parties, according to counsel for Mr Madan, carries a true meaning that extends beyond strict accounting concepts to 'catch' all revenue and capital amounts received by Mineralogy from CITIC Ltd (because, it seems, they are to be assessed as 'inflows').
Another question arises, namely, whether by parity of reasoning, Mr Madan's 'inflow outflow' hypothesis extends to catch all of Mineralogy's Balmoral Project expenditures ‑ to draw in all Mineralogy's early capital expenditures ‑ in an exercise ultimately to be undertaken towards ascertaining a net profit capital outcome from the Balmoral Project?
Such liability issues present, prima facie, as conceptually difficult. Further, a first-instance interpretive adoption of a position upon true meaning for these issues - if disturbed later on appeal ‑ would carry repercussions that could render valueless any allied (if then conducted) quantum of damages computation ‑ were the computation founded on an interpretive position subsequently determined to be incorrect.

A Primary Trial would assist in clarifying uncertainties about the true meaning of 'net profit'

Logically then, given what now presents as an array of early liability uncertainties around true meaning, there is for this particular dispute a good deal to be said for the proposed course of obtaining as much settled interpretive clarification as possible upon all liability issues of meaning ‑ before embarking further upon the longer and resource-extensive quantification of breach damages exercise, if that does become necessary.
My view emerges essentially from commercial experience of civil litigation actions and a required analysis of the uniquely arising as‑pleaded issues of liability presenting here for determination on the parties' exchanged pleadings ‑ without needing to descend too much further into an evaluation of the affidavit evidence submitted on this application.
Essentially, the uncertainties detected around the true meaning of the phrase 'net profits' are embedded in the present contractual dispute. They arise as a result of what is a modestly expressed one-sentence contractual platform for the suggested payment obligation relied upon under Mr Madan's case as illustrated in the extract from the 14 June 1985 letter.

The lack of any financial statements and accounts of Mineralogy prepared specifically for a Balmoral Project

There is another problem which presents as being more in the nature of a pragmatic, rather than a contractually interpretive, issue.
This emerges from the evidentiary landscape underlying the present application by Mineralogy. The evidence emerging out of Mr Browning's three affidavits, as canvassed earlier, establishes that there are no, and have never been, any accounts or financial statements that were brought into existence by Mineralogy specifically towards isolating only the revenues and expenses of a Balmoral Project - annual or otherwise.
Hence, towards ascertaining when a 'net profit' position came to be achieved by Mineralogy by its participation or involvement in a 'Balmoral Project' (assuming that descriptive term becomes clarified), a revenue and expense accounting exercise specific to that project would need to be generated from out of what are presently generically prepared accounts for all of the operations and activities of Mineralogy and its corporate group.
Out of the Browning affidavit materials, it appears that Mineralogy has, in the past, conducted or engaged in multiple other commercial activities ‑ extending well beyond its bare involvement in a Balmoral Project. I accept, as a result, that it would be a mistake to assume that all of Mineralogy's past expenses and revenues as identified from out of its past financial statements and accounts can be associated with its pursuit, or participation in, a Balmoral Project.
At times in the past, Mineralogy operated under a regime of consolidated corporate accounts for a Mineralogy group of corporations. That grouped position was further adopted in terms of the lodgement of group taxation returns, as seen earlier.
The pragmatic difficulty arising then, particularly for a carrying out of any quantum of breach damages assessment, is essentially one of identifying and isolating only the relevant underlying financial materials for a 'Balmoral Project' - by undertaking a fresh accounting exercise of setting off relevant project expenses against relevant project revenues with a view to ascertaining whether, and then when, for a particular financial year, any net profit result was reached.
Mineralogy submits this exercise can only be reliably undertaken once a settled understanding has been achieved towards the true meanings of 'net profits' and 'Balmoral Project'. Otherwise, great waste could be incurred if the true meaning 'goalposts' are later moved.
The evidence of Mr Browning provided on the present application as seen, and despite criticisms of counsel for Mr Madan, does show sufficiently that there are no past revenue and expenditure financial statements or accounts prepared specifically for Mineralogy towards a Balmoral Project.
Hence, that fresh project accounting will need to be done at some stage, if Mr Madan is successful on liability issues.
Further practical difficulties emerge because the past yearly events now being litigated over by Mr Madan hold a potential to extend backwards in time to require fiscal investigations across the past 38 years.
I accept that a required accounting journey conducted so far back into the past would magnify the time, difficulty and scale of the potential forensic accounting exercise from a hearing on quantum perspective. It could take a lot of trial time.
It will also be recalled that Mr Madan's writ commencing the present action only issued on 14 April 2021 (folio 1). As now seen from the FREASOC pleading, Mr Madan's case proceeds upon various contentions that the significant capital payments received by Mineralogy or by Mr Palmer (between 2006 ‑ 2008) from CITIC Ltd (paid to enter the Sino Iron Project by an indirect acquisition of shares in what were formerly wholly-owned subsidiary corporations of Mineralogy, such as Sino Iron Pty Ltd), included payment amounts of $US215 million and $US40,000, respectively referred to in pars 45, 46 and 50 of the FREASOC.
Mr Madan pleads that those amounts are all 'caught' as revenue of a Balmoral Project under a net profit calculation upon Mr Madan's contended true meaning of the term 'net profits' ‑ for a purpose of engaging with his claimed 1% annual net profit payment contractual entitlement against Mineralogy.
To that end, paragraph 45 of the FREASOC reads:
On 31 March 2006 the first defendant sold its 100% shareholding in Sino Iron to a subsidiary entity of CITIC Limited (CITIC), Sino Iron Holdings Pty Ltd, for US$215 million under a share takeover agreement and the first defendant was paid the amount of US$215 million on or about 6 July 2006.
By its defence pleading filed 28 July 2022 (folio 52), Mineralogy admits par 45 of the FREASOC concerning receipt of the payment of $US215 million by CITIC Ltd to Mineralogy.
I refer further to Mr Madan's pleas under par 56 in the FREASOC, reading:
The plaintiff now claims 1% of the net profits on the following amounts:
(a)US$215 million;
(b)the royalties received by the first defendant in relation to [Royalty Component A];
(c)US$149,413,470;
(d)the royalties received by the first defendant in relation to [Royalty Component B] subsequent to 24 November 2017;
(e)all other monies received by the first defendant in relation to the Balmoral Project; and
(f)US$40,000.
That is the pleaded position by Mr Madan. But, from an accounting perspective, such 'entry' purchase amounts as were paid by CITIC Ltd to acquire shares in Sino Iron Pty Ltd should be characterised as capital (not as income) payments made and received in return for the acquisition by CITIC Ltd of personal property (being the purchased shares in Mineralogy's former subsidiary corporations).
If the share acquisition sums paid over by CITIC Ltd to Mineralogy are assessed as being in the character of capital receipts, rather than of income (or revenue) character, questions still present as to how they ought be treated for the purposes of reaching conclusions in this trial upon whether or not a 'net profit' for the Balmoral Project was reached in a particular financial year ‑ for the purpose of generating a liability in Mineralogy to him under whichever agreement he relies upon.

Repercussions of $US215 million received by Mineralogy being assessed as income or otherwise

Towards the amount of $US215 million admitted as received by Mineralogy at or about 6 July 2023, question arise over how that ostensible capital sum should be treated under Mr Madan's alleged agreement(s) with Mineralogy sued upon in this action.
This amount was paid over six days after the conclusion of the preceding financial year ended 30 June 2006. If the $US215 million sum is to be brought to account as revenue in the 2006/2007 financial year for Mineralogy's Balmoral Project towards computation of a net profit for that financial year, then a correlative scrutiny of all subsequent financial years' net profit results falls heavily into focus from July 2008 and for each financial year thereafter.
On the other hand, were the $US215 million sum characterised as capital (not revenue), and as such not brought into any annual net profit computation, then a net profit ascertainment exercise looks to be likely to arise (if it has) at a point later in time (ie, a time more proximate to when magnetite ore production ramped up in earnest) once a regular stream of annual Royalty Component B (RCB) income began to flow through to Mineralogy - theoretically, as I explain later, around the end of 2017.

Predicted duration of any Primary Trial

The interpretive difficulties arising around any unlocking of the true meanings of 'net profits' and 'Balmoral Project' ‑ as aspects foundational to any payment obligation to Mr Madan on any version of the alleged contracts he contends for - should be acknowledged. Mineralogy submits that an initial Primary Trial (confined to issues of liability and limitation of actions) would have a duration of days, rather than weeks. Hence, it submits it is the more appropriate way to proceed.
Under pars 44, 45 and 46 of its written submissions of 7 February 2023 (folio 78), Mineralogy advocates this position concerning a Primary Trial to isolate and defer any damages quantification exercise until later, if necessary. These paragraphs say:
44.If the parties press on to a trial on quantum without any ruling as to the meaning of 'net profits', there is every likelihood that large volumes of ultimately irrelevant material would [be] put into evidence and submissions made as to that material. This is likely to substantially prolong and increase the costs of the hearing on quantum issues.
45.Accordingly, Mineralogy proposes that at [sic] the first hearing would address certain specific questions which are set out in paragraph 2 of Mineralogy's Chamber Summons.
46.The questions may be summarised as follows:
(a)Where there is an excess of expenditure over revenue in a given year, is that excess to be 'carried over' to the following year and offset against revenue from the following year?
(b)What variables are to be included in assessing net profits from year to year, and by what formula should they be applied?
(c)Are certain sums received by Mineralogy as a result of agreements to sell shares and as consideration under an option agreement to be taken into account in determining what is payable to the plaintiff - that is, are those sums revenue which is relevant to assessing 'net profits' within the meaning of the relevant contract?
(d)In determining net profits for a given financial year, should taxation, royalties or other statutory impositions be taken into account?
Note further Mineralogy's written submissions under pars 47 to 56.
From the earlier-assembled case authorities in this field, applications for the determination of separate issues are inherently action-specific. Each application must invariably be determined on its unique facts. Sometimes little, if any, affidavit material is required to meet the applicant's onus of showing the greater utility of proceeding to a trial that separates issues. Sometimes, more will be needed.
Here, Mineralogy submits that the overwhelming utility in what it proposes is almost self-evident, given Mr Madan's foundational reliance on contractual terms (if there is a binding agreement) presents demonstrable contractual choices that must first be resolved.
Given this horizon, there is, it says, an obvious a need for foundational clarity to be achieved early over these issues of true meaning. Also submitted, correlatively, is a potential for a very wasteful derailment of any quantum phase if conducted in an unseparated trial - were this suggested path of issue separation not followed.

Four more matters to weigh

I should mention the following further matters which also bear upon the overall assessment being undertaken.
First, the exercises in contractual interpretation that will be required towards deriving the true meanings for 'net profits' and 'Balmoral Project' will be conducted objectively under Australian contract law. The parties' personal subjective views on their perceived understandings of those terms will be irrelevant. Mr Madan is not running a rectification case. The objective character of the interpretive exercise necessarily confines and limits the scope of admissible witness evidence in the required interpretative tasks.
There is some scope in that interpretative exercise for the receipt of relevant surrounding-circumstances evidence bearing upon context by proving facts mutually known to the parties, or facts that were notorious to them at the time of the perfecting of their agreement. To that end, the interpretive principles of contract law explained by Mason J (as his Honour then was) in Codelfa Constructions Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 349 at 352, are well understood.
Mason J's reasons in Codelfa came to discuss at 239 - 241 earlier reasons given in the House of Lords by Lord Wilberforce in Prenn v Simmonds [1971] 1 WLR 1381. That appeal concerned an exercise in contractual interpretation undertaken regarding the uncertain textual deployment of the word 'profits'.
The House of Lords ultimately concluded that the word, once assessed in context, was to be understood as a reference to 'consolidated profits' (see the discussion in Codelfa at 348).
I mention this simply as an illustration of the potential elasticity of the meaning of the word 'profits', or indeed the phrase 'net profits', depending on the surrounding context.
Here, the FREASOC of Mr Madan has not yet identified any extrinsic facts as being relevant to or relied upon towards contextually supporting a true meaning of the term 'net profits' which Mr Madan will advance at trial. A sustained absence of any such extrinsic facts to be relied upon and proven (disputed or otherwise) would contribute to limiting the duration of a liability issues hearing.
Second, the written and verbal submissions of counsel for Mr Madan have tended to unduly downplay the difficulties to be confronted in the interpretive aspects of Mr Madan's case.
Such uncertainties over aspects of Mr Madan's liability case ought not, on my prima facie assessment, be diminished. An early interpretive exercise conducted towards the agreement terms (assuming an agreement is found) of uncertain meaning, on my view, would obviously assist the parties and indeed the court in safely conducting any potential quantum of damages hearing - from a reliable platform of settled meaning for that later task.

To the extent that Mr Madan's lawyers' letter suggests that the grant of liberty to apply - made earlier concerning a hearing of Mineralogy's application for a split trial - could be invoked to support an application to re-open what was a fully concluded hearing (save for my reasons for decision), any such perception is erroneous.
In a context of what had by then been a fully argued and concluded interlocutory hearing on 13 February 2023, the expressed invocation of the liberty to apply was misconceived.
Third, Mr Madan's lawyers' communication at other points does look to acknowledge the true nature of its foreshadowed application. This, of course, was a foreshadowed application for leave to re-open that otherwise concluded hearing and, upon such leave being obtained, to then adduce further evidence, by way of augmented opposing materials on Mineralogy's separation of issues application.
The position needed to be pointed out in a communication sent from my Associate by email to Mr Madan's lawyers the following day (at my behest) at 10.20 am, advising them:
His Honour has asked me to let you know that, prima facie, his view is that your communication foreshadows the plaintiff's intention to apply for leave to reopen the arguments which were heard and reserved upon the defendant's application of 11 November 2022 - with judgment reserved on that application on Monday, 13 February 2023.
In light of your advice, his Honour will suspend further work upon his reserved reasons - until receipt of the plaintiff's formal application and supporting materials seeking leave to reopen.
If that application to reopen is filed, and if it is opposed by the defendant, then his Honour advises that he is likely to list the opposed application for hearing.
Given Mineralogy's expressed opposition, what was then a foreshadowed (albeit not yet made) application by Mr Madan's lawyers for leave to re-open was listed for a further special appointment hearing at 2.30 pm on Friday, 17 March 2023.
Fourth, the 16 February 2023 communication to chambers displayed another conceptual misunderstanding - namely, that there was no need for a formal application. This was not correct. There was very much a need for a formal application to be made seeking leave for Mr Madan to re-open and adduce the further evidence. In the CMC list, however, it is permissible for such an application (which would necessarily be an inter partes application made with notice, rather than an ex parte application) to be made in accord with the court's practice directions by a 'letter', rather than by filing a chamber summons. See in that context, RSC O 4A r 5A(1)(a) and r 5A(2). Also see RSC O 4A r 5B(1), providing:
(1)A party making a request under rule 5A by way of a letter must -
…
(b)set out in the letter details of any order or direction sought or file with the letter as an attachment a minute in Form 78 of any order sought; and
Mr Madan's lawyers' passing communications to chambers at that point had not set out the terms of the orders or directions to be sought in regard to them seeking leave to re-open the hearing and adduce further evidence.
Customarily, where there is no chamber summons, or an ex parte motion filed to support an application in chambers (see RSC O 4A r 5A(2)), the court would still expect to receive at least a minute of the proposed orders being sought - electronically filed and, of course, served on the counterparty.
Mr Madan's lawyers' communication of 16 February 2023 merely foreshadowed an application. They did not actually apply for anything.
Fifth, Mr Madan's lawyers' communication suggests applications for leave to re-open can be made informally. That is in suggested reliance upon observations found in Osborne v Landpower Developments Pty Ltd (in liq) [2003] WASCA 117,by the reasons of McLure J (as her Honour then was) at [11] and by Heenan J at [47]. That is not the case.
That decision does not support any proposition as to informality as is contended for.
An application seeking leave to re-open a hearing which has ostensibly been fully concluded upon judgment reserved by a judicial officer, be it at a trial or for an interlocutory application, is a grave and serious matter. It is no occasion for informality. The application should be made explicitly clear to both the court and to any necessary counterparty.
In Osborne, an oral application had been made to the Master seeking to tender a further affidavit on behalf of a defendant - by way of supplementing that defendant's resistance against Mr Madan's summary judgment application. The issue faced by the Full Court was how to treat the extra material as received - rather than how an application to re-open and adduce further evidence should be made.
At that point, the Master had been on the verge of handing down the reserved reasons for decision upon Mr Madan's argued summary judgment application.
The Full Court, in the interlocutory appeal in Osborne, concluded that the Master had applied an incorrect test by rejecting the further affidavit that Mineralogy had sought to read, via the oral motion of his counsel made at the time, to rely upon and thereby to effectively re-open the already argued summary judgment hearing on a basis of extra materials recently obtained - see the observations of Heenan J at [47]. His Honour observed at [48]:
I respectfully agree with the conclusion of McLure J that the test to be satisfied in order to determine whether or not the application to re-open and adduce further evidence for the appellant should be granted is that formulated in Smith v New South Wales Bar Association (1992) 176 CLR 256 at 266 - 267 and that no such test was applied by the learned Master in this case. Accordingly, I have reached the conclusion that the learned Master was in error in failing to consider and admit into evidence the appellant's affidavit of 27 March 2002.
But the oral application to the Master considered at the Osborne appeal was a different situation to the present. That oral motion was made by counsel, effectively in open chambers, seeking then to re-open argument in that summary judgment hearing.
Nothing in the Osborne reasons suggests that the court's general approach to the re-opening of arguments on an otherwise concluded hearing of an interlocutory application can be advanced informally. The observations of Heenan J only direct attention back to the primary reasons of McLure J.
Relevantly, in Osborne McLure J observed at [14] (with the agreement of Heenan J):
It is to be expected that a less stringent test would apply when leave to re-open is sought before reasons are delivered and orders made because the policy in favour of finality does not have the same force. In this case there was no deliberate decision not to adduce the evidence in the March affidavit but it may have been available at the earlier hearing by exercise of reasonable diligence. It is unnecessary for me to decide that question because I propose to apply the less stringent test referred to by the High Court in Smith (supra). Relevant factors in the exercise of the discretion include the materiality of the evidence and whether the interests of justice would be advanced by its admission: Joyce v GIO (NSW) reported in Ritchie's Supreme Court Procedure NSW Vol 2 p 8551 - 8552 and cited with approval by the High Court in Smith (supra) (at 267).

Arguments and evidentiary materials relied upon at the second hearing

Materials relied upon by Mr Madan

From the perspective of Mr Madan in seeking to further resist Mineralogy's separation of issues application, he relies on materials contained in the Second Camp Affidavit and his further written submissions of 24 February 2023 (folio 85).
Summarising Mr Madan's position, he says at pars 14 - 16 of those further submissions, concerning the materiality of the proposed further information obtained from the DMIRS by Mr Camp, that:
14.The additional evidence is material because it shows the expenses on a tenement specific basis, for a specific amount of the period prior to 2010 based on information provided by the defendant to DMIRS.
15.The additional evidence shows that significantly less time, cost and resources of the Court and the parties, would be needed to determine matters relating to quantum.
16.The additional evidence further shows that the defendant has not discharged either of its evidential or legal burdens on its application. The additional evidence shows that the defendant has not provided a sufficient basis for the Court to assess the time and cost it would take for all issues [to] be determined in one trial compared to separate trials.
More specifically at par 31, Mr Madan's submissions elaborate towards the additional evidence in the Second Camp Affidavit in terms:
31.The additional evidence in the Second Camp Affidavit, and which is discussed above, shows that based on the publicly available information for the periods concerned:
(a)the expenditure information related to the Balmoral Project will not need to be forensically reconstructed as asserted by the defendant, at the very least for the period between 1997-2002, and in the case of E08/117 and E08/118 to 2003;
(b)will not require expert evidence as asserted by the defendant;
(c)will not take the time, cost and resources of the defendant as asserted by the defendant. Mr Camp annexes a spreadsheet of the recorded expenditure and payments on a tenement-by-tenement basis based on the publicly available information in TGC-5 and TGC‑6: Second Camp Affidavit at [28] and Exhibit TGC-10; and
(d)will not require a significant amount of the Court's time at trial to determine the expenditure on the Balmoral Project, such as to warrant a separate trial on the issue of quantum.
Concluding that submission, Mr Madan contends at 37 to 38:
37.There is little prejudice to the defendant, the additional evidence is material, and the interests of justice are advanced by its admission. The admission of the additional evidence shows that the time, costs and resources required of the parties and the Court, will be significantly less than asserted by the defendant, and do not warrant separate trials as sought by the defendant.
38.... The defendant has not undertaken sufficient steps to allow the Court to find that the utility, economy and fairness of separate trials are beyond question. The additional evidence put on by the plaintiff, over objection by the defendant, supports the contrary position.
I have already referred to the communication to the court under Mr Madan's lawyers' letter dispatched by email (and attached letter) to my Associate late on 16 February 2023. I have addressed the multiple misconceptions evident in that letter.
It then took more time for Mr Madan's further evidentiary materials to arrive. Eventually, however, he sought to rely upon the Second Camp Affidavit.
Within the Second Camp Affidavit, the offered explanation for the late arrival of the further evidence as was sought to be adduced upon the application for leave to re-open, is stated in candid terms, as follows:
2.On 13 February 2023, subsequent to the hearing on 13 February 2023 (the Hearing), my client said words to the effect that 'tenement holders are required, under the Mining Act, to make a minimum amount of expenditure and report their expenditure to the Department'.
3.I had not considered this prior to the Hearing, but it caused me to think that it was possible that such information may be publicly available on one of the databases kept by the Department of Mines, Industry Regulation and Safety's [sic] (DMIRS).
The balance of the Second Camp Affidavit seeks to explain, from pars 4 to 30, the nature of the Mineralogy's expenditure information uncovered from that public source as a result of Mr Camp's searches on the DMIRS website commencing at 15 February 2023 and thereafter.
The content of the late expenditure information was said to be relevant to augment the resisting of Mineralogy's application for a deferment of a hearing on quantum. This information obtained from DMIRS came to be assembled by Mr Camp's secretary on an Excel spreadsheet found as TGC-11 (incorrectly referred to as TGC‑10 at par 28 of the affidavit).
The suggested relevance of this information, as expressed by Mr Camp at par 27, was:
Based on my experience and the examples of the information contained in previous reports I consider that calculating the expenditure associated with the Balmoral Project will take significantly less time than suggested by the Defendant.
The information compiled in that Excel spreadsheet effectively shows two tables.
The first of the assembled tables spans a period from 1987 to 2003 for the same tenements. There is no further information after 2003.
In effect, Mr Madan says that any quantum of damages exercise at a trial could be confined to this public information - which was not before the court at the first hearing. The extra information is said to render a quantification exercise more feasible - such that it will 'take significantly less time than suggested by Mineralogy'.
The second table shows fees paid across the years 1987 to 2023 for various exploration licences and mining leases as identified (constituting, on Mr Madan's pleaded case, tenements which make up the so-called Balmoral Project). It shows an aggregate amount of annual fees paid in respect of those tenements as $5,551,277.10.

Materials relied upon by Mineralogy

Mineralogy opposes any grant of leave to Mr Madan to re-open the hearing of the interlocutory application, albeit on my assessment of its position it does not contend for any forensic prejudice to its position were that to occur. Nor does it contend that Mr Madan's failure to adduce the evidence at the first hearing was a deliberate decision. It is, however, critical of Mr Madan's contended lack of diligence in not obtaining and putting the material before the court at the earlier hearing.
Mineralogy's opposition is the subject of a further outline of written submissions filed 14 March 2023. It seeks further, in the event that the court was minded to re-open the hearing of the application and allow the adducing of the further evidence as is sought, to read and rely upon a further affidavit made on behalf of Mineralogy via a ninth affidavit of Thomas Vincent Browning sworn and filed on 13 March 2023 with exhibits TVB-38 to TVB-48 (folio 87) ('Ninth Browning Affidavit').
Referring to a transcript of an earlier interlocutory case management hearing concerning the proposed categories of discovery which occurred in chambers on 3 November 2022, par 6 of the Ninth Browning Affidavit points out that at that time counsel for Mr Madan had made direct reference to Mineralogy's obligations to comply with the tenement expenditure conditions ‑ from the time that Mineralogy first obtained control of the tenements in the mid-1980s. The point essentially was to demonstrate the existence of public information filed with the DMIRS or its predecessor department, including tenement expenditure information from the mid-1980s. This public avenue for obtaining that public information would hardly be a surprise to anybody with a basic knowledge of how expenditure records are kept.
At par 17 of the Ninth Browning Affidavit, Mr Browning points out that at par 29(c) of the Sixth Browning Affidavit he had identified seven categories of cost or expense that would need to be identified and calculated in order to assess the net profits related to, or arising out of, the Balmoral Project. One of those categories was 'statutory expenditure requirements relating to the holding of tenements, licences and leases'.
Thus, the existence therefore of those statutory expenditure records concerning the holding of Mineralogy's tenements, licences and leases has been accepted as one component of any task involved in assembling the costs and expenses for the Balmoral Project. But Mineralogy's point, essentially, is that they are merely one component of the Balmoral Project 'net profit' ascertainment exercise. See also par 28 of the Ninth Browning Affidavit identifying there eight categories of expenditures under par 29 of the Sixth Browning Affidavit. Having assembled and reviewed what are various reports obtained from DMIRS (so-called Form 5s) addressing reports on operations on those mining tenements, Mr Browning appends documents obtained and then by reference to the potential eight categories of expenditure, observes at par 29:
Based on my review of the Form 5s, I have not been able to identify any Form 5 which describes any expense related to categories 1, 2, 4, 6, or 7. [The statutory expenditures on tenements were identified as category 3.] As the Form 5s do not appear to include expenses related to those categories of expenditure, I expect the hard-copy repositories will need to be reviewed for relevance to these categories of expenditure. This work will be unnecessary if the defendant is successful in respect of the issue of liability or the plaintiff's submission that 'net profits is based on financial inflows in any ... financial year' is accepted (at T-128, exhibit page 32).
At par 38 Mr Browning observes that none of the information provided under the Second Camp Affidavit led to any material change in his view as to the time and cost associated with the exercise of giving discovery in relation to quantum issues, obtaining of expert forensic evidence and assistance in respect of materials with a view to assessing net profits of the Balmoral Project and the conducting of a trial upon all issues, including quantum.
By par 19 of Mineralogy's written submissions put against the grant of leave to re-open, it contends that the materiality of the further information the subject of the Second Camp Affidavit is 'very limited'. At par 22(f) of Mineralogy's submissions concerning limited materiality of the further information, it is said:
(f)It is important to have regard to the purpose of the Form 5s and the statutory context in which the obligation to provide them appears. The Form 5s are intended to provide a report of the holders' compliance with minimum expenditure conditions allowable categories of costs. The Mining Act 1978 (WA) stipulates that exploration licences (s 62(a)) and mining leases (s 82(c)) are granted subject to the condition, relevantly, that the holder comply with prescribed expenditure conditions. A holder may apply for an exemption from the minimum expenditure conditions (s 102) but a failure by the holder to comply with the condition absent an exception renders the licence or lease liable to forfeiture by the Minister (ss 63A and 97).
Paragraph 22(g) continues:
(g)... In 1999, r 96C of the Mining Regulations was added which provides additional guidance on 'allowable' and 'non-allowable' expenditure which may be applied by the holder to calculate whether the minimum amounts required to have been spent by the holder have been spent.
(h)Accordingly, it may be seen that there are various costs (such as those set out in s 96C(4)) which would likely (or at the very least arguably) be relevant to assessing the 'net profits' of the Balmoral Project but which were not required to be included on the Form 5s. (footnotes omitted)
I refer also to par 22(i) as examples of costs that would not be included in the Form 5 returns filed by Mineralogy vis-à-vis an exercise in assessing net profits for the purposes of Mr Madan's case, if required.
Paragraphs 26 to 28 of Mineralogy's submissions assert a contended level of limited prejudice to Mineralogy, if leave to re-open is granted. This is said to arise due to the inconvenience and wasted costs involved in re-opening in circumstances where matters later sought to be agitated could and should have been dealt with at the hearing on 13 February 2023. However, on my assessment, that suggested prejudice is capable of being addressed by an appropriate indemnity or wasted costs order. It does not rise to the level of forensic prejudice that would otherwise weigh against an exercise of the court's discretion to allow a hearing to be re-opened in the interests of justice. Indeed, Mineralogy's own submissions refer to observations by Garling J in Gaskin v Ollerenshaw [2010] NSWSC 788 at [38], where his Honour indicated that this variety of limited prejudice could be addressed, in effect, by an order for costs on an indemnity basis 'whatever be the outcome of the proceedings'.

Relevant principles to an application to re-open and adduce further evidence

The materiality threshold to be applied to the further evidence that the party seeks to adduce

Upon what is ultimately an exercise of discretion concerning whether or not there should be a grant of leave for this plaintiff to re-open a hearing that was otherwise fully concluded on 13 February 2023, the court exercises that discretion by asking, in effect, whether the interests of justice are better served by allowing or by rejecting the application, as the case may be (see the observations of Le Miere J in Jaddcal Pty Ltd v Minson [2011] WASC 28 [45]). That matter involved circumstances where his Honour was of the end view that the evidence had been reasonably available at the time of the first hearing ([46]). There had been an unintentional oversight in not adducing the evidence which could have, by reasonable diligence (as is also the case here), been previously obtained.
At [47] Le Miere J applied, as regards materiality, the standard of asking whether the applicant had shown there was a real possibility that the further evidence would produce a different result if it had been admitted, applying Australian Electrical Electronics Foundry & Engineering Union (WA Branch) v Hamersley Iron Pty Ltd (1998) 19 WAR 145. His Honour observed that the proposed evidence was equivocal. Further factors considered included the delay in bringing the application seeking leave to re-open. The application was refused.
Here, I do not consider delay to be a relevant factor against the application to re-open. That is the case, although for reasons which still remain unclear it took Mr Madan until 27 February 2023 to provide the court a minute of proposed orders (folio 92) which might (generously) be assessed as a formal application seeking leave to re-open (albeit this minute being expressed as seeking a programming of orders relating to a re-opening of the hearing on 13 February 2023). That minute, in effect, assumed an application for leave to re-open had been made earlier. By my assessment, that assumption was erroneous. The earlier communication to the court had merely foreshadowed the bringing of such an application for leave to re-open.
At [50] of Jaddcal Pty Ltd v Minson, Le Miere J concluded, by reason of the availability of the evidence at the time of the hearing and the delay in bringing the application to re-open in the absence of probative value in the proposed further evidence, that he would decline that application for leave to re-open on the advocated interlocutory injunction application.
In the somewhat distinct context of a family provision application challenging the dispositions under a will, Pritchard J (as her Honour then was) in Devenish v Devenish [2011] WASC 129 came to render an extensive consideration of the case authorities concerning the re-opening of a case after a hearing has been concluded, but before judgment was delivered - for the purpose of admitting new or additional evidence (see [111] - [122]).
In that context, her Honour ultimately admitted the further evidence.
The threshold of materiality that was utilised by her Honour was to admit that fresh evidence 'when it is so material that the interests of justice require it' (see [118]).
I would, with respect, notwithstanding these different contexts, apply that same materiality standard applied by Pritchard J - rather than any higher standard for materiality, being that the further evidence produces a different result that looks to have been used in Jaddcal Pty Ltd v Minson at [47]. Like Pritchard J, Simmonds J, in Computer Accounting and Tax Pty Ltd v Professional Services of Australia [No 4] [2011] WASC 284 at [24(5)] appears to have also, by reference to Devenish, applied the lower standard.
Next, I turn back to the decision of the High Court in Smith v New South Wales Bar Association (1992) 176 CLR 256.

The 'less stringent test' for applications for leave to re-open before reasons are delivered

From a passage cited by McLure J (seen in [315] of these reasons), from Osborne there arises a need to locate a less stringent test - by reference to Smith v New South Wales Bar Association. It will however be recognised for present circumstances, that:
(a)the foreshadowed application for leave to re-open here is not a situation in which there had been some deliberate forensic decision made by counsel for Mr Madan to not adduce the further evidence at the first hearing of the application, nor was that ever suggested;
(b)nevertheless, by reference to the observations of McLure J, the present case should be assessed as one in which the further evidence sought to be adduced was very much evidence that would have been fully available (from a DMIRS search) to Mr Madan upon an earlier exercise of reasonable diligence; and
(c)current circumstances present a situation on which the court's reasons for judgment on an ostensibly completed interlocutory argument were reserved and for which those reasons were not yet delivered. I contrast that situation against the underlying factual circumstances of Smith v New South Wales Bar Association, where the NSW Court of Appeal had already provided its reasons. That occurred prior to an application of counsel to re-open and adduce further evidence. On those published reasons (but before orders) a majority of the New South Wales Court of Appeal stood poised to strike Mr Smith off the roll of barristers in New South Wales.
It is evident from the High Court plurality's reasons in Smith v New South Wales Bar Association that there had been a publication of that NSW Court of Appeal's reasons after a first strike-off hearing. The plurality (Brennan, Dawson, Toohey and Gaudron JJ) said at 263:
Very soon after publication of reasons for judgment and before the order was entered, the appellant moved the Court of Appeal to re-open the matter by reason of the error contained in the statement that he had not referred to a car park conversation prior to the proceedings in that court. He also sought leave to present further evidence, including evidence of his good character ...
On analysis of the High Court plurality reasons at 266 - 267, it can be discerned that the New South Wales Court of Appeal decided then to allow counsel for Mr Smith to re-open.
Thus, what was at issue at the appeal to the High Court was how the Court of Appeal had gone about dealing with the further evidence to be adduced, having already made the decision to allow the evidence and further argument.
That position in Smith is somewhat at odds with the introduction at [12] in the Osborne reasons. Nevertheless, at 263, the plurality of the High Court in Smith observed:
The Court of Appeal allowed the application to re-open, although there seems to have been a misunderstanding as to the precise scope of that application ... [and] although the matter was re-opened, the Court of Appeal ruled that it would not have regard to the further evidence which the appellant wished to present.
At 264 - 265, the plurality said:
It is convenient to consider the first and second arguments of the appellant together, for, in combination, they raise a question as to the nature of the review required once it was decided that the case should be re-opened.
At 265, they continued:
As already mentioned, the orders of 9 May 1991 had not been entered when the appellant made his application for re‑opening. It has long been the common law that a court may review, correct or alter its judgment at any time until its order has been perfected ... The power is discretionary and, although it exists up until the entry of judgment, it is one that is exercised having regard to the public interest in maintaining the finality of litigation. Thus, if reasons for judgment have been given, the power is only exercised if there is some matter calling for review. And there may be more or less reluctance to exercise the power depending on whether there is an avenue of appeal. It is important that it be understood that these considerations may tend against the re-opening of a case, but they are not matters which bear on the nature of the review to be undertaken once the case is re-opened, as this case was. (footnotes omitted)
They added:
It is said in Ritchie's Supreme Court Procedure that the power to review a judgment in a case where the order has not been entered would not ordinarily be exercised 'to permit a general re-opening'. As a general statement that is correct, both as to whether leave to re-open will be granted and, if it has been, as to the nature of the review involved. But it is a general statement only and, once a matter has been re-opened, the nature and extent of the review must depend on the error or omission which has led to that step being taken... (footnotes omitted)
Then at 266 the plurality observed:
Once the decision to re-open was made, what was required was a reconsideration of [Mr Smith's] truthfulness in relation to that matter and, because it also bore on the matter, his truthfulness generally.
It is also evident that Sheppard J dealt with very different circumstances to the present in Joyce v GIO (NSW) (Unreported, NSWSC, Sheppard J, 21 July 1976), an excerpt of which is found cited in Ritchie's Supreme Court Procedure, New South Wales, Vol 2, 8551-8552. There, an application to re-open was opposed, notwithstanding the counterparty accepted that the new evidence would not cause any embarrassment or prejudice.
In Joyce, the extra evidence had been available. But it had not originally been led, concerning depositions taken at a Coroner's inquest and which had been in court during the trial.
After referencing Watson v Metropolitan (Perth) Transport Trust [1965] WAR 88, Murray v Figg (1974) 4 ALR 612, Hughes v Hill [1937] SASR 285, Betts v Wittingslow [No 1] [1944] SASR 163 and finally Barker v Furlong [1891] 2 Chancery 172 at 184, Sheppard J came to reject the so-called severe view, as earlier expressed by Cleland J in Hughes v Hill - being that to allow a party to re-open a case in order to lead evidence he had conscientiously decided not to lead in the course of a case 'would form an evil and dangerous precedent'.
Sheppard J in Joyce then observed:
I think in arriving at a conclusion as to what I should do I must take very much into account the need to ensure that cases are properly presented and, further, that if risks are taken by counsel consciously, strong reasons must be shown why their clients are, after all, to have a second chance. But I must also take into account the fact that the defendant in this case has expressly disclaimed that any prejudice will be occasioned to it by allowing the evidence in... In those circumstances, and notwithstanding what has been said in other Australian cases on [the] subject, I am of opinion that I should admit the evidence in the plaintiff's case and I do so.
I refer to that extract from Sheppard J's observations given an evident endorsement of his Honour's expressed stance at footnote 12 of the plurality observations in Smith, at 267.
But here, there is no suggestion of real prejudice to Mineralogy by allowing the further evidence sought to be adduced by Mr Madan as part of an augmentation to assist Mr Madan's resistance against Mineralogy's application seeking a split hearing - if a decision to grant leave to re-open is made.
As I have laboured to explain, however, the anterior stage of obtaining leave to re-open must first be passed.
The first question is whether there ought to be leave to re-open under present circumstances. That question, as I will explain next, should be answered in the negative.

Disposition of Mr Madan's application seeking leave to re-open

As I have endeavoured to show by reference to the plurality reasons in Smith, said to have been followed in Osborne, the first question is whether there should be leave to re-open, or not.
Leave is opposed by Mineralogy.
The circumstances in which the extra information has come to light, as explained in the Second Camp Affidavit, render it demonstrable that this information was public information openly available on the DMIRS website. It is therefore information which, with ordinary diligence, could have been readily available to Mr Madan and his advisers prior to and for use at the first hearing of the separation of issues application.
This is not like a case where some material witness who, having been looked for, is only located late after the first hearing - akin to the facts considered by Wolff CJ in Watson v Metropolitan (Perth) Transit Trust. Nor is it a case where evidence held was overlooked at the time and so was not tendered earlier by counsel's omission (see Muirhead J in Murray v Figge).
I accept there was no deliberate decision not to adduce such evidence at the first hearing. Its emergence essentially was presented to the court on a basis of its attainment being attributable to something of an afterthought, following the first hearing on 13 February 2023.
I must weigh the policy consideration of finality in litigation as referred to by the plurality in Smith alongside the potential materiality of this extra evidence said to bear upon the fate of Mineralogy's interlocutory application.
In all the circumstances, I am not persuaded to grant leave to adduce the extra evidence.
Moreover, I would reject the submission put on behalf of Mr Madan through counsel - to the effect that the test for the grant of leave is at a threshold approaching that of merely asking at a point before the court has delivered its reasons for decision.
That is not the correct test. Were it so, virtually no interlocutory hearing and no trial in respect of which reasons for decision are reserved could ever be safely assessed as being completed. That situation would be untenable to the efficient administration of justice. It would be a licence to promote afterthoughts. Arguments would be unending.
Consequently, I must ultimately refuse the application for leave to re-open.

Conclusions and orders

Mineralogy's application seeking separate trials of issues should be allowed. Orders to that end should now issue, reflecting Mineralogy's proposed orders, as follows:
1.All questions arising upon a quantification of the plaintiff's claim, being the subject of pars 2 to 8 of the prayer for relief in the FREASOC, are hereby separated and removed - to be tried separately, if necessary, subsequent to a determination by trial of all other issues in the proceeding at a first trial session (the Primary Trial).
2.Without detracting from order 1 above, all other questions upon issues of liability and limitation of actions are posed for final determination at the Primary Trial, including (non‑exclusively):
(a)Pursuant to each of:
(i)the alleged pre-incorporation oral agreement pleaded in pars 4 to 7B of the FREASOC;
(ii)the alleged agreement pleaded in pars 7C to 7D of the FREASOC;
(iii)the alleged pre-incorporation written agreement pleaded in pars 17 to 20C of the FREASOC;
(iv)the alleged post-incorporation written agreement pleaded in pars 20D and 20E of the FREASOC; and
(v)the alleged agreement pleaded in pars 20F to 20G of the FREASOC
(Alleged Agreements),
if in a given financial year the defendant's expenditure in respect of the Balmoral Project exceeds its revenue from the Balmoral Project, is the surplus expenditure required to be carried over to the following financial year and taken into account in determining the amount (if any) payable by the defendant to the plaintiff in respect of the latter financial year pursuant to the relevant agreement?
(b)Pursuant to each of the Alleged Agreements, what are the variables to be considered in assessing the defendant's 'net profits' as that term is used in pars 4(d) and 19 of the FREASOC and what is the formula by which those variables are applied to assess such 'net profits'?
(c)In particular, in respect of each of the Alleged Agreements, are the following sums amounts which are required to be taken into account in determining the amount (if any) payable by the defendant to the plaintiff under the relevant agreement:
(i)the sum of US$215 million pleaded in par 45 of the FREASOC;
(ii)the sum of US$40,000 pleaded in par 46 of the FREASOC; and
(iii)the sum of US$200 million pleaded in par 50 of the FREASOC.
(d)Pursuant to each of the Alleged Agreements, in ascertaining the 'net profits' (as that term is used in pars 4(d) and 19 of the FREASOC) in a given financial year, should a deduction be made in respect of any taxation, royalty or other statutory imposition payable by the defendant upon revenue obtained from the Balmoral Project?

Costs

Given the opposed character of this application, upon which Mineralogy has ultimately been successful, I am of the view, prima facie, that party-party costs should follow that event.
In other words, Mr Madan as the unsuccessful party resisting the application must bear the costs of Mineralogy in respect of his unsuccessful resistance put against Mineralogy's interlocutory application for a separation of trial issues.
Those costs should be payable on an ordinary party-party basis, save in respect of any special costs orders sought by Mineralogy.
Regarding Mr Madan's unsuccessful application for leave to re-open heard on 17 March 2023, I would prima facie make a costs order against Mr Madan. Moreover, following the observations of Garling J referred to at [339] of these reasons, I would order that the application be refused upon the basis of Mr Madan paying Mineralogy's costs of that application to re-open on an indemnity basis.
These prima facie indications as to costs orders above should be the subject of conferral between the parties' legal representatives. If there remains a dispute over the costs orders, I will hear the parties urgently upon that issue of costs. For now, costs are reserved pending that conferral.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
VC
Associate to the Honourable Justice K Martin
22 JUNE 2023