Marindi Metals Ltd v Kidman Resources Ltd

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: MARINDI METALS LTD -v- KIDMAN RESOURCES LTD [2017] WASC 189

CORAM: KENNETH MARTIN J

HEARD: 29-31 MAY 2017

DELIVERED : 7 JULY 2017

FILE NO/S: CIV 2964 of 2016

BETWEEN: MARINDI METALS LTD
Plaintiff
AND
KIDMAN RESOURCES LTD
Defendant

Catchwords:

Contract - Trial of issues save for damages - Disputed contract formation - Exchanges by email and text between managing directors of ASX listed corporations - Essential terms - Alleged uncertainty - Draft heads of agreement remaining incomplete - Specific performance claimed - Laches and acquiescence - Unclean hands of plaintiff alleged as inhibitor to relief even if contract proved

Legislation:

Nil

Result:

Plaintiff's action dismissed

Category: B

Representation:

Counsel:

Plaintiff: Mr M L Bennett
Defendant: Mr G R Donaldson SC & Mr T P O'Leary

Solicitors:

Plaintiff: Bennett + Co
Defendant: Maddocks Lawyers

Case(s) referred to in judgment(s):

Austman Pty Ltd v Mount Gibson Mining Ltd [2012] WASC 202
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd [1988] 18 NSWLR 540
Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191
Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95
Feldman v GNM Australia Ltd [2017] NSWCA 107
G R Securities v Baulkham Hills Private Hospital (1986) 40 NSWLR 631
Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd [1995] NSWCA 166; (1995) 7 BPR 97,578
Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353
Sinclair Scott & Co v Naughton [1929] HCA 34; (1929) 43 CLR 310
Streeter v Western Areas Exploration Pty Ltd [No 2] [2011] WASCA 17
Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015] WASCA 21; (2015) 47 WAR 547

KENNETH MARTIN J:

Introduction

The plaintiff, Marindi Metals Limited ('Marindi') commenced the present action by writ of summons issued in this court on 14 November 2016. In essence, it pursues against the defendant, Kidman Resources Limited ('Kidman'), a claim for specific performance of an alleged written agreement which Marindi says was brought into existence through an exchange of eight communications (five emails and three SMS text messages) passing between the respective managing directors of each of these listed ASX corporations over the afternoon/evening of Monday, 4 April 2016.
Under its prayer for relief Marindi seeks a declaration 'that a binding agreement exists between the plaintiff and the defendant for the acquisition by the plaintiff of Pegmatite Rights in respect of the relevant Tenements' and specific performance of that alleged agreement - which as seen is specifically contended to have been brought into existence on 4 April 2016 as an agreement wholly in writing.
The binding written agreement that is contended for by Marindi is identified in explicit terms as regards its eight (8) constituent written components and its alleged essential terms under par 30 of Marindi's further amended statement of claim (FASOC) I will set out in full shortly.
The term 'Pegmatite Rights' is explicitly defined within the FASOC at par 5 - on the basis of these being alleged rights to 'explore for and mine pegmatitic minerals including lithium, tantalum, tin, kaolin and semi‑precious stones within the Mt Holland project located on the Tenements'.
Marindi's FASOC at par 3 also defines 'Tenements'. It does that by reference to some 56 identified Tenements in a schedule A to the FASOC (noting, however, that Tenement E77/1776 is contended to have expired in March 2016) - thereby leaving some 55 Tenements of diverse character as the geographic subject matter of Marindi's action.
For its part, Kidman wholly refutes any binding agreement with the plaintiff as regards the Tenements reached on 4 April 2016, or ever.
Kidman does accept that there were passing communications that day between Victoria and Western Australia as between the respective managing directors. But Kidman rejects that any completed and binding agreement was reached that day or at all with Marindi.
After 4 April 2016 legal representatives for Marindi and Kidman became engaged in attempting to agree upon a draft heads of agreement document between the parties. However, those efforts were unfulfilled.
On 11 April 2016, Kidman's managing director, in effect, advised Marindi's managing director verbally and in writing that Kidman would not be proceeding further with the legal work then under way towards finalising a heads of agreement.
Kidman's position is that between 11 April 2016 and 11 November 2016 Marindi, through the actions and conduct of its representatives, manifested to it no indication, or articulation whatsoever as to the existence of a binding agreement of 4 April 2016 and which had been completed with Marindi under the text messages and emails exchanged between the managing directors across 4 April 2016.
Inaction by Marindi over a course of seven months until the receipt by Kidman 'out of the blue' of a letter of demand from Marindi's legal representatives on Friday, 11 November 2016 presents as significant - not only in relation to the objective evaluation required as to the parties' conduct as regards the ascertainment of a binding Marindi/Kidman contract allegedly consummated on 4 April 2016 - but also as an independent basis for Kidman correlatively contending that Marindi ought, even if it could prove a binding contract as having been completed at that time, nevertheless still being denied equitable relief by way of specific performance.
Kidman asserts that equitable relief should be denied in any event on the basis of either Marindi's laches (gross causative of harm delay), over a seven month period, or on the basis of Marindi's disentitlement to discretionary equitable relief on the basis of Marindi's 'unclean hands' (being asserted misconduct by Marindi of a causative kind that would debar Marindi's right to seek to persuade a court of equity to compel the performance by Kidman of any contractual agreement otherwise found to have been perfected).
In all the circumstances then, the key issues which arise for determination in the present action concern:
(a)the first and fundamentally disputed issue over whether or not a binding and enforceable written agreement was perfected as between Marindi and Kidman on Monday, 4 April 2016;
(b)the related issue as to whether the parties' essential terms within any completed agreement as might be ascertained under (a) are sufficiently certain or comprehensive enough to be enforced, or whether, as Kidman argues, the agreement fails in any event for contractual uncertainty; and
(c)assuming Marindi could surmount those two issues, whether the equitable discretionary remedy of specific performance (being an order of the court that would compel Kidman to complete performance of a 4 April 2016 agreement as ascertained) should be withheld from Marindi in any event - on a basis of either its gross delay or by the overlapping issue of Marindi's alleged 'unclean hands' manifesting in all the circumstances.
It is established contract law in Australia that an issue as to an ascertainment of a disputed binding written agreement as between parties needs to be evaluated objectively, rather than subjectively. In other words, the respective parties' overall conduct towards each other is assessed and weighed by a court from the perspective of a commercially dispassionate and neutral observer - rather than by asking what each of the parties themselves subjectively 'thought' their individual 'contract' or 'no contract' position to be.
In conducting an objective evaluation of the parties' assessed intentions, a court will look at any relevant surrounding contextual circumstances - up to the time at which the allegedly consummated contract is contended to have been brought into existence and even beyond that time.
Contextual circumstances viewed by a court will include the subject matter of the bargain, the evolution of the parties' negotiations, and any other relevant mutually known objective matters of fact. A convenient list of eight potential considerations helpful in the objective evaluation required towards the ascertaining of a binding contract or otherwise was assembled by Kirby P (as he then was) in Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd [1995] NSWCA 166; (1995) 7 BPR 97,578, 18 ‑ 19.
As a further part of the objective analysis towards seeking to ascertain whether the parties have completed a binding agreement, a court is also permitted to look at subsequent conduct of the parties after the date of an alleged contractual agreement, if such ex post facto conduct is objectively probative towards the contract or absence of a contract ascertainment exercise.
For the present case, it is significant that the 4 April 2016 agreement that is contended for by Marindi is argued to be a completely written agreement made up of eight constituent components. Hence the present is not a scenario of an alleged agreement containing any oral terms, implied terms or other terms arising, say, by reason of the parties' conduct towards each other.
It is convenient, therefore, as a matter of structure, to identify the eight constituent components of Marindi's contended 4 April 2016 written agreement. They are explicitly identified as being five emails and three SMS text messages, under pars 22 - 29 of Marindi's FASOC. That contention of Marindi is made explicitly clear by par 30 of the FASOC - which then advances to nominate the six essential terms which Marindi contends arise out of those eight passing communications all of 4 April 2016.
By par 30 of Marindi's FASOC, it identifies between par 22 to par 29 the contended basis for Marindi to acquire 'the Pegmatite Rights' - being rights earlier defined at FASOC par 5). Six (presumably) essential terms of the 4 April 2016 contended agreement follow. Paragraph 30 FASOC reads:
30By the exchange of the written statements between the parties' duly authorised representatives on 4 April 2016 pleaded in paragraphs 22 to 29 above, Kidman and Marindi reached a conditional binding agreement for Marindi to acquire the Pegmatite Rights (Agreement) the terms of which, properly construed, are as follows:
30.1Marindi is to pay Kidman $100,000 cash;
30.2Marindi is to issue to Kidman securities to the value of $175,000 at a 7 day volume weighted average price (VWAP);
30.3Kidman is to have a 2.0% net smelter return (NSR) royalty on any pegmatite-related production or resource defined by Marindi;
30.4Marindi is to surrender the Pegmatite Rights back to Kidman if no resource is defined within 5 years from the Agreement;
30.5the gold rights of Kidman to always have priority if any conflict arises regarding exploration or mining on the Mt Holland project; and
30.6the Agreement would be reduced to a heads of agreement to be promptly prepared by Marindi's solicitors.
As mentioned, the surrounding context as between these parties leading up to 4 April 2016 is important. Hence, I propose first to set out the terms of two earlier email communications - both sent from Marindi's managing director (Mr Joe Treacy) to Kidman's managing director (Mr Martin Donohue).
The first of two earlier emails is identified under par 12 of Marindi's FASOC. Its terms and content are then to be contrasted, from an evolutionary perspective, with a following email of 4 April 2016, sent at 1.34 pm by Mr Treacy to Mr Donohue. That was in similar, but in somewhat altered or evolved, terms.
Neither of the two earlier email communications is, as we will see, contended by Marindi as being a constituent component of a 4 April 2016 agreement for which Marindi ultimately contends under par 30 of its FASOC. Nevertheless, it is clear that they are both pleaded and relied upon for context by Marindi. Scrutinising their contents prior to evaluating the core eight 4 April 2016 express written elements of Marindi's contended agreement assists an overall evaluation.
It is, of course, necessary after that for me to render some factual findings both up to and after 4 April 2016, commencing from 18 December 2015. That December 2015 day was when Kidman made an announcement to the ASX to the effect that it had entered a non-binding heads of agreement to acquire (through its acquisition of shares in various subsidiary corporations) a basket of mining tenements in the Forrestania region of Western Australia which are, at least under the announcement, referred to as the Mt Holland gold field.
Kidman at that time was essentially focused upon its activities to that time as an Australian gold exploration and production company.

The earlier emails by Marindi of 22 March and 4 April 2016

At the outset, I set out two key email communications sent by Marindi's managing director, Mr Treacy, to Mr Donohue, first of 22 March 2016, then on 4 April 2016. I will also render some preliminary observations concerning each once their contents are revealed. The first email read:
22 March 2016
Mr Martin Donohue

Managing Director

Kidman Resources Limited

Suite 3, Level 4

12-20 Flinders Lane

Melbourne VIC 3000
Dear Martin
It was good to catch up with you and Dominique today and thanks for making the time.
I understand that part of your tenement package is under plaint at present. We would propose an agreement that is conditional on Kidman obtaining clear title in the future.
At a high level, Marindi would like to propose the following deal to Kidman for your consideration:
•Marindi to acquire the rights to pegmatitic minerals including lithium, tantalum, tin, kaolin and semi-precious stones within the Mt Holland project;
•Kidman to have a 2.5% NSR royalty on any pegmatite related production or resource defined by Marindi;
•Marindi to surrender the pegmatitic mineral rights back to Kidman if no resource is defined within five years from the letter agreement; and
•the gold rights of Kidman to always have priority if any conflict arises regarding exploration or mining on the Mt Holland project.
I hope this reflects our conversation. Please add anything I have overlooked and come back to me with your comments.
Given the amount of work you have on, if you are agreeable, Marindi are happy to get a draft conditional letter agreement to you for consideration.
Yours sincerely
Joe Treacy
Managing Director (my emphasis in bold)

Preliminary observations upon Mr Treacy's email and letter of 22 March 2016 (TB TAB 58, pages 538 and 540

The 22 March 2016 emailed letter from Mr Treacy to Mr Donohue is identified by Marindi (par 12 FASOC) as a part of the surrounding circumstances and context relied upon - towards the ultimate evaluating of eight written communication components of 4 April 2016 - which it argues should be objectively assessed as showing the parties at 5.28 pm (WST) on 4 April 2016 intended to be immediately committed to a 'deal' over lithium rights by a binding agreement - notwithstanding a further contractual document was expressly contemplated at that time to embody their deal (ie, a 'HOA', meaning 'heads of agreement').
By then, of course, Mineralogy and Kidman had executed, on 6 March 2016, a confidentiality agreement as regards permitting Marindi's access on terms to mining tenement data with Kidman had just acquired out of its Mt Bruce share acquisition.
The 22 March 2016 emailed letter communication from Mr Treacy was sent as an attachment to his email of 5.14 pm. That happened chronologically on the day Mr Treacy had met Mr Donohue in person for the first time that morning at the Sentinel Café/Restaurant premises at 111 St George's Terrace, Perth CBD. Mr Donohue was travelling from his base in Victoria. He was then accompanied by Ms Dominque Stewart, an employee of Kidman, who, as seen, was also copied in to Mr Treacy's email.
After the morning coffee meeting at Sentinel, Mr Donohue and Ms Stewart left to travel by car via Hyden to the Mt Holland tenements (close to Southern Cross) and which included the old Bounty goldmine.
Mr Treacy's covering email of later that day is seen to display a heading 'Mt Holland Lithium proposal'. His covering email attached his letter to Mr Donohue and Ms Stewart 'for some light reading'.
When the letter is scrutinised and then read with Mr Treacy's following 'revised offer' letter of 4 April 2016 (which I discuss next), a close similarity is evident, especially as between the content of the dot points in the two letters.
Of initial note is the proposal of Marindi of 22 March 2016 to acquire rights to 'pegmatitic minerals' including lithium, tantalum, tin, kaolin and semi‑precious stones within the Mt Holland project.
Of further significance from the 22 March 2016 letter which I can presently highlight are these matters:
(a)an expressly conditional nature of the proposal - as regards Kidman needing to obtain clear title in future. The relevant sentence notes Kidman's then to be acquired 'tenement package' as being under plaint. There was a reasonably expressed concern by Marindi at the time that some or all of Kidman's proposed to be acquired 'tenement package' was in some degree of jeopardy of being forfeit to third parties under the regime of the local Mining Act 1978 of Western Australia ;
(b)an as expressed 'high level' basis for this proposal, meaning here in overall commercial context, a proposal that was only embryonic in concept, rather than fully formulated;
(c)the reference to 'pegmatitic minerals' extending well beyond, but obviously including, lithium. It was, of course, lithium to which Mr Treacy had expressed his chief interest (including on the heading to the covering email) on behalf of Marindi;
(d)the 2.5% NSR royalty - which will be seen to reduce later;
(e)first reference, at the third dot point referring to a surrender of pegmatitic mineral rights if no resource is defined within five years from the 'letter agreement', and second, at the last paragraph under 'draft conditional letter agreement'. The 22 March letter indicated then (as also seen in the 'revised offer' email of 4 April 2016) that a written 'letter agreement' was then envisaged by Marindi as being a next step 'if you are agreeable', which letter agreement would be prepared by Marindi 'for consideration' (ie, the consideration of Kidman). (my emphasis in bold)

Mr Treacy's 'revised offer' email of 4 April 2016

A subsequent email communication from Mr Treacy to Mr Donohue said:
4 April 2016
Mr Martin Donohue

Managing Director

Kidman Resources Limited

Suite 3, Level 4

12-20 Flinders Lane

Melbourne VIC 3000
Dear Martin
As discussed please see Marindi's revised offer below;
I understand that part of your tenement package is under plaint at present. We would propose an agreement that is conditional on Kidman obtaining clear title in the future.
At a high level, Marindi would like to propose the following deal to Kidman for your consideration:
•Marindi to acquire the rights to pegmatitic minerals including lithium, tantalum, tin, kaolin and semi-precious stones within the Mt Holland project;
•Marindi to pay Kidman $200,000 in Marindi stock or $100,000 cash and $1000,000 [sic] in stock at Kidman's election, the stock to have a voluntary escrow period of 12 months;
•Kidman to have a 2.0% NSR royalty on any pegmatite related production or resource defined by Marindi;
•Marindi to surrender the pegmatitic mineral rights back to Kidman if no resource is defined within five years from the letter agreement, and
•the gold rights of Kidman to always have priority if any conflict arises regarding exploration or mining on the Mt Holland project.
As I mentioned I would like to finalise this quickly if possible and look forward to your response.
Yours sincerely
Joe Treacy
Managing Director (my emphasis in bold)

Preliminary observations upon Mr Treacy's email and letter of Monday, 4 April 2016 to Mr Donohue sent at 1.34 pm WST (3.34 pm EST) (TB TAB 78, pages 663 and 664

This emailed 'revised offer' by Marindi is seen to be sent the very day of Marindi's contended par 30 FASOC 4 April 2016 binding agreement. But it is not relied upon by Marindi as even being one of the (eight) written elements of such written agreement, notwithstanding its timing and proximity to those other communications.
The FASOC of Marindi (par 19) advances this email as a part of the surrounding context, preceding the alleged concluded agreement of the same day said to follow. This is so notwithstanding that the despatch of this 4 April 2016 email communication by Mr Treacy at 1.34 pm WST looks to have commenced and stimulated all the following communication events of that following afternoon as between Mr Treacy and Mr Donohue, who were then located on opposite sides of the country.
Mr Treacy was based in and was working from Perth that day. He was emailing and texting Mr Donohue, who was then located at his farming property in central Victoria. Mr Donohue looks upon that mid to late Monday afternoon (bearing in mind what was then a two hour time difference as between Western Australia and Victoria) as being occupied outdoors and engaged at least for a time that day moving sheep on his farm.
From this 4 April 2016 letter, I draw attention to:
(a)the terminology of 'revised offer', that was 'as discussed'. I assess that to refer to what passed verbally between Mr Treacy and Mr Donohue over the period after 22 March, resulting eventually in a revision of what had been first proposed by Marindi under Mr Treacy's earlier letter of 22 March 2016;
(b)the still conditional nature of Marindi's 'revised offer', advanced in light of a perceived issue over Kidman's tenement package being 'under plaint at present'. There is no change here as regards the express conditionality of the proposal and a perceived need (not unreasonably sought) to establish Kidman's 'clear title in the future' (over the Tenements);
(c)the Marindi proposal for a 'deal' still expressly couched as put 'at a high level';
(d)the identical dot point (to the 22 March letter) referring to Marindi acquiring under the proposed 'deal' what are termed 'rights to pegmatitic materials within the Mt Holland project';
(e)the identical penultimate dot point about an envisaged surrender by Marindi of 'pegmatitic mineral rights' back to Kidman - if no resource is defined (presumably a measured, indicated or inferred 'resource' as delineated under the JORC Code, with which both these ASX listed mining companies would be familiar) within five years of the specified event;
(f)within the penultimate dot point the identical (ie, to the 22 March 2016 email) dot point reference to a period of five years running from the event of 'the letter agreement'. However, that reference to a 'letter agreement' in the 4 April communication is not otherwise elaborated upon. In context, Marindi's chosen terminology of 'letter agreement' has to be unlocked. This is achieved by reference to the earlier communication of 22 March 2016 - at the last paragraph of that earlier letter in terms of what was still envisaged as a necessary event;
(g)plainly, both communications proceed on a basis that the proposal offer from Marindi, even if accepted by Kidman, will need to be the subject of further documentation - under what was being referred to then by Marindi as a 'letter agreement';
(h)the concluding sentence in Mr Treacy's letter is seen to express a wish on behalf of Marindi to 'finalise this quickly if possible'. That was Marindi's position at 1.34 pm WST (3.34 pm EST) that day. Contemporaneously with this email communication, Mr Treacy had sent Mr Donohue a SMS text message. It had said 'Just sent a revised proposal' (see TB TAB 13, page 173). Mr Donohue had in turn sent back his SMS five minutes later (1.39 pm WST) (see TB TAB 13, page 173) saying, 'Got it. I'll come back to you in an hour or so. Thanks';
(i)Mr Donohue then proceeded to communicate by email with his fellow director, Mr Brad Evans. Mr Evans noticed the stock offered consideration typo (being not $1000,000, but only $100,000 in stock correctly understood); (TB TAB 80, page 668)
(j)at 3.07 pm WST (5.07 pm EST) Mr Donohue sent his email (TB TAB 82, page 674) to Mr Treacy. It comprises the first of the eight written components of the alleged 4 April 2016 binding agreement as contended for by Marindi under FASOC par 30.
It is now possible to turn to each of the eight written elements of Marindi's contended 4 April 2016 binding agreement with Kidman. Whilst I look at each sequentially, at the end they needed to be assessed together in aggregate.

The elements of the contended 4 April 2016 agreement

First in the sequence of eight communications is Mr Donohue's email of 3.07 pm WST (5.07 pm EST) just mentioned. It read:
From:
Martin Donohue <[email protected]>

Sent:
Monday, 4 April 2016 3.07 PM

To:
Joe Treacy

Subject:
Kidman
Hi Joe
Our board has advised me if Marindi is prepared to offer $100k cash, $175 in stock at a 7 day vwap and 2% nsr then we would sell the lithium rights and advise the other parties that a deal has been done.
The same terms as previously proposed need to apply for gold having priority over lithium exploration and or production. We would also need to discuss terms on any of your field crew using our camp if that is preferable. I see a basic contribution to cover costs as all that's required.
We would also have a strong preference to sign a binding HOA promptly with a view to completion soon after.
I hope this is acceptable so we can knock this over and move on.
Regards,

Martin Donohue

Second element

Sequentially, the first email relied upon by Marindi was followed that afternoon by Mr Donohue's SMS to Mr Treacy of 3.08 pm WST (5.08 pm EST):
I've shot you an email. Currently moving sheep so hard to talk.

Third element

Next in sequence came Mr Donohue's short email:
From:
Martin Donohue <[email protected]>

Sent:
Monday, 4 April 2016 3:19 PM

To:
Joe Treacy

Subject:
And the escrow on the stock you proposed is ok
Regards,

Martin Donohue

Fourth element

Next in the sequence followed Mr Treacy's SMS to Mr Donohue of 3.20 pm WST (5.20 pm EST), which said:
Thanks Martin

That is acceptable I will send you an email to confirm

Joe

Fifth element

There followed Mr Donohue's SMS back to Mr Treacy of 3.34 pm WST (5.34 pm EST) that read:
Ok I'll speak to you tomorrow

Sixth element

But there was more. Next followed the email from Mr Treacy to Mr Donohue of 3.40 pm WST (5.40 pm EST), reading:
…
Thanks Martin,

Yes, that is acceptable to Marindi, I am assuming the voluntary escrow remains.

We also would like to get a HOA promptly; do you want me to get a draft from our lawyers for you to review?
Regards
Joe Treacy

Managing Dierctor

Seventh element

Mr Donohue then responded by his email of 5.26 pm WST (7.26 pm EST):
…
Joe
Yes please get your lawyers to draft a HOA for our review.
Regards,
Martin Donohue

Managing Director

Eighth element

Finally for that day at 5.28 pm (WST) (or 7.28 pm EST) Mr Treacy emailed Mr Donohue:
Martin,

Will do and thanks for your help
Joe
Regards
Joe Treacy

Managing Director

Observations on the eight written elements of Marindi's contended 4 April 2016 agreement under par 30 FASOC

As can now be seen, the eight written communications of 4 April 2016 (three SMS texts and five emails) as invoked by Marindi all passed as between the two managing directors (Mr Treacy being in Perth and Mr Donohue at his farm in central Victoria) over the course of two hours and 21 minutes - commencing at 3.07 pm WST, ending at 5.28 pm WST (with it being two hours later in the day that Monday for Mr Donohue in Victoria - Victoria having reverted to normal EST following an end to daylight saving for that summer on the preceding weekend).
As seen:
(a)Marindi does not contend in this trial as regards the subject matter of the 'deal' for Kidman just to sell it 'the lithium rights'. No direct reference to claimed 'Pegmatite Rights' can be found across the five emails under TB TABS 82, 84, 86, 89 and 90, or the three relevantly relied upon SMS messages (under TB TAB 13, and see par 23, par 25 and par 26 of the FASOC).
(b)The lengthiest of the eight communications as relied upon by Marindi is Mr Donohue's commencing email of 3.07 pm WST (5.07 EST) (TB TAB 82, page 674). It mentions, at its penultimate paragraph, Kidman's 'strong preference' to sign a binding HOA (meaning, I find, a heads of agreement) with a future signing event to be happening 'promptly with a view to completion soon after'. It is accepted in this trial that 'HOA' must mean, as between these parties, a 'heads of agreement'. As we know, some intensive drafting work by lawyers engaged on each side upon a draft heads of agreement began after these exchanges. But it was never completed. No heads of agreement was ever signed off as between Marindi and Kidman as regards the culmination of these negotiations.
(c)These parties clearly knew of the distinction between a binding and a non‑binding heads of agreement. Kidman had used the terminology of 'non-binding' heads of agreement in its ASX announcement of 17 December 2015, regarding Kidman acquiring the option to purchase shares in the corporate entity that owned the shares in Mt Holland Gold Pty Ltd (and thereby gain rights over various tenements making up the Mt Holland gold field in Western Australia (TB TAB 7, page 139 and exhibit 1, Treacy primary statement par 50). Marindi had seen that release. These were mutually known contextual surrounding circumstances known prior to 4 April 2016. Mr Donohue then had used the terminology of 'binding' heads of agreement, seen in the first of the eight exchanges.
(d)Kidman and Marindi were ASX listed corporations dealing at the time with each other remotely (Victoria/Western Australia) through their respective managing directors. They had already completed and executed a binding confidentiality agreement. That was at Kidman's behest on 8 March 2016 (TB TABS 17 - 18, pages 225 - 240) and was done to enable Marindi to gain access to Kidman's newly acquired and confidential mining data obtained in respect of the Mt Bruce tenements. Kidman and Marindi, as commercially sophisticated ASX listed corporate parties, viewed objectively, had previously observed a procedural formality of documenting their mining data sharing arrangements formally by signed off writing - to gain access to Kidman's data on an agreed confidential basis. Reference to an envisaged binding HOA by Mr Donohue is to be understood in the light of that accepted prior use of a transparent mode of conducting business on the relatively formalised basis of a signed off written confidentiality agreement. That was done for a matter of lesser magnitude than what was subsequently being negotiated over. There is every reason to objectively assess that a similar sign off procedure by formally documenting any agreement that was reached would be used again.
(e)Of the five emails, three (see TB TABS 82, 86 and 89) expressly refer to a HOA. In the sixth exchange Mr O'Donohue agrees to Mr Treacy's suggestion for Marindi's lawyers to get (ie, prepare) a draft HOA for 'our' (ie, for Kidman's) 'review'. The last passing email (TB TAB 90, page 684) sees Mr Treacy accept that step as regards Marindi preparing a HOA for Kidman to review by his words 'Will do'.
(f)Taking account of an envisaged draft HOA being prepared for Kidman's review, the essential term of Marindi's contended agreement as seen pleaded under FASOC par 30.6 which is to the effect merely that 'the agreement would be reduced to a heads of agreement to be promptly prepared by Marindi's solicitors', is untenable. Applying ordinary principles of English grammar and comprehension, there was to be a draft HOA to be submitted by Marindi to Kidman for its review. That is clearly not the par 30.6 term which is something of a different character altogether.
(g)Reference in par 30.3 FASOC to a 2% NSR [net smelter return] royalty that would be payable on a pegmatite related 'resource' (as distinct from a royalty assessed upon production) is nonsensical - as even Marindi's own closing written submissions would accept (see par 40) by the characterisation of this as 'loose thinking' by Marindi.
(h)Read together, with all pre-4 April 2016 context aside, these eight passing communications, objectively assessed, display a clear acceptance of a need for a binding heads of agreement to be drafted, reviewed and then signed off by these parties - before the parties on this 'deal' could become contractually bound to each other as regards mutual obligations coming into existence between them (ie, a Masters v Cameron category 3 situation) seems demonstrable as at 4 April 2016.
Beyond that position, if the preceding Mr Treacy email to Mr Donohue of 1.34 pm WST earlier that day (FASOC par 19, TB TAB 78, pages 663 - 664) is added to the analysis, as an inseparable part of the lead up context, there is to be seen in the penultimate dot point of Marindi's own document attached to the email, a reference to there being an envisaged 'letter agreement' - in the context overall of an 'as proposed conditional agreement'.
Tracking the evolution of a 'deal' of 4 April under the revised Marindi offer email even further back to Marindi's first written proposal of 22 March 2016 (FASOC par 12, TB TAB 58, page 540) only highlights the double reference in Marindi's starting proposal of a need for a 'draft conditional letter agreement'.
By 4 April 2016 at 5.28 pm WST (FASOC par 29) (7.28 pm EST) Marindi's starting concept of a letter agreement looks to have evolved towards the use of an HOA. But terminology differences aside, the basal need for a further written documentation of any finalised deal was always very firmly stated. That future documentation event was at the forefront of each side's stated position, objectively assessed, both prior to and throughout 4 April 2016. However, it never came to pass.
That is the setting within which Marindi's FASOC par 30 foundational plea that a binding and enforceable agreement was brought into existence by 5.28 pm WST on 4 April 2016 is to be evaluated.
In the end, my assessment, viewed against the events of 4 April 2016, is that Marindi's contention of a binding agreement that day is not supportable. Moreover, as will be seen, a required overall contextual examination of mutually known surrounding circumstances between these two ASX listed companies leading up to 4 April 2016, viewed objectively, only solidifies that negative assessment as regards Marindi's case.
Beyond even that, by looking at events unfolding as between these parties subsequent to 4 April 2016 (more accurately, non-events, sustained inaction and Marindi's seeming acquiescence in Kidman's public announcements that were wholly inconsistent with there being any binding agreement perfected on 4 April 2016 with Marindi as regards lithium or wider pegmatitic rights) across a period up to 11 November 2016 - only serves to entrench my negative conclusion as regards the absence at any stage between these parties of a concluded contractual bargain lately asserted by Marindi under par 30 of its FASOC.
Since it is the key responsibility of trial judges to find and collect all relevant facts in a case, I move shortly to address that task concerning periods both before and after 4 April 2016. Fortunately, at this trial there was very little real underlying factual controversy presenting as between the parties.
But before chronologically collecting all found facts together, I need to say a little about the state of Australian law concerning contract formation and what is a separate but related legal issue, namely contractual uncertainty.

Contract formation: 'The law'

Prevailing commercial urgency does not afford me the luxury of a lengthy discourse on the numerous prior cases which have discussed the applicable principles under Australian law towards the ascertainment of the existence or otherwise of a binding and enforceable agreement as between negotiating parties - in circumstances where their negotiations also envisage a future creation of a further written document embodying their bargain. In this area there is, of course, always as a starting position the classic tripartite taxonomy of Dixon CJ, McTiernan and Kitto JJ in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353, which is now too well known to be repeated.
But in the wholly objective exercise of determining the existence or otherwise of a binding and immediately enforceable contract, no unduly rigid or shackled analysis can be taken. To that end, it is helpful to recall that in Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 Gaudron, McHugh, Hayne and Callinan JJ observed at [25] in these terms:
[N]ot only is there obvious difficulty in formulating rules intended to prescribe the kinds of cases in which an intention to create contractual relations should, or should not, be found to exist, it would be wrong to do so. Because the search for the 'intention to create contractual relations' requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. (citation of authority omitted)
In prevailing circumstances, it is enough to mention a comprehensive discussion of the law within this area by Buss JA (as he then was) in Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015] WASCA 21; (2015) 47 WAR 547 [87] - [112]. Concluding that analysis, his Honour observed at [113]:
Plainly, whether in a particular case it should be inferred, on an objective assessment, that the parties intended to make a concluded and binding agreement must depend on the facts and circumstances of the case.
I have already mentioned the helpful indicia collected towards undertaking the evaluation exercise by Kirby P (as his Honour then was) in Geebung Investments Pty Ltd v Varga Group, a decision of the New South Wales Court of Appeal, reported in (1995) Butterworth Property Reports at page 19. His Honour's remarks included this point of particular guidance at par 8:
Where a binding agreement is said to have been formed as a result of correspondence, it is necessary to look at that correspondence as a whole. It is wrong to isolate any part of the correspondence from the rest in order to prove or disprove the existence of a binding agreement. The same approach should be taken to the analysis of words and phrases within the correspondence. Reference to an 'agreement' having been reached does not necessarily prove the existence of a presently binding contract. Conversely, references to a 'proposed' agreement, and similar expressions, will not necessarily mean that no agreement presently exists. It is a question of how the words are to be interpreted in their context, and in the light of the correspondence, viewed as a whole.
Within this realm there is, of course, the correlatively interesting, but as yet not finally resolved (by the High Court) debate concerning whether or not there actually is or should be a fourth Masters v Cameron category - as discussed by McLelland CJ in Equity in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622. In a recent decision of the New South Wales Court of Appeal, Feldman v GNM Australia Ltd [2017] NSWCA 107, Beazley P (with whom McColl and Macfarlan JJA agreed) discussed contractual formation principles commencing at [60]. Beazley P addressed the Baulkham Hills decision tracking back to the 1929 decision by the High Court in Sinclair Scott & Co v Naughton [1929] HCA 34; (1929) 43 CLR 310 (a decision of Knox CJ, Rich and Dixon JJ) which had addressed scenarios where parties were content to be bound immediately and exclusively by the terms which they had agreed upon - whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.

At [68] Beazley P returned to the point that I made at the commencement of this analysis, namely, that the Masters v Cameron categories are neither strict nor prescriptive. Her Honour added:
Nor are they exclusive or necessarily exhaustive. Rather they describe circumstances in which a finally binding contract may or may not have come into existence.
Her Honour referred to observations by McHugh JA (as he then was) in the appeal taken from the first instance decision of McLelland CJ. This is reported as G R Securities v Baulkham Hills Private Hospital (1986) 40 NSWLR 631. McHugh JA had observed in the passage at [634] - [635]:
[T]he decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in light of the surrounding circumstances: Godecke v Kirwan (1973) 129 CLR 629 at 638, Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1985] 2 NSWLR 309 at 332 - 337, 337.
There are now numerous academic contributions entering the ongoing debate over a possible fourth Masters v Cameron category. I would simply mention the assistance which I have derived from the article by Bret Walker SC entitled 'The Fourth Category of Masters v Cameron' (2009) 25 Journal of Contract Law 108. On my assessment, Walker SC articulates the essence of the ongoing fourth category debate at page 110 in these observations:
… it is worth repeating the importance for the analysis in hand of the impossibility of making an agreement to agree or, as it has sometimes been described, a contract to enter into a contract; for example, in Masters v Cameron (1954) 91 CLR 353 at 362. In Baulkham Hills Private Hospital McLelland J captured the crucial difference between the idea that there must necessarily be agreement on further terms … as opposed to an expectation that there would or might be agreement on further terms (referring to (1986) 40 NSWLR 622 at 628C) - the difference being crucial because the former remains an incomplete negotiation while the latter concludes a binding agreement while expecting further negotiations for a possible superseding agreement. The incompleteness of an agreement 'to agree at some time in the future', in the eyes of the common law of Australia (referring at footnote 12 to Booker Industries v Wilson Parking (Qld) (1982) 149 CLR 600 at 604), is by no means an atavistic or excessively formalist - and thereby dubious - tenant of the law of contract. True, it is based on ancient authority, but in a course of precedent that reinforces rather than attenuates its strength. (my emphasis in bold)
It will also be appreciated that an exercise in objectively determining the negotiating parties' intention towards immediately perfecting a binding agreement, at a point where an event of a further document signed off between them is contemplated, raises considerations that intersect with what is a discrete legal question. This is the related exercise towards the ascertaining of whether or not the parties' end bargain, as regards its essential terms, is sufficiently complete or not to be enforced. For this issue, it is sufficient to note the observations of Gleeson CJ (NSW) (as he then was) in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd [1988] 18 NSWLR 540, 548 which I endeavoured to apply in Austman Pty Ltd v Mount Gibson Mining Ltd [2012] WASC 202 (see [331] - [334]).
At [333] of my reasons in Austman Pty Ltd I also cited observations of McLure P in the Court of Appeal of this court in Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [6] concerning contractual uncertainty. Her Honour had said:
There are two limbs to the uncertainty doctrine. A contract (or a term thereof) is void for uncertainty if (1) all the essential and critical terms of the bargain have not been agreed upon or (2) the language used is so obscure and incapable of any precise or definite meaning that the court is unable to attribute to the parties any particular contractual intention: Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429, 436 - 437; Anaconda Nickel v Tarmoola Australia Pty Ltd (2000) 22 WAR 101. Under the first limb, the contract is incomplete. Under the second limb, the contract is unable to attribute a meaning to the language used by the parties. I refer to the latter as linguistic uncertainty. Both limbs apply only to essential terms.
I must conclude this necessarily truncated discussion of the law at the place I began, namely, with Masters v Cameron. In the present trial Kidman contends for a category 3 situation, ie, a scenario of no perfected contract at all, prior to a formal written agreement being executed (ie, being here the envisaged signed off binding heads of agreement).
The reverse position of Marindi as plaintiff, by its submissions, contends for the establishment on 4 April 2016 of either a first, second (or possibly fourth) Masters v Cameron category of a fully binding and enforceable contract. Bearing all that in mind, I note that Dixon CJ, McTiernan and Kitto JJ had said this at the foot of page 360 about the three categories of situation they had canvassed to that point:
In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case the contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution.
As regards the third class, of no contract, Dixon CJ, McTiernan and Kitto JJ had observed at 361:
Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own: (citation of authority omitted) The parties may have so provided either because they have dealt only with major matters and contemplate that others will or may be regulated by provisions to be introduced into the formal document, as in Summergreene v Parker (1950) 80 CLR 304, or simply because they wish to reserve to themselves a right to withdraw at any time until the formal document is signed.
For the present case, Kidman says that it withdrew from the unfinished negotiations towards the completing of a heads of agreement, on 11 April 2016, as was its right and as it was entitled to do under a category 3 situation.
In the end, the evaluation exercise as regards contract formation is inherently factual as I noted that Buss JA (as his Honour then was) observed. It is also objective in its character as regards the nature of the exercise to be undertaken.
Given all that, and given the importance of a result for these parties, it is necessary for me to render factual findings over periods both prior to and after 4 April 2016, bearing in mind the accompanying need to assess my relevant surrounding circumstances and the overall context as regards a concluded bargain - which is both contended for by Marindi but rejected by Kidman.
As I have said, in the present action there were in the end very few seriously contested facts. Most trial documents tendered within a seven lever arch volume trial bundle were admitted to evidence consensually. I refer to them in these reasons by reference using their tab number references across seven volumes with their chronological page references.
Even as between respective trial witnesses called on each side, namely Messrs Treacy, Ashton and Robinson (for Marindi) and Messrs Donohue, Lester and Ms Dominique Stewart (for Kidman), there was very little really significant factual disagreement in the trial. In the main, a few matters at issue raised mostly questions of differing emphasis or perspective.
Helpfully, the parties prior to trial sequentially exchanged their rival factual chronologies (see MFI 16A and 16B) - which in large measure proved not to be in dispute: see MFI 16A, 16B and 16C. In this phase of the reasons I have heavily drawn upon the exchanged factual chronologies as regards facts not in controversy, together with some significant admissions of fact ascertainable from the parties' pleadings - to undertake the fact finding exercise that now follows for periods prior to, and then after, 4 April 2016. Some further facts derive from relatively uncontroversial components of the written statements of Mr Treacy (exhibit 1) and Mr Donohue (exhibit 9).

Chronology of factual findings at trial

The facts now found bear upon contextually evaluating the eight written elements of Marindi's contended FASOC par 30 agreement of 4 April 2016 - in terms of lead-up facts prior to that date.
It is also permissible to scrutinise the parties' respective conduct vis-à-vis each other after 4 April 2016 in relation to objectively resolving the contractual formation question - providing further indicia to be weighed as well, where relevant.
Post 4 April 2016 facts are also material to the further and next tier trial issues, if a binding contract were to be ascertained. Those next tier issues are, of course, the defendant's contentions towards the debarring of equitable relief to Marindi by specific performance in any event upon a basis of Marindi's alleged laches (gross delay) and, as well, its alleged 'unclean hands'.

Commencing facts found concerning Marindi and Kidman

Both Marindi and Kidman are ASX listed corporations. Marindi's managing director is Mr Joseph Treacy. He holds a Bachelor of Applied Science (Geology) from Curtin University. Mr Treacy has more than 40 years' experience as a geologist specialising in gold and base metals exploration development in mining. This experience, Mr Treacy relates, is both local (Australia) and overseas.
Mr Treacy was appointed as the managing director of Marindi on 6 July 2015. His fellow board members include Mr Ross Ashton, who was appointed non-executive chairman of Marindi's board at the same time as Mr Treacy (July 2015). Other members making up Marindi's board of directors at relevant times were Mr J Hutton and Mr G Jones.
The company secretary of Marindi at relevant times was Mr Jeremy Robinson. He holds a Bachelor of Commerce from the University of Western Australia obtained in 2003.
Mr Robinson was a witness for Marindi at the trial. He was appointed company secretary of Marindi also in July 2015. Mr Treacy provided two witness statements for the purposes of trial. They became exhibits 1 and 2.
Mr Robinson provided a witness statement (exhibit 3). So did Marindi's chairman, Mr Ashton (exhibit 4).
As related by Mr Robinson, at around December 2015 Marindi's targeted mineral commodity was zinc, but which was then, by his terminology, 'on the nose'. Consequently, he said that Marindi's share price was down (in the region of one cent or perhaps just above at 1.1 cent, as I was told without controversy by interjection from the bar table during the course of trial): ts 114.
Mr Robinson said that at around December 2015 he had heard from 'some brokers' and 'analysts' that 'lithium was becoming the hot commodity'.
Mr Robinson then believed that because zinc and, consequently, Marindi's share price was down that 'Marindi needed to move into the lithium space'.
Mr Robinson relates that he then began to investigate lithium projects. He focused on the 'Forrestania belt'. That was because, as he said, he knew from previous discussions that Marindi's managing director had a lot of experience in the Forrestania region from Mr Treacy's time exploring for gold and nickel (exhibit 3, par 13).
Mr Robinson then encountered in his researches within an open file online Wamex file some data for a drill hole MHD 19. This was on Western Areas Ltd (WSA) tenements to the north of a pegmatite mine reported in the Forrestania Gold NL prospectus.
Mr Robinson knew of a review of the Mount Hope area undertaken by an expert (Dr Leigh Bettenay) reporting as to an identification of lithium oxide at 20 metres at 1.4%.
Mr Robinson discussed his research findings about lithium with Mr Treacy and also at around this time incorporated a wholly owned corporation as a subsidiary of Marindi. This was done with a view to it being the vehicle to enter into any joint venture agreements proposed. The subsidiary was Forrestania Pty Ltd. It was incorporated in early January 2016 - Mr Robinson was initially the sole director.
Mr Treacy's witness statement relates that, as far as he was aware, there was no real commercial interest in lithium in the Forrestania region prior to December 2015. He says there were only two major tenements holders in that region at the time, being WSA and Convergent Minerals Ltd. However, WSA, according to Mr Treacy, was a nickel miner. The Convergent tenements had been prospective for gold.
Mr Treacy says that he had been watching lithium exploration companies for some time in a context where lithium was, as he related it, initially considered to be 'spivy'. However, Mr Treacy was familiar with Pilbara Minerals Ltd, which he knew had been exploring for lithium for two or so years.
Mr Treacy had observed that Pilbara Minerals Ltd was 'gaining serious market traction' (exhibit 1, par 15). He had followed notable events in the share market. He saw the price of lithium carbonate had skyrocketed in a very short time from a price of US$1,000 to a price of US$10,000 per tonne.
Mr Treacy relates some further international developments at around this time concerning the world's biggest producer of lithium (as spodumene) which had declared that it would be restricting its sales of lithium to the world market.
Mr Treacy describes Mr Robinson and himself as Marindi's executive management. It was they who had jointly started to research lithium prospects for Marindi in early December 2015.
Mr Treacy (like Mr Robinson) came to the view that lithium was 'going to be the right space for Marindi to be in' (exhibit 1, par 23).
Mr Treacy and Mr Robinson's independent research had led them towards the Forrestania region of Western Australia in the Yilgarn Shire, approximately 120 km south of Southern Cross.
These matters are regards Marindi can all be accepted as uncontroversial background facts.

December 2015: First contract

In late December 2015 Mr Treacy contacted Dr Leigh Bettenay to see if Dr Bettenay would consult for Marindi, in the context of Marindi's developing interest in lithium. Dr Bettenay was engaged. Early in 2016 he met Mr Robinson and Mr Treacy.
The result of the meeting was a view that 'Forrestania was the most prospective area for lithium that was not spoken for already' (exhibit 1, par 39).
At this time there had been some pegging and an acquisition of ground by Marindi in the period between December 2015 to February 2016 (exhibit 1, par 40 through par 41). There was also contact made by Mr Treacy with the managing director of WSA about lithium. However, those negotiations, as related by Mr Treacy (par 48) were not concluded.
Mr Treacy relates that at this same time he came to learn that Kidman was acquiring, by his words, a big land holding of the (Forrestania) area, as it was 'buying the Mt Holland project in Forrestania from the receiver of Convergent Minerals Ltd' (par 50).
Mr Treacy says he was aware of the Mt Holland project as he had worked in that belt previously. He had liked the ground from a 'gold perspective'.
There was 'lack of traction' in Marindi's negotiations with WSA, so Mr Treacy decided to make contact with Kidman. Contact was facilitated through a joint corporate adviser to both corporations. Mr Treacy was given the telephone contact details for Kidman's managing director, Mr Martin Donohue.
On 2 February 2016, Mr Treacy phoned Mr Donohue and introduced himself. Mr Treacy said that he (Marindi) was interested in the lithium potential of ground which Kidman was in the process of obtaining through its acquisition of the Mt Holland project from the receiver of Convergent Minerals Ltd.
According to Mr Treacy, his early telephone conversation was conducted on the basis of Mr Treacy mentioning interest in the lithium potential of the Convergent tenement ground, and with Mr Donohue responding that Kidman was a gold miner that had no interest in lithium at the time, with consequence that if Kidman received a royalty or something similar there would be interest on Kidman's part in selling its lithium rights.
Mr Treacy said he wanted to look at technical data first, including geological logs, going to the core far and reclogging drill holes with pegmatite and cutting the core and sending it off for analysis (exhibit 1, par 58). Mr Treacy said this could take a few weeks. The first step would be to look at the data base.
At this point, Mr Donohue told Mr Treacy that the Kidman data base was then on a few computers and was 'a mess'. Further, he said that a messed up data base was not a priority for Kidman as it was concentrating on trying to sort the data base out for gold exploration and was short staffed.
That first phone conversation led to a despatch from Kidman's office manager, Ms Dominique Stewart, of a confidentiality agreement in pro forma terms for Marindi to first consider, sign and return. That was needed prior to Marindi being given access to Kidman's data through a Dropbox folder. That was done. Again, none of this evidence is controversial.

Early 2016: The first in person meeting at Sentinel

There ensued further verbal discussions or contact between Mr Treacy and Mr Donohue by telephone and email. But they did not meet in person until Mr Donohue and Ms Stewart both travelled to Perth on business in 2016. They met with Mr Treacy in person at Sentinel Café/Restaurant at 111 St George's Terrace on the morning of 22 March 2016.
There was a cordial discussion at that meeting about lithium in general terms and a broad reference to a potential joint venture on a basis of it being called a 'Mark Creasy' style deal - seeking that Kidman secure a free carried equity interest.
Mr Treacy relates that Mr Donohue's response was that he did not like the idea of a joint venture, but that a royalty might be sufficient.
Mr Treacy related that a royalty of 1% was mentioned at the meeting, although he cannot specifically remember. I make no finding about that.
After the meeting Mr Donohue and Ms Stewart were driving that afternoon from Perth to the Mt Holland site. Mr Treacy was told that. Mr Treacy said he would put a proposal summarising their conversation.
There followed the Marindi email of 22 March 2016, which I have set out in full earlier in these reasons. That email was, on its face, submitted to Kidman as being put by Marindi at a 'high level'.

Kidman's perspective

As I mentioned, Kidman was also a corporation whose shares were listed for quotation on the ASX. Its managing director, Mr Martin Donohue, had been appointed director of Kidman on 20 June 2014.
Mr Donohue had obtained a Bachelor of Arts (Economics) from Monash University in 1992. He had practised as a stockbroker for about 10 years. He relates that in 2010 he established Kidman, which became listed on the ASX in January 2011. He joined the board as executive director in October 2014.
Mr Donohue relates (exhibit 19, par 15) that Kidman was a diversified resource company which owns advanced exploration projects in the Northern Territory, New South Wales and Western Australia.
Mr Donohue had been responsible for the acquisition of all of Kidman's current projects. They include eight current projects as identified under par 17 of his witness statement, including a Burbanks Gold project situated near Coolgardie, the Barrow Creek project in the Northern Territory and the Browns Reef project in central New South Wales.
Most significantly, however, Mr Donohue relates that Kidman's current projects (ie, as of May 2017) include the Earl Grey lithium project situated near Southern Cross in Western Australia. This he describes as a 'globally significant tier one lithium deposit', and the Mt Holland gold project, which includes the Mt Holland gold field.

Mr Donohue explained that the Mt Holland gold field covers the same area as the Earl Grey lithium project. He collectively refers to both as the Mt Holland project (of Kidman).
Mr Donohue relates that Kidman has an 'earn-in^' agreement with Western Areas in respect of lithium rights over 19 tenements. That had been announced to the ASX on 20 March 2017. Pursuant to the 'earn-in' agreement, Kidman acquired exploration licences immediately adjacent to the Mt Holland project, under a binding agreement with Western Areas that was announced to the ASX on 28 February 2017.
By his witness statement (exhibit 9) Mr Donohue relates the somewhat complicated (but uncontroversial) circumstances under which Kidman became the ultimate holding company of two other corporations, namely, MH Gold Pty Ltd and Montague Resources Australia Pty Ltd. That arose under the transaction that began on 17 December 2015 as Kidman agreed with Capri Trading Pty Ltd to acquire all shares in a subsidiary of Convergent Minerals Ltd. But this transaction was not completed for some time.
There is a full explanation of the share acquisition transaction by Kidman at par 3(a) through par 3(l) of Kidman's further amended defence, which is then admitted under par 2A of Marindi's further amended reply. For convenience, I will set out par 3 of the further amended defence of Kidman containing those facts which are admitted.
The share acquisition was only completed by Kidman in terms of it acquiring ultimate holding company control of underlying subsidiaries, MH Gold and Montague, on 7 July 2016.
The transaction took over six months to implement and complete. It began, in effect, as was said under the particulars to par 3.2 of Marindi's FASOC, with what had been a 'non-binding heads of agreement' entered between Kidman and Capri Trading Pty Ltd (which was also a significant shareholder in Kidman) on 17 December 2015.
The December 2015 non-binding heads of agreement between Kidman and Capri Trading was announced to the market under an ASX announcement made by Kidman. This is referred to at par 4 of Marindi's statement of claim and the fact is also admitted.
Under par 5 of the FASOC Marindi pleads:
Prompted by Kidman's announcement to the ASX … on or about 2 February 2016 Mr Treacy telephoned Mr Donohue to discuss whether Marindi could 'explore for and mine pegmatitic minerals including lithium, tantalum, tin, kaolin and semi-precious stones within the Mt Holland project located on the Tenements (Pegmatite Rights) to the extent that such activities did not interfere with Kidman's gold production'.
So it is established uncontroversially that Marindi (Mr Treacy) knew of the Kidman/Capri developments as regards a non-binding heads of agreement.
I find it established that Mr Treacy's first telephone contact with Kidman (Mr Donohue) was indeed prompted by the public announcement to the ASX by Kidman of the non‑binding heads of agreement - by which Kidman announced the intention to acquire (effectively through share acquisition arrangements for subsidiary companies) a controlling interest through these subsidiaries in the corporations holding the diverse tenements making up the Mt Holland gold field of Western Australia.
But on the evidence as now related, I do not conclude that Mr Treacy's initial telephone contact with Mr Donohue (prior to them meeting face to face in Perth for the first time at the Sentinel Café/Restaurant) was as specific as is pleaded in par 5 of the FASOC.
Mr Donohue relates their first telephone contact with Mr Treacy at par 26 of exhibit 9. Mr Donohue remembers, in effect, a question posed from Mr Treacy as to whether Kidman was interested in selling its lithium rights to the Mt Holland project and whether Mr Treacy could undertake a site visit at some point. Mr Donohue said he was happy to have the chat. He knew of Mr Treacy by reputation at that time, but had seen Mr Treacy make a presentation at a mining conference on the Gold Coast at which they had both attended and presented in September 2015.
Mr Donohue relates that Mr Treacy's telephone call was not the first call he had received about the lithium potential at Mt Holland. There was some minor controversy at trial over which entity was first in time or not in contacting Kidman. It matters little. It is correct that there were, in fact, a number of other corporations, however, 'sniffing' around at this time interested in the same area from a lithium rights exploitation perspective, including Macarthur Minerals Pty Ltd and Platypus Minerals Limited.
As a pre-requisite to holding any level of serious discussion with Mr Treacy and Marindi, there was the prior need for a confidentiality agreement. Both sides accepted the need for that to be signed off before anything could happen.
After some slight amendments to a pro forma type draft confidentiality agreement initially provided to Marindi by Kidman (Ms Stewart) a confidentiality agreement was signed off by Marindi (executed in counterparts on 8 March 2016).
In terms of mining data once accessed, Mr Donohue relates it was 'a bit "light on"' (par 33). He explains Kidman did not then own the shares in MH Gold at that time. Kidman was not prepared to devote resources to tidy up and consolidate approximately 80 data bases reflecting the mature exploration and mining area around Mt Holland as this was an expensive and time consuming exercise.
At this time, Kidman's non-executive chairman was Mr Peter Lester. He was a witness at the trial and provided a witness statement which became exhibit 13.
The other member of Kidman's board was Mr Brad Evans, a non‑executive director.
Kidman in December 2015 had a chief operating officer and a chief financial officer. But those persons were not directors of its board.
Mr Lester relates at par 19 of exhibit 13 that Kidman acquired the Mt Holland project from Capri Trading Pty Ltd (a major shareholder in Kidman) primarily as a prospective gold project. However, a number of the mining tenements that together comprised the Mt Holland project were then the subject of forfeiture applications pursued by a company known as Phoenix Rise Pty Ltd (Phoenix Rise). This rendered some tenements, which then comprised overall a mixture of exploration, mining lease, prospecting lease, miscellaneous licence and other tenements (see schedule A to the FASOC), at risk of being lost by a successful forfeiture plaint in the Wardens Court.
With that respective early background established, it is now convenient to collect mostly from the respective exchanged chronologies what are all following uncontroversial facts over the period between 17 December 2015 and 8 March 2016.
The related facts as can be sourced by reference to either tab numbers of documents in the evidentiary trial bundle or to witness statement paragraphs or to pleading paragraphs and subparagraphs. It is unnecessary to collect all those sourced references in the reasons. They are ascertainable from MFI 16A and 16B, if ever required.

Findings in period 17 December 2015 - 8 March 2016

1.	17 December 2015	Kidman and Capri Trading Pty Ltd as trustee for the Capri Family Trust (Capri) enter into a Non-Binding Heads of Agreement for Kidman to acquire an option to purchase from Capri shares issued in MH Gold Pty Ltd (MHG)
2.	17 December 2015	Capri is Kidman's largest shareholder at the time
3.	18 December 2015	Kidman ASX Announcement: Kidman agrees to acquire 1Moz Mt Holland gold field in WA
4.	4 January 2016	Marindi incorporates a subsidiary Forrestania Pty Ltd
5.	14 January 2016	Montague Share Sale Agreement executed between Convergent Minerals Limited (Convergent) and HMG by which all issued shares in Montague Resources Australia Pty Ltd (Montague) are sold by Convergent to MHG
6.	18 January 2016	MHG becomes the holder of securities issued by Montague pursuant to the Montague Share Sale Agreement
7.	2 February 2016	Mirandi's Managing Director Joseph (Joe) Treacy makes (telephone) contact with Kidman's Managing Director Martin Donohue to enquire about acquiring the Pegmatite Rights (to the extent that such activities did not interfere with Kidman's gold exploration)
8.	2 February 2016	Mr Treacy sends a text to Mr Donohue "Hi martin Can you drop me an email. Thanks Joe Treacy"
9.	29 February 2016	Kidman, MHG and Capri enter into a Share Sale Agreement by which Kidman agrees to acquire all of the securities issued by MHG (MH Gold Acquisition).
10.	1 March 2016	Kidman ASX Announcement: Kidman signs binding agreement to acquire -1Moz Mt Holland gold field in WA
11.	4 March 2016	Kidman provides a draft pro forma Confidentiality Agreement to Marindi
12.	8 March 2016	Marindi and Kidman enter into Confidentiality Agreement

Observations to 8 March 2016

That these parties entered a written, executed confidentiality agreement to record and formalise the basis upon which Kidman would provide Marindi with access to confidential mining data concerning the Mt Holland project tenements, in my view, is contextually significant to an observed method of commercial dealing by both these two ASX listed corporations.
As is only to be expected for such ASX listed public entities and was fully appropriate, their early dealings had proceeded on the pre-requisite basis of Marindi's access to any mining information of Kidman being permitted on the basis of a recorded written agreement setting out all terms and conditions upon which that access would be allowed and regulated for the future.
From the perspective of an objective and reasonable observer, there manifests a serious incongruity between what happened with the confidentiality agreement and a scenario by which the same two corporations are later said to have perfected an immediately binding and enforceable deal in respect of royalties to be paid over a long period by Marindi to Kidman tied to lithium exploitation rights (or wider pegmatite rights) on former goldmining or exploration tenements without those arrangements being fully formalised under a signed off written agreement. In other words, where a signed off agreement was required to implement a confidentiality regime to allow access to confidential mining data, it would only be logical to expect the same commercially sophisticated ASX listed parties (owing significant responsibilities to their investing shareholders) to be expected to recognise a need to document any enforceable concluded contractual arrangement over future royalty payments and access to lithium exploitation and then to follow that procedure.
Moreover, one might also reasonably expect that the ASX and the market thereby would, at some point, be openly told about completed arrangements under the reporting responsibilities concerning a disclosure of material developments resting on entities who solicit capital from the investing public. The history of ongoing ASX announcements made by these same corporations, as will be seen, suggests that each of them well knew and frequently implemented a practice of ASX disclosure routinely where any commercial event of positive possible significance arose in respect of a mining opportunity of a potentially optimistic character.

Findings for period from 8 March 2016 to 22 March 2016

I next find the following facts. They were essentially submitted under par 13 through par 16 of Kidman's chronology.

13.	From 8 March 2016	Marindi undertakes due diligence and receives data from Kidman Marindi offers to 'sort out the data' at Marindi's cost
14.	17 March 2016	Kidman receives inquiry from Macarthur Minerals re opportunity to farm-in for lithium
15.	22 March 2016	Mr Treacy, Mr Donohue and Kidman's Executive Manager Dominque Stewart all meet at Perth (Sentinel) Café/Restaurant
16.	22 March 2016	Marindi sends a letter to Kidman regarding a proposed deal: • Marindi to acquire rights to pegmatitic minerals including lithium, tantalum, tin, kaolin and semi-precious stones within the Mt Holland project • Kidman to have 2.5% net smelter return royalty on any pegmatite related production or resource defined by Marindi • Marindi to surrender rights back to Kidman if no resource is defined within five years from the letter agreement • Kidman's gold rights to have priority

Comments to 22 March 2016

Mr Treacy's, as seen, high level proposal was despatched late in the day to Mr Donohue and Ms Stewart. They were then travelling to the Mt Holland or Bounty gold site for the first time via Hyden.
The swiftness of Mr Treacy's submission of this communication following the first face to face meeting at the Sentinel Café/Restaurant that day reflects Marindi's significant interest in acquiring lithium rights at the time.
Nevertheless, Mr Treacy's email of 22 March 2016 explicitly envisaged, as I have already commented, that there would need to be a 'letter agreement' as between the parties.

Period from 24 March 2016 to 1April 2016

The facts below are established:

17.	24 March 2016	Mr Donohue emails Mr Treacy to say he will run the idea past his Board
18.	24 March 2016	Mr Treacy reiterates to Mr Donohue that Marindi is flexible about the structure of the deal
19.	29 March 2016	Kidman gives Marindi's consultant Dr Leigh Bettenay access to Kidman's data room in relation to the tenements at Forrestania
20.	29 March 2016	Kidman receives inquiry from Platypus Minerals regarding joint venturing for ground that Kidman was acquiring
21.	29 March 2016	Kidman receives inquiry from Poseidon Nickel
22.	31 March - 1 April 2016	Mr Treacy follows up Mr Donohue by email and SMS message for a response to Marindi's proposal Mr Donohue advises Mr Treacy that Kidman has been approached by two other companies Macarthur Minerals and Platypus Minerals

Observations on facts to 1 April 2016

After their visit to the Mt Holland tenements and the Bounty gold mine, Ms Stewart and Mr Donohue returned by plane to their base in Victoria (Melbourne).
The Easter holiday period was then approaching. In 2016 the four-day Easter weekend occurred across Friday, 25 March to Monday, 28 March 2016.

Monday, 4 April 2016

Next are the events of this Monday - most of which have been collected earlier. Nevertheless, for chronological completeness, I record that these events unfolded.

23.	Monday, 4 April 2016	Kidman receives a request from a third party Platypus Minerals Limited for access to Kidman's data room to review the "indicative lithium potential of your recently acquired Mt Holland tenements"
24.	Mr Treacy and Mr Donohue exchange emails and SMS messages
25.	1.08 pm WST	Mr Treacy asked Mr Donohue to call him
26.	1.34 pm WST	Mr Treacy sends Marindi's revised proposal to Mr Donohue by email: • Marindi to acquire rights to pegmatitic minerals including lithium, tantalum, tin, kaolin and semi-precious stones within the Mt Holland project • Marindi to pay Kidman $200,000 in Marindi stock or $100,000 cash and $1000,000 [sic] in stock at Kidman's election, the stock to have a voluntary escrow of 12 months • Kidman to have 2.0% net smelter return royalty on any pegmatitie related production or resource defined by Marindi • Marindi to surrender rights back to Kidman if no resource is defined within 5 years from the letter agreement • Kidman's gold rights to have priority
27.	1.41 pm WST 3.07 pm WST	Mr Donohue forwards Marindi's revised proposal to Kidman's Chairman of the Board of Directors, Peter Lester, and Non-Executive Board Member Brad Evans
28.	1.41 pm WST 3.07 pm WST	Mr Donohue informs Mr Treacy by email inter alia that: 'Our Board has advised me if Marindi is prepared to offer $100k cash, $175[k] in stock at a 7 day vwap [meaning volume weighted average price] and 2% nsr [meaning net smelter return] then we would sell the lithium rights and advise the other parties that a deal has been done. The same terms as previously proposed need to apply for gold having priority over lithium exploration and or production. We would also need to discuss terms on any of your field crew using our camp if that is preferable …'
29.	3.19 pm WST	Mr Donohue follows up with another email to Mr Treacy that 'the escrow on the stock that you proposed is ok'
30.	3.20 pm WST	Mr Treacy texts Mr Donohue stating 'that is acceptable I will send you an email to confirm'
31.	3.24 pm WST	Mr Treacy informs Mirandi's Chairman of the Board of Directors, Ross Ashton and the Directors Geoff Jones and John Hutton, about Mr Donohue's email.
32.	3.40 pm WST	Mr Treacy emails Mr Donohue to confirm: 'Yes, that is acceptable to Marindi, I am assuming the voluntary escrow remains. We also would like to get a HOA promptly; do you want me to get a draft from our lawyers for you to review?'
33.	5.26 pm WST 5.28 pm WST	Mr Donohue responds to Mr Treacy's email to advise: 'Yes please get your lawyers to draft a HOA for our review.'
34.	5.26 pm WST 5.28 pm WST	Mr Treacy confirms by reply email: 'Will do and thanks for your help.'

Findings and more comments on events of 4 April 2016

Within this section of the chronology there are collected the eight critical written elements (three SMS texts and five emails) that form the basis of Marindi's plea under par 30 of its FASOC to sustain a binding and concluded contractual agreement as of 5.28 pm WST that Monday.
At the end of this day Mr Treacy and Mr Robinson contacted Mr Antony Eaton, their legal representative, to get him involved in preparing a draft heads of agreement: see email of 4 April 2016 which is at TB TAB 94, page 694.
Mr Eaton moved swiftly.
By Wednesday, 6 April 2016 Mr Eaton had sent off his email to Jeremy Robinson copying Mr Treacy and his law firm partner, Mr Luke Hall, into this first draft of a heads of agreement (TB TAB 105, pages 729 - 743).
Mr Eaton's instructions had been received from Mr Robinson.
It is significant Mr Eaton was never provided until many months later, as I find, with copies of the eight elemental communications now contended to constitute Marindi's allegedly binding and enforceable agreement of 4 April 2016 reached with Kidman (see exhibit 5, par 9 through par 13).

Facts found for period from 5 April 2016 to 11 April 2016

Next unfolded these events.

35.	5 April 2016	Kidman advises Platypus Minerals Limited that 'our discussions with another party are too advanced to progress this [with] Platypus Minerals.'
…
37.	4 April 2016 - 7 April 2016	Marindi's lawyers, Eaton Hall, prepare a draft Heads of Agreement (HOA)
38.	7 April 2016 3.43 pm WST	A first draft of the HOA is sent to Kidman. Mr Treacy's email to Mr Donohue states, inter alia: 'The area to which you should pay most attention is Clause 6 the mining rights agreement. We have tried to reflect the email exchange and I have highlighted those areas where, if there is a conflict and we cant sort it out, then KDR will prevail. I hope that allays any concerns of your fellow directors. Regarding the tenements and companies, we worked off the mines department site so if you could check to see that we have picked up all the tenements concerned and we have assigned them to the correct owners that would be good.'
39.	3.52 pm WST	Mr Donohue provides the draft HOA to Kidman's lawyer stating inter alia 'we would like to knock this over ASAP'
40.	A Joint Venture Agreement is executed between St Barbara, Montague and Convergent in respect of certain tenements at Forrestania
41.	8 April 2016 1.01 pm	Kidman's lawyer in Victoria (Ms Higgins) amends the draft HOA and provides it to Mr Donohue, stating inter alia: 'These changes address the following: - Removing Montague and MHG as parties - Adding as a CP (ie, meaning 'condition precedent') completion of the MGH acquisition - Emphasising the priority of KDR's rights to the Pegmatitite Rights In relation to the last point, the Mining Rights Agreement is likely to contain extensive provisions dealing with priority of activities … Also note the HOA is, in clause 3(a), 'subject to agreement and execution of legally binding documentation' and is also subject to the satisfaction of the 'Conditions Precedent' in clause 4(a). The CP's include completion of the MHG Purchase and the entering into of the Mining Rights Agreement and Royalty Agreement. Accordingly the HOA is an agreement to agree and only creates the obligation to use all reasonable endeavours to negotiate the relevant agreements and ensure the CP's are satisfied. (my emphasis in bold) … The only thing I haven't changed, which I think you should consider further, is the definition of 'Pegmatite Minerals'. I'm worried that the definition of Pegmatite Minerals may be a little on the simple side …'
42.	2.59 pm WST	Mr Donohue emails Mr Treacy attaching Kidman's lawyer's comments on the draft HOA and states 'Im [sic] in Perth Monday so hopefully we can finalise the HOA by then'
43.	3.10 pm WST	Marindi provides the marked up draft HOA to its lawyer (Mr Eaton) who responds shortly thereafter with further mark-ups
44.	4.58 pm WST	Mr Treacy forwards Marindi's lawyer's comments regarding the draft HOA and the further marked up draft HOA to Mr Donohue. Marindi's lawyer's email states inter alia: '1. I note that KDR is saying that it doesn't yet own shares in MHG or Montague. As discussed I'd suggested that MZN satisfy itself as to the terms of KDR's acquisition of those companies. Eg, To ensure that nothing in that transaction impacts the tenements or future ownership of those companies … 2. I also note that KDR's changes effectively mean a formal sale agreement will be required. You'll recall that we'd been intending to leave it open for completion to occur under the HOA. We haven't suggested pushing back on this, but please let me know if you prefer to do so.
45.	7 or 8 April 2016	Mr Donohue speaks with a Mr Simon Tritton, a broker with Wilsons Stockbroking
…
47.	10 April 2016	Mr Donohue speaks with Mr Lester and Mr Evans (separately)
48.	11 April 2016 11.05 am WST	Mr Donohue (who had travelled to Perth) sends an SMS to Mr Treacy cancelling a pre‑arranged meeting and stating 'I've got a curve ball from our lawyers and largest shareholder so I'll call to explain when I'm free in an hour or so'
49.	Mr Donohue informs Mr Treacy by telephone that Kidman does not intend to proceed any further
50.	Mr Treacy and Mr Robinson contact Marindi's lawyer (ie, Mr Eaton) for legal advice and are informed that the alleged agreement is an 'agreement to agree'
51.	6.42 pm WST	Mr Treacy sends an email to Mr Donohue, putting Marindi's revised proposal, stating inter alia: 'As you can guess I am disappointed with the outcome of the HOA but a realist in the industry. On that basis without prejudice I have the following action for you to consider. That Kidman announce that you intend to sell your Li rights to Marindi for 60 million shares and that those shares arethen [sic] to be distributed in specie to the shareholders with a corresponding 1:3 option in Marindi at 4 cents. … This proposal will need some more thought and work but you can see where I am going and it would need the acceptance and approval of both boards.'

As is now known, there followed a court sponsored mediation conducted between the parties which did not lead to any settlement.
The action then proceeded to a trial in the period between 29 - 31 May 2017. The plaintiff's action was assessed to fail in the respects as identified in my reasons delivered 7 July 2017. Clearly, as matters turned out, the outcome for the plaintiff (ie, total failure and a costs exposure of some degree) is far worse than the position it would have been in, had it accepted the defendant's $300,000 (costs inclusive) proposal.
That is the underlying basis for the first way in which the defendant contends the plaintiff should now be liable to it for not only taxed costs on a party and party basis but, beyond that, liable to an order for indemnity costs from 1 March 2017.
To be clear, the defendant does not merely contend that simply because the plaintiff rejected its 1 March 2017 Calderbank proposal and then ultimately ended up in a worse position is the exclusive factual platform on which such an order should be made. That is not the law. Rather, it contends, in accordance with established case authority that the overall assessment of the plaintiff's conduct has been shown (with the defendant accepting that it carries the onus to establish this standard) that the plaintiff's conduct must be assessed overall, as unreasonable.
An alternative basis on which an indemnity costs award is sought by the defendant contending that the present is the rare genre in which all material facts were known to the parties from the outset. The plaintiff, somewhat unusually, was always in possession here of sufficient information to make what should have been a reliable assessment as to its ultimate chances of success at a trial. Consequently, the submission of the defendant is that the plaintiff ought never to have started then pursued this action and ought to have been aware of the fatal defects in its case from the beginning.
The defendant argues it was always clear, supported by the ultimate findings of the court, that there was no binding legal agreement. Further, there was, in any event, always uncertainty upon surrounding issues as to essential terms, and that even if those anterior hurdles could be surmounted, the plaintiff was most unlikely to be awarded the equitable remedy of specific performance - thereby limiting the plaintiff's potential remedy, at best, to an award of common law damages - which would need to be assessed.
The defendant contends, therefore, that this plaintiff is to be assessed as a party that has persisted in the running to trial of what should have always been properly assessed by it and its legal representatives, as a hopeless case. Consequently, the plaintiff, it is said, has acted unreasonably by putting the defendant to the significant cost of defending a hopeless claim. That provides the independent justification for an award of indemnity costs.
As I mentioned, the parties are agreed that it is appropriate I resolve the disputed issue over costs orders as between them (essentially, deciding between either indemnity costs or taxed costs for the defendant) on the papers. To that end, I hold an affidavit submitted on the part of the defendant containing the passing Calderbank exchanges before trial and other without prejudice material as to costs. Of course, I hold as well all the evidence that was tendered at the trial.
The material provided concerning costs after trial by the defendant is found in the affidavit of Lauren Alexandra Shave sworn 14 July 2017. It includes the relevant pre‑trial legal correspondence passing between the parties' legal representatives to which I have referred.
In terms of exchanged written submissions on the costs orders issue, I hold the defendant's extensive written submissions of 28 July 2017 contending for indemnity costs. They were responded to by the unsuccessful plaintiff's written submissions of 4 August 2017.
The plaintiff's submissions accept, in effect, a post-trial exposure to an award of taxed costs to the defendant (subject to a minor issue in respect of the costs of interlocutory applications which I need to resolve). I also need to render a determination in respect of the interlocutory costs reserved over a successful challenge to the plaintiff's pre-trial without prejudice claims over certain exchanged SMS messages as between these parties in the days just prior to this action being commenced. That without prejudice claim by the plaintiff was the subject of urgent resolution under the ex tempore reasons provided by the Chief Justice who, because of expressed possible conflict concerns for myself as trial judge, was required to determine that issue on the Friday prior to the commencement of the trial. His Honour concluded that the exchanged SMS materials as between the parties were not properly the subject of any subsisting without prejudice privilege by the plaintiff. Therefore, they were required to be produced for inspection. The Chief Justice reserved all questions of costs of that application to the trial judge.
I am of the view that the defendant, who was successful in challenging the plaintiff's assertion of without prejudice privilege over those SMS materials, should have its costs of successfully prosecuting that application. Whether those costs should be taxed at scale or awarded on an indemnity basis is a result that I consider should accompany whatever decision I ultimately reach in respect of the substantive arguments concerning the costs of the trial - now, of course, sought by the defendant on an indemnity basis from 1 March 2017.
The defendant filed some brief submissions in reply of 11 August 2017 in order to facilitate an on the papers determination.
There was no dispute as between the parties concerning applicable principles of law concerning Calderbank offers. Those principles are discussed in the reasons of Buss JA (as he then was) in Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115 (with whom Wheeler JA agreed). In particular, I note the observations upon principle at between [16] - [22] of those reasons, which I will not set out. I direct particular attention, however, to the six factors as identified under [19] of the reasons towards rendering any assessment about whether a rejection of a Calderbank offer has been established as unreasonable. The nominated factors included:
(a)the stage of the litigation at which the offer was put;
(b)the time allowed for the consideration of the offer by the offeree;
(c)the extent of the compromise offered under the proposal;
(d)the offeree's prospects of success at the time the Calderbank proposal was being assessed by the offeree;
(e)the clarity with which the terms of the Calderbank proposal was made; and
(f)whether the Calderbankproposal as put explicitly foreshadowed the making of an application for indemnity costs in the event of the rejection of the proposal and the ultimate success of the offerer on conclusion of the trial.
A seventh consideration discussed in later cases to add to these six factors is whether the Calderbankproposal gave fair warning to the offeree of the substance or merits of the case that was going to be advanced against the offeree at the trial: see Peet Ltd v Richmond [2010] VSCA 71 [31] - [34].
The parties' respective written submissions on costs discuss at some length these factors and their repercussions in the present context.
In short, I am of the view that the 1 March 2017 proposal was made at a time approximately three months before the commencement of the trial. It allowed the plaintiff, in effect, a full month to consider the proposal. As seen, however, the plaintiff through its legal representatives only required 16 days to consider but then reject the proposal.
In some cases, the information held by a party is incomplete and is still being unearthed or being augmented as a matter proceeds toward trial. For those cases, it may be that a rejection of a Calderbank or O 24A settlement offer proposal cannot be considered to be unreasonable as there presents, at that earlier time, a lack of material information. But that is not the case here.
In the present case, the relevant underlying facts appear to have been fully or at least very substantially known to the parties by the time the plaintiff filed its first statement of claim. That pleading did not greatly alter before the trial began. Nothing greatly material appears to have emerged in the period after 1 March 2017 to any real extent. Indeed, by the time of trial most surrounding and underlying facts were then relatively uncontroversial as between the parties, as I noted.
This is not then, on my assessment, the type of case where a plaintiff lacked material information required to reliably determine its overall prospects of trial success at the time it was considering a Calderbank or O 24A offer, with the benefit of legal advice.
The amount of time allowed for this plaintiff to consider the Calderbank proposal was proper and adequate. Indeed, only half that amount of time was required in order for the plaintiff's solicitors to respond for their client, albeit negatively, when rejecting the $300,000 proposal.
The extent of the offered compromise (namely, $300,000 inclusive of costs) was a respectable amount of money, albeit proposed on the basis of being inclusive of costs. This was not a demand for a proposal for an unconditional surrender - as is sometimes seen.
The clarity with which the terms of the offer were put by the defendant was unambiguous. The 1 March 2017 proposal explicitly foreshadowed a later Calderbank application for indemnity costs - in the event of a rejection and correlative success of the defendant at trial - as has unfolded.
Furthermore, the 1 March 2017 defendant's lawyers' 15‑page communication (appended as attachment LAS2 to Ms Shave's affidavit of 14 July 2017) elaborates in great detail upon the nature of the defendant's arguments that would be run against the plaintiff at a trial. In the main, these points were later upheld at the trial.
In other words, for this plaintiff there were no forensic surprises which this defendant had kept up its sleeve for the purposes of the looming trial. All its cards were on the table for this plaintiff to evaluate from 1 March 2017.
Factor (d) above needs some further comment concerning the required assessment of the offeree's prospects of its success being made as at the date of an offer in a required context of assessing the reasonableness of its rejection of that offer.
To this end, the trial evidence, but in particular the evidence unearthed as a consequence of the challenge to the without prejudice privilege assertions, then assessed as wrongly advanced on the basis of a without prejudice privilege by the plaintiff, all bear on this issue. They provide insights towards what was a careful and calculated rejection this plaintiff made of the 1 March 2017 offer.
From page 178 of the trial bundle, a communication, which issued from the managing director of the plaintiff by SMS to the managing director of the defendant on 14 November 2016, provides relevant commercial insights towards the plaintiff's position. The SMS text sent at this time read:
Without prejudice
Martin
We are confident in our position
We have rights and those rights have value. We believe if this goes to court it is 50:50
That is we have zero downside because at present we have nothing. KDR [ie, the defendant] have 50:50 chance of success and 100 per cent downside. We would look to a corporate transaction that reflects that and recognises our rights. We again suggest that both parties go into a trading halt to negotiate. We have an operative in Sydney who would be available to come to Melbourne at short notice today to talk through our position.
Joe
That SMS communication, found by the Chief Justice not to be the proper subject of without prejudice privilege at the time of trial, provides direct insight towards the plaintiff's position in pursuing this litigation. It saw its position as being fifty-fifty at a trial. From a position of 'nothing', therefore, it said it had a 'zero downside'.
This plaintiff did not assess its position to be strong or better than the defendant's. Nor did it suggest it had received any legal advice giving it the comfort of holding anything beyond an even bet. It was effectively, therefore, foreshadowing that it was prepared to 'roll the dice' and gamble giving its perceived zero downside at a trial. Hence it gambled, but ultimately lost.
The question then is whether, assessed by reference to all relevant facts and circumstances, the plaintiff's conduct, including its rejection of the Calderbank offer for $300,000, is properly shown as unreasonable. The principles in Ford Motor Company of Australia Ltd v Lo Presti were recently repeated and applied by the Court of Appeal in Sakari Resources Ltd v Purvis [2016] WASCA 24 (S) [12] - [14] by the judgment of that court (Buss, Newnes and Murphy JJA). At [13] their Honours, having referred to the six key considerations I earlier synthesised, then said:
The assessment of unreasonableness is not to be made with the benefit of hindsight and the rejection of a Calderbank offer will not be unreasonable merely because the offeree is ultimately worse off than it would have been had it accepted the offer.
When assessing if an O 24A offeree has acted unreasonably, like principles apply. The offeror bears the onus of proof to show that the RSC O 24A threshold of unreasonableness has been demonstrated in the offeree (see particularly O 24A r 10(7A)).
Likewise, a court must be satisfied that a plaintiff's failure to accept the defendant's O 24A offer was unreasonable (unless the interests of justice require otherwise).

Determination

By its written submissions on costs the plaintiff contends its conduct does not warrant any costs sanction and that there is no reasonable basis for ordering indemnity costs in favour of the defendant.
I accept the plaintiff's submission that its case was not 'hopeless' and that the court made no finding to that effect. Consequently, the alternate basis for indemnity costs as propounded by the defendant, namely, that the plaintiff has persisted with a hopeless case, is not, on my assessment, established.
The only legitimate basis then upon which an indemnity costs award might be sustained here is if the overall assessment of the plaintiff's conduct including by it rejecting the 1 March 2017 Calderbank proposal is proved by the defendant to be unreasonable conduct by the plaintiff. In my view, it has.
On my assessment, there should for this litigation be an order for indemnity costs favouring the defendant from 1 March 2017 in this action. I reach that conclusion taking account of the key factors enumerated above. Evaluating all facts and circumstances, I am of the view that there was here, in substance, a regrettable failure by this plaintiff to properly engage with the defendant over the explicitly identified legal weaknesses in its case that were pointed out with in the 15‑page communication of 1 March 2017.
This plaintiff, with the benefit of legal advice, on my view, has had every opportunity to assess the legal deficiencies in its case, then to respond on an engaged basis through its legal representatives to the weaknesses that were explicitly made to it by the defendant.
Instead, the plaintiff's rejection response, on my assessment, was too brief and too blunt. It was an unreasonably disengaged plenary dismissal of what was a carefully put submission to it.
A failure to seriously engage and respond against the deficiencies that were raised and which, in the end, I essentially accepted after a 3-day trial, persuade me, in the end, that the plaintiff's stance by persisting with this litigation beyond 1 March 2017 and to trial after rejecting the all inclusive amount of $300,000, was unreasonable.
It is not just the case that because this plaintiff's end position as now seen is a lot worse than holding the $300,000 offered that this indemnity costs outcome results. Rather, it is a failure to seriously engage with the defendant, combined with its rejection conduct, which in aggregate persuades me, at the end, that this defendant has met the threshold necessary to show that this plaintiff has acted unreasonably overall.
The plaintiff's rejection conduct and march to a trial was reflective of a stance it held and articulated by SMS that it had a fifty-fifty chance of success at trial and that its downside commercially was less than that of the defendant. There must be, in my view, a just price to be paid at the end of the day for a disengaged commercial gamble ultimately backfiring.
An indemnity costs determination favouring the defendant from 1 March 2017 also then carries through to the reserved costs of the interlocutory application that was determined urgently and in the defendant's favour by the Chief Justice one working day before the trial began. The defendant should have its costs of that application to be met by the unsuccessful plaintiff on an indemnity basis as well for that urgent interlocutory exercise, which also backfired for the plaintiff.

Costs of earlier interlocutory production of documents application

There is a further minor issue raised by the plaintiff's submissions, concerning the costs of an earlier interlocutory application, where the defendants had sought production of many documents that the plaintiff resisted. There was yet another urgent argument before me, heard over a period of about two hours at a special appointment on 13 April 2017. I ultimately resolved that interlocutory clash with the parties concerned by my on the papers ruling issued on 27 April 2017.
The plaintiff points out that at the end I had disallowed inspection on 31 out of 34 of the documents which had then been sought on that application brought by the defendant. Hence, it is contended the plaintiff was substantially successful both mathematically and practically in opposing that inspection application by the defendant and should have its costs.
But I am of the view that, as regards the costs of that inspection application, there was a measure of success and failure on both sides in terms of its ultimate outcomes. It is undesirable, on my assessment, to descend towards impracticable proportionality outcome assessments concerning interlocutory outcomes as regards discovery and inspection applications of this kind. A robust and plenary approach to their costs is called for.
In the circumstances, given measures of success and failure on both sides within that documents application, I am of the view that it ought ultimately to carry no orders as to its interlocutory costs, one way or the other. In other words, there should be no order as to the costs of that application in any respects. A no costs outcome delivers a sensible measure of practicable justice to both sides, given the end outcome and, as well, at a policy level, a general discouragement to arguments upon such discovery applications which can and should be generally resolved by a sensible conferral between the parties.
Consequently, I am of the end view that the defendant has established to my satisfaction it is entitled to an award of indemnity costs against the parties in respect of this litigation from 1 March 2017. That follows in light of all the relevant prevailing facts and circumstances assessed at and after that time.
The final costs orders, therefore, will now issue upon the publication of these reasons. The order is in the following terms:
Save for the costs of the defendant's interlocutory application of 12 April 2017 (determined by the court's consequential ruling of 27 April 2017 and as to which there will be no orders as to costs), the plaintiff is to pay the defendant its taxed costs of this action to be assessed on a party and party basis for the period up until 1 March 2017 but then, for all periods thereafter, paid by the plaintiff on a solicitor and client (ie, indemnity) basis to the defendant, save for any costs that are assessed by a taxing officer to be of an unreasonable amount, or which were unreasonably incurred.

For the avoidance of any doubt, the costs of this on the papers determination should be the defendant's on the same (ie, indemnity) basis.

[2017] WASC 189

12 SEPTEMBER 2017