Mighty River International Ltd v Mineral Resources Ltd
[2020] WASCA 44
•2 APRIL 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: MIGHTY RIVER INTERNATIONAL LTD -v- MINERAL RESOURCES LTD [2020] WASCA 44
CORAM: QUINLAN CJ
BEECH JA
VAUGHAN JA
HEARD: 25 MARCH 2020
DELIVERED : 25 MARCH 2020
PUBLISHED : 2 APRIL 2020
FILE NO/S: CACV 72 of 2019
BETWEEN: MIGHTY RIVER INTERNATIONAL LTD
Appellant
AND
MINERAL RESOURCES LTD
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: LE MIERE J
Citation: MIGHTY RIVER INTERNATIONAL LTD -v- MINERAL RESOURCES LTD [No 2] [2019] WASC 197
File Number : CIV 2474 of 2016
Catchwords:
Procedure - Appeal against discretionary decision - Appeal against order dismissing application for extension of time within which to comply with orders for security for costs - Where order provided for immediate dismissal of claim for non-compliance - Where order was made by consent of the parties
Whether primary judge erred in exercise of discretion - House v The King error - Failure to take into account material considerations - Whether premise for immediate dismissal of the action had valid evidentiary basis - Whether full circumstances were taken into account - Whether primary judge properly took into account prejudice suffered by plaintiff for dismissal of claim
Legislation:
Nil
Result:
Leave to appeal refused
Appeal dismissed
Category: B
Representation:
Counsel:
| Appellant | : | Mr P D Evans & Mr M G Lundberg |
| Respondent | : | Mr J Gilmour QC & Mr N C Ebbs |
Solicitors:
| Appellant | : | Quinn Emanuel Urquhart & Sullivan |
| Respondent | : | Bennett + Co |
Case(s) referred to in decision(s):
Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170
Cliffs Robe River Iron Associates v Dravo Pty Ltd [1988] WAR 32
FAI General Insurance Co Ltd v Southern Cross Exploration NL [1988] HCA 13 (1988) 165 CLR 268
Fylas Pty Ltd v Vynal Pty Ltd [1992] 2 Qd R 593
Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2019] WASCA 141
House v The King [1936] HCA 40; (1936) 55 CLR 499
Kelbush Pty Ltd v Australian and New Zealand Banking Group Ltd [2016] WASCA 14; (2016) 49 WAR 374
Lachlan v HP Mercantile Pty Ltd [2015] NSWCA 130; (2015) 89 NSWLR 198
Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66
Mighty River International Ltd v Mineral Resources Ltd [2017] WASC 298
Mighty River International Ltd v Mineral Resources Ltd [No 2] [2019] WASC 197
Norilya Minerals Pty Ltd v Easterday [2009] WASC 191
Paino v Hofbauer (1988) 13 NSWLR 193
Park Trent Properties Group Pty Ltd v Australian Securities and Investments Commission [2016] NSWCA 298; (2016) 116 ACSR 473
Pearce v International Mining Technologies Ltd [2009] WASCA 239
R D Werner & Co Inc v Bailey (1988) 18 FCR 389
Siebe Gorman & Co Ltd v Pneupac Ltd [1982] 1 WLR 185
Snook v Registrar of Fines Enforcement Registry [2019] WASCA 204
Zaghloul v Woodside Energy Ltd [2019] WASCA 187
REASONS OF THE COURT:
Introduction
The appellant, Mighty River International Ltd (Mighty River), appeals against the orders made by Le Miere J on 12 June 2019,[1] dismissing Mighty River's application for an order extending the time for it to comply with orders for security for costs made on 13 February 2019 (the February 2019 orders).
[1] Mighty River International Ltd v Mineral Resources Ltd [No 2] [2019] WASC 197 (primary reasons).
The February 2019 orders, which were made with the consent of the parties, provided, in Order 1:
By 1 May 2019, the plaintiff do give security for the defendant's costs of the action up to and including the preparation and attendance at mediation in the sum of $30,000 by payment of that amount into court.
There is no issue that Mighty River did not comply with this order.
Order 3 of the February 2019 orders provided:
In the event that the plaintiff fails to comply with either order 1 or 2 above, the proceedings be immediately dismissed with the plaintiff to pay the defendant's costs of the proceedings to be taxed if not agreed.
As a consequence of Order 3, the effect of the learned primary judge's decision not to extend the time for compliance with the security for costs order was that Mighty River's action continued to stand dismissed. Judgment was entered to that effect.
After hearing Mighty River's submissions in support of its appeal, the court made the following orders:
(1)Leave to appeal is refused.
(2)The appeal is dismissed.
(3)Mighty River pay the costs of the respondent, Mineral Resources Ltd (Mineral Resources).
On pronouncing orders the court stated that reasons would be provided at a later date. These are our reasons for making those orders.
A brief history of the proceedings below
The appellant's action had a long history.
While it was commenced in 2016, the action related to matters that occurred in 2010. Mighty River's claim against Mineral Resources related to representations alleged to have arisen from, and conduct in relation to, a Bidder Statement issued to the shareholders of Mesa Minerals Ltd (Mesa) in April 2010 and an investor presentation released to the ASX in May 2010.
The action was commenced on 26 August 2016 by writ of summons with an indorsement of claim issued against Mineral Resources and 11 other defendants who were directors of Mineral Resources or Mesa.
Mighty River did not serve the writ. Mineral Resources, however, became aware of the writ and on 17 January 2017 entered an appearance.
When the writ became stale Mighty River applied to extend the writ so as to enable service on the defendants other than Mineral Resources. That application was dismissed.[2]
[2] Mighty River International Ltd v Mineral Resources Ltd [2017] WASC 298.
On 13 August 2018, Le Miere J made case management orders, by consent, which required Mighty River to file and serve its witness statements and expert evidence by 19 October 2018. Mighty River did not comply with that order.
On 30 October 2018, Le Miere J extended the time for Mighty River to file and serve its witness statements and expert evidence to 30 November 2018. Mighty River again failed to comply with that order.
On 3 December 2018, Le Miere J again extended time for compliance with the orders relating to Mighty River's witness statements and expert evidence.
Mighty River ultimately filed one witness statement, of its sole director, Yuzheng Xie. It also filed a substance of expert evidence in relation to the issue of damages.
Orders for security for costs
On 17 July 2017, Banks‑Smith J ordered that the appellant provide security for the respondent's legal costs in the action up until and including discovery in the sum of $40,000. Those orders gave the respondent liberty to apply to uplift the amount of security.
Those orders also provided, by consent, that in the event that the appellant failed to comply with the orders, the proceedings would be immediately dismissed with the appellant to pay the respondent's costs of the proceedings.
As will be seen, a self-executing order in these terms appeared in all of the subsequent orders for security for costs. In that regard, further orders were made on 22 November 2018 for payment of an additional $40,000 security.
In its appeal, Mighty River relied upon the correspondence preceding the order of 22 November 2018. In an email of 20 November 2018, Mighty River's solicitors stated that, while the parties could not agree on whether the action should be stayed or dismissed if the security for costs was not paid, 'for the sake of avoiding a contested application … and not for any other reason', Mighty River would consent to an order for dismissal in the event that payment was not made.[3] Mighty River's solicitor's email of 21 November 2018 asserted that its consent should not be considered a concession that Mineral Resources was entitled to a dismissal and should not be interpreted as a concession for any further application.[4]
[3] GAB 36.
[4] GAB 34.
The events leading to the 13 February 2019 orders
In light of ground 1, which challenges the learned primary judge's conclusion that the February 2019 orders were based on an underlying agreement between the parties, it is necessary to outline, in some detail, the events leading to the making of those orders.
On 19 December 2018, the respondent's solicitors, Bennett + Co, wrote to the appellant's solicitors, Pragma Lawyers, pressing for an uplift to the security for its costs in the amount of an additional $120,000. They proposed that the $120,000 be payable in two tranches and that, in the event of failure to pay either or both of the tranches, the proceedings be immediately dismissed and the appellant pay the respondent's costs.
On 16 January 2019, Pragma Lawyers responded to Bennett + Co's letter of 19 December 2018. It advised that the appellant did not agree to the proposal.
On 24 January 2019, Pragma Lawyers again wrote to Bennett + Co advising that as the appellant had assets in Australia worth approximately $880,000, they considered that the respondent would have difficulty establishing that it was entitled to a further security.
On 29 January 2019, Bennett + Co responded to Pragma Lawyers' correspondence. Bennett + Co advised that it had no basis to accept the assertion that Mighty River had the financial capacity to meet an adverse costs order, without all of its liabilities being identified. In that regard, the letter referred to a number of costs orders against Mighty River in Mineral Resources' favour.
On 30 January 2019, Pragma Lawyers again wrote to Bennett + Co. It stated that Mighty River was 'mindful of the considerable resources, both in terms of time and cost, which will be required of both parties if an application for security for costs is made' and stated that 'on a commercial basis only' Mighty River would consent to providing Mineral Resources with security over certain shares held by it.
Later on 30 January 2019, Pragma Lawyers sent an email to Bennett + Co which referred to a recent conversation between the lawyers in the two firms regarding security for costs. The email stated that, as foreshadowed, Pragma Lawyers attached a proposed memorandum of consent orders for execution. It proposed two further tranches of security, $30,000 on 1 May 2019 and $70,000 within 14 days of the completion of mediation.
The orders proposed by Pragma Lawyers, and provided to Bennett + Co, included Order 3, set out at [4] above.
On 4 February 2019, Bennett + Co replied to Pragma Lawyers by email. The email stated that Mineral Resources 'is prepared to accept Mighty River's offer for further security for [Mineral Resources'] costs on the basis of the attached minute of consent orders'. The attached minute of consent orders was substantially in the form of the consent orders proposed by Pragma Lawyers, except that the memorandum inserted a date for the provision of the second tranche rather than specifying that it be within 14 days after the completion of mediation.
On 5 February 2019, Pragma Lawyers sent to Bennett + Co a signed copy of the consent orders proposed by Bennett + Co. Later on 5 February 2019, Bennett + Co sent to Pragma Lawyers a copy of the minute which was countersigned on behalf of Mineral Resources. The memorandum of consent orders was subsequently filed by Pragma Lawyers on 5 February 2019.
On 13 February 2019, Le Miere J made the February 2019 orders in the terms of the memorandum of consent orders.
The circumstances surrounding the failure to comply with Order 1 of the February 2019 orders
As noted at the outset, Mighty River did not comply with Order 1 of the February 2019 orders by paying $30,000 into court by 1 May 2019.
Rather, Mighty River paid $30,000 into court on 3 May 2019. When it did so, it knew that it had not complied with the February 2019 orders.
The explanation for that occurring was contained in an affidavit of Mr Xie affirmed on 9 May 2019 in support of Mighty River's application to extend the time for compliance with the orders.
The learned primary judge recounted the effect of that affidavit as follows.[5] There is no challenge to any of these findings of primary fact.
[5] Primary reasons [42] - [47].
In February 2019, Mr Xie instructed Pragma Lawyers to agree to the February 2019 orders. Mr Xie was aware that the orders provided for automatic dismissal if the payment was not made on time. He discussed the matter, and the reasons for it, with Mighty River's lawyers.
Pragma Lawyers ceased acting for Mighty River at the end of March 2019. Mr Cockman of Justice Legal was subsequently appointed as the solicitor for Mighty River. For a couple of weeks in late April 2019, Mr Xie was in discussions with Pragma Lawyers regarding the possibility that they would again take over carriage of the action.
On 23 April 2019, Pragma Lawyers gave Mr Xie reminders orally and by email of the need to pay monies by way of security for costs on 1 May 2019, and that the order provided for dismissal of the proceeding if this was not paid.
On 29 April 2019, Mr Xie was in his office in West Perth. He flew to Kununurra at lunchtime. While in the West Perth office he was attending to other business of Mighty River. He was planning to be out of Perth on 1 May 2019. He prepared and signed a cheque for payment of the security. He left the cheque on his desk because he was not clear whether Pragma Lawyers would resume conduct of the matter. He planned to have a further discussion with Pragma Lawyers that morning regarding them acting in the action, but did not have time before boarding the plane for Kununurra.
Mr Xie returned to Perth late in the afternoon on 1 May 2019. He deposed that it was not until he returned to the office mid‑morning on 2 May 2019 that he realised that he had forgotten to make arrangements to pay the cheque he had prepared into court. The cheque for the security together with the necessary court form was filed at the court at about 9.30 am on 3 May 2019.
The learned primary judge stated that Mr Xie's statement, that it was not until he returned to the office mid‑morning on 2 May 2019 that he realised that he had forgotten to make arrangements to pay the cheque into court, must be considered in light of the statements made by his solicitor, Mr Cockman, in an email of 9 May 2019 to Bennett + Co that:
Mr Xie realised his oversight on returning to the office on Thursday 2 May 2019 and the consequences of that oversight when he was forwarded Bennett & Co's correspondence with the court.
The learned primary judge, accordingly, found that Mr Xie did not give instructions for the payment into court to be made until after he had been informed that Mineral Resources had requested that the court enter judgment.
His Honour found the following additional matters. Mr Xie knew, on the morning of 29 April 2019, that the payment for security of costs must be made on 1 May 2019. He was planning to leave his office at lunchtime and was planning to be out of Perth on 1 May 2019. He drew the cheque and left it on his desk. He made no arrangements for the cheque to be paid into court. He did not claim that he intended to make any such arrangements. To the contrary, he chose to fly to Kununurra at lunchtime on 29 April 2019, intending to be out of Perth on 1 May 2019, and chose to make no arrangements for the cheque to be paid into court. Mr Xie made no arrangements for the payment into court to be made until he learned that Mineral Resources had applied to the court for judgment to be entered.
The primary judge's decision
Le Miere J found that the February 2019 orders were based on the memorandum of consent orders signed by the parties on 5 February 2019, which in turn was based on an underlying agreement between the parties. After outlining the matters set out at [22] ‑ [31] above, the judge concluded as follows:[6]
Counsel for Mighty River did not dispute that the consent orders were made following an agreement between the parties. Counsel submitted this case is distinguishable from Lachlan v HP Mercantile Pty Ltd because payment has been made and there is no evidence of prejudice to Mineral Resources.
I find that the February 2019 orders were based on the memorandum of consent orders signed by the parties on 5 February 2019, which in turn was based on an underlying agreement between the parties. I reach that finding having regard to the following matters. First, the orders were made following substantial negotiations between the parties. Mighty River first argued that Mineral Resources was not entitled to further security for costs, then proposed that it give security in the form of security over shares held by it, and finally agreed it would give security in the terms proposed by Mineral Resources and consent to orders to give effect to that agreement. Secondly, Bennett + Co's email of 4 February 2019 stated that Mineral Resources was prepared 'to accept' Mighty River's 'offer' for further security for Mineral Resources' costs. That is the language of contract. Thirdly, on the hearing of the application Mighty River did not dispute the submission of counsel for Mineral Resources that the February 2019 orders were made pursuant to an agreement between the parties.
[6] Primary reasons [49] - [50].
His Honour distinguished two decisions of the New South Wales Court of Appeal upon which Mineral Resources had relied, to the effect that a party seeking an extension of time to comply with a consent order must make out an exceptional case before the court will vary times fixed by a consent order based on an agreement, where the underlying agreement could not be set aside or varied: Paino v Hofbauer[7] and Lachlan v HP Mercantile Pty Ltd.[8]
[7] Paino v Hofbauer (1988) 13 NSWLR 193 (Paino v Hofbauer).
[8] Lachlan v HP Mercantile Pty Ltd [2015] NSWCA 130; (2015) 89 NSWLR 198Error! Bookmark not defined..
After considering these and other authorities, the judge said:[9]
The weight to be given to the consideration that an order is agreed will vary according to the nature of the order and thus the agreement. Where the agreement is the compromise of a substantive dispute or the settlement of proceedings, that will have great and perhaps decisive weight. Where the agreement is to resolve an interlocutory dispute, the weight to be accorded to the parties' agreement as to the consequences of non‑compliance are real and substantial but correspondently less and rarely decisive. Everything must depend on the circumstances.
In a case such as the present where the consent order is made to implement an agreement between the parties to resolve an interlocutory dispute, rather than to finally resolve the proceeding, the circumstances in which the court may extend time need not be characterised as 'exceptional'. However, the circumstances that a party failed to comply with a consent order based on an agreement, and will suffer prejudice if the time within which to comply with the order is not extended, will rarely if ever be a sufficient ground to vary the order.
[9] Primary reasons [63] - [64].
Earlier the primary judge had correctly identified that in considering the exercise of power under O 3 r 5(1) to extend the time for compliance the court must consider all of the circumstances and make such order, as in the circumstances, is in the interests of justice.[10]
[10] Primary reasons [62].
As to the merits of the application before him, the learned primary judge identified a number of factors weighing in favour of extending the time for compliance with the February 2019 orders:[11]
(a)if the time for compliance with the order was not extended, the action would stand dismissed and Mighty River would have lost its claimed cause of action;
(b)the payment into court had been made and was only two days late;
(c)the matter was at an advanced stage; and
(d)extending time would not cause prejudice to the defendant beyond the delay in preparing the case caused by awaiting the payment into court and attending to this application.
[11] Primary reasons [72].
His Honour identified the following factors which weighed against the extension of time:[12]
(a)The fact that the order was a consent order based on an agreement between the parties, a factor upon which his Honour said the court should place great weight.
(b)Mighty River had been dilatory in commencing and then pursuing the proceedings.
(c)Mighty River had previously failed to comply with case management directions made by the court.
(d)Mighty River was reminded orally and by email of 23 April 2019 from its former solicitors, Pragma Lawyers, of the need to pay monies by way of security for costs on 1 May 2019, and that if the payment was not made the proceeding would be immediately dismissed and Mighty River would be liable for Mineral Resources' costs.
(e)Mighty River had provided no adequate explanation for its failure to make the payment in accordance with the consent orders.
[12] Primary reasons [73].
His Honour held that the discretionary factors against extending the time for compliance with the February 2019 orders outweighed the factors in favour of exercising the discretion to extend the time.
In particular, his Honour said:[13]
Mighty River will suffer hardship by the refusal of an extension of time in that it will not be able to pursue its claim against Mineral Resources. However, that hardship is of Mighty River's own making. Mighty River made a bargain with Mineral Resources that it would pay into court the agreed amount for security for Mineral Resources' costs by 1 May 2019 and if it did not do so, its action would be dismissed. That bargain was made in circumstances where Mighty River had been dilatory in commencing and pursuing its claim, had failed to comply with court orders and had previously agreed to self‑executing orders if it did not comply with court orders. Mighty River, by Mr Xie, knew of the requirement to make the payment by 1 May 2019 and the consequences if it did not. Mr Xie was reminded of those matters by Pragma Legal orally and by email in late April 2019.
There is no evidence that Mighty River could not have made the payment at any time prior to 3 May 2019 if it had chosen to do so. Mr Xie turned his mind to the requirement to make the payment as late as 29 April 2019 and went as far as writing out a cheque. He decided to leave Perth and planned to be out of Perth on 1 May 2019, and made no arrangements for the payment to be made. He returned to Perth on 1 May 2019, but did nothing to cause Mighty River to make the payment until after he had been informed by Justice Legal that Mineral Resources had requested the court to enter judgment in consequence of Mighty River's failure to comply with the order for payment into court. Mighty River has provided no explanation for its failure to comply with the February 2019 orders.
In all the circumstances there is no good or sufficient reason to relieve Mighty River from the consequences of its failure to comply with the February 2019 orders.
[13] Primary reasons [76] ‑ [78].
Grounds of appeal
Mighty River initially advanced five grounds of appeal, but abandoned ground 2 in the course of argument. It relied on both express and implied error (in the House v The King sense). The grounds are:
Grounds:
1The Primary Judge erred in law in finding that the Appellant had made an agreement with the Respondent to the effect that, if the Appellant did not comply with the Order, the Appellant's action would be immediately dismissed, when there was no evidence to support that finding (Reasons at [64], [73] and [76]). The Primary Judge should have found that, although a consent order was prepared by the parties and subsequently made by the Court, there was no underlying agreement between the parties to the above effect.
2[abandoned]
3Further, the Primary Judge erred in fact and law in refusing to extend time for the Appellant to comply with the Order (for a period of two days) in that his Honour failed to take into account the following material considerations, both of which were relevant to the exercise of the Primary Judge's direction, and in the circumstances ought to have exercised the discretion to extend the time period:
3.1First, a springing order for immediate dismissal of the action was included in the consent orders for security for costs which were agreed in or about July 2017. The original premise for the inclusion of such an order (as opposed to a more orthodox self‑executing order staying the action) was that the Respondent contended the progress of the action had been resisted by the Appellant. That premise was no longer valid either at the time the consent orders were made on 13 February 2019 or at the time of non‑compliance on 1 May 2019.
3.2Second, the full circumstances in which the springing order for immediate dismissal of the action was included in the consent orders made on 13 February 2019 were not taken into account by the Primary Judge (Reasons at [50]).
4The Primary Judge erred in law in refusing to extend time for the Appellant to comply with the Order (for a period of two days) in that, although the Judge concluded that the circumstances in which the Court may extend time to comply with a consent order need not be characterised as exceptional (where the consent order is made to implement an agreement between the parties to resolve an interlocutory dispute rather than to finally resolve the proceedings), the Judge wrongly held that prejudice suffered by a party who has failed to comply with such a consent order (if the time to comply was not extended), will rarely if ever be a sufficient ground to vary the order (Reasons at [64]). The Primary Judge ought to have concluded that prejudice suffered by a party who has failed to comply with a consent order (if the time to comply is not extended), is a material consideration to which the Court should have regard, and in the circumstances ought to have exercised the discretion to extend the time period.
5Further and in any event, the Primary Judge erred in fact and law in refusing to extend time for the Appellant to comply with the Order (for a period of two days) in that his Honour failed to give adequate weight to the following factors which heavily weighed in favour of granting the extension of time, such that the decision of the Primary Judge is so perverse that it is unreasonable and plainly unjust:
5.1First, the refusal of the extension would result in the overwhelming prejudice to the Appellant of having a valuable cause of action dismissed, in contrast to the absence of any material prejudice to the Respondent if the extension is granted.
5.2Second, the proceedings were at an advanced stage, with lay and expert evidence having been filed, and the action had been listed for trial in late July 2019.
5.3Third, the security had by then been paid into Court.
5.4Fourth, the delay in question was extremely short and the application for an extension was promptly made.
Leave to appeal
The appellant requires leave to appeal.[14] Generally speaking, leave should not be granted unless the decision below is plainly wrong or is attended by sufficient doubt to justify the grant of leave and substantial injustice would be done if the decision remains undisturbed.[15]
[14] Zaghloul v Woodside Energy Ltd [2019] WASCA 187 [57].
[15] Kelbush Pty Ltd v Australian and New Zealand Banking Group Ltd [2016] WASCA 14; (2016) 49 WAR 374 [80].
Appeals against discretionary decisions
In addition to the requirement for leave, the decision of the learned primary judge was clearly a discretionary one. Pursuant to O 3 r 5 of the Rules of the Supreme Court 1971 (WA), the court has power to extend time for compliance with a self‑executing order, even after judgment has been entered by its automatic operation.[16] That power is a discretionary one.
[16] FAI General Insurance Co Ltd v Southern Cross Exploration NL [1988] HCA 13; (1988) 165 CLR 268.
In those circumstances, the standard of review described in House v The King[17] applies, that is:
It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
[17] House v The King [1936] HCA 40; (1936) 55 CLR 499, 504 - 505 (Dixon, Evatt and McTiernan JJ).
Further, an appellate court will exercise particular caution in reviewing a decision which involves the exercise of discretion on a matter of practice and procedure.[18] Such appellate restraint has particular force where, as here, the appeal is brought from a procedural decision of the judge with the management of the case in the Commercial and Managed Cases list.[19]
[18] Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170, 177.
[19] Pearce v International Mining Technologies Ltd [2009] WASCA 239 [25]; Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2019] WASCA 141 [49].
We turn to the grounds of appeal.
Ground 1
Ground 1 challenges the learned primary judge's conclusion that the February 2019 orders were based on an underlying agreement between the parties, asserting that there was no evidence to support the finding.
In challenging that finding, Mighty River relies upon the distinction, drawn by Lord Denning in Siebe Gorman & Co Ltd v Pneupac Ltd:[20]
There are two meanings to the words 'by consent' … One meaning is this: the words 'by consent' may evidence a real contract between the parties. In such a case the court will only interfere with such an order on the same grounds as it would with any other contract. The other meaning is this: the words 'by consent' may mean 'the parties hereto not objecting'. In such a case there is no real contract between the parties. The order can be altered or varied by the court in the same circumstances as any other order that is made by the court without consent of the parties.
[20] Siebe Gorman & Co Ltd v Pneupac Ltd [1982] 1 WLR 185, 189 (Lord Denning MR).
We note in passing that most of the Australian authorities, including in this State, while recognising this distinction, do not go so far as to hold that the court will only interfere with an order made by consent which is based on a contract 'on the same grounds that it interferes with any other contract'.[21] Further, as the learned primary judge recognised in the present case, in Australia, it is recognised that the court always retains a discretion to vary an interlocutory consent order where it is in the interests of justice to do so. In the present case the February 2019 orders were interlocutory.
[21] Paino v Hofbauer, 198; Cliffs Robe River Iron Associates v Dravo Pty Ltd [1988] WAR 322; Norilya Minerals Pty Ltd v Easterday [2009] WASC 191 [73] - [74] (Le Miere J). But cf Fylas Pty Ltd v Vynal Pty Ltd [1992] 2 Qd R 593, 599 - 601.
In finding that the February 2019 orders were based on consent orders which in turn were based on an underlying agreement between the parties, the judge did not err. That is so for two reasons.
First, as the judge noted, Mighty River did not dispute that the consent orders were made following an agreement between the parties.[22] The judge did not err in acting on counsel's concession.
[22] Primary reasons [49]. See ts 111.
Secondly, the concession was properly made. In our respectful view, his Honour was correct to hold that the consent order was based on an underlying agreement between the parties. The exchanges were no mere conferral for the purposes of formulating an order which could be made without argument.[23] The objective evidence leading to the February 2019 orders reveal substantial negotiations directed to the substance of the parties' interests, both as to the orders sought by Mineral Resources and the consequences of a failure to comply with those orders.
[23] cf Cliffs Robe River Iron Associates v Dravo Pty Ltd [1988] WAR 322, 324 (Wallace J).
Mighty River, in the appeal, sought to characterise the inclusion of the springing order as 'an act of capitulation, to avoid a contested (and costly) interlocutory application', rather than an agreement. It emphasises that the background negotiations 'expressly indicated that [Mighty River] did not regard the making of a springing order as appropriate'.
These submissions do not advance Mighty River's position that there was no underlying agreement. Indeed, they reinforce the fact that the orders were the result of an underlying agreement. The fact that Mighty River adopted a negotiating position, at the beginning, which asserted that Mineral Resources was not entitled to further security for costs, and later proposed the two tranches of security totalling $100,000 (less than the amount originally proposed by Mineral Resources), objectively reveals substantive negotiations leading to agreement. It was in that context that Mighty River proposed the inclusion of the springing order. Objectively construed, the springing order was part of the bargain for the compromised position. Mighty River's consent could not properly be characterised as merely connoting that it was 'not objecting'.[24]
[24] See [59] above.
In this regard, the learned primary judge's conclusion as to the existence of an underlying agreement is on all fours with the conclusion reached by the Full Court of the Federal Court in R D Werner & Co Inc v Bailey,[25] relied upon by Mighty River.
[25] R D Werner & Co Inc v Bailey (1988) 18 FCR 389 (R D Werner & Co).
The point of principle in R D Werner & Co was concerned with whether the court had power to vary a consent order based on an underlying contract. Consistent with the Australian authorities referred to above, and the learned primary judge's decision in the present case, the court concluded that it did.
In that context, the court concluded that the negotiations leading to a consent order for security for costs (including a springing order) did give effect to an underlying contract. In so finding Woodward & Foster JJ observed:[26]
It is not possible to set out all the indicia of a binding contract having been entered into in a particular case. The subject matter and the circumstances will both be important. In the present case there was a history of negotiation about the claim for security for costs which extended over several weeks. A number of letters were exchanged, and there was a good deal of discussion as to the appropriate sum in which security might be ordered, before the parties reached agreement as to the order which ought to be made. On the other hand there was nothing to indicate how the self‑executing provision came to be introduced into the consent order. There is certainly nothing to show that this was insisted upon by the respondent and conceded by the appellant. It may be that, having been proposed by the respondent's advisers, it was not closely considered by the appellant's advisers because they had so much time to comply with the order. However it is clear that it was agreed to before the consent order was made.
[26] R D Werner & Co (391) (Woodward & Foster JJ).
These observations apply with even more force in the present case. In the present case it was Mighty River that proposed the springing order in the memorandum of consent orders.
For these reasons, ground 1 is without merit.
Ground 3
Ground 3 is curious.
It contends that the learned primary judge ought to have, and failed to, take into account material considerations, namely:
(a)whether the original foundation for the springing order for dismissal existed; and
(b)the full circumstances of the making of the springing order.
The ground appears to be focussed on the same issue as ground 1 (to which it is said to be allied) and the part of the learned primary judge's reasons referred to in the ground (paragraph [50]) are those in which his Honour found there to be an underlying agreement.
As to the first matter, the 'original foundation' upon which the 2017 springing order was said to be based 'was that [Mineral Resources] contended the progress of the action has been resisted by [Mighty River]'.[27]
[27] Appellant's submissions [52].
The factual basis for this submission itself lacks any proper evidentiary foundation. It is, so far as we can see, based solely upon a statement made not by Mineral Resources but by the solicitor for Mighty River in correspondence with Mineral Resource's solicitor on 9 May 2019 (ie, after the February 2019 springing order had taken effect). The basis for the statement is not apparent. The solicitor was not acting for Mighty River at the time that it consented to the 2017 springing order.
In any event, the continuing foundation for the springing order was not contested by Mighty River, either in February 2019 (when it included it in the consent orders) or when it made application to extend the time for compliance. Nor, for the reasons given in relation to ground 1, could it affect the objective intention to be attributed to the parties as a consequence of their words and actions.
Moreover, it is incumbent on parties who contend on an appeal against a discretionary decision that the judge failed to take particular matters into account, to demonstrate that the primary judge's attention was drawn to those matters, at least unless they are fundamental and obvious.[28] As counsel for Mighty River properly conceded before us, the primary judge's attention was not drawn to the 'original foundation' upon which the 2017 springing order was said to have been based. Its relevance was by no means fundamental or obvious. The judge cannot be said to have erred in failing to take into account these matters to which his Honour's attention was not directed.
[28] Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66 [120]; Park Trent Properties Group Pty Ltd v Australian Securities and Investments Commission [2016] NSWCA 298; (2016) 116 ACSR 473 [51]; Snook v Registrar of Fines Enforcement Registry [2019] WASCA 204 [23], [37].
As to the second matter, Mighty River's submissions do not identify what the 'full circumstances' were to which his Honour failed to have regard. As it was, his Honour had regard to all of the material circumstances that were in evidence before him and to which his attention was directed.
Ground 3 fails.
Ground 4
Ground 4 is formulated as one alleging an error of principle. In truth it asserts a weighting error, contrary to the first limb of House v The King.
The ground challenges his Honour's statement in [64] of the primary reasons that 'the circumstances that a party failed to comply with a consent order based on an agreement, and will suffer prejudice if the time within which to comply with the order is not extended, would rarely if ever be a sufficient ground to vary the order'.
Mighty River contends in written submissions that his Honour ought to have found that prejudice suffered by such a party is a material consideration to which the court should have regard.[29]
[29] Appellant's submissions [58].
The short answer to that contention is that the learned primary judge did conclude that prejudice to Mighty River was a material consideration. His Honour referred to that prejudice as the first factor weighing in favour of an extension of time.[30] His Honour recognised that Mighty River would suffer hardship by the refusal of an extension of time (which hardship was of its own making).[31]
[30] Primary reasons [72].
[31] Primary reasons [76].
Ultimately, while his Honour gave weight to the prejudice to Mighty River, that prejudice was outweighed by the other factors his Honour identified.
The statement challenged by Mighty River, in our view, simply reflects the truism that prejudice to a defaulting party alone will rarely be sufficient to extend the time for compliance with a consent order based on an underlying agreement. That is because other factors will almost always be relevant, such as the explanation (if any) for the default, the party's history of compliance with court orders generally, and public confidence in the court and the administration of justice that court orders are observed.
In oral submissions, Mighty River contended that the passage it impugns by ground 4 reveals that, in substance, the judge acted on the basis that Mighty River needed to show exceptional circumstances in order to obtain leave to vary the consent order. That submission is entirely without substance. It invites reading the second sentence of [64] (set out at [46] above) as directly contradicting the immediately preceding first sentence. Moreover, the manner in which the primary judge both stated and applied the principles demonstrates the absence of merit of this contention. The principles stated by the judge in [63] of the primary reasons (set out at [46] above) indicate a nuanced approach, sensitive to the particular circumstances. In considering the exercise of his discretion, the judge weighed, evidently in a careful fashion, the various factors in favour of and against an extension of time. Nothing in the manner in which the judge approached that balancing exercise suggests that the judge, in effect, required exceptional circumstances to be demonstrated or treated the agreement as controlling.
For these reasons, ground 4 is without merit.
Ground 5
Ground 5 asserts implied error, in the House v The King sense.
It is a high threshold, and requires Mighty River to demonstrate that the result was unreasonable or plainly unjust such that it should be inferred that the discretion had not been exercised properly. In this context, contrary to Mineral Resource's submission, we do not accept that an implied error, in the House v The King sense, may only arise where no reasons are given for the exercise of the discretion. In our view, in an appropriate case, a substantial injustice might be discerned from a particular result, notwithstanding that reasons are given for the result that do not, themselves, reveal error.
In the present case however, there is no implied error.
The learned primary judge's decision was not plainly unreasonable or unjust.
His Honour properly took into account all relevant considerations, including the entire history of the proceedings and Mighty River's dilatory approach to the proceedings and court orders. Mighty River was aware of the requirements of the order, and was expressly reminded that it must be complied with and the consequences for not doing so.
The judge found that there was no adequate explanation for the delay.[32] Counsel for Mighty River properly conceded that that finding was well open.
[32] Primary reasons [73], [77].
In our view, it was particularly significant, in the present case, as his Honour found, that there was no evidence that Mighty River could not have chosen to pay the security at any time between the date of the orders (13 February 2019) and 1 May 2019. The orders did not require that Mighty River wait until the last moment before attending to the matter of security. As his Honour found, Mighty River, through Mr Xie, took no step to comply with the order until 29 April 2019, two days before the springing order would take effect, and even then simply left a cheque on his desk and left Perth.
Mighty River, in deciding not to attend to the court orders until the very last moment, chose to live by the deadline to which it had agreed. It was just, in all of the circumstances, that it be bound by the consequences of that agreement.
Mighty River has fallen well short of establishing that the primary judge's decision was unreasonable or plainly unjust. Indeed, if we were exercising the discretion afresh we would have reached the same result.
For these reasons, ground 5 fails.
Conclusion
In the result Mighty River did not demonstrate that the learned primary judge's decision was wrong or attended by sufficient doubt to justify the grant of leave.
For these reasons, we refused leave to appeal and dismissed the appeal.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JS
Principal Associate to the Honourable Chief Justice Quinlan2 APRIL 2020
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