Mighty River International Ltd v Mineral Resources Ltd

[2017] WASC 298

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   MIGHTY RIVER INTERNATIONAL LTD -v- MINERAL RESOURCES LTD [2017] WASC 298

CORAM:   BANKS-SMITH J

HEARD:   31 AUGUST & 1 SEPTEMBER 2017

DELIVERED          :   13 OCTOBER 2017

FILE NO/S:   CIV 2474 of 2016

BETWEEN:   MIGHTY RIVER INTERNATIONAL LTD

Plaintiff

AND

MINERAL RESOURCES LTD
First Defendant

CHRISTOPHER JAMES ELLISON
Second Defendant

PETER DAVID WADE
Third Defendant

JAMES McCLEMENTS
Fourth Defendant

KELVIN EDWARD FLYNN
Fifth Defendant

JOSEPH MARIO PAUL RICCIARDO
Sixth Defendant

MARK RICHARD DUTTON
Seventh Defendant

NORMAN COLDHAM-FUSSELL

Eighth Defendant

ALAN SCOTT
Ninth Defendant

WARREN THOMAS BROWN
Tenth Defendant

DAVID RAYMOND TEPLITZKY
Eleventh Defendant

MARCEL EDWARD VAN DE VELDE
Twelfth Defendant

Catchwords:

Practice and procedure - Extension of validity of writ - Relevant considerations - Where plaintiff waiting on future developments - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 7 r 1

Result:

Application for extension dismissed

Category:    B

Representation:

Counsel:

Plaintiff:     Mr J R Reynolds

First Defendant              :     Mr N C Ebbs

Second Defendant         :     No appearance

Third Defendant            :     No appearance

Fourth Defendant           :     No appearance

Fifth Defendant              :     No appearance

Sixth Defendant             :     No appearance

Seventh Defendant         :     No appearance

Eighth Defendant           :     No appearance

Ninth Defendant             :     No appearance

Tenth Defendant            :     No appearance

Eleventh Defendant        :     No appearance

Twelfth Defendant         :     No appearance

Solicitors:

Plaintiff:     Nova Legal

First Defendant              :     Bennett + Co

Second Defendant         :     No appearance

Third Defendant            :     No appearance

Fourth Defendant           :     No appearance

Fifth Defendant              :     No appearance

Sixth Defendant             :     No appearance

Seventh Defendant         :     No appearance

Eighth Defendant           :     No appearance

Ninth Defendant             :     No appearance

Tenth Defendant            :     No appearance

Eleventh Defendant        :     No appearance

Twelfth Defendant         :     No appearance

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

Brealey v Board of Management Royal Perth Hospital [1999] WASCA 158; (1999) 21 WAR 79

Chalmers and Partners v Kensit [2008] WASCA 122

Coyne v Sun Securities Ltd (1992) 8 WAR 218

Ebner v Clayton Utz [2012] VSCA 56; (2012) 36 VR 25

Great Southern Ltd (in liq) (Receivers & Managers Appointed) v Young [2014] WASC 481

Howard v Power [2013] VSC 198

Kensit v Popperwell [2007] WASC 163

Kleinwort Benson Ltd v Barbrak Ltd [1987] 1 AC 597

Mesa Minerals Ltd v Mighty River International Ltd [2016] FCAFC 16; (2016) 111 ACSR 289

Mighty River International Ltd v Hughes & Bredenkamp [2017] WASC 69

Mighty River International Ltd v Hughes [2017] WASCA 152

Mighty River International Ltd v Mesa Minerals Ltd [2015] FCA 462

Mighty River International Ltd v Mineral Resources Ltd [2017] WASCA 72

Mighty River International v Bryan Hughes and Daniel Bredenkamp as Deed Administrators of Mesa Minerals Ltd (Subject to Deed of Company Arrangement) [2017] WASC 203

Ramsay v Madgwicks (a firm) [1989] VR 1

Re Australian Property Custodian Holdings Ltd (in liq) [2014] VSC 190

Savcor Pty Ltd v Cathodic Protection International APS [2005] VSCA 213; (2005) 12 VR 639

Sonsan Pty Ltd v Vlavianos [2015] WASC 336

T-D Joint Venture Pty Ltd (In liq) v SGH Energy Corporate Pty Ltd [2016] WASC 102

Tucker v Hamdorf [2006] WADC 191

Van Leer Australia Pty Ltd v Palace Shipping KK [1981] HCA 11; (1981) 180 CLR 337

Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514

BANKS-SMITH J: 

Overview

1. On 26 August 2016 the plaintiff (Mighty River) issued a writ of summons with indorsement of claim against the defendants.

2. The writ has not been served on any defendant.  Mighty River has chosen not to effect service.

3. The first defendant (MRL) became aware of the writ and on 17 January 2017 entered an appearance.  Since that time, the action has been entered into the Commercial and Managed Cases list and certain programming orders have been made as between Mighty River and MRL, primarily as to filing any further amended statement of claim.

4. On 2 March 2017 Mighty River filed a statement of claim that pleads its case against all defendants.  On 14 July 2017 it filed an amended statement of claim.  The statement of claim is signed on behalf of a barrister, Mr Hannan.  The amended version is unsigned but also bears his name.  I was told by counsel for Mighty River that the statement of claim had also been settled by senior counsel.[1]

   [1] ts 26.

5. A writ is valid for 12 months beginning with the date of its issue: O 7 r 1(1) of the Rules of the Supreme Court 1971 (WA). Accordingly, the writ was valid up to and including 25 August 2017. After that the writ was stale.[2]

   [2] Chalmers and Partners v Kensit [2008] WASCA 122 [6].

6. On 25 August 2017 Mighty River's solicitors wrote to the court foreshadowing the filing of an urgent application on 28 August 2017 to extend the validity of the writ under O 7 r 1(2) of the Rules of the Supreme Court.  The application was filed on 29 August 2017.

7. Mighty River seeks an order under O 7 r 1(2) extending the validity of the writ for such period from 29 August 2017 'that the court thinks fit'. It is apparent that Mighty River proceeded on the basis that the writ was valid until 26 August 2017, but now accepts it expired on 25 August 2017.[3]

   [3] ts 19.

8. Relevantly, O 7 r 1 provides as follows:

   (1)For the purpose of service, a writ … is valid in the first instance for 12 months beginning with the date of its issue …

   (2)Where a writ has not been served on a defendant, the Court may by order extend the validity of the writ from time to time for such period, not exceeding 12 months at any one time, beginning with the day next following that on which it would otherwise expire, as may be specified in the order, if an application is made to the Court before that day or such later day (if any) as the Court may allow.

9. Mighty River's primary contention is that before deciding whether to serve the writ, it was awaiting the progress and investigations into the affairs of Mesa Minerals Ltd (Mesa), a company under administration and against which Mighty River has a claim.

10. Because of that primary contention, it is necessary to go into some detail about the administration of Mesa, litigation between the relevant parties, Mighty River's requests for investigations and the nature of its proof of debt.

11. These matters are dealt with below before turning to the factors relied upon generally by Mighty River in support of its application and the relevant principles to be applied.

Ex parte application

1. As is usual for such applications, it was brought on an ex parte basis.  However, MRL's solicitors became aware of the hearing and attended, seeking to make submissions as to case management issues that might arise for MRL if the extension were granted.  I granted leave for MRL's solicitors to appear on that limited basis.  I also gave leave to Mighty River to file supplementary evidence after the hearing.  That was filed on 1 September 2017.

The pleaded case

1. The matters alleged by the statement of claim are summarised as follows (utilising terms as defined in the pleading):

   (a)Mesa is currently subject to a deed of company arrangement;

   (b)MRL made an off‑market takeover bid to acquire all of the issued shares in Mesa (MRL/Mesa Takeover Bid);

   (c)as part of the MRL/Mesa Takeover Bid, MRL offered one share in MRL for every 70.6 shares held in Mesa (MRL/Mesa Share Offer);

   (d)on or about 6 April 2010, MRL issued to Mesa's shareholders a 'Bidder's Statement' (approved by MRL's directors) in respect of the MRL/Mesa Takeover Bid;

   (e)on or about 6 April 2010, Mesa issued to Mesa's  shareholders a 'Target's Statement' (approved by Mesa's directors) in respect of the MRL/Mesa Takeover Bid;

   (f)on 30 July 2010, MRL gave notice to Mesa's shareholders that the time for acceptance of the MRL/Mesa Share Offer had been extended to 27 August 2010;

   (g)the plaintiff did not accept the MRL/Mesa Share Offer;

   (h)the second, third and fifth to seventh defendants were at all material times directors of MRL.[4]  The eighth to twelfth defendants were at all material times the directors of Mesa;

   [4] Mighty River has stated it does not intend to proceed against the fourth defendant.

   (i)as at 6 September 2011 Mighty River held approximately 20% of the shares in Mesa.  MRL held approximately 64%;

   (j)both the Bidder's Statement and Target's Statement represented that MRL would use certain assets of Mesa on a commercial basis as part of its export manganese processes (MRL's Bidder Representation and Mesa's Target Representation).  In short those assets are Mesa's Utah Point port facility access rights and land available to it for storage referred to as the Boodarie Facility;

   (k)from time to time and after about August 2011 MRL has taken steps to use Mesa's Utah Point port facility and the Boodarie Facility but MRL has not passed on any proper commercial return to Mesa;

   (l)after the MRL/Mesa Takeover Bid, MRL did not export manganese ore from relevant sites;

   (m)during the period between the making of the MRL/Mesa takeover bid and the close of the MRL/Mesa Share Offer (on 27 August 2010), Mighty River considered and relied upon the content of the MRL's Bidder Representation, Mesa's Target Representation, the Bidder's Statement and the Target's Statement in deciding not to sell its shares in Mesa to MRL;

   (n)but for those representations, it would have sold its shares in Mesa to MRL.  If it had sold its shares and accepted the MRL/Mesa Share Offer it would have received about 1.4 million shares in MRL;

   (o)the value of the shares which Mighty River retains in Mesa is significantly lower than the value of the MRL shares it would have obtained;

   (p)MRL engaged in misleading or deceptive conduct or conduct that was likely to mislead or deceive, and each of the second, third, fifth, sixth and seventh defendants aided or abetted or were directly or indirectly knowingly concerned in or a party to MRL's conduct, or, in the alternative, engaged in misleading or deceptive conduct.  Mighty River relies on those defendants being directors of MRL at the time the MRL Bidder's Statement was unanimously approved and at the time of the MRL's Bidder Representation;

   (q)Mesa's Target Representation was made with respect to a future matter and was misleading or deceptive.  It was unanimously approved by the eighth to twelfth defendants.  Each of the eighth to twelfth defendants aided or abetted or were directly or indirectly knowingly concerned in or a party to Mesa's conduct, or, in the alternative, engaged in misleading or deceptive conduct; and

   (r)Mighty River claims damages under the applicable provisions of the Australian Consumer Law, the Australian Securities and Investments Commission Act 2001 (Cth), the Corporations Act 2001 (Cth) and the Fair Trading Act 2010 (WA).

2. For ease of reference, I will refer to the second and third and fifth to twelfth defendants as the 'director defendants'.

Appointment of administrators and execution of DOCA

1. On 13 July 2016 Bryan Hughes and Daniel Bredenkamp were appointed administrators of Mesa under s 436A of the Corporations Act.  The first meeting of creditors was held on 25 July 2016.  The second meeting of creditors was held on 17 August 2016 but adjourned to 20 October 2016.  On 20 October 2016, the creditors resolved that Mesa execute a deed of company arrangement.  The deed was executed on 3 November 2016 (DOCA).[5]  Bryan Hughes and Daniel Bredenkamp were appointed deed administrators of the DOCA (Administrators).

   [5] Affidavit of John Reynolds filed 1 September 2017 (Third Reynolds affidavit), JRR23.

2. It was a term of the DOCA that the Administrators would provide a further report to creditors by the 'Sunset Date', that date being 3 May 2017.  The DOCA also contained terms providing for the variation or termination of the DOCA.

3. On 3 May 2017, the Administrators recommended a variation to the DOCA to extend the Sunset Date to 3 August 2017.  The extension was to facilitate the Administrators considering offers relating to the recapitalisation of Mesa and to continue their investigations.  The DOCA was varied by resolution to reflect the extension at a meeting of creditors held 11 May 2017.

4. On 3 August 2017, the Administrators recommended a variation to the DOCA such that the Sunset Date be extended to 21 August 2017.  The DOCA was varied by resolution to reflect that further extension at a meeting of creditors held 11 August 2017.

5. On 21 August 2017, the Administrators convened a meeting to be held 29 August 2017 and recommended an amendment to the DOCA to facilitate completion of a proposal known as the Auvex proposal.  Apparently a resolution was passed at that meeting to vary the DOCA to give effect to that proposal.[6]

   [6] Third Reynolds affidavit, JRR25.

6. Throughout this period, the Administrators issued five reports to Mesa's creditors as follows:

   (a)Report to Creditors dated 10 August 2016 (First Report);[7]

   (b)Report to Creditors dated 13 October 2016 (Second Report);[8]

   (c)Report to Creditors dated 3 May 2017 (Third Report);[9]

   (d)Report to Creditors dated 3 August 2017 (Fourth Report);[10] and

   (e)Report to Creditors dated 21 August 2017 (Fifth Report).[11]

   [7] Affidavit of John Reynolds filed 29 August 2017 (Second Reynolds affidavit), JRR7.

   [8] Second Reynolds affidavit, JRR9.

   [9] Second Reynolds affidavit, JRR14.

   [10] Second Reynolds affidavit, JRR19.

   [11] Third Reynolds affidavit, JRR23.

Litigation about the DOCA

1. Mighty River, Mesa, the Administrators and Mineral Resources have been involved in litigation about the DOCA since its execution.

2. On 16 November 2016, Mighty River issued proceedings against the Administrators and Mesa seeking orders that the DOCA be set aside, primarily on the basis it was a 'holding' deed of company arrangement.

3. On 3 February 2017, Mineral Resources issued proceedings seeking to uphold the DOCA.

4. The proceedings were heard together in February 2017 and the court upheld the validity of the DOCA.[12]

   [12] Mighty River International Ltd v Hughes & Bredenkamp [2017] WASC 69.

5. Mighty River appealed that decision.  Hearings took place on 19 ‑ 20 April 2017, 19 May 2017, and 10 August 2017.  On 11 August 2017 the Court of Appeal dismissed the appeal.[13]

   [13] Mighty River International Ltd v Hughes [2017] WASCA 152 (appeal); Mighty River International Ltd v Mineral Resources Ltd [2017] WASCA 72 (security for costs of appeal application).

6. Meanwhile, on 10 May 2017 Mighty River also instituted separate proceedings (COR 96 of 2017) seeking orders that the DOCA be terminated and Mesa be wound up on grounds including an allegation that MRL was wrongly admitted for the full value of its claim for the purpose of voting at the meeting of creditors held 11 May 2017.[14]  It contends that had MRL not been admitted to vote, the resolution to vary the DOCA executed on 3 November 2016 would not have passed.  Mighty River subsequently amended its claim to include the same allegations in relation to the meeting of creditors held 11 August 2017.

   [14] Mighty River International v Bryan Hughes and Daniel Bredenkamp as Deed Administrators of Mesa Minerals Ltd (Subject to Deed of Company Arrangement) [2017] WASC 203.

7. The court has dealt with various interlocutory matters arising in COR 96 of 2017 and has published reasons.  The application has not yet been finally determined.

8. In correspondence to the Administrators' solicitors and MRL's solicitors, Mighty River's solicitors note on several occasions that they are busy dealing with the litigation on foot and it has been a cause for delay in dealing with other matters.[15]

   [15] Affidavit of John Reynolds filed 21 April 2017 (First Reynolds affidavit) [as to security for costs but read in this application], JRR14, JRR21, JRR23.

9. The Administrators noted the following in the Fifth Report:[16]

   The legal proceedings brought by Mighty River continue to be a significant and expensive undertaking, consuming a large portion of our time and the time of our lawyers.

   [16] Third Reynolds affidavit, JRR23, page 16.  Similar comments were made in the Fourth Report, Second Reynolds affidavit, page 523.

10. It is clear from the various decisions outlined above that the litigation between the parties since November 2016 has been hotly contested and time consuming.

Mighty River asks the Administrators to investigate claims by Mesa

1. During August 2016, Mighty River's solicitors wrote to the Administrators regarding concerns it had about the manner in which Mesa has been managed since MRL had become a majority shareholding.

2. It raised particular matters it asked the Administrators to investigate:

   (a)the use by MRL and related parties of Mesa's Utah Point port facility access rights and terms of such use;

   (b)the use by MRL and related parties of Mesa's Boodarie Facility (or Boodarie Lease, as it is referred to in correspondence) and terms of such use;

   (c)the decision of the Mesa Board to place certain manganese mines on care and maintenance;

   (d)the terms of a debt said to be due by Mesa to MRL; and

   (e)the decision of the Mesa Board to relinquish certain rights relating to port access.

3. Those matters were raised by Mighty River not in the context of Mighty River's claim in the administration against Mesa, but as potential claims by Mesa against its directors or others.  Mighty River said the Administrators should investigate those claims.[17]  Mighty River suggested it had senior counsel's advice that such claims by Mesa were likely to exceed $50 million.[18]

   [17] First Reynolds affidavit, JRR2 - JRR6, being letters/emails Nova Legal to the Administrators 1 August 2016 to 30 August 2016.

   [18] First Reynolds affidavit, JRR4.

4. The Administrators indicated in the First Report that they would investigate those claims during the period of the proposed DOCA or liquidation period.[19]  They proceeded to investigate the claims, albeit in the circumstances of the time constraints and competing priorities that apply in an administration process.  In their Second Report, they reported on their investigations into Utah Point, Boodarie, Mesa's decision not to commence mining operations and the debt owing to MRL (utilising the descriptions of the claim used by the Administrators).  They again noted their investigations would continue during the period of the proposed DOCA or liquidation period.[20]

   [19] Second Reynolds affidavit, JRR7, page 299.

   [20] Second Reynolds affidavit, JRR9, pages 375 ‑ 377.

5. In the Third Report, the Administrators reported that they had received high level preliminary legal advice on the potential claims and that the most promising claim was that in regard to the Boodarie Lease.  As to the decision not to commence mining and the decision to let certain rights lapse, they reported that the decisions appeared to have been commercial decisions and that the Board had taken a commercial approach.  The Administrators said they would provide further details on the claims in future reports.[21]

   [21] Second Reynolds affidavit, JRR14, pages 461, 469 ‑ 471.

6. The Administrators also noted in the Third Report that they were dealing with proposals as to restructuring of the company and that as to one of the offers, 'if it can be successfully completed, it may have the potential to satisfy creditors' claims in full'.[22]

   [22] Second Reynolds affidavit, JRR14, page 472.

7. The most comprehensive response from the Administrators is contained in the Fourth Report.  They advised creditors that they had not found sufficient evidence to support a claim against Mesa's directors with respect to the Utah Point facilities.  They reported that whilst there might be a claim against MRL's related entity Process Minerals International Pty Ltd or other related entities relating to the Boodarie Lease, those entities said they had potential counterclaims against Mesa that exceeded any such claims and that any proceedings would be defended.  The Administrators indicated they considered any return would likely be less than the estimate, 'if anything'.[23]  They confirmed they would take no further action with respect to the decision not to commence mining operations or to allow other port rights to lapse.[24]  They confirmed they had investigated the debt claimed by MRL, that they had reconciled the most significant part of the claim (cash advances) and they considered the next most significant component to be high but reasonable (management fees).[25]

   [23] Second Reynolds affidavit, JRR19, pages 524, 532 ‑ 535.

   [24] Second Reynolds affidavit, JRR19, page 534.

   [25] Second Reynolds affidavit JRR19, page 534.

1. In summary, the Administrators had reported to the creditors on their preliminary views as to the matters raised by Mighty River by at least 3 August 2017.

Mighty River lodges proof of debt

1. Mighty River lodged a proof of debt in the Mesa DOCA administration claiming as follows:[26]

   Mighty River International Ltd has legal claim against Mesa Minerals Ltd (Administrators Appointed) ACN 009 113 160 (Mesa) under the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 sections 4 and 18) for misleading and deceptive representations made in the target statement with respect to the takeover bid by Mineral Resources of Mesa which concluded on 7 September 2010.

   The value of the claim is $15,746,090 - $26,897,753.19.

   [26] First Reynolds affidavit, JRR7.

2. In December 2016, the Administrators requested information to support the proof of debt within fourteen days as they had an intention to adjudicate claims.[27]

   [27] First Reynolds affidavit, JRR10.

3. On 22 December 2016, Mighty River replied, asking why the Administrators intended to adjudicate claims when there was no provision in the DOCA for distribution of proceeds, and challenging the involvement of the Administrator's solicitors due to an alleged conflict.  Mighty River acknowledged it had received certain files it had requested but said it was waiting for more and asked for an extension of time in which to provide further information.[28]

   [28] First Reynolds affidavit, JRR11.

4. It appears not all correspondence has been placed before the court but the next communication provided is a letter from the Administrators' solicitors of 10 March 2017 in which they state that in light of claims in these proceedings (CIV 2474 of 2016) it seemed Mighty River had concurrent claims to those against Mesa.[29]

   [29] First Reynolds affidavit, JRR13.

5. On 13 April 2017, Mighty River provided an amended proof of debt to the Administrators, reserving the right to amend or supplement it.[30]  The amended proof of debt sets out the complaints relating to Utah Point, the Boodarie Lease and the placing of certain projects on care and maintenance as already referred to above.  In addition, it recites Mesa's Target Representation, reliance on that representation, alleges the representation was misleading or deceptive, alleges it was a representation with respect to a future matter,  and claims relief against Mesa in an amount of 'at least $16 million'.  This is the first evidence before the court of the Administrators being provided with further details about the alleged representation by Mesa that founds its claim to relief.[31]

   [30] First Reynolds affidavit, JRR15, Second Reynolds affidavit, JRR13.

   [31] There are references to phone calls or meetings in some of the correspondence but there is no particularity or evidence of content.

6. There is no evidence of further communications between Mighty River and the Administrators as to the amended proof of debt or the status of its adjudication.  Mighty River accepts that as at 3 August 2017 it had heard nothing as to the progress of adjudication of its proof of debt.[32]

   [32] ts 13.

Work undertaken shortly prior to expiry

1. As discussed further below, in my view it ought to have been apparent to Mighty River prior to and at least by 3 August 2017 that there was a real prospect that the Administrators would not pursue the alleged claims by Mesa against MRL or third parties, with the possible exception of allegations relating to the Boodarie Lease.  It was also highly unlikely the Administrators would formally adjudicate upon the amended proof of debt by 25 August 2017.

2. By way of the supplementary evidence, the solicitors for Mighty River allege that it was not until 21 August 2017 that they considered it was apparent that the adjudication was some time off and that there was no proposal that would see unsecured creditors paid in full.[33]  They described the work undertaken by them in the period immediately preceding the expiry of the writ.[34]

   [33] Third Reynolds affidavit [9].

   [34] Third Reynolds affidavit [10] ‑ [11].

3. During the period 21 August 2017 to 25 August 2017 they:

   (a)instructed another firm of solicitors to take over the matter;

   (b)instructed counsel to prepare an application to extend the validity of the writ;

   (c)considered the content of the Fifth Report including an addendum (as to the terms of the Auvex proposal);

   (d)instructed counsel as to the content of the Fifth Report, and took counsel's advice and instructions from Mighty River as to its legal and commercial ramifications in preparation for the meeting of creditors convened for 29 August 2017;

   (e)considered submissions seeking special costs orders and drafted submissions in the Court of Appeal proceedings;

   (f)prepared a draft amended statement of claim in these proceedings;

   (f)conferred with the parties about issues arising in COR 96 of 2017 and attended a directions hearing;

   (g)prepared submissions seeking costs in COR 96 of 2017; and

   (h)provided advice as to the merits of seeking leave to appeal to the High Court from the Court of Appeal decisions.

Basis for extension application

1. Mighty River admits it did not attempt to serve the writ on the director defendants prior to its expiry.

2. It says there are good reasons why it did not serve the writ and why the validity of the writ should be extended:

   (a)it may be prejudiced by the potential expiry of limitation periods, and so may be unable to pursue its claims against the MRL directors and the Mesa directors;

   (b)the defendant directors must have known about the writ even though it was not served;

   (c) Mighty River was delayed in investigating the claims because of a delay in provision of certain documents;[35]

   (d)it was waiting for the Administrators to adjudicate on its proof of debt, and asserts it expected an adjudication initially by 3 May 2017 and then by 3 August 2017;[36]

   (e)there was an overlap in the matters the subject of the proof of debt and the pleaded matters and it considered the court proceedings should in effect be stayed pending the Administrators' adjudication of the proof;[37]

   (f)it was waiting to see whether the Administrators would pursue the claims by Mesa that it had raised with them, because if they pursued them, Mighty River may not pursue the misleading and deceptive conduct claim but accept whatever compensation it might receive as a shareholder of Mesa;[38]

   (g)it was hoping a liquidator would be appointed and a liquidator would pursue claims by Mesa about events following the takeover and these proceedings could 'fall by the wayside';[39]

   (h)in the Third Report the Administrators had suggested there was a prospect of unsecured creditors being paid in full;[40] and

   (i) it was hoping to avoid paying security for costs of the proceedings in circumstances where it hoped the Administrators would adjudicate on the proof of debt and pursue the claims on behalf of Mesa.[41]

   [35] ts 22.

   [36] ts 21, 29, 39.

   [37] ts 14, 16.

   [38] ts 17 ‑ 19.

   [39] ts 16.

   [40] Third Reynolds affidavit [8], referring to Second Reynolds affidavit, JRR14, page 472.

   [41] ts 31 (a submission based, it seems, on the fact that Mighty River is registered in the British Virgin Islands and would be vulnerable to a security for costs order).

Extending the validity of a writ - principles

1. The principles to be applied to extend the validity of a writ have been summarised elsewhere.[42]  Those of particular relevance to this application are as follows.

   [42] Great Southern Ltd (in liq) (Receivers & Managers Appointed) v Young [2014] WASC 481 [51] ‑ [56]; Howard v Power [2013] VSC 198 [10].

2. The power to extend is discretionary.  The discretion is broad and should be exercised by reference to the general justice of the case.[43] It should only be exercised for good reason, even though exercise of the discretion under O 7 is not specifically premised on there being 'good reason'.[44]

   [43] Brealey v Board of Management Royal Perth Hospital [1999] WASCA 158; (1999) 21 WAR 79.

   [44] Ramsay v Madgwicks (a firm) [1989] VR 1, 6.

3. Delay is a basis for inferring that the defendant will suffer prejudice.[45]

   [45] Savcor Pty Ltd v Cathodic Protection International APS [2005] VSCA 213; (2005) 12 VR 639 [2].

4. A wish to await the outcome of appeals or other determinations and possibly save costs is generally not a good reason.  It is not for the party to proceedings but for the court to say whether there should be effectively a stay of proceedings.[46]  Useful examples of the application of this principal in this jurisdiction include Coyne v Sun Securities Ltd[47] and Great Southern Ltd (in liq) v Young.

   [46] Ramsay v Madgwicks (4); Howard v Power [10], [20], [28].

   [47] Coyne v Sun Securities Ltd (1992) 8 WAR 218.

5. In Coyne v Sun Securities Ltd, the applicant made a tactical decision of not serving the writ because he wished to await the outcome of other proceedings in which he believed liability may be established which would assist in the proceedings in issue.  The court considered it was not reasonable that the plaintiff wishes to hold up proceedings while some other case is tried or to await some further development.  The court also took into account that the plaintiff was not left without remedy in that there were other proceedings on foot against some of the defendants which raised similar questions.  An extension was refused.

6. In Great Southern Ltd (in liq) v Young, the plaintiff's liquidators issued writs against its former directors to preserve their causes of action.  The validity of the writ was not extended, Allanson J stating as follows:[48]

   I have found the balancing of these competing considerations to be a particularly difficult exercise.  I am acutely aware that a failure to renew the writ will result in the loss of those causes of action which are now subject to limitation provisions.  But my view overall is that the plaintiffs have not shown sufficient reason why the further period should be allowed.  Two particular matters are, for me, decisive.  First, the action having been commenced shortly before the expiry of the causes of action, diligence was required to ensure that it was served, if possible, within the initial period of validity of the writ.  Second, the approach of awaiting further expert evidence, in the form of a report, was unduly conservative when preliminary expert advice had been obtained, and the issues had been identified, before the close of 2012.

   [48] Great Southern Ltd (in liq) v Young [144].

7. Continuing negotiations are not a good reason for an extension.  In Ebner v Clayton Utz,[49] the reasons relied on for an extension included that the applicants believed the writ was valid for longer than it actually was and that they had been trying to negotiate a settlement in order to avoid litigation.  The limitation period had expired since the issue of the writ.  An extension originally granted by a registrar was set aside by an associate judge and that decision was upheld on appeal.  The Court of Appeal accepted that continuing negotiations are not a good reason for an extension.[50]

   [49] Ebner v Clayton Utz [2012] VSCA 56; (2012) 36 VR 25.

   [50] Ebner v Clayton Utz [23].

8. The limitation period having expired after the filing of the writ and before the extension application is merely a circumstance of the case.  The defendant does not have an absolute right to immunity, as the writ is not a nullity.  This means that the plaintiff's burden in seeking an extension is not increased by reason of the limitation period expiring.  Equally, the burden is not reduced by reason of the defendant's limitation defence to any refiled writ.[51]

   [51] Van Leer Australia Pty Ltd v Palace Shipping KK [1981] HCA 11; (1981) 180 CLR 337, 341 ‑ 342, 350, 351; Re Australian Property Custodian Holdings Ltd (in liq) [2014] VSC 190 [104]; Kleinwort Benson Ltd v Barbrak Ltd [1987] 1 AC 597, 615 ‑ 616.

9. In Chalmers and Partners v Kensit, it was not possible to ascertain when the cause of action accrued from the indorsement on the statement of claim.  At first instance, the court was prepared to assume the plaintiff's claims would be statute barred.[52]  The Court of Appeal took a different approach, noting that a factor in favour of an extension was that the statutory limitation period for some of the causes of action may have expired, but also noting that where the position as to statutory limitations was unclear it may weigh against an extension.  No statutory limitation applied for some causes of action[53] and as for those where the court could not reliably assess whether the limitation period applicable had expired, the plaintiff was responsible for the uncertainty attending that issue.[54]

   [52] Kensit v Popperwell [2007] WASC 163.

   [53] And so as noted in T-D Joint Venture Pty Ltd (In liq) v SGH Energy Corporate Pty Ltd [2016] WASC 102 [14], referring to Chalmers and Partners v Kensit, if no limitation question arises the plaintiff is unable to point to prejudice if an extension application is not granted.

   [54] Chalmers and Partners v Kensit [32(a)], [33(a) ‑ (b)] (Buss JA, Murray AJA agreeing).

Enlargement of time for bringing application

1. Order 7 r 1(2) provides that a court may extend the validity of the writ if an application is made to the court before the day on which the validity of the writ would expire or such later day as the court may allow. There is no issue in this case that it is open to me to allow the application to proceed albeit that it was filed after the date of expiry. Taking into account the short delay, that course is appropriate.[55]

   [55] See interplay between O 7 r 1(2) and O 3 r 5 as explained in Tucker v Hamdorf [2006] WADC 191 [32] ‑ [34].

Consideration of Mighty River's case to extend

Preliminary matter - limitation periods

1. Counsel for Mighty River, Mr Reynolds, did not concede before me that the limitation periods for the claims had in fact expired.  He said that he would not commit to a position because he had not prepared the pleading.[56]  Presumably, he was concerned there may be some questions as to when loss was incurred and the causes of action accrued.[57]  However, he also submitted that the limitation period with respect to each cause of action was six years, that Mesa rejected the takeover offer, that the cut-off date for its acceptance was 27 August 2010 and so the limitation period began to run on that date.[58]  There is therefore some uncertainty as to the important issue of the limitation point, uncertainty created by Mighty River's reticence to commit to or elucidate a position.

Factors against an extension

[56] ts 11.

[57] Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514, 530 ‑ 532.

[58] ts 10 - 11. Plaintiff's outline of submissions filed 29 August 2017 [59].

1. The most significant issue is the strategic decision by Mighty River to await the outcome of investigations by the Administrators into the potential claims that Mesa might have (investigations it requested), and also to await the adjudication of its proof of debt.  I do not consider that awaiting decisions on the part of the Administrators to assess their impact comprises a good reason to extend the validity of the writ.[59]  I take into account the following:

   [59] Taking into account the principles referred to above and applied in Ramsay v Madgwicks; Coyne v Sun Securities Ltd; Great Southern (in liq) v Young; and Ebner v Clayton Utz.

   (a)the capacity of the Administrators to address matters raised by Mighty River was at all times limited by time and their other responsibilities as Administrators.  The investigations comprised only one aspect of their duties, a matter that was known to Mighty River from the Reports to Creditors;

   (b)Mighty River was aware of the competing pressures under which the Administrators were operating arising out of the litigation it had instituted.  Its own solicitors similarly were operating under some pressure.  Litigation between Mighty River and the Administrators was ongoing during the critical time period of May 2017 to August 2017;

   (c)whilst it is true that originally the Administrators intended to report by May 2017 and that period was extended, the risk of such an extension was foreseeable.  The DOCA expressly provided for variations and termination.  If the DOCA had been terminated, issues as to the investigations may have taken a considerable period in a liquidation.  In short, there was at all times a real risk that the Administrators would not be in a position to report to Mighty River with the level of detail or certainty it requested or in the time period it anticipated;

   (d)in particular, it was clear by (at the latest)  the Fourth Report of 3 August 2017 that the Administrators would not pursue all claims raised by Mighty River and there was a real chance it would not pursue any of them;

   (e)Mighty River needed to consider its position taking into account the risk that the Administrators would not formalise decisions or provide feedback prior to the expiry of the writ;

   (f)it also needed to consider the narrower scope of inquiries being undertaken by the Administrators, with their focus on the rights of Mesa.  It would have been artificial to assume that the Administrators were assessing all matters relevant to a decision by Mighty River as to whether or not to proceed against each or any of the defendant directors.  Although I accept there may be assistance provided by, for example, the Administrator's investigations into Utah Point access arrangements and other overlapping matters, it was still necessary for Mighty River to consider independently the conduct of each director, whether it wished to pursue each director, the prospects of success and other matters;

   (g)there was also a real risk that there would be no adjudication of the amended proof of debt before the expiry of the writ.  Mighty River itself had deferred providing information and doubted the value of an adjudication process absent any identified fund.[60]  Regardless, from the time of the lodgement of the amended proof of debt until the expiry of the writ, there was an absence of any representation by the Administrators or communications between them and Mighty River that suggested an adjudication was in fact underway or imminent;

   (h)the court is able to manage issues that might arise if an adjudication process and court proceedings proceed separately.  It is not for Mighty River to assume there should be a stay of the proceedings pending an adjudication.  That is a matter for the court; and

   (i)it was unrealistic, in my view, to rely on a statement as preliminary and general as that made in the Third Report as indicating any prospect that there would be a 100c in the dollar return on Mighty River's amended proof of debt.  That statement was not repeated in the Fourth Report.  The position also has to be viewed against the backdrop that Mighty River was seeking to have the DOCA set aside and Mesa wound up, a result that would have affected the Administrators' power to secure any restructure or recapitalisation.

   [60] I assume in context, other than for voting purposes.

2. In all the circumstances, including the restraints on time in an administration regime, the ongoing litigation in this court and the qualified nature of the Administrators' reports, Mighty River took a calculated risk in assuming it would receive from the Administrators useful information or certainty about its own claim and Mesa's claims sufficient to inform a decision as to whether to serve the writs.  That risk was heightened as 25 August 2017 rapidly approached.  Such approach does not found, in my view, proper grounds for an extension of validity of the writ.

3. The delay in service was deliberate, Mighty River wishing to await the outcome of steps in the administration and avoid the costs and risk of a security order if it proceeded.  It was aware that there was a limitation period issue and so should have been diligent as to effecting service.  Its solicitors were aware of the need to apply for an extension of the validity of the writ if it were not served.  Whilst there is no doubt that the respective parties were busy with litigation at the time, Mighty River chose to prioritise other work, such as costs submissions, in the period leading up to the expiry of the writ.  There is no evidence to suggest they could not have effected service if they wished to do so.

1. This is not a case where a plaintiff was still seeking sufficient information about a potential cause of action in order to plead a case.  By at least 2 March 2017 Mighty River had sufficient information about the causes of action against the director defendants to file a statement of claim, a statement of claim that was prepared by and signed on behalf of counsel.[61]  There is some contest as to whether or not relevant documents were available to Mighty River,[62] but regardless, it had sufficient documents to plead its claim by at least 2 March 2017.[63]

   [61] Rule 63 of the Western Australian Barristers' Rules published by the Western Australian Bar Association provides that a barrister must not allege any matter of fact in any court document settled by the barrister unless the barrister believes on reasonable grounds that the factual material already available provides a proper basis to do so.

   [62] Clayton Utz, solicitors for the Administrators, stated in a letter dated 10 March 2017 that in effect access had been provided to all relevant documents in their possession:  First Reynolds affidavit, JJR13.

   [63] Mighty River had also obtained documents relating to Mesa's assets as a result of earlier proceedings:  see Mighty River International Ltd v Mesa Minerals Ltd [2015] FCA 462; Mesa Minerals Ltd v Mighty River International Ltd [2016] FCAFC 16; (2016) 111 ACSR 289.

2. No formal notice of the writ has been given to the director defendants.  Mighty River seemed content to rely on an inference that the directors were aware of the writ but did not take any steps to confirm whether or not that was the case.  Counsel for MRL confirmed that some of the MRL directors were aware of the writ.[64]  However, it is unclear whether all defendant directors were on notice and if so, from when.  Nor is it known what assumptions, if any, the director defendants have made from the fact that Mighty River has continued with the proceedings against MRL, but still has not served the writ on them.  In the circumstances of this case, I do not consider the issue of lack of notice is compelling but I give it some regard.

   [64] ts 37.

3. I am not persuaded that there is no prejudice to the director defendants in the delay in serving the writ.  The representations complained of occurred in 2010.  However, I do not consider it to be a significant factor weighing against the grant of an extension as there is likely to be documentary evidence from that time and it may be that at least some of the defendant directors were involved in earlier proceedings in the Federal Court between Mighty River and Mesa to obtain documents.[65]  The position as to delay may not be the same for all director defendants.  Some of the director defendants may well be prejudiced.  Therefore, it is still a matter which I take into account.

   [65] Mighty River International Ltd v Mesa Minerals Ltd [2015] FCA 462; Mesa Minerals Ltd v Mighty River International Ltd [2016] FCAFC 16; (2016) 111 ACSR 289.

4. I also note the risk that an extension may deny the directors a limitation defence, depending on when the causes of action accrued.  However as noted at the outset, the position is to some extent unclear.  Taking into account the other factors relevant to this application, it is not a decisive factor.

5. Mighty River is not without remedy.  It has its claim against Mesa to pursue in the Mesa deed administration.  It has its claim against MRL which is already on foot and proceeding in this court.  Counsel in fact conceded that Mighty River would not be left without remedy.[66]  It can proceed against the party that has been served.  The risk that allegations may be made in these proceedings against the director defendants who will not be parties to the proceedings does not of itself justify extension of the writ.[67]

Factors in favour of extension

[66] Plaintiff's outline of submissions filed 29 August 2017 [59].

[67] Sonsan Pty Ltd v Vlavianos [2015] WASC 336 [29] ‑ [30].

1. There is the real risk of potential loss of causes of action against the director defendants due to the expiry of limitation periods, but such a consequence always exists when renewal of a writ after expiry of a limitation period is in question.  In this case, that prejudice is self‑inflicted in the sense that there was no conduct on the part of the director defendants that induced delay.  Further, Mighty River has made no concession as to the expiry of limitation periods and so to the extent there is uncertainty, it is a product of its own making.  Of itself, I would not have found that the expiry of limitation periods was sufficient to outweigh the matters that militate against the grant of an extension.

2. Mighty River applied quickly to extend the validity of the writ, applying only a matter of days after its expiry.

3. In terms of case management, the existing proceedings against MRL are not particularly advanced (pleadings have not closed) and whilst there would inevitably be some delay in the proceedings should they proceed against the director defendants, that delay may be manageable.

4. Despite originally being non‑committal as to the length of any extension, during the course of the hearing counsel for Mighty River indicated that an extension of some six to eight weeks may be sufficient for the new solicitors for Mighty River to determine the preferred course and serve the writ if appropriate.

Conclusion

1. Having assessed the factors in favour and the factors against an extension of the validity of the writ, I consider those that militate against it outweigh those in favour and have concluded that Mighty River's application should be dismissed.  The interests of justice and the balancing of hardship do not require that discretion be exercised in favour of the extension.