Mineralogy Pty Ltd v Adani Mining Pty Ltd - [2022] QSC 154

SUPREME COURT OF QUEENSLAND

CITATION:

Mineralogy Pty Ltd v Adani Mining Pty Ltd [2022] QSC 154

PARTIES:

MINERALOGY PTY LTD ACN 010 582 680

(applicant)

v
ADANI MINING PTY LTD ACN 145 455 205

(first respondent)

and

RUSSELL THIRGOOD
(second respondent)

FILE NO/S:

6211 of 2022

DIVISION:

Trial

PROCEEDING:

Application (heard in civil list)

ORIGINATING COURT:

Supreme Court

DELIVERED ON:

22 July 2022

DELIVERED AT:

Brisbane

HEARING DATE:

18 July 2022

JUDGE:

Freeburn J

ORDER:

The application filed on 27 May 2022 be dismissed.

The parties be heard on costs.

CATCHWORDS:

ROYALTY DEED – DISPUTE RESOLUTION CLAUSE – NOTICE – APPOINTMENT OF INDEPENDENT EXPERT – CONTRACTUAL INTERPRETATION – STAY OF EXPERT DETERMINATION – where the applicant and first respondent entered into a royalty deed – where the first respondent sought finance – where the financier sought for the applicant to execute a priority deed – where the applicant did not execute the priority deed – where the first respondent sent the applicant a notice of dispute – where the first respondent referred the dispute the chief executives – where an independent expert was appointed by the President of the Queensland Law Society – Whether the dispute is within the terms of the Royalty Deed – whether the first respondent gave the applicant proper notice – whether the dispute holds merits.

COUNSEL:

Mr P Dunning QC and Mr K Byrne (for the applicant)
Mr S Doyle QC & Mr A Messina (for the first respondent)

SOLICITORS:

Alexander Law (applicant)
Allen & Overy (first respondent)

REASONS
Introduction

The second respondent, Mr Thirgood, has embarked on an expert determination. He is an expert appointed by the President of the Queensland Law Society. He has been appointed to give an expert determination of a dispute between the applicant (Mineralogy) and the first respondent (Adani).
By this application Mineralogy seeks to enjoin the continuation of that expert determination. Adani opposes the application: it wishes the expert determination to proceed. Mr Thirgood, for his part, appeared at the outset of the hearing, agreed to abide the order of the court, and was excused.
Background to the Dispute
The dispute arises in this way. By a deed entered into on 29 November 2011 Adani agreed to pay royalties to Mineralogy for mining a particular mining tenement (the Royalty Deed).
Clause 7.1 of the Royalty Deed provided:
7. Security
7.1As security for Mineralogy’s rights under this deed, including to receive payment of the Royalty, Adani agrees it will not create or permit the creation of any Encumbrance over any of part of the Royalty Tenement or its interest under this Deed unless the person taking the benefit of the Encumbrance (financier) executes a chargee’s priority deed, agreeing that:
(a)the Encumbrance will rank in priority after unpaid Royalty;
(b)any sale, assignment or foreclosure by the financier under the Encumbrance will be subject to compliance with the provisions of this Deed relating to assignment by Adani; and
(c)the financier will release its Encumbrance if Adani withdraws from…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] QSC 154
Decision Date: 22 July 2022

CaseChat Overview and Summary

Mineralogy Pty Ltd has brought an application against Adani Mining Pty Ltd to stay an expert determination that has been referred to by the parties under a dispute resolution clause in a deed of agreement between them. The deed, which is a royalty deed, was executed in 2011. The dispute concerns Adani’s failure to execute a priority deed in accordance with clause 7.1 of the royalty deed, which requires any financiers to whom Adani seeks to encumber the mining tenement to execute a priority deed agreeing that any encumbrance they take will rank after any unpaid royalties owed to Mineralogy. Mineralogy did not sign the priority deed, and Adani referred the dispute to expert determination under clause 8.5 of the royalty deed. Mineralogy seeks to stay that expert determination. The court was required to determine whether the dispute resolution clause in the royalty deed applied to the dispute, whether Adani gave Mineralogy proper notice of the dispute, and whether the dispute had merit. The court held that the dispute resolution clause applied to the dispute, that Adani gave Mineralogy proper notice of the dispute, and that the dispute had merit. The application was dismissed.

Orders

Orders of the court

The application filed on 27 May 2022 be dismissed.

The parties be heard on costs.

Background

Background to the litigation

By this application Mineralogy seeks to enjoin the continuation of that expert determination. Adani opposes the application: it wishes the expert determination to proceed. Mr Thirgood, for his part, appeared at the outset of the hearing, agreed to abide the order of the court, and was excused.Background to the Dispute The dispute arises in this way. By a deed entered into on 29 November 2011 Adani agreed to pay royalties to Mineralogy for mining a particular mining tenement (the Royalty Deed). Clause 7.1 of the Royalty Deed provided:7. Security7.1As security for Mineralogy’s rights under this deed, including to receive payment of the Royalty, Adani agrees it will not create or permit the creation of any Encumbrance over any of part of the Royalty Tenement or its interest under this Deed unless the person taking the benefit of the Encumbrance (financier) executes a chargee’s priority deed, agreeing that:(a)the Encumbrance will rank in priority after unpaid Royalty;(b)any sale, assignment or foreclosure by the financier under the Encumbrance will be subject to compliance with the provisions of this Deed relating to assignment by Adani; and(c)the financier will release its Encumbrance if Adani withdraws from this Deed. In 2021, Adani sought funding from certain financiers to assist it with the development of the tenement. The financiers required security. However, as can be seen, clause 7.1 requires that Adani not agree to encumber the tenement unless the financiers execute a priority deed which possesses the three necessary features specified in clause 7.1. Of course, the most important of those was that Mineralogy’s unpaid royalties would have priority over the rights secured by the financier’s encumbrance. There was some correspondence about the Priority Deed.[1] Mineralogy suggested some changes, which were accepted. Minerology did not sign the Priority Deed and so, on 14 December 2021, Adani’s solicitors called on Mineralogy to execute the Priority Deed, failing which there would be a notice of dispute.[1]There were two priority deeds proposed. For convenience these reasons refer to them in the singular. In the same letter Adani’s solicitors said:Dispute resolution procedure – noticeIf [Mineralogy] does not sign and return the enclosed Priority Deeds within the time set out above, then this letter will be deemed to serve as a written notice given by [Adani] to [Mineralogy] under and for the purposes of clause 8 (in particular, clause 8.2) of the Royalty Deed. The matters set out above are the particulars of the dispute the subject of this notice.In accordance with clause 8.4 of the Royalty Deed, [Adani] refers the dispute the subject of this notice to the Australian chief executives (or their nominees) of the parties’ respective global corporate groups. There was no response from Mineralogy. And so, on 17 December 2021, Adani’s solicitors wrote to Mineralogy’s solicitors saying that under clause 8.4 of the deed the dispute was referred to the parties’ Australian chief executives and that, if that mechanism did not resolve the dispute within 20 business days, Adani would refer the dispute to expert determination under clause 8.5 of the deed.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

In many cases, of course, a party who has ignored a dispute resolution clause and has brought proceedings in the court, will be met with an application to stay the court proceeding in order to force the plaintiff back to the agreed dispute resolution procedure.[30] In those cases, the plaintiff has what Chesterman J described as a heavy onus:The discretion whether or not to grant the stay is obviously wide. The starting point for a consideration of its exercise is that the parties should be held to their bargain to resolve their dispute in the agreed manner … However, a stay will not be granted if it would be unjust to deprive the plaintiff of the right to have his claim determined judicially or, to put it slightly differently, if the justice of the case is against staying the proceeding. The party opposing the stay must persuade the court that there is good ground for the exercise of the discretion to allow the action to proceed and so preclude the contractual mode of dispute resolution. The onus is a heavy one. The court should not lightly conclude that the agreed mechanism is inappropriate.[31] [emphasis added][30]See Straits Exploration (Australia) Pty Ltd v Murchison United NL (2005) 31 WAR 187 at 193. [31]Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] 2 Qd R 563, 568. This passage was quoted and approved by Daubney J in Hooks Enterprises Pty Ltd v Sonnenberg Pty Ltd [2018] 1 Qd R 116 at [30] and by Brown J in Hutson v Nerang Subdivision Pty Ltd [2021] QSC 323 at [27]. Here, Mineralogy seeks a stay of the contractually agreed expert determination process. Having concluded that this dispute is comprehended by clause 8, a parity of reasoning suggests that, at the least, the court would ordinarily conclude that the agreed dispute resolution mechanism is the most appropriate forum for the parties to resolve their dispute. For those reasons the application will be dismissed.

CITATION:	Mineralogy Pty Ltd v Adani Mining Pty Ltd [2022] QSC 154
PARTIES:	MINERALOGY PTY LTD ACN 010 582 680 (applicant) v ADANI MINING PTY LTD ACN 145 455 205 (first respondent) and RUSSELL THIRGOOD (second respondent)
FILE NO/S:	6211 of 2022
DIVISION:	Trial
PROCEEDING:	Application (heard in civil list)
ORIGINATING COURT:	Supreme Court
DELIVERED ON:	22 July 2022
DELIVERED AT:	Brisbane
HEARING DATE:	18 July 2022
JUDGE:	Freeburn J
ORDER:	The application filed on 27 May 2022 be dismissed. The parties be heard on costs.
CATCHWORDS:	ROYALTY DEED – DISPUTE RESOLUTION CLAUSE – NOTICE – APPOINTMENT OF INDEPENDENT EXPERT – CONTRACTUAL INTERPRETATION – STAY OF EXPERT DETERMINATION – where the applicant and first respondent entered into a royalty deed – where the first respondent sought finance – where the financier sought for the applicant to execute a priority deed – where the applicant did not execute the priority deed – where the first respondent sent the applicant a notice of dispute – where the first respondent referred the dispute the chief executives – where an independent expert was appointed by the President of the Queensland Law Society – Whether the dispute is within the terms of the Royalty Deed – whether the first respondent gave the applicant proper notice – whether the dispute holds merits.
COUNSEL:	Mr P Dunning QC and Mr K Byrne (for the applicant) Mr S Doyle QC & Mr A Messina (for the first respondent)
SOLICITORS:	Alexander Law (applicant) Allen & Overy (first respondent)