Mineralogy Pty Ltd v Sino Iron Pty Ltd
[2022] WASC 319
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: MINERALOGY PTY LTD -v- SINO IRON PTY LTD [2022] WASC 319
CORAM: KENNETH MARTIN J
HEARD: ON THE PAPERS
DELIVERED : 15 SEPTEMBER 2022
FILE NO/S: CIV 2139 of 2020
BETWEEN: MINERALOGY PTY LTD
Plaintiff
AND
SINO IRON PTY LTD
First Defendant
KOREAN STEEL PTY LTD
Second Defendant
Catchwords:
Practice and procedure - Action commenced - Pleadings exchanged and closed - Leave to discontinue sought - Defendants oppose leave unless a condition imposed on grant of leave - Condition is that plaintiff provide undertaking that cause of action discontinued not be re-ventilated in any future action - Plaintiff refuses undertaking as unnecessary
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Leave to discontinue granted unconditionally
Category: B
Representation:
Counsel:
| Plaintiff | : | No appearance |
| First Defendant | : | No appearance |
| Second Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | T Browning C/- Mineralogy Pty Ltd |
| First Defendant | : | Allens |
| Second Defendant | : | Allens |
Case(s) referred to in decision(s):
Ashby v Commonwealth of Australia [No 4] (2012) 209 FCR 65
Beijing Joseph Investment Co Ltd v Starr World Investment Ltd [No 2] [2015] WASC 186
Covell Matthews & Partners v French Wools Ltd [1977] 1 WLR 876
James Point Pty Ltd v The Minister for Transport [No 3] [2018] WASC 277
Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd (2009) 239 CLR 75
Massarani v Kriz [2022] FCA 80
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2020] WASC 40
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2021] WASC 45
Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 2] [2021] WASCA 105
Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [No 12] [2013] WASC 245
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2020] WASC 311
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2021] WASC 170
Visy Board Pty Ltd v Attorney-General (Cth) (1984) 2 FCR 113
KENNETH MARTIN J:
This concerns yet another action commenced by Mineralogy Pty Ltd (Mineralogy) in this court, under its writ of summons with an endorsed statement of claim brought on 17 November 2020, agains
t Sino Iron Pty Ltd (Sino Iron) and Korean Steel Pty Ltd (Korean Steel)
- which are wholly-owned subsidiaries of CITIC Ltd. I will generally refer to the two defendants as 'the CITIC defendants'.
Under the prayer for relief accompanying the original statement of claim as filed, it is evident that Mineralogy was seeking relatively modest amounts of damages for claimed financial loss arising in respect of alleged late payments made to it - concerning Royalty Component A (RCA) and Royalty Component B (RCB) moneys. Such royalty payments are due to Mineralogy under respective payment obligations towards those royalties under Mining Right and Site Lease Agreements (MRSLAs), which agreements have otherwise been a subject of much litigation in this court. There is a Goods and Services Tax (GST) payment component involved in respect of the alleged underpayment pleading.
I was appointed case manager of the action and made some initial case management directions on 11 December 2020, by consent. The pleadings in the action came to be closed after the filing of the CITIC defendants' defence on 18 December 2020 and thereafter Mineralogy's reply filed on 13 January 2021.
On 19 February 2021, I made further case management directions concerning discovery, electronic document exchange and a confidentiality protocol. Subsequently, there were amendments to Mineralogy's writ and statement of claim at 12 March 2021, leading to an amended defence of the CITIC defendants at 26 March 2021.
Further amendments were then made to the pleadings. Consequently, the current pleadings in the action are Mineralogy's further amended statement of claim of 30 September 2021 and the CITIC defendants' second further amended defence of 16 February 2022.
On 5 May 2022, Mineralogy applied by chamber summons for leave to discontinue its action (folio 41). The application follows in the aftermath of what looks to have been an unsuccessful mediation hearing conducted within this court.
By the chamber summons of 5 May 2022, Mineralogy seeks that it be granted leave to discontinue the proceeding against the CITIC defendants. Leave of the court to that end is required, given that the pleadings have been exchanged and closed.
The application is made pursuant to O 23 r 2 of the Rules of the Supreme Court 1971 (WA) (RSC).
Further, uncontroversial orders are sought (by proposed order two) that all costs orders in the proceeding that have not been satisfied be vacated and (by proposed order three) that Mineralogy agrees to pay the CITIC defendants' costs of the proceedings to be taxed, if not agreed.
The only problematic issue between the parties surrounding a grant of leave to Mineralogy to discontinue this action, is a condition which the CITIC defendants seek to impose upon Mineralogy
- essentially, as part of the 'price' of obtaining leave from the court to discontinue. By their minute of proposed orders filed 13 April 2022 (folio 38) the CITIC defendants ask the court to require, in effect, an undertaking from Mineralogy (by its solicitors) in terms that:
... upon the Court granting leave to the plaintiff to discontinue this proceeding and ordering that the proceeding be discontinued, the plaintiff will not commence or continue any action in this Court or in any other court, tribunal or forum against any of the defendants (or against their parent company, CITIC Ltd) in respect of any claims or causes of action pleaded in this proceeding.
However, Mineralogy does not agree to provide such an undertaking. It contends, in effect, that leave should be granted unconditionally to discontinue and without any such undertaking.
Given the as requested undertaking is now the only residual dispute remaining between the parties, the matter is being determined upon the papers.
To that end, I hold the CITIC defendants' written outline of submissions of 21 April 2022 (folio 39) and Mineralogy's written outline of submissions of 28 April 2022 (folio 40).
Concerning the essential issue as to the requested undertaking sought of Mineralogy, I turn to the parties' respective written submissions as they relate to this remaining issue. Before that, however, I need to say a little more about the claim that is the subject of Mineralogy's action.
The cause of action pursued by Mineralogy under its further amended statement of claim of 30 September 2021
Clause 36.1(c)(iii) in the MRSLAs was the foundation for the contract claim by Mineralogy, in respect of the action as then framed.
Under par 5 of its further amended statement of claim (folio 32), Mineralogy asserts that on 11 August 2020 it issued to the CITIC defendants 'tax invoices' (within the meaning of cl 36.1(c)(iii)) for GST said to be payable on the 'Mineralogy Royalty' (as defined in the MRSLAs).
A table to par 5 identifies tax invoices 170 through 175 and then, 178 through 181 - and so spanning the last quarter of 2017 through to the first quarter of the 2020 calendar year.
In an aggregate amount, those tax invoices sought payment from the CITIC defendants by reference to GST payable on the Mineralogy Royalty in the amount of US$44,862,587.90.
Under par 6, Mineralogy asserted the due date for payment of those tax invoices was 14 days after their issue, namely, 25 August 2020 (Due Date).
Under pars 7A and 7, Mineralogy then asserts that the CITIC defendants paid the US$44,862,587.90 for GST in respect of RCB in payment of the tax invoices, as identified in the table to par 5, late. The plea under par 7 is that payment was only made to Mineralogy at 11 September 2020.
Consequently, as is seen reflected under pars 16A and 16B, the character of the claim as articulated by Mineralogy - is in the nature of a claim for breach of contract damages.
This is reflected in pleas seen under pars 16B and 16 in the following terms:
16B.Had Sino Iron and Korean Steel paid the sum of US$44,862,587.90 on 25 August 2020 in accordance with their obligation under clause 36.1(c)(iii) of the applicable MRSLA Mineralogy would have converted those funds from United States dollars into Australian dollars on that date at an exchange rate of 0.7174, being the exchange rate published by the Reserve Bank of Australia, with the result that the funds would have been converted into AU$62,534,970.59.
16.Sino Iron and Korean Steel paid to Mineralogy the Royalty Payment at 3.47 pm on Friday, 11 September 2020 with the consequence that the amount could not be converted from United States dollars to Australian dollars until, at the earliest, 11 September 2020 (Date of Receipt).
By par 17A, Mineralogy pleads that it:
(c)converted the Royalty Payment from United States dollars into Australian dollars on 14 September 2021 (Date of Conversion) with the result that the funds were converted into AU$61,480,865.97.
An evident culmination of Mineralogy's plea for damages as seen at par 17, reads in the following terms:
In the premises pleaded in paragraphs 16B, 16, 17A, 17B and 17C above, by reason of the failure of Sino Iron and Korean Steel to pay to Mineralogy the tax invoices pleaded in paragraph 5 above (for GST in respect of RCB) by the Due Date in breach of the MRSLAs, Mineralogy has suffered direct loss and damage attributable to such breach in the sum of AU$1,054,104.62 or alternatively AU$919,000.39 being the difference between the value of the GST converted from United States dollars into Australian dollars on the Due Date and the value on 14 September 2020, or alternatively the value on the Date of Receipt.
Given the proposed discontinuance of the action by Mineralogy, it is not necessary for me to express a view upon the ultimate merits of its damages claim - from out of Mineralogy's further amended statement of claim.
What emerges, however, is that this action presents as a relatively unique claim for breach of contract damages - arising out of the contended late payments of the as identified tax invoices and later, a contended foreign exchange conversion loss - claimed as suffered by Mineralogy as a result of the contended failure to pay to it the United States dollar invoiced amount by the Due Date.
Consequently, Mineralogy's damages, as pleaded, are seen as attributable to a delayed and inopportune later date when it converted the United States dollar invoiced amount it received from the CITIC defendants.
Mineralogy is claiming, in effect, that had its invoiced amount for GST been paid at or by the due date, the United States dollar payment would then have been converted earlier. Consequently, upon its exchange of the United States dollar payment, Mineralogy would have received more Australian dollars in return than what it ultimately received - at the later time when it actually exchanged the funds received - at 14 September 2020.
That is Mineralogy's alleged claim for damages in this action, predicated upon the contended late payment and a resulting currency conversion loss.
Risks of repetition
I have spent some time elaborating upon the nature of Mineralogy's as pleaded claim albeit, it is now sought to be discontinued by leave. That was necessary, on my assessment, because it explains what is a unique and readily identifiable claim for breach of contract damages as drawn by Mineralogy.
Consequently, the likelihood, in my view, of such a like claim being missed or overlooked, were it ever to be rearticulated in the future as fresh litigation commenced by Mineralogy, is remote.
That visibility consideration bears, in my assessment, upon a resolution of the remaining area of disagreement between these parties
- concerning the CITIC defendants' insistence that Mineralogy give an undertaking - that it will not raise such a claim against them by fresh litigation in the future, as the 'price', in effect, of the court granting it leave to discontinue.
On my assessment, if Mineralogy were ever to adopt such a course in future, then any such ventilation of the same claim would be liable to be cut down at that future point - as a vexatious abuse of process.
Given the evident visibility of such a damages claim as articulated under the present proceedings prior to discontinuance, a future revival as some component for fresh litigation or otherwise, would, on my assessment, be easily spotted and likely challenged at that time.
With those observations made, I turn to the exchanged written submissions by each of the parties.
The parties' submissions
The CITIC defendants' requested undertaking
By their written submissions of 21 April 2022, the CITIC defendants point to significant steps taken in the action whilst it was afoot after 17 November 2020, including amendments to pleadings, provision by the parties of discovery and inspection, the provision of further and better particulars, an unsuccessful attempt to resolve the matter at a mediation in November 2021, and the CITIC defendants' obtaining of a private tax ruling in relation to the tax invoices as issued to them by Mineralogy.
Noting Mineralogy accepts it must pay the CITIC defendants' taxed costs as a part of the price of obtaining leave before a discontinuance, the CITIC defendants respond that this, in effect, is not enough.
They say, correctly, that Mineralogy has provided no real explanation for why it wishes to discontinue - including when it gave its notice to that effect in email correspondence to the court on 11 April 2022.
The CITIC defendants say there has been no event or change in circumstances notified to the court to explain the mooted discontinuance. The CITIC defendants say they have fashioned the terms of an undertaking they would seek from Mineralogy by reference to words used in the form of another undertaking seen used in the reasons of Edelman J in Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [No 12] [2013] WASC 245.
They observe that the undertaking is limited to matters pleaded and which would have been finally determined by the trial of this action, had it proceeded.
The CITIC defendants also submit the present action ought not be viewed merely in isolation. Instead, it should be seen as one of many more 'battle fronts', at which a greater range of civil litigation disputation as between the same parties has been unfolding - referring to my own earlier observations in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2021] WASC 45 [525] and the observations of Quinlan CJ in Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2021] WASC 170 [1] - [2].
The CITIC defendants also draw my attention to the fact that in another decision of mine concerning stays and abuse of process, I recognised that decisions made by Mineralogy in pending proceedings, as between the same parties, can be vexing to defendants irrespective of their scale and resources - referring to observations in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2020] WASC 40 [209]. They point out that Mineralogy has previously commenced, but then abandoned, claims as a subject of commenced litigation filed and pursued against Sino Iron and Korean Steel (including against their parent, CITIC Ltd) - only for a discontinued action to be attempted later to be resurrected - referring to my observations in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2020] WASC 40 [29] - [54].
At par 16 of their written submissions, the CITIC defendants say:
Mineralogy's decisions to bring, progress and now abandon this action have been, and will be, vexing to the CITIC parties. It is an action that has required time and attention while other proceedings between the parties have been on foot. These include CIV 1915 of 2019 which concerns matters of considerable importance to the CITIC parties and the Sino Iron Project which they operate -
referring again to my observations in a related context (see Sino IronPty Ltdv MineralogyPty Ltd [2020] WASC 311 [57] - [62]).
Consequently, the CITIC defendants say that it is only reasonable for them, in effect, to now seek finality in respect of an explicit and lasting termination of the present action - rather than (using my terminology) to later on see it rise again in future 'like a phoenix from the ashes'. They say it is undesirable for them to be left with a level of uncertainty over whether (and, if so, when) there might be some further litigation by Mineralogy concerning the subject matter of this action in the future. They say this condition is necessary, since based upon Mineralogy's previous litigation conduct, there is indeed a reasonable prospect that Mineralogy might later seek to relitigate the very same claim, in effect, under a freshly commenced future action.
Rounding off this component of their submissions, the CITIC defendants say that it is fully legitimate then, in all the circumstances, to seek for them to be put in the same position as if the action had gone to a trial hearing and had there been a determination in their favour, relying on some observations of Vaughan J, as his Honour then was, in James Point Pty Ltd v The Minister for Transport [No 3] [2018] WASC 277 [176].
Mineralogy's refusal of such an undertaking
The condition sought to be attached to a grant of leave to discontinue, by reference to a requirement of the court for an undertaking in the terms identified, is firmly rejected by Mineralogy. By its written submissions of 28 April 2022, Mineralogy says a discontinuance does not operate as a judgment and so, subject to the terms of any leave to discontinue, fresh proceedings could, ordinarily, be instituted on the same cause of action - referring to RSC O 23 r 2(2).
Referring to observations made in Visy Board Pty Ltd v Attorney-General (Cth) (1984) 2 FCR 113, 182, Mineralogy accepts the court has power to impose conditions, or to require an undertaking as a term of a grant of leave to discontinue. Nevertheless, Mineralogy observes that any undertaking must, ultimately, be voluntarily given by it.
Interpolating at this point what I understand Mineralogy to be submitting, is that it cannot be compelled to give an undertaking it does not wish to proffer to the court. That being so, if the court holds the power to validly impose a condition upon a grant of leave to discontinue, but which condition requires the provision of such an undertaking, then Mineralogy might still refuse to provide the undertaking sought of it.
The consequence would then be something of a stalemate, in that the action would remain afoot, rather than being discontinued under a grant of leave - when the required leave is not forthcoming by reason of the failure to meet the condition requiring the undertaking.
Mineralogy next says that where there has been no substantive trial or determination of a plaintiff's claim for relief against a defendant, then prima facie, there is no warrant for requiring the plaintiff to file an undertaking not to commence further proceedings - referring to observations in Beijing Joseph Investment Co Ltd v Starr World Investment Ltd [No 2] [2015] WASC 186 [37].
Mineralogy says that a court will usually allow a plaintiff to discontinue a proceeding, provided no injustice will be caused to the defendant and that defendant is not deprived of some advantage which it has already gained. To that end, it also relies upon Sheppard J's observations in Visy Board Pty Ltd v Attorney-General (Cth) (1984) 2 FCR 113, 182 and observations in Covell Matthews & Partners v French Wools Ltd [1977] 1 WLR 876.
Mineralogy says that requiring it to pay the CITIC defendants' (taxed) costs will cure any injustice suffered in defending the present action - up to the point at which it is sought to be discontinued. Mineralogy says that this action has had a relatively short procedural history, and no advantage has been gained by the CITIC defendants in the litigation which they will be deprived of.
Mineralogy also observes the court holds ample power to protect its own processes and that if, wholly hypothetically, of course, like proceedings were ever to be commenced by it at some time in future, and with its future action including claims or causes of action the subject of the present proceeding, then the appropriate relief would be accessible from the court at that time. It refers to observations by Rares J in Ashby v Commonwealth of Australia [No 4] (2012) 209 FCR 65 [4] (noting the decision came to be reversed later on appeal, but that a statement of principles relied upon was not criticised and has, indeed, been subsequently used and referred to as a convenient summary of principles in Massarani v Kriz [2022] FCA 80 [105]).
In Ashby v Commonwealth [No 4], Rares J referred to the leading High Court authority concerning abuse of process, namely, Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd (2009) 239 CLR 75 where French CJ, Gummow, Hayne and Crennan JJ had observed at [27] - [28] that the categories of abuse of process, were not closed.
Rares J in Ashby v Commonwealth [No 4] observed at [4]:
Proceedings that are seriously or unfairly burdensome, prejudicial or damaging, or productive of serious and unjustified trouble and harassment are examples of abuses of process. So too are proceedings where the Court's process is employed for an ulterior or improper purpose, or in an improper way, or in a way that would bring the administration of justice into disrepute among right-thinking people.
Mineralogy concluded its written submissions observing that the undertaking sought of it, in effect, as a 'price' of it obtaining leave to discontinue, would pre‑empt the result of a prospective future abuse of process application. It would, in effect, reverse the 'heavy onus' on the party seeking a permanent stay upon a basis of showing an abuse of process under exceptional circumstances. Mineralogy says the relatively short procedural history of this action does not warrant such a pre‑emption by a requiring of such an undertaking, in the circumstances.
Disposition
The position is finely balanced.
There clearly is jurisdiction in the court for it to require Mineralogy to provide an undertaking in the terms as now sought by the CITIC defendants as the 'price', in effect, of a grant of its leave to Mineralogy to discontinue the action. Mineralogy's written submissions, in effect, do not cavil over the holding of that jurisdiction.
The true question is - what is the overall appropriateness of making such an order, taking full account of all of the present circumstances.
There is no doubt that - as is manifested in other contexts I have earlier canvassed between the very same parties (see, for instance, my reasons in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2020] WASC 40, subsequently upheld on appeal, Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 2] [2021] WASCA 105) - Mineralogy, as a matter of public record, now suffers the baggage of having a certain element of prior 'form'. That is, in terms of Mineralogy previously unilaterally discontinuing, but later on then subsequently bringing fresh actions raising the like complaints it had earlier litigated over but not run to their completion. Such conduct is undoubtedly oppressive to a counterparty, bordering on harassment by litigious oppression. Such conduct would undoubtedly vex a recipient no matter the extent of their corporate resources.
On the other hand, to apply a permanent 'black mark' against Mineralogy, placing it under suspicion each time it wishes to terminate an action, is not a supportable approach. Mineralogy has never been declared a vexatious litigant.
Consequently, at present, each litigation horizon under which Mineralogy seeks the leave of the court, such as when discontinuing this action, still needs to be evaluated upon its individual merits and assessed holistically - in the invariably unique context of all the surrounding circumstances of a particular action at hand.
Here, as I have observed, the contended foreign exchange loss damages claim by Mineralogy that is now sought to be discontinued by leave of the court, is rather unique. That renders it visible should it ever re‑emerge in future - in some fresh action brought by Mineralogy in this, or in another, court.
However, I have gone to some lengths in these reasons to record and explain, as an enduring public record, the current constituents of the present action (prior to any discontinuance) - so a ready comparison to any future proceeding may, if needed, be gleaned from out of these reasons - without a need to track back to underlying pleadings in a terminated action.
There is also a countervailing policy consideration towards issuing a grant of leave to discontinue which, on my assessment, is more significant in the overall weighing exercise of rival factors as is being presently undertaken.
It is in the public interest where civil actions running in this court are at a point where a propounding party desires to discontinue a pending action that their termination step, albeit requiring leave of the court, be accessible and relatively uncomplicated. A capacity to swiftly 'stop a clock' on litigious costs otherwise running in civil litigation in good time is a necessary, indeed essential, component of a properly functioning civil justice system. An exit process must not become unduly cumbersome.
Facilitating accessible exit from litigation upon the proffering of the other side's reasonable costs, ought not become susceptible to being unduly thwarted or bogged down by 'horse trading' arguments - with the defendants seeking to extract from a putative discontinuing party their very last 'pound of flesh'. The process to achieving closure must be swift, accessible and just.
If there are ever any later emerging problems by some subsequent litigation, then that case would need to be uniquely evaluated at the time. It may never happen and should not be pre-judged. For the present case, the unique and visible nature of the cause of action of Mineralogy - which is no longer sought to be pursued after a discontinuance under leave - is evident.
In the overall scheme of presently considered facts and considerations to be weighed, I am, at the end, persuaded that the undertaking condition as is sought by the CITIC defendants, in effect, as the 'price' of the leave of the court to discontinue - should not be asked of Mineralogy. The remedy of abuse of process deployable against any future cause of action (if ever brought) reviving the same damages claim, is a sufficient abiding disincentive against that hypothetical eventuality said to be feared.
Consequently, the orders seen below will issue upon my publication of these reasons.
Discontinuance orders
1. Pursuant to RSC O 23 r 2, the plaintiff is granted leave to discontinue civil action CIV 2139 of 2020 and the proceeding is hereby discontinued.
2. All costs orders in the proceeding that have not been satisfied are vacated.
3. The plaintiff shall pay the defendants' costs of the proceeding to be taxed, if not agreed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
PP
Research Associate to the Honourable Justice K Martin
15 SEPTEMBER 2022
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