Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 19]
[2025] WASC 234
•19 JUNE 2025
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: MINERALOGY PTY LTD -v- SINO IRON PTY LTD [No 19] [2025] WASC 234
CORAM: LUNDBERG J
HEARD: 26 & 27 FEBRUARY 2024 (FURTHER SUBMISSIONS RECEIVED ON 15 AND 16 MARCH 2024)
DELIVERED : 19 JUNE 2025
FILE NO/S: CIV 1808 of 2013
BETWEEN: MINERALOGY PTY LTD
Plaintiff
AND
SINO IRON PTY LTD
First Defendant
KOREAN STEEL PTY LTD
Second Defendant
CITIC PACIFIC LTD
Third Defendant
FILE NO/S: CIV 3024 of 2017
BETWEEN: MINERALOGY PTY LTD
Plaintiff
AND
SINO IRON PTY LTD
First Defendant
KOREAN STEEL PTY LTD
Second Defendant
CITIC LIMITED
Third Defendant
Catchwords:
Costs - Proceedings conducted before primary judge between 2013 and 2017 - Proceedings relate to proper construction of agreement between the parties concerning the payment obligation on the part of the defendants to pay Royalty Component B - Final orders made by primary judge in December 2017 - Orders made for costs to be mediated - Application for costs not made to the Court for some 5 years and 8 months and after retirement of the primary judge - Competing and complex costs order sought by both sets of parties - Turns on own facts
Costs - Application by successful plaintiff for indemnity costs orders against the defendants and alternative claim for special costs orders - Assessment of principles and evidence - Relevance of delay to the exercise of the costs discretion - Authorities as to relevance of delay considered
Costs - Application by unsuccessful defendants for orders that plaintiff pay costs in respect of certain matters and events in the proceedings - Application by defendants for special costs orders in favour of all parties
Costs - Relevance of case management principles and the principle of finality in litigation to the exercise of the Court's costs discretion
Legislation:
Legal Profession Uniform Law Application Act 2022 (WA), s 141
Rules of the Supreme Court 1971 (WA), O 1 r 4A, O 1 r 4B, O 66 r 1, O 66 r 50, O 66 r 51
Supreme Court Act 1935 (WA), s 37
Result:
Orders set out in [287] of the reasons
Category: B
Representation:
CIV 1808 of 2013
Counsel:
| Plaintiff | : | P J Dunning KC and K S Byrne |
| First Defendant | : | S H Parmenter KC and J R C Sippe |
| Second Defendant | : | S H Parmenter KC and J R C Sippe |
| Third Defendant | : | S H Parmenter KC and J R C Sippe |
Solicitors:
| Plaintiff | : | Hamad Mirza |
| First Defendant | : | Allens |
| Second Defendant | : | Allens |
| Third Defendant | : | Allens |
CIV 3024 of 2017
Counsel:
| Plaintiff | : | P J Dunning KC and K S Byrne |
| First Defendant | : | S H Parmenter KC and J R C Sippe |
| Second Defendant | : | S H Parmenter KC and J R C Sippe |
| Third Defendant | : | S H Parmenter KC and J R C Sippe |
Solicitors:
| Plaintiff | : | Hamid Mirza |
| First Defendant | : | Allens |
| Second Defendant | : | Allens |
| Third Defendant | : | Allens |
Case(s) referred to in decision(s):
Almona Pty Ltd v Parklea Corporation Pty Ltd (No 4) [2020] NSWSC 553
Barjeba Pty Ltd v Boggs [2023] WASC 232 (S)
Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; (2019) 269 CLR 333
Ben Pelech v Royle [2020] WASCA 168 (S)
Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107
Business Finance Pty Ltd v Casula Projects Pty Ltd (No 2) [2022] NSWSC 1608
Chen v Chan (No 2) [2009] VSCA 233
Civil Properties Pty Ltd v Miluc Pty Ltd [2011] WASCA 195
Dee-Tech Pty Limited v Neddam Holdings Pty Limited (No 2) [2012] NSWSC 517
Electricity Generation and Retail Corporation trading as Synergy v Woodside Energy Ltd [2014] WASC 469
Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400
Facek v Gargano [2019] VSC 31
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S)
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Frigger v Lean [2012] WASCA 66
Gippsreal Ltd v Kenny [2016] VSCA 319; (2016) 52 VR 149
Gomba Holdings UK Limited & Others v Minories Finance Limited & Others (No. 2) [1993] Ch 171; [1992] 4 All ER 588
Inglis and Anor v Commonwealth Trading Bank of Australia (1973) 47 ALJR 234
INPEX Operations Australia Pty Ltd v AIG Australia Ltd [No 3] [2023] WASC 332 (S)
Kyabram Property Investments Pty Limited v Murray [2005] NSWCA 87
Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534
Lewandowski v Lovell (Unreported, FCt Sct of WA, Library No. 960310, 14 June 1996)
Mak Industrial Water Solutions Pty Ltd v Doherty [No 3] [2023] WASC 313
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105
Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 13] [2016] WASC 403
Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16] [2017] WASC 340
Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 17] [2018] WASC 8
Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 18] [2018] WASC 307
Naidoo v Williamson [2008] WASCA 179
Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164
Oshlack v Richmond River Council (1998) 193 CLR 72
Rayner v Australia and New Zealand Banking Group Limited [2003] WASC 264
Re Adelphi Hotel (Brighton) Limited [1953] 2 All ER 498
Ridgepoint Corporation Pty Ltd v McCallum Donovan Sweeney (A Firm) [2011] WASC 167 (S)
Rumball & Ors v Mortimore [1999] WASC 66
Rumball & Ors v Mortimore [2000] WASC 126
Saraceni v Mentha [2013] WASC 95 (S)
Sino Iron Pty Ltd & Ors v Mineralogy Pty Ltd [2020] HCATrans 10
Sino Iron Pty Ltd v Mineralogy [No 2] [2017] WASCA 76 (S)
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80 (S)
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80; (2019) 55 WAR 89
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2021] WASC 170
Stambulich v Ekamper [No 4] [2008] WASCA 189
Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S)
Tzaneros Investments Pty Ltd v Walker Group Constructions Pty Ltd (No 4) [2018] NSWSC 431
Woolworths Ltd v Olson [2004] NSWSC 896
Table of Contents
A. Introduction
B. Summary
(1) Costs of the action
(2) Mineralogy's claim for indemnity costs
(3) Mineralogy's alternative claim for special costs
(4) CITIC Parties' claims for costs
(a) Where the Court expressly made no order as to costs
(b) Where the Court previously made orders in favour of the CITIC Parties
(c) Where the Court previously reserved costs
(d) Costs thrown away
(e) Special costs
C. The course of the proceedings
(1) Overview
(2) Final orders made by the primary judge
(3) Appeal to the Court of Appeal
(4) Special leave application to the High Court
(5) Communications between the parties as to costs
(a) Communications in 2019
(b) Communications in 2020
(c) Communications in 2021
(d) Communications in 2022
(e) Communications in 2023
D. The present costs applications
(1) The applications
(2) The materials relied upon by Mineralogy
(3) The materials relied upon by the CITIC Parties
(4) Leave granted for further submissions to be filed
(5) The plaintiff's proposed costs orders
(6) The defendants' proposed orders
E. Relevant principles as to costs
(1) General rules
(2) Indemnity costs
(a) Indemnity costs based on conduct
(b) Indemnity costs based on contract
(3)Special costs order under s 141(3) of the Uniform Law
(4) Relevance of delay
(a) Esther Investments v Markalinga Pty Ltd
(b) Lewandowski v Lovell
(c) Tzaneros Investments P/L v Walker Group Constructions P/L (No 4)
(d) Facek v Gargano
(e) Gippsreal Ltd v Kenny
(f) Stambulich v Ekamper [No 4]
(g) The CITIC Parties' submissions as to delay
(h) Mineralogy's submissions as to delay
(i) Conclusion in relation to delay
F. Disposition - the costs of the action and reserved costs
(1) Costs of the action
(2) Reserved costs
G. Disposition - Mineralogy's claim for indemnity costs based on the conduct of the CITIC Parties
(1) Merits of the claim for indemnity costs
(2) The length of the delay
(3) The explanation or cause of the delay
(4) The likely prejudice and the extent of any prejudice
(5) Other considerations
(6) Overall assessment
H. Disposition - Mineralogy's claim for indemnity costs based on an asserted contractual right
I. Disposition - Mineralogy's alternative claim for special costs
J. Disposition - the CITIC Parties' claims for costs
(1) Costs thrown away
(2) Special costs
K. Conclusion and orders
ATTACHMENT A Litigation time line post-judgment
ATTACHMENT B Schedule 1 to the Defendants' Minute of Proposed Orders
ATTACHMENT C Schedule 2 to the Defendants' Minute of Proposed Orders
ATTACHMENT D Schedule 3 to the Defendants' Minute of Proposed Orders
LUNDBERG J:
A. Introduction
These reasons relate to competing costs orders sought by the parties to this action.[1] The primary action, CIV 1808 of 2013, was on foot for approximately 4 years before it proceeded to a 10 day trial before his Honour Justice Kenneth Martin (as his Honour then was) in June 2017, and was the subject of a judgment published on 24 November 2017: Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16].[2] I will refer to his Honour as the primary judge throughout these reasons.
[1] Chamber summons filed by the plaintiff dated 23 August 2023 (CS) (Folio 35); and defendants' minute of proposed orders dated 10 November 2023 (Folio 41). Both sets of parties amended their orders during the course of the application.
[2] Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16] [2017] WASC 340.
The action, which was plainly complex in nature involving substantial sums of money, was brought by the plaintiff (Mineralogy) against the defendants (the CITIC Parties) as to the proper construction and application of agreements between Mineralogy and the first and second defendants described as the Mining Right and Site Lease Agreements or MRSLAs. The pleadings in the action were lengthy and were amended on numerous occasions. At its core, the parties were in dispute as to the payment by the defendants to the plaintiff of a component of the royalty payable under the MRSLAs, known as Royalty Component B or RCB. I will refer to the action as the RCB Proceeding, for convenience.
Mineralogy was wholly successful at trial and the primary judge granted monetary relief in favour of Mineralogy in the order of hundreds of millions of dollars. The CITIC Parties' counterclaim was dismissed. Final orders were made by the primary judge on 18 December 2017.[3]
[3] I will refer throughout to CIV 1808 of 2013 as the action. The related action, CIV 3024 of 2017, was commenced by Mineralogy to address an issue identified by the Court as to the claim for payments of the royalty after the commencement of the initial action. The majority of the folio references in these reasons are to the costs documents filed in CIV 3024 of 2017.
The primary judge did not make final orders as to the costs of the proceedings. Instead, at the behest of the parties, the Court ordered that all costs orders be held over and dealt with through a mediated process. In January 2022, the primary judge became aware of the parties' failure to hold any mediation to address the costs issues. His Honour remarked through his associate at that point, some 4 years after final orders had been made, that the 'sustained inertia' was surprising.[4] A mediation to deal with the costs issues was not ultimately held until May 2023.
[4] Affidavit of Mr Blaxill sworn 9 November 2023, Attachment CPB-13, pg 98.
The parties belatedly, and following the retirement of the primary judge in June 2023, now seek a determination as to their respective costs entitlements, including orders as to indemnity costs and special costs, and as to the costs of particular interlocutory steps along the litigation journey.[5] By reason of this delay, the burden of assessing the costs of the action and of the trial now falls to me.
[5] I have proceeded on the basis that the claims made by Mineralogy in CIV 1424 of 2021 do not preclude the Court determining the costs issues in CIV 1808 of 2023. Any concern as to double recovery of those costs can be addressed by the Court at a future stage.
B. Summary
The delay between the primary judge's disposition of the case on 18 December 2017 and the approach made to the primary judge in January 2022 was around 4 years. A delay of that magnitude is extraordinary and excessive in the extreme.
The overall delay until the application for costs was filed in August 2023 is approximately 5 years and 8 months. I doubt whether the commercial litigation records of this country have seen many similar lapses in time between the publication of a court's reasons and the ultimate contest on costs. I sincerely hope I am right.
It must therefore be said at the outset that it is far from an attractive or efficient proposition to have a judicial officer other than the trial judge, on a matter of this magnitude and complexity, hear and determine the parties' competing arguments as to costs, especially after such an inordinate delay. There was ample time for the parties to seek costs orders prior to the filing of the present applications. Both sets of parties are well‑resourced and represented by experienced solicitors and counsel.
Costs issues on such matters should properly be resolved in close proximity to the trial, while the matter is fresh in the mind of the trial judge and the Court is better able to undertake a reliable assessment of the work involved, having regard to the findings made at trial. As will be explained below, the inordinate delay in seeking costs orders in this action, on the part of both the plaintiff and the defendants, is relevant to the exercise of the Court's discretion to award costs and, in all of the circumstances, is a highly influential factor in the outcomes I have reached.
In my respectful view, simply allowing the parties to any litigation, much less large-scale commercial litigation such as the present action, to decide for themselves when they will choose to run their costs arguments is counter to the goal and objects in O 1 r 4A and r 4B of the Rules of the Supreme Court 1971 (WA) (RSC).
For the reasons which follow, in the exercise of the discretion in all the circumstances, I will make the following orders:
(1) Costs of the action
As to the costs of the action, given that Mineralogy was wholly successful at trial, the proper order is that the costs should follow the event.[6] There is no reason to depart from such an order and, indeed, the CITIC Parties accept that such an order should be made.[7]
[6] Plaintiff's submissions dated 13 October 2023 (PS1) [2] - [4] (Folio 39).
[7] Defendants' submissions dated 10 November 2023 (DS1) [5] and [41] (Folio 42).
I will therefore make an order that the CITIC Parties pay Mineralogy's costs of the action, including reserved costs, to be assessed if not agreed. I have addressed this issue under Heading F below.
(2) Mineralogy's claim for indemnity costs
Mineralogy seeks an order that the CITIC Parties pay the costs of the action on an indemnity basis.[8] That is, indemnity costs of the whole of the proceedings. That order is sought on the basis that the CITIC Parties' defence was hopeless, and also on the basis of an asserted contractual entitlement to such costs.
[8] CS [1] (Folio 35); Plaintiff's amended minute of proposed order dated 1 December 2023 [1] (Folio 45).
In the exercise of the Court's discretion, I decline to make an order on the first basis. The second basis, being the contractual basis, is not engaged as a matter of proper construction but in any event I would decline to make the order sought on this basis by reason of the discretionary considerations to which I have referred. I have addressed this issue under Headings G and H below.
(3) Mineralogy's alternative claim for special costs
In the alternative, Mineralogy seeks an order that the CITIC Parties pay the costs of the action without regard to the limits imposed under the various costs scales, pursuant to s 141(3) of the Legal Profession Uniform Law Application Act 2022 (WA) (Uniform Law).[9] That is, special costs orders are sought.
[9] Plaintiff's amended minute of proposed order dated 1 December 2023 [2] (Folio 45); PS1 [132]. The Uniform Law applies to applications for special costs made after 1 July 2022, being the date on which s 141 came into force and the Legal Profession Act 2008 (WA) was repealed.
In the exercise of the Court's discretion, other than one exception, I decline to make such orders. I have addressed this issue under Heading I below. The exception is in relation to the allowance for the costs of senior counsel including for attendance at all pre‑trial hearings and the trial, being an issue in respect of which the parties are in complete concurrence and which I am able to say, even after such a lengthy delay in the proceeding, is an appropriate order to make. I cannot make any assessment as to the reasonableness of extending this order to junior counsel, however. All other matters should appropriately be left to the taxing officer.
(4) CITIC Parties' claims for costs
(a) Where the Court expressly made no order as to costs
As to those steps in the action in respect of which the Court expressly made no order as to costs, the effect of those orders is that the parties ought bear their own costs associated with those hearings and those issues. The CITIC Parties propose that this be made clear in the orders to be made by the Court.[10]
[10] Defendants' amended minute of proposed orders dated 15 February 2024 [1(a)] and Schedule 1 (Folio 48); DS1 [47] - [48].
There is simply no warrant to make such an order.[11] The efficacy of any extant costs orders are preserved by the operation of the Rules.
(b) Where the Court previously made orders in favour of the CITIC Parties
[11] I accept the plaintiff's submission in this regard: PS2 [60].
As to those steps in the action in respect of which the Court made orders in favour of the CITIC Parties, the effect of those orders is that Mineralogy will be required to pay the CITIC Parties' costs in that regard and, of course, be obliged to bear its own legal costs of the work involved. Again, the CITIC Parties propose that this be made clear in the orders to be made by the Court.[12]
[12] Defendants' amended minute of proposed orders dated 15 February 2024 [1(b)], [2(a)] and Schedule 2 (Folio 48); DS1 [49] - [50].
Again, there is no warrant to make such an order.[13] The efficacy of any extant costs orders are preserved by the operation of the Rules.
(c) Where the Court previously reserved costs
[13] I accept the plaintiff's submission in this regard: PS2 [62].
In respect of four particular steps in the action, the CITIC Parties contend that, although the costs were reserved and ordinarily would be awarded to Mineralogy as the successful party, the costs should instead be awarded in favour of the CITIC Parties.[14]
[14] Defendants' amended minute of proposed orders dated 15 February 2024 [1(b)] and [2(c)] and Schedule 3 (Folio 48); DS1 [51] - [64].
I do not consider that the CITIC Parties have demonstrated that the usual order concerning reserved costs (in Mineralogy's favour) is not appropriate in the circumstances. In any event, in the exercise of the Court's discretion, I decline to make such orders. I have addressed this issue under Heading F below.
(d) Costs thrown away
The CITIC Parties seek an order that the costs thrown away by reason of the applications by Mineralogy to amend its pleadings, and the amendments made thereto, be paid by Mineralogy.[15] Various amendments are identified by the CITIC Parties.[16]
[15] Defendants' amended minute of proposed orders dated 15 February 2024 [1(b)] and [2(b)] (Folio 48); DS1 [51] - [64].
[16] Defendants' amended minute of proposed orders dated 15 February 2024 refers at [2(b)] to the applications to amend and the amendments to Mineralogy's statement of claim in the Fourth Further Amended Statement of Claim dated 1 April 2016 and in the Fifth Further Amended Statement of Claim dated 25 January 2017, including the proposed amendments dated 13 December 2016, 21 December 2016 and 11 January 2017.
In the exercise of the Court's discretion, I decline to make such orders. I have addressed this issue under Heading J below.
(e) Special costs
The CITIC Parties seek special costs orders in respect of costs orders already made in their favour.[17]
[17] Defendants' amended minute of proposed orders dated 15 February 2024 [3] (Folio 48); DS1 [99] - [106].
In the exercise of the Court's discretion, I decline to make such orders, other than the allowance for the costs of senior counsel. I have addressed this issue under Heading J below.
C. The course of the proceedings
(1) Overview
This complex and lengthy action was initially commenced by Mineralogy in the Supreme Court of New South Wales on 18 March 2013 and was then transferred on 30 April 2013 to this Court under the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW).
The ultimate trial of the action principally concerned the meaning of a royalty clause which was common to the MRSLAs regarding the RCB payments. The action also addressed whether or not the parties' dispute concerning the non‑payment of the RCB amounts to Mineralogy could properly be referred to an expert for determination under cl 8.6 of the MRSLAs. No relief was sought by Mineralogy in respect of this issue, but relief was sought by the CITIC Parties in their counterclaim.[18]
[18] Defence to the Sixth Further Amended Statement of Claim and Sixth Further Amended Counterclaim dated 8 December 2017, prayers for relief H to K and AA to DD (Folio 554).
On 24 November 2017, the primary judge published lengthy reasons for judgment, which were wholly in favour of Mineralogy.[19] As explained below, the decision was the subject of an appeal to the Court of Appeal.[20] I have attached a diagram to these reasons as Attachment A, showing the broad timeline of events in the proceedings, post‑trial.
[19] Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16] [2017] WASC 340.
[20] Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80; (2019) 55 WAR 89 (Buss P, Murphy and Beech JJA) (Sino Iron Appeal Decision).
The background to the proceedings, and the primary conclusions of the trial judge, were conveniently summarised by the Court of Appeal in its reasons:[21]
[21] Sino Iron Pty Ltd v Mineralogy Pty Ltd [4] - [20].
[4]CITIC operated specialty steel manufacturing businesses in China prior to 2005/2006. Unlike some other larger non‑specialty Chinese steel enterprises, CITIC had not been able to obtain long-term supply contracts from major iron ore producers such as Rio Tinto or BHP. At that time, CITIC obtained its iron ore supplies from the spot market. In 2005, CITIC became aware of an iron ore supply opportunity from the north‑west of Western Australia involving the mining tenements held by Mineralogy. Negotiations commenced between CITIC and Mineralogy in early October 2005. By March 2006, the CITIC parties contemplated that any production of processed iron ore products from Western Australia would be sold to CITIC-related Chinese purchasers.
[5]On 21 March 2006, the parties entered the Agreements. The Agreements established a long-term relationship between Mineralogy and Sino, and Mineralogy and Korean. The relevant terms of the Agreements are set out later in these reasons. Taking the Agreement involving Sino as an example, in broad summary, the effect of the Agreement is that (1) Mineralogy, the holder of certain mining leases, grants Sino the right to take ore from the areas of the mining leases, (2) Sino agrees to produce certain iron ore products from the ore for sale or export, and (3) Sino agrees to pay Mineralogy a royalty comprising two separate components. The first component, Royalty A, is a fixed rate of A$0.30 (adjusted by CPI) per tonne of ore taken during the term of the Agreement. The second component, Royalty B, is based on an agreed formula, evidently designed to provide Mineralogy with a royalty relating to the notional export value of the ore taken.
[6]Broadly speaking, Royalty B operates with reference to three basic integers (1) product (effectively tonnages), (2) price, and (3) royalty rate. The royalty rate is specified. This appeal concerns, principally, the proper construction of the provisions in the Agreements relating to Royalty B and, in particular, aspects of those provisions in relation to the price integer.
[7]At the time the Agreements were entered and for many years prior, there was in place a pricing system known in the iron ore market as the 'benchmark' system. There is no dispute that the formula for Royalty B could be calculated on the basis of export prices determined under the benchmark system.
[8]However, around April 2010, before any production commenced under the Agreements, the benchmark pricing system ceased to be used in the iron ore market. It was effectively replaced by a 'price index' system, under which various publishers of iron ore indices published their assessment of spot prices for iron ore in the international iron ore market. The CITIC parties contend that Royalty B ceased to be payable, on the proper construction of the royalty provisions, once the price index system replaced the benchmark pricing system.
…
[13]The benchmark system was effectively replaced in 2010 by the price index system. Price indices are an approximate measure of current market conditions. Iron ore index prices are derived from iron ore spot-market prices assessed by index providers. These reflect the value that market participants place on a given quantity of iron ore of a particular specification, at a specific point in time and at a specific location. Iron ore index prices are directly derived from iron ore spot-market prices.
[14]In the primary proceedings, the CITIC parties contended that Royalty B, and in particular the pricing integer, could not be calculated once the benchmark system had been effectively replaced by the price index system. The CITIC parties contended, in effect, that the language employed by the parties in the formula for Royalty B denoted, exclusively and exhaustively, prices under the benchmark pricing system and, once that had been replaced by the index pricing system, the Royalty B formula was incapable of any further application. The CITIC parties contended, in effect, that, on the proper construction of the Agreement, Royalty B could not apply using pricing information under the price index system.
[15]In the primary proceedings, the CITIC parties contended that as a result:
1.Royalty B should be severed from the Agreement, leaving Royalty A (only) payable by Sino.
2.Alternatively, there is an implied term of the Agreement to the effect that Sino is to pay one, single, 'fair and reasonable' royalty - on the basis that as Royalty B is incapable of operation, the whole express royalty obligation, including Royalty A, has no continued application.
3.On this alternative case, a 'fair and reasonable' royalty would be based on profit share, and Mineralogy would not be entitled to any royalty at all in the period the subject of the dispute.
[16]In general terms, the judge found that the Royalty B formula, on the proper construction of the Agreement, was capable of application to the price index system. His Honour found that a certain phrase in relation to Royalty B, which his Honour referred to as the 'market reference price phrase' or 'MRP phrase', and to which we will refer as the 'disputed phrase', conveyed the meaning of 'market reference price' or 'world market price', or 'market price', and that the price index system, no less than the benchmark price system, provides a market reference price or world market price, or market price. The disputed phrase comprises the words 'the prevailing published annual FOB price'. The disputed phrase is followed by the words '(expressed in US dollars per DMTU)'. The disputed phrase appears in the definitions of 'PP' (Pellet Price) and 'CP' (Concentrate Price) in the Royalty B formula.
[17]The judge also found that as a secondary and alternative construction to the one referred to in [16] above, the parties had entrusted the construction of the relevant provisions of Royalty B to determination by an expert.
[18]The judge also found that the obligation to pay Royalty B was not severable.
[19]Production first commenced in late 2013. At the time of the primary decision, no Royalty B had been paid following the commencement of production.
[20]On the CITIC parties' case in this appeal, the formula in cl 8.2 effectively became unworkable some three and a half years before production commenced, when the benchmark system was replaced by the price index pricing system, but the Agreement is saved by an implied term to pay a fair and reasonable royalty, without which the Agreement as a whole would be unworkable.
(2) Final orders made by the primary judge
The primary judge did not make any costs orders upon the publication of his reasons in November 2017 but rather, at the behest of the parties, ordered that all costs orders be held over and dealt with through a mediated process.[22]
[22] Orders made on 18 December 2017 (Folio 20).
The orders made by the primary judge on 18 December 2017, titled 'Final Judgment and Orders after Trial', were as follows:
1.There be judgment entered for the plaintiff against the defendants respectively as follows:
(a)as against the first defendant US$82,409,227.91 (including US$7,702,492.91 interest to this day pursuant to section 32 of the Supreme Court Act 1935 (WA));
(b)as against the second defendant US$82,409,227.91 (including US$7,702,492.91 interest to this day pursuant to section 32 of the Supreme Court Act 1935 (WA)); and
(c)as against the third defendant US$153,859,032.00 (including US$4,445,562.00 for interest to this day pursuant to section 32 of the Supreme Court Act 1935 (WA)).
2.The obligations of the defendants' to pay the amounts in order 1 above to the plaintiff is suspended until the close of business (WST) on 15 January 2018.
3.All questions as to consequential relief are reserved.
4.All questions of costs as between the parties are to be dealt with by mediation, orders and directions to these orders for judgment for which process are scheduled.
Schedule of mediation orders regarding costs
5.Subject to paragraph 8 below, all issues as to the appropriate orders in respect of the costs of the proceedings (the Costs Orders Issues) be referred to mediation pursuant to Pt VI of the Supreme Court Act 1935 (WA) to occur on a date to be fixed after 29 March 2018.
6.Without limiting the power of the Court to make any order for costs of the action or the mediation, the plaintiff pay 50% and the defendant pay 50% of the fee prescribed within 2 business days of the matter being set down for mediation.
7.By 4:00pm, 35 days prior to the mediation date, the parties file and serve minutes of proposed orders concerning Costs Orders Issues.
8.By 4:00pm, 28 days prior to the mediation the defendants file and serve any affidavits and an outline of submissions in respect of the Costs Orders Issues.
9.By 4:00pm, 14 days prior to mediation the defendants file and serve any affidavits and an outline of submissions in respect of the Costs Orders Issues.
10.Within 7 days after the conclusion of a mediation conference the plaintiff shall inform the Case Manager's Associate that the conference has occurred as directed and the outcome of the conference.
11.To the extent not agreed at mediation, the parties shall have liberty to apply in respect of all costs issues, including but not limited to any special costs orders or indemnity costs orders.
12.All questions as to the quantum and taxation of costs in relation to any costs orders made be deferred until a date to be fixed.
The mediation process ordered by the primary judge was undoubtedly a sensible process. It appears to have been a proposal which emanated from the defendants' camp, been accepted by the plaintiffs,[23] and then endorsed by the primary judge. It allowed the parties, at least in theory, the opportunity to resolve the complex costs issues in a commercial manner, prior to any judicial assessment of the issues.
[23] ts 2553 (18 December 2017).
The primary judge observed as follows at the hearing on 18 December 2017:[24]
And I indicate in that respect that the schedule as regards how costs are to be dealt with will be in terms of orders 1 through 8 under the defendants' minute of proposed mediation orders, which I won't articulate, but I will identify by way of initial dating, 18 December 2017.
Effectively, those mediation orders provide for an exchange of materials between the parties as regards costs issues in an attempt to resolve them at mediation. They are complex, reflecting the history of this matter.
There is, of course, the ability to return to the court if that mediation about costs and quantum is not successful, and that's the eighth of the eight orders, which I will now make and schedule to those orders for judgment.
[24] ts 2567 (18 December 2017).
For completeness, it should be noted that the primary judge delivered formal reasons concerning the terms of the judgment and the orders for consolidation which were sought post‑trial: Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 17].[25] Further, there was an additional interlocutory step in the action, post‑trial, involving an application by the defendants to enforce undertakings as to damages given by Mineralogy in support of its interlocutory injunctions. That application was heard by Quinlan CJ on 11 September 2018 and dismissed on 8 October 2018: Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 18].[26]
(3) Appeal to the Court of Appeal
[25] Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 17] [2018] WASC 8.
[26] Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 18] [2018] WASC 307.
The decision of the primary judge was the subject of an appeal to the Court of Appeal, which was determined on 21 May 2019.[27] The appeal was dismissed. The costs position at trial was not disturbed by any orders made by the Court of Appeal.
[27] Sino Iron Appeal Decision (CACV 5 of 2018, CACV 6 of 2018 and CACV 9 of 2018).
The Court of Appeal promptly dealt with the costs orders to be made consequent on the appeal, including special costs, as can be seen in Sino Iron Pty Ltd v Mineralogy Pty Ltd.[28]
(4) Special leave application to the High Court
[28] Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80 (S), published on 28 June 2019.
The proceeding was then the subject of an application for special leave to the High Court of Australia, which was refused on 14 February 2020.[29]
(5) Communications between the parties as to costs
[29] Sino Iron Pty Ltd & Ors v Mineralogy Pty Ltd[2020] HCATrans 10 (Kiefel CJ, Gageler and Edelman JJ).
Following the delivery of reasons by the Court of Appeal, there were numerous written communications between the parties on the issue of costs. Those communications continued between the parties after special leave was refused by the High Court.
The following summary of those communications is drawn from the reply submissions filed by Mineralogy,[30] which are themselves drawn from the affidavit of Mr Mirza sworn 1 December 2023. The communications are also found in the affidavit sworn by Mr Blaxill on 9 November 2023.
(a) Communications in 2019
[30] PS2.
On 17 June 2019, Mineralogy's solicitor sought to confer with the CITIC Parties' solicitors as to mediation. The response from the CITIC Parties' solicitors on 24 June 2019 was that, among other things, the CITIC Parties did not consider it sensible to mediate at that time given the costs orders were complex and span many years, the complexity was exacerbated by their entitlement to costs thrown away, and they had not given detailed consideration to the relevant costs orders given the appeals on foot. With respect, the complexity justified a prompt consideration of the issues, not a delay.
On 22 August 2019, Mineralogy's solicitor again sought to confer with the CITIC Parties' solicitors.
On 23 August 2019, the CITIC Parties' solicitors informed Mineralogy that they considered it 'premature and a potential waste of Court resources for the parties to mediate while their (unsuccessful) application for special leave had not been determined. The CITIC Parties indicated they considered that 'to mediate at this time may result in the parties incurring unnecessary legal costs' and stated they would show their letter to the Court if Mineralogy applied in respect of costs.
(b) Communications in 2020
On 3 April 2020, after special leave was refused, Mineralogy sought to confer with the CITIC Parties' solicitors and made a without prejudice offer to resolve the question of costs.
On 16 April 2020, the CITIC Parties' solicitors rejected the offer.
On 20 April 2020, Mineralogy made a further without prejudice offer and noted that if the offer was not accepted, it would proceed to mediation under the orders made by the primary judge.
On 4 May 2020, the CITIC Parties' solicitors rejected Mineralogy's offer and stated that if Mineralogy proceeded to mediation without providing sufficient information to assess its without prejudice offer, they would show their correspondence to the Court in relation to the question of costs.
On 5 May 2020, Mineralogy indicated its position was that mediation should occur between 3 and 14 August 2020 and requested that the CITIC Parties nominate their preferred mediator and venue for mediation.
On 12 May 2020, rather than provide their preferred mediator or venue for mediation, the CITIC Parties' solicitors instead stated that in order to avoid incurring the time and costs associated with a mediation, they considered the parties should continue to engage in without prejudice negotiations. To facilitate those negotiations, the CITIC Parties' solicitors required Mineralogy to provide the information which had been requested.
On 13 May 2020, Mineralogy made a further without prejudice offer to settle questions of costs of the proceedings. Then, on 14 May 2020, Mineralogy made a further offer in the same terms, altering the time for acceptance.
On 20 May 2020, the CITIC Parties' solicitors rejected the offer and repeated the request for further information from Mineralogy in order to consider the costs position.
On 25 August 2020, Mineralogy proposed in writing to the CITIC Parties' solicitors that mediation take place between 23 November 2020 and 4 December 2020 and requested that the CITIC Parties nominate their preferred mediator and venue for mediation.
On 3 September 2020, the CITIC Parties stated that they remained of the view that the parties should be able to 'commercially negotiate the costs of the Proceedings'. The CITIC Parties outlined its interpretation of the primary judge's orders concerning mediation. The letter indicated that if Mineralogy agreed with the suggested approach, they would let Mineralogy know their available dates and view as to suggested length of the mediation. The CITIC Parties further stated they considered a Registrar would be best placed to serve as mediator.
On 10 September 2020, Mineralogy indicated it agreed with the CITIC Parties' interpretation of the orders and sought the available dates and length of mediation. Mineralogy appeared to accept that a Registrar would be suitable as a mediator.
On 25 September 2020, the CITIC Parties' solicitors indicated they considered one day would be sufficient for the mediation but they and their counsel were not available until after March 2021.
On 7 October 2020, Mineralogy took issue with the mediation being delayed until after March 2021, noting it was 'wholly unacceptable' to delay the mediation any further. With respect, I entirely agree. Mineralogy indicated the mediation could be conducted between 21 October 2020 and 30 October 2020. Mineralogy inquired whether the CITIC Parties were amenable to that proposal.
On 21 October 2020, the CITIC Parties' solicitors wrote to Mineralogy and did not agree to a mediation between 21 and 30 October 2020, and instead proposed a one‑day mediation in March 2021. The CITIC Parties stated that no basis for any urgency in dealing with these matters had been identified by Mineralogy. The CITIC Parties reserved their right to bring their letter to the attention of the Court if Mineralogy applied to the Court to seek costs instead of mediating.
(c) Communications in 2021
There is then a 12‑month gap in the communications. This lengthy delay is not explained.
On 18 October 2021, by letter, Mineralogy sought the CITIC Parties' availability for a mediation.
On 20 October 2021, the CITIC Parties' solicitors wrote to Mineralogy and sought an explanation as to the basis for seeking to proceeding with a costs mediation, when Mineralogy had commenced other proceedings in this Court by which it sought to recover, among other things, costs for the RCB Proceeding. I refer in this regard to CIV 1424 of 2021, which was commenced by Mineralogy on 21 May 2021.
On 28 October 2021, Mineralogy responded and stated that it was not precluded from pursuing the costs mediation in the RCB Proceeding by the commencement of those other proceedings. Mineralogy again sought the CITIC Parties dates for mediation.
On 2 November 2021, the CITIC Parties' solicitors responded and again made reference to the new proceedings, CIV 1424 of 2021, in which Mineralogy was seeking costs of the RCB Proceeding. The CITIC Parties' solicitors indicated they would consider their position once an amended statement of claim was filed by Mineralogy in CIV 1424 of 2021. The CITIC Parties' solicitors also stated that attending a directions hearing in the RCB Proceeding 'would be a waste of both the parties' and the Court's time' and reserved their right to claim against Mineralogy the costs of attending any such hearing.
(d) Communications in 2022
On 17 January 2022, Mineralogy indicated that as the parties had been unable to mediate, it proposed filing a chamber summons for orders disposing of the question of costs. Mineralogy sought the CITIC Parties' consent to a joint communication to the Court seeking a directions hearing.
On 21 January 2022, the associate to the primary judge indicated the Court would not address Mineralogy's chamber summons for costs until after judgment was delivered in CIV 1915 of 2019, generally known as the 2017 MCP Proceeding, which had been listed for trial of some 10 weeks commencing in February 2022. The written communication from the primary judge's associate to the parties, sent on 21 January 2022 reads, in part, as follows:
As his Honour recalls, the order 4 reference to resolving costs issues by a mediation process was made at the parties consequential behest at the time i.e., it was not the court's idea. Nevertheless, it now presents that no mediation as to costs has yet been convened. The sustained inertia is surprising.
As you are no doubt aware, the same parties are currently preparing intensively for a 10 week civil trial commencing on 14 February 2022 in CIV 1915 of 2019. Dealing with that forthcoming trial will likely consume most of his Honour's available hearing time into the foreseeable future.
Since there looks to have been a time lag of over some four (4) years since the 18 December 2017 orders in CIV 1808 of 2013 and CIV 3024 of 2017 - such costs issues are clearly not a priority as between these parties.
His Honour therefore does not propose to list the chamber summons for a return date until after his reasons for decision are delivered upon the completion of the trial in CIV 1915 of 2019. You should write again at that time requesting a hearing date for the chamber summons.
In the meantime, the parties are obliged to confer and are welcome, of course, to agree to timetabling directions as between themselves by submitted consent orders. (emphasis added)
On 29 July 2022, Mineralogy indicated to the CITIC Parties' solicitors that it wished to proceed with a mediation in two weeks' time and inquired whether the CITIC Parties were amenable to the proposal.
On 9 August 2022, the CITIC Parties' solicitors responded and indicated they did not agree to a mediation in two weeks' time because the programming directions of the primary judge required particular time periods and also given that Mineralogy was claiming its costs of the RCB Proceeding in CIV 1424 of 2021. The CITIC Parties stated that the suggestion for a mediation to take place in two weeks' time was 'clearly unworkable'.
On 10 August 2022, Mineralogy responded that the mediation was independent of, and did not affect, the other proceedings. Mineralogy sought the dates the CITIC Parties were willing to set down for the costs mediation.
On 16 August 2022, the CITIC Parties reiterated their position that they were not prepared to engage in two parallel processes in relation to the costs of the proceedings and to do so 'would be a waste of the resources of the Court and the parties'.
On 22 August 2022, Mineralogy responded and disagreed with the contentions made by the CITIC Parties' solicitors and requested their soonest availability for mediation.
On 26 August 2022, the CITIC Parties' solicitors sought Mineralogy's minute of proposed orders for mediation in accordance with the orders of the primary judge so their solicitors could take instructions.
Between August 2022 and February 2023, the parties conferred regarding minutes of proposed orders and mediation dates.
(e) Communications in 2023
On 20 February 2023, Mineralogy wrote to the Court to request the listing of the mediation for 2 and 3 May 2023. The Court confirmed that listing on 28 February 2023 and the mediation was conducted on those dates.
There was therefore no formal attempt at mediation of the costs issues until May 2023, which was conducted by a Registrar of this Court. The matter was not settled at that mediation. The primary judge's aspiration that the costs issues might be resolved through mediation were, ultimately, not realised.
D. The present costs applications
(1) The applications
The plaintiff's application for costs orders was filed on 23 August 2023. The defendants did not file any formal responsive application, but instead filed a minute of proposed orders on 10 November 2023. These dates represent the first occasions on which either party formally sought costs orders from the Court, other than pursuing the matter through the mediation process as outlined above and the approach through correspondence to the Court in January 2022.
I heard argument on the costs issues over the course of two days, on 26 and 27 February 2024. I reserved my decision at the conclusion of the hearing. A great deal of material, in effect around 8 lever arch files of documentation, was provided to the Court for the purposes of the application. The material included copies of the pleadings in the action, the orders made in the action, the contractual instruments which were in evidence at trial, and numerous authorities. This is not intended as a criticism of the parties. The material was well compiled. It simply emphasises the volume and complexity of the competing orders sought by the parties and the contentions raised on this application.
(2) The materials relied upon by Mineralogy
The plaintiff filed written submissions in support of its proposed orders and submissions in reply,[31] as well as an outline of oral submissions in chief and in reply.[32]
[31] PS1 and Plaintiff's reply submission dated 1 December 2023 (PS2) (Folio 46).
[32] Plaintiff's outline of oral submissions dated 26 February 2024 (Folio 52) (PS3) and Plaintiff's outline of oral submissions in reply dated 27 February 2024 (PS4) (not filed).
The plaintiff's application for costs was supported by affidavits sworn by one of its solicitors, Mr Hamid Kamal Mirza, dated 23 August 2023 and 1 December 2023.[33]
(3) The materials relied upon by the CITIC Parties
[33] Folios 36 and 47.
The CITIC Parties filed written submissions in opposition to the application brought by the plaintiff, and in support of its own costs orders.[34] The CITIC Parties also prepared a court hearing book, which ran to five volumes, together with a detailed aide memoire titled 'Evolution of Minimum Production Royalty (MPR) Claims throughout the Royalty Component B Proceedings'.[35]
[34] DS1.
[35] Folio 50. See email from Allens to the Court dated 21 February 2024.
The defendants' position was supported by an affidavit sworn by one of its solicitors, Charles Philip Blaxill, dated 9 November 2023.[36]
(4) Leave granted for further submissions to be filed
[36] Folio 40.
Following the hearing, I gave leave for the parties to file further submissions in relation to various authorities I had identified in an email to the parties on 1 March 2024.[37] The email to the parties from my associate reads as follows:
[37] Orders made on 8 March 2024 (Folio 54).
Following the hearing, his Honour has identified further authorities of potential relevance to the delay issue raised by the parties in their respective submissions. His Honour has not had the opportunity as yet to form any views in relation to these further authorities, but considers it appropriate to allow the parties an opportunity to provide further submissions should they so wish.
The authorities are:
1.Gippsreal Ltd v Kenny [2016] VSCA 319 (Whelan, Priest and Kyrou JJA).
2.Facek v Gargano [2019] VSC 31 (McMillan J).
3.Tzaneros Investments Pty Ltd v Walker Group Constructions Pty Ltd (No 4) [2018] NSWSC 431 (Ball J).
4.Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400 (Malcolm CJ).
5.Lewandowski v Lovell, unreported, FCt SCt of WA, Library No 960310, 14 June 1996.
His Honour will make a direction that any party may file and serve further written submissions on these authorities within 10 days of today, being 4.00pm on Monday, 11 March 2024, of no more than 5 pages in length. If, by reason of the unavailability of senior counsel, some additional time is needed, please let me know by close of business today and his Honour is prepared to extend the time accordingly.
Further submissions were then filed by the plaintiff[38] and by the defendants.[39]
(5) The plaintiff's proposed costs orders
[38] Plaintiff's outline of submissions on delay dated 16 March 2024 (PS5) (Folio 56).
[39] Defendants' supplementary submissions dated 15 March 2024 (DS2) (Folio 55).
The plaintiff initially sought orders in the following terms in its chamber summons:[40]
The defendants pay all the costs incurred by the plaintiff in the proceeding except in so far as they are of an unreasonable amount or have been unreasonably incurred, so that, subject to those exceptions, the plaintiff is completely indemnified by the defendants for its costs, including the plaintiff's costs of this chamber summons.
[40] CS [1] (Folio 35) and Plaintiff's minute of proposed orders dated 23 August 2023 [1] (Folio 34).
Subsequently, the plaintiff's position was expanded to include an alternative order that special costs orders be made pursuant to s 141(3) of the Uniform Law, as follows:[41]
[41] Plaintiff's amended minute of proposed orders dated 1 December 2023 (Folio 45).
[2]In the alternative to paragraph 1 above, pursuant to section 141(3) of the Legal Profession Uniform Law Application Act 2022 (WA), the plaintiff's costs are to be taxed (if not agreed):
(a) without regard to the limits imposed by the maximum allowable hourly and daily rates for Senior Counsel, Junior Counsel and Senior Practitioners fixed under Table A of the [various costs scales];[42]
[42] The plaintiff's minute identified the Legal Profession (Supreme and District Courts) (Contentious Business) Determinations made in 2012, 2014, 2016, 2018, 2020 and 2022.
(b) without regard to the limits imposed by the maximum allowances for time, number of legal practitioners and total costs by the classification of the experience of the fee earner for all relevant items in Table B of the Scales;
(c) to allow costs in relation to the scale category item 'Other work' in the Scales despite Mineralogy not being awarded an indemnity costs award;
(d) to allow costs claimed in relation to travel (including flights and accommodation for interstate practitioners), in the item 'Disbursements' under the Scales;
and that any taxation be performed on the basis that an allowance be made for the costs of Senior Counsel and two Junior Counsel including for attendance at all pretrial hearings and the trial.
(6) The defendants' proposed orders
The defendants filed an amended minute of proposed orders on 15 February 2024 which sought orders in the following terms:[43]
[43] Folio 48.
1.The Defendants (CITIC Parties) pay the Plaintiff's (Mineralogy) costs of the proceedings, including reserved costs save as otherwise specified below, to be taxed if not agreed, except for Mineralogy's costs:
(a)in respect of the hearings or issues where the Court expressly made no order as to costs, as set out in Schedule 1; and
(b)of and incidental to the matters the subject of Order 2 below.
2.Mineralogy pay the CITIC Parties' costs:
(a)pursuant to the costs orders already made in favour of the CITIC Parties, as set out in Schedule 2;
(b)of and occasioned by, and thrown away as a result of, the applications to amend and the amendments to its statement of claim in the Fourth Further Amended Statement of Claim dated 1 April 2016 and in the Fifth Further Amended Statement of Claim dated 25 January 2017, including the proposed amendments dated 13 December 2016, 21 December 2016 and 11 January 2017; and
(c)of or incidental to the matters set out in Schedule 3, to be taxed if not agreed.
3.Special costs orders be made under section 141(3) of the Legal Profession Uniform Law Application Act 2022 (WA) so that Mineralogy's costs and the CITIC Parties' costs (other than those the subject of the orders made in Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 4] [2014] WASC 282 and Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 11] [2016] WASC 235 (S)):
(a)will be taxed upon the basis of allowing up to double the level of the scale limits imposed by the maximum allowances for time for all relevant items in Table A of the [various costs scales];[44]
(b)will be taxed by reference to a ceiling of double the level of the scale limits imposed by the maximum allowable hourly and daily rates for Senior Counsel, Junior Counsel and Senior Practitioners fixed under the Scales;
(c)will allow costs under the scale category item 'Other work' in the Scales (and with the doubling of the level of the limits imposed by the maximum hourly rates for Senior Counsel, Junior Counsel, Senior Practitioners for the item 'Other work' in the Scales); and
(d)will include amounts claimed in relation to travel, to be allowed in the item 'Disbursements' under the Scales;
and any taxation be performed on the basis that an allowance be made for the costs of Senior Counsel and two Junior Counsel including for attendance at all pre-trial hearings and the trial.
[44] As with the plaintiff's minute, the defendants' minute identified the Legal Profession (Supreme and District Courts) (Contentious Business) Determinations made in 2012, 2014, 2016, 2018, 2020 and 2022.
The defendants attached three schedules to their amended minute, as explained below.
The first schedule, Schedule 1, is headed 'No order as to costs expressly made previously'. This schedule identifies three circumstances in which the Court made no order as to costs.[45] I have extracted Schedule 1 in Attachment B to these reasons.
[45] Being events on 4 July 2013, 12 August 2014 and 18 December 2017 (Folios 24, 142 and 575 respectively).
The second schedule, Schedule 2, is headed 'Costs orders previously made in favour of the CITIC Parties'. This schedule identifies ten circumstances in which costs were made in favour of the CITIC Parties.[46] I have extracted Schedule 2 in Attachment C to these reasons.
[46] Being events on 30 April 2013, 14 May 2013, 12 February 2014, 20 March 2014, 12 August 2014, 20 January 2015, 13 January 2016, 13 May 2016, 9 August 2016, and 19 December 2017 (Folios 10, N/A, 103, 112, 142, 192, 296, 328, 360 and 578 respectively).
The third schedule, Schedule 3, is headed 'Costs previously reserved and now ordered in favour of CITIC Parties'. This schedule identifies four circumstances in which costs were reserved.[47] I have extracted Schedule 3 in Attachment D to these reasons.
[47] Being events on 7 October 2013, 31 October 2013, 28 May 2015 and 27 January 2017 (Folios 53, 69, 251 and 447 respectively).
E. Relevant principles as to costs
(1) General rules
Costs are creatures of statute and are not awarded under the common law.[48]
[48] Oshlack v Richmond River Council (1998) 193 CLR 72 [134] (Kirby J) (Oshlack); Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; (2019) 269 CLR 333 [33] (Kiefel CJ, Bell, Keane and Gordon JJ) [59] (Gageler J) (Pentelow); Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 [12] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ) (Sangare).
The Court has a wide discretion to award costs, pursuant to the power in s 37 of the Supreme Court Act 1935 (WA) which relevantly provides as follows:
Subject to the provisions of this Act and to the rules of court and to the express provisions of… any other Act, the costs of and incidental to all proceedings in the Supreme Court, including the administration of estates and trusts, shall be in the discretion of the Court or judge, and the Court or judge shall have full power to determine by whom or out of what estate, fund, or property, and to what extent such costs are to be paid.
Costs are awarded by way of indemnity. That is, to provide the successful party with a measure of indemnity against the expense of professional legal costs actually incurred in the litigation.[49]
[49] Pentelow [33] (Kiefel CJ, Bell, Keane and Gordon JJ); [60] (Gageler J).
The discretion regarding costs has been described as 'absolute, unconfined or unfettered although a discretion that must be exercised judicially, not arbitrarily or capriciously, or on grounds unconnected with the litigation'.[50] The discretion is to be exercised such that the legislative intention is not frustrated.[51]
[50] Frigger v Lean [2012] WASCA 66 [53] (Allanson J, Newnes and Murphy JJA); Naidoo v Williamson [2008] WASCA 179 [39] (Steytler P).
[51] Oshlack [134] (Kirby J).
Several general rules as to costs are described in O 66 r 1 RSC, which relevantly provides as follows:
(1)Subject to the express provisions of any statute and of these rules the costs of and incidental to all proceedings including the administration of estates and trusts shall be in the discretion of the Court but, without limiting the general discretion conferred on the Court by the Act, and subject to this Order, the Court will generally order that the successful party to any action or matter recover his costs.
(2)If the Court is of opinion that the conduct of a party either before or after the commencement of the litigation or that a claim by a party for an unreasonably excessive amount has resulted in costs being unnecessarily or unreasonably incurred it may deprive that party of costs wholly or in part, and may further order him to pay the costs of an unsuccessful party either wholly or in part.
(3)Where a party though generally successful in an action has, by the introduction of some issue or issues on which he has failed, increased the costs the Court may order such party to pay the costs of such issue or issues.
The first rule, in rule 1(1), states that 'the Court will generally order that the successful party to any action or matter recover his costs', which is subject to any express provisions in any statute or in the Rules, and of course does not limit the Court's general discretion. This is typically the starting point for most analyses of costs outcomes.[52] The general principle is that a successful party is entitled to recover its costs, which principle is grounded in reasons of fairness and policy.[53]
[52] Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388 [49] (Murphy, Mitchell and Pritchard JJA) (Strzelecki Holdings).
[53] Oshlack [67] (McHugh J); Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S) [51] (Flotilla).
However, the Court has often emphasised that it is 'unwise to seek to lay down hard and fast rules in considering the application of a court's general discretion for costs orders'.[54]
[54] For example, Ridgepoint Corporation Pty Ltd v McCallum Donovan Sweeney (A Firm) [2011] WASC 167 (S) [10] (Kenneth Martin J) (Ridgepoint Corporation).
The rationale for the general rule is that where a party has unjustifiably brought another party before the Court, that party should be liable to compensate the other in costs. It is therefore incumbent on an unsuccessful party to satisfy the Court that there are good reasons it should not pay the successful party's costs.[55]
[55] Strzelecki Holdings [50] - [52] (Murphy, Mitchell and Pritchard JJA).
Ultimately, the costs discretion must be exercised to achieve what is fair and just between the parties according to the circumstances of the particular case, recognising that costs orders serve a compensatory function, not a punitive one.[56]
[56] Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, 543 (Mason CJ), 563 (Toohey J) and 567 (McHugh J) (Latoudis).
The rule that costs follow the event will typically mean that the party who on the whole succeeds in the action will obtain the general costs of the action. However, as is apparent from O 66 r 1(3) RSC, the event is not limited to the final outcome of the proceedings and can include the fate of individual issues litigated in the course of the proceedings. The Court may also depart from the general rule that costs follow the event and modify a costs order to take into account matters such as any unreasonable conduct of a generally successful party, as appears from O 66 r 1(2) RSC.
The central and overriding principle in assessing costs is that of doing substantial justice to the parties in each particular case, there being 'no better test than the test of what is fair and just between the parties'.[57]
[57] Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 [5] as cited in G E Dal Pont, Law of Costs (4th ed, 2018, LexisNexis Butterworths) (Dal Pont) at [6.15].
In approaching the task of achieving substantial justice on costs issues, an evaluation as to the costs outcome in a particular matter is not necessarily arithmetic in character.[58] It need not necessarily descend to a tabulation of wins and losses during the course of the application and the hearing. It need not involve an exercise of counting the pages of the transcript, the submissions or the reasons which are devoted to particular issues.
[58] Almona Pty Ltd v Parklea Corporation Pty Ltd (No 4) [2020] NSWSC 553 [118] (Robb J) (Almona).
It is more often a process appropriately undertaken as a matter of overall impression, involving a holistic assessment of the various issues involved, the significance of the issues, the time consumed by those issues, and the degree of intellectual engagement required by the issues.[59]
[59] Saraceni v Mentha [2013] WASC 95 (S) [9]; Chen v Chan (No 2) [2009] VSCA 233 [10(5)].
It is not usually appropriate, and it is often not possible, for the court to 'engage in a minute analysis of the evidence bearing upon issues for which particular parties have succeeded and failed'.[60]
(2) Indemnity costs
[60] Almona [120] (Robb J).
An award of indemnity costs is a departure from the usual order that costs be awarded on a party and party basis. The categories in which indemnity costs may be awarded are not rigid or closed. Indemnity costs are only awarded in exceptional circumstances.[61] The plaintiff accepts this is the test it must meet.[62]
[61] Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) [7] (Pullin JA and Kenneth Martin J).
[62] ts 5 (26 February 2024).
If costs are awarded on an indemnity basis, then the costs will be payable unless the opposing party can show they have been unreasonably incurred or are of an unreasonable amount.
(a) Indemnity costs based on conduct
One category in which such an award is appropriate is where the action 'has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success'.[63] In cases such as that, the action 'must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established laws'.[64]
[63] Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, 401 (Woodward J) (Fountain Selected Meats).
[64] Fountain Selected Meats (401) (Woodward J).
The following passages from Newnes JA's decision in Civil Properties Pty Ltd v Miluc Pty Ltd[65] provide a useful summary of the principles:
[82]Ordinarily an indemnity costs order is appropriate only where the unsuccessful party has been involved in some unreasonable conduct in relation to the proceedings, such as where the institution or continuation of the proceeding was plainly unreasonable or the proceeding was issued or maintained for an ulterior or collateral purpose: see Rosniak v Government Insurance Office (1997) 41 NSWLR 608, 616; PCRZ Investments Pty Ltd v National Golf Holdings Ltd [2002] VSCA 24 [36]. An order for indemnity costs reflects the court's disapproval of the conduct of the unsuccessful party: Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [25].
[83] If a party brings a case which is hopeless it can normally be inferred that the proceeding was commenced or continued 'for some ulterior motive or because of some wilful disregard of the known facts or the clearly established law': Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, 401. But it is not necessary that such an inference be drawn; it is sufficient that the court's resources and the successful party's costs have been wasted on entirely frivolous litigation: Re SCA Properties Pty Ltd (in liq) [1999] QSC 180; (1999) 17 ACLC 1611 [70].
[65] Civil Properties Pty Ltd v Miluc Pty Ltd [2011] WASCA 195.
Further, in Ben Pelech v Royle,[66] the Court of Appeal observed that:
[93]Relevantly, while the categories of cases in which an indemnity costs order may be made are not closed, one category where indemnity costs are appropriate is where the action has been commenced or continued in circumstances where the applicant, properly advised, should have known that it had no chance of success. Whether that is so is determined objectively ‑ it does not direct attention to the actual legal advice given to the party. The court should not be too quick to characterise a case as hopeless ‑ parties should not be discouraged from persisting in an action merely because success is uncertain. Whether a case was hopeless must be judged without the benefit of hindsight.
[94]Thus, it is sufficient to enliven the discretion to award indemnity costs that, for whatever reason, a party persists in what should, on a proper consideration, have been seen to be a hopeless case.
[66] Ben Pelech v Royle [2020] WASCA 168 (S).
The Court should be cautious before making an order for indemnity costs on the basis of the conduct of the party in question.[67]
[67] Woolworths Ltd v Olson [2004] NSWSC 896 [8] ‑ [12] (Einstein J).
It has been said that a properly crafted special costs order may obviate the need for an indemnity costs order, where components of cost scale items are allowed above the applicable scale ceiling. Further, an indemnity costs order may not be appropriate if the claimed costs would be likely to be recovered under the standard order for party and party costs, or under a special order raising or removing a scale ceiling allowance.
These propositions were endorsed by Pullin JA and Kenneth Martin J in Swansdale as part of a ten point summary of the relevant principles (at [10], see point 9). Their Honours went on to observe that an indemnity costs order may nonetheless be made as an appropriate sanction marking the disapproval of improper or unreasonable conduct, where the unsuccessful party's conduct is genuinely to be impugned by the successful party (at [10], see point 10).
(b) Indemnity costs based on contract
Indemnity costs may also be awarded on the basis of an underlying contractual right as to costs.
Where there is a contractual entitlement to costs on a basis other than the usual party/party basis, the Court will usually give effect to that contract by making an order as to costs. This issue was explored at some length by the English Court of Appeal in Gomba Holdings UK Limited & Others v Minories Finance Limited & Others (No. 2).[68]
[68] Gomba Holdings UK Limited & Others v Minories Finance Limited & Others (No. 2) [1993] Ch 171; [1992] 4 All ER 588 (Gomba Holdings).
In that matter, Scott LJ, speaking for the Court of Appeal, held that an order for the payment of the costs of proceedings by one party to another party is always a discretionary order, and where there is a contractual right to the costs, the discretion should ordinarily be exercised so as to reflect that contractual right.[69]
[69] Gomba Holdings (194) (Scott LJ).
Further, Scott LJ held that any such contractual right is unlikely to be construed to justify the award of costs and expenses improperly or unreasonably incurred or improper or unreasonable in amount, and any contractual term to that effect would be subject to serious question on public policy grounds.[70]
[70] Gomba Holdings (187 ‑ 188) (Scott LJ). See also G E Dal Pont, Law of Costs (5th Edition, 2021, LexisNexis) [15.51].
The reasoning in Gomba Holdings has been followed in this Court on numerous occasions, including by Wheeler J in Rumball & Ors v Mortimore[71] and by Owen J in a later decision in a related matter, Rumball & Ors v Mortimore.[72] It has also been applied by the Full Court of the Supreme Court of Western Australia in Rayner v Australia and New Zealand Banking Group Limited.[73] As the Full Court in Rayner observed, the statutory provisions examined by Scott LJ are relevantly the same as the provisions applicable in this Court.[74]
[71] Rumball & Ors v Mortimore [1999] WASC 66 [9] (Wheeler J).
[72] Rumball & Ors v Mortimore [2000] WASC 126 [15] (Owen J).
[73] Rayner v Australia and New Zealand Banking Group Limited [2003] WASC 264 [26] (Murray and Parker JJ) (Rayner).
[74] Rayner [23] (Murray and Parker JJ).
I therefore take the position in this regard, as stated by Scott LJ in Gomba Holdings, to be relatively orthodox.[75] Whether there is a contractual right to indemnity costs will turn on the proper construction of the contractual instrument, which should be 'plainly and unambiguously expressed'.[76] The presence of such a right is not dispositive of the proper exercise of the Court's discretion, although the discretion would ordinarily be exercised to reflect the contractual right.[77]
(3) Special costs order under s 141(3) of the Uniform Law
[75] Kyabram Property Investments Pty Limited v Murray [2005] NSWCA 87 [11] - [14] (Beazley JA, with whom Hodgson and Ipp JJA agreed) (Kyabram Property); Inglis and Anor v Commonwealth Trading Bank of Australia (1973) 47 ALJR 234, 235.
[76] Kyabram Property [12] (Beazley JA, citing Vaisey J in Re Adelphi Hotel (Brighton) Limited [1953] 2 All ER 498, 502).
[77] See also Business Finance Pty Ltd v Casula Projects Pty Ltd (No 2) [2022] NSWSC 1608 [32] (Parker J).
The principles applicable to the determination of a claim for special costs under s 141(3) of the Uniform Law are those expressed by the Court of Appeal in this State in Sino Iron Pty Ltd v Mineralogy [No 2],[78] among other authorities. The Court was there dealing with the predecessor legislation in that case. However, the current provision is in the same terms as the repealed provision. Accordingly, the principles expressed as applicable to the predecessor provision continue to apply.[79]
[78] Sino Iron Pty Ltd v Mineralogy [No 2] [2017] WASCA 76 (S).
[79] The following summary of the principles draws on the summary set out in my reasons in INPEX Operations Australia Pty Ltd v AIG Australia Ltd [No 3] [2023] WASC 332 (S) [41].
The provision operates, in effect, to give the party the opportunity to recover those costs which have been reasonably and properly incurred where, in the court's opinion, the scale is inadequate because of the unusual difficulty, complexity or importance of the matter. These elements are to be addressed as matters of impression, rather than as matters of detailed evaluation, precision or science.[80]
[80] Sino Iron Pty Ltd v Mineralogy [No 2] [11].
In general terms, the provision is protective of the party who benefits from the costs order, and serves the administration of justice, by facilitating, within the limits imposed by the statutory criteria, the operation of the general principle that a successful party is entitled to its costs of the litigation.[81]
[81] Sino Iron Pty Ltd v Mineralogy [No 2] [11].
Of course, an order under s 141(3) of the Uniform Law does not, of itself, mean that the party will recover all of the costs it has incurred, or seeks from the other parties. It is the task of a taxing registrar to consider the reasonableness and necessity for the work undertaken and to make a judgment about the remuneration reasonably required.[82]
[82] Sino Iron Pty Ltd v Mineralogy [No 2] [11].
As to the statutory criteria, the court may make an order under s 141(3) of the Uniform Law if satisfied of two things.
First, that the amounts allowed under the relevant scale item are inadequate in the sense that there is a fairly arguable case that the bill of costs may tax out at an amount which is greater than the amount allowable under the scale (because of the limits expressed within the scale). Second, that the inadequacy of the costs allowable arises because of the unusual difficulty, complexity or importance of the matter.
For the purposes of assessing whether to exercise the powers conferred by s 141(3) of the Uniform Law, it will not ordinarily be necessary for the court to determine what amount should be allowed on taxation, but only whether there is a fairly arguable case that a greater amount should be allowed than that which is allowable under the relevant determination.[83]
[83] Sino Iron Pty Ltd v Mineralogy [No 2] [11]; and Electricity Generation and Retail Corporation trading as Synergy v Woodside Energy Ltd [2014] WASC 469 (S) [7] (Le Miere J).
Further, a special costs order will not be warranted simply by reference to the effort of the successful party, which may have been disproportionate in all of the circumstances.
(4) Relevance of delay
As I have earlier noted, both sets of parties were invited to make submissions on the issue of delay and filed further submissions post‑hearing.[84] The issue of delay in the context of the exercise of the costs discretion has been considered in a number of authorities. I have addressed some of the more salient authorities below and then summarised the parties' respective submissions on this issue.
(a) Esther Investments v Markalinga Pty Ltd
[84] PS5 and DS2.
This point of delay was addressed by Malcolm CJ in Esther Investments Pty Ltd v Markalinga Pty Ltd.[85] In that case, judgment had been delivered on 28 April 1989 and the motion for special costs orders was filed on 7 August 1992, representing a delay of some 3 years and 4 months. In that case, costs orders had been made upon judgment being delivered but counsel had, through inadvertence, not sought special costs orders.
[85] Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400 (Esther Investments).
Malcolm CJ regarded that delay as 'extremely gross and extraordinary', and concluded that:[86]
In my view, the making of an order after such an inordinate period of delay and in the circumstances which I have mentioned would be to do something which would tend to 'bring the administration of justice to disrepute among right thinking people', a phrase used in the judgment in Hunter v Chief Constable of West Midland Police [1982] AC 529.
There must come a point where the interests of finality of litigation militate against the exercise of discretion in favour of a party whose solicitors or counsel have failed by inadvertence to make an appropriate application at the appropriate time.
…
In my view, the circumstances of this case are such that it would be a wrong exercise of the discretion which I undoubtedly have to exercise it in favour of the defendant in this case. I am not persuaded that it is necessary to show delay coupled with prejudice in the sense in which that was demonstrated in Tak Ming Co Ltd v Yee Sang Metal Supplies Co (supra) before the court would decline to exercise its discretion…
In any event, there is an interest in the finality of litigation, and a party is entitled to order its affairs on the basis of a judgment regularly obtained, entered and perfected in the court. That has been the case in this instance for something over three years. If I be wrong in my view and it is necessary to show some degree of prejudice, the fact that, if an order were made, the state of affairs created by the judgment which has been left to stand for so long would itself constitute sufficient prejudice to make it inexpedient or inequitable to make an order. The fact that the company is a substantial company and could well afford to pay any additional costs involved is not, in my view, a relevant consideration having regard to the other matters I have mentioned. If it is relevant, its significance in the context of this case is outweighed by the conduct of the defendant's solicitors in failing to take any steps to enforce the order for costs which was made or to take any earlier steps to seek a special order. For those reasons, I am of the opinion that the application should be dismissed.
[86] Esther Investments (408 ‑ 409) (Malcolm CJ).
It is evident from his Honour's decision that he did not consider it was necessary to demonstrate prejudice as well as an excessive delay before the Court would decline to exercise its jurisdiction. I accept that this approach must be seen in the context of the facts of that case, which concerned a perfected order made several years before the costs application was made.
(b) Lewandowski v Lovell
In Lewandowski v Lovell,[87] the Full Court examined Malcolm CJ's decision in Esther Investments in the context of a late application for special costs in respect of proceedings at first instance.
[87] Lewandowski v Lovell (Unreported, FCt Sct of WA, Library No. 960310, 14 June 1996) (Kennedy, Murray and White JJ) (Lewandowski).
Counsel for the appellants in that case sought a special costs orders from the Full Court even though one had not been sought before the Master below. The explanation was inadvertence. The application was made some 19 months after the Full Court had initially given judgment.[88]
[88] Lewandowski (13) (Murray J).
Murray J, with whom White J agreed, considered that the material before the Court did not support a finding to the effect that delay would disentitle the appellant to the order which was belatedly sought. Murray J noted that the appellant had informed the respondent of the intention to seek the orders at an early point in time and the parties agreed that the application could await the final determination of the special leave to appeal to the High Court. The order was extracted by reason of the cooperation of the parties, to allow the application for special leave to appeal to the High Court.
Murray J concluded that the delay which had occurred would not preclude the grant of the application for special costs.
Nonetheless, Murray J declined to grant the application having regard to the 'exceptional and limited nature of the Court's inherent jurisdiction' to vary its earlier orders, which had been perfected. His Honour regarded it as irrelevant whether a special costs order might well have been made if it had been sought at the appropriate time. His Honour noted the interests of the respondent had to be considered as well, and the 'interests of the parties must be balanced and the wider interest of the finality of the orders made by the Court given proper weight'.[89]
[89] Lewandowski (16) (Murray J).
As I have stated above, the delay to this point was grossly excessive. By November 2021, almost 4 years had passed since final orders were made by the primary judge. In my respectful view, no explanation of substance has been forthcoming for this delay. The affidavit material recites the history of the proceedings and the correspondence, but none of that in truth explains why Mineralogy could not have initiated the mediation process earlier or sought costs orders from the Court. It may be said that the CITIC Parties played a degree of interference in their correspondence, responding to the attempts by Mineralogy to pursue a resolution to the costs. But even a conclusion that the CITIC Parties were being obstructive does not explain the delay in any real sense. There were significant periods where there was no movement on the issue at all. It remained open to Mineralogy to approach the Court to list the mediation or seek orders from the primary judge if necessary. That was not done until January 2022.
Prior to that, and simply to emphasise the point just made, it was always open for Mineralogy to 'outflank' the manoeuvring of the CITIC Parties by directly approaching the Court to list the mediation or by approaching the primary judge. There was no imbalance of power between these parties which might lead the Court to conclude that Mineralogy was being pressured by the CITIC Parties in any way, or being dissuaded from pursuing whatever costs entitlements it had.
When the primary judge was first approached by Mineralogy in January 2022, the timing could not have been more inopportune. The primary judge was shortly to commence hearing the 10‑week civil trial between the CITIC Parties and Mineralogy known as the 2017 MCP Proceeding (CIV 1915 of 2019). The trial of that action commenced on 21 February 2022 and ran for some 33 hearing days until 29 April 2022. I have earlier recounted his Honour's response to the parties, through his associate, which was sent on 21 January 2022. His Honour made it clear he would be unable to hear the application for some time.
However, it is important to understand the nature of the approach which was made by Mineralogy. The email from Mineralogy's solicitor to the Court, sent on 18 January 2022, was focused on the dispute between the parties concerning the impact of the fresh proceedings, CIV 1424 of 2021.[149] Mineralogy foreshadowed it would file a chamber summons seeking orders to dispose of the question of costs in the RCB Proceeding, given the dispute between the parties.
[149] Affidavit of Mr Blaxill, Attachment CPB-13, pg 99.
The trail of correspondence goes cold at this point. All concerned were no doubt then in the teeth of battle on the 2017 MCP Proceeding. The next communication appears to be in around July 2022, some months later. There were further exchanges of communications between the parties through until February 2023 when the mediation was listed. Then, in March 2023, Mineralogy's solicitors wrote to the primary judge's associate to confirm that the earlier mentioned chamber summons had not been filed by Mineralogy and the 'issue the subject of the chamber summons [was] proceeding to mediation between the parties before Registrar Davies'.[150]
[150] Affidavit of Mr Blaxill, Attachment CPB-13, pg 97 (email from Mr Mirza to the Court send on 29 March 2023).
It cannot be said that any material part of the delay is attributable to the Court. As I have noted, there was one occasion in which the primary judge indicated he could not hear any application until after the conclusion of the trial of the 2017 MCP Proceeding, and after his Honour had delivered reasons in that action. That was in January 2022, already some 4 years after the final orders had been at trial. Importantly, the parties did not make arrangements for the mediation until well into 2023.
The primary judge's assessment that there was 'sustained inertia' on the part of the litigants is one with which I respectfully agree (at [65] above). It was always open to Mineralogy and, indeed, to the CITIC Parties if they wished to seek orders, to list the mediation and thereafter file applications to the primary judge to dispose of any costs questions. It can be inferred that decisions were taken by the parties to focus on other matters. There were undoubtedly several other disputes on foot between the parties during this time. That does not operate as a satisfactory explanation for the delays, in my view.
(4) The likely prejudice and the extent of any prejudice
Third, the likely prejudice flowing from the delay and the extent of that prejudice are relevant considerations to examine. The greater the lapse of time and the weaker the explanation, the less significant the prejudice may need to be in order to justify a decision to decline to exercise the discretion in a particular manner. That prejudice will also fall to be assessed having regard to the nature of the costs orders sought and the complexity of the action.
The prejudice which may flow from delays in pursuing final costs orders has several facets.
The delay may impair the ability of the Court to properly assess the costs orders which are sought.
The delay may impair the ability of the opposing party to properly respond to the costs orders which are sought.
The delay must also be seen in the context of the Court's costs assessment process, not simply by reference to the hearing at which the final costs orders are sought. For example, it should be recognised that orders which will permit the costs assessment (or taxation) process to be undertaken by reference to whether the costs have been unreasonably incurred or are of an unreasonable amount, or by removal of scale items, will likely lead to a far more complex and time consuming costs assessment process before a Registrar, in my experience, compared to a costs assessment based on scale amounts.
Where a costs assessment process predicated on indemnity costs or special costs orders is required to be undertaken many, many years after the work was undertaken, the process is likely to be extremely challenging, time consuming and inefficient.
The prejudice in the present case is significant, on my assessment. First, the delay in pursuing these matters when there was ample opportunity to do so, has meant the proceeding has extended beyond the retirement of the primary judge. The assessment of the costs issues must therefore be undertaken by another judicial officer. However, even the primary judge's assessment of the costs issues, and the work undertaken by the parties during the proceedings, is likely to have been unreliable given the lapse of time involved. Second, the delay operates to prejudice the ability of the opposing party to respond to the application. Third, the costs orders sought are very likely to create the type of challenging, time consuming and inefficient costs assessment process I have mentioned above, given the size of the costs claim, the complexity of the proceedings and the likely number of line items in the bills of costs which would need to be reviewed.
Overall, I consider the considerable delay since the primary judge made final orders, which is around 5 years and 8 months, has left the Court in the problematic position of having to assess the course of the action and the conduct of the parties without the usual benefit of having seen and heard the evidence and the arguments. That is a prejudice which I consider is material. It implicitly brings with it a prejudice to the CITIC Parties in being able to properly respond to the application. Further, the nature of the order sought by Mineralogy, for indemnity costs, is very likely to create a far more complex, time consuming and costly assessment process before a Registrar of this Court, which will also consume the valuable and scarce resources of the Court.
(5) Other considerations
There are other features of the present case which should be mentioned and assessed. These features do not fall within the above factors, but might be said to form part of the overall circumstances of the case.
The first of these is the quantum of the costs involved. I recognise that Mineralogy will have incurred significant costs in the pursuit of this action against the CITIC Parties. That is apparent from the affidavit material filed on the application before me. The actual costs incurred are in the order of many millions of dollars. I also recognise, therefore, that the difference between a costs assessment on an indemnity basis and costs assessed in accordance with the scale is likely to be significant. The amounts involved render it all the more surprising that there has been such a delay in pursuing these orders.
The second feature is that both sets of parties are sophisticated and experienced litigants, they are well‑resourced, represented by experienced solicitors and counsel, and so well‑advised as to the steps which may be taken to pursue costs orders.
The third feature is that there is no suggestion that the delay in pursuing the costs orders has been as a result of any inadvertence or failing on the part of the solicitors or counsel involved.
When these additional features are assessed as a whole, I would regard them as having a neutral effect on the exercise of the discretion. While the refusal to exercise the discretion to award indemnity costs is likely to have a significant material effect on the quantum of the plaintiff's costs recovery, that must be seen in the context of the nature of the parties as sophisticated, well‑resourced, and well‑advised litigants. The parties may be presumed to have been aware that the delay in progressing matters carried with it the risk of operating as a disentitling factor in the exercise of the Court's discretion, which would, if it eventuated, preclude the party from securing a higher quantum of costs recovery, relative to scale.
(6) Overall assessment
In the present case, I must say I can see force in the application made by Mineralogy for indemnity costs, having regard to the apparent weakness of the CITIC Parties' defences in the underlying proceeding.
The force of that position emerges from the recorded observations of the trial judge to which I have referred, including statements that the 'contended frustration' of the instruments was 'always an untenable proposition', and assessments by his Honour that various arguments advanced by the CITIC Parties were 'commercially unreal', 'repugnant to commercial common sense', 'self-serving', and 'misconceived' (see [198] above).
His Honour may well have been disposed to grant indemnity costs orders had such an application been made to him in a timely manner, prior to his retirement. But that was not done.
The difficulty which now arises is that a judicial officer who did not hear the evidence and the arguments is called upon to assess whether the arguments presented by the CITIC Parties were so hopeless and untenable that the exceptional order of indemnity costs should be granted, across the whole of the action.
I have a great deal of difficulty with making such an order.
As noted, I did not sit through the trial and do not have the same understanding of the material and the arguments which the primary judge would have. I have noted above the grossly excessive delay between the making of the final orders in December 2017 and the first occasion on which the Court was approached, which was January 2022. That delay was around 4 years. But there was a further delay of some 20 months until the costs application was filed in August 2023, following the unsuccessful mediation in May 2023. That further delay is also excessive, in my view.
As I noted at the outset of these reasons, costs issues on such matters should properly be resolved in close proximity to the trial, while the matter is fresh in the mind of the trial judge and the Court is better able to undertake a reliable assessment of the work involved, having regard to the findings made at trial. It is far from an attractive or efficient proposition to have a judicial officer other than the trial judge, on a matter of this magnitude and complexity, hear and determine the parties' competing arguments as to costs, especially after such an inordinate delay. There was ample time for the parties to seek costs orders prior to the filing of the present applications.
In all the circumstances, although I recognise that there are indications in the material which might objectively support an indemnity costs award had such an application been brought promptly, I consider the inordinate delay in this case, which is largely unexplained in any meaningful way, and which has led to material prejudice of the kinds I have identified, points strongly against the making of any order of the type sought by the plaintiff. The delay in this case has caused prejudice as earlier explained.
It must also be remembered that making such an order in effect operates as a sanction, marking the conduct of the unsuccessful party with the Court's disapproval as being improper or unreasonable. The imperative for such a sanction to be imposed after such a lengthy delay by Mineralogy in pursuing these orders must surely be doubtful.
I therefore decline to make such an order in the exercise of the Court's discretion.
In general terms, it should be said that delays in pursuing costs orders after trial, such as the one apparent in the present case, are antithetical to the goal and objects in O 1 r 4A and r 4B RSC and should be deprecated.
H. Disposition - Mineralogy's claim for indemnity costs based on an asserted contractual right
The indemnity costs application is also pursued on the basis of a contractual entitlement. Mineralogy submitted that the making of the indemnity costs order would be consistent with the contractual regime between the parties.[151] I have set out earlier in these reasons the applicable principles to a claim for indemnity costs based on a contractual provision.
[151] PS1 [58].
The first matter to consider is the language of the relevant contractual provision. Mineralogy says its entitlement is to be found in cl 30.4 and cl 30.5 of the MRSLAs, which read as follows:[152]
[152] Noting there appears to be a typographical error in cl 30.4(d).
30.4Specific performance and injunction
(a)Certain breaches of this Agreement, including without limitation breaches of the conditions contained in Clauses 7 and 27(b), the Schedule and a failure to comply with Legal Requirements, will not be capable of remedy or of compensation by the payment of damages only.
(b)In relation to such a breach, Sino acknowledges that the breach will cause Mineralogy to suffer loss and damage. Sino agrees that Mineralogy will be entitled to an order for specific performance and/or an injunction to prevent or restrain the breach, and Sino will consent to any application brought by Mineralogy for specific performance or injunction.
(c)Sino will be liable to reimburse Mineralogy in respect of all costs and expenses (including, without limitation, any solicitors or other legal costs) in respect of such action.
(d)In the event that such default, or a default in Sino's obligations to pay Mineralogy the Mineralogy Royalty or the State Government Royalties payable pursuant to this Agreement or any, continues for a period of twenty one (21) days after written notice of such default requiring Sino to remedy the same, Mineralogy shall be entitled by notice in writing to Sino to require Sino to suspend all operations carried out by or on behalf of Sino upon the Project Area until payment is resumed. If such default has· not been remedied after 90 days from the service of any notice pursuant to this clause, Mineralogy has the right on twenty one days written notice to terminate this Agreement. (underlining added)
30.5Other non-compliance
Subject to clause 30.2, if Sino defaults in the due observance or performance of any covenant, condition or provision contained in this Agreement, other than the payment of money, then:
(a)Mineralogy may institute proceedings against Sino to enforce performance of any of the provisions of this Agreement.
(b)Sino will pay on demand all solicitors fees, court costs, and other costs reasonably incurred by the party taking action to enforce the provisions of this Agreement. (underlining added)
The second matter to address is the pleadings. The terms of the above provisions of the MRSLAs, but not their effect, were pleaded by Mineralogy in this action. I refer to [39] and [40] of the Sixth Further Amended Statement of Claim dated 1 December 2017.[153] Mineralogy therefore did not expressly plead a claim for 'indemnity costs', in terms.
[153] Folio 553.
In their defence, the CITIC Parties pleaded out the terms of the provisions, but not their effect, and otherwise denied the above pleas.[154]
[154] Defence to the Sixth Further Amended Statement of Claim dated 8 December 2017 (Folio 554).
The proper construction of these provisions was not raised at trial before the primary judge, and so his Honour was not called upon to determine their meaning and scope.
The third matter to address is therefore the scope of the provisions upon which Mineralogy relies.
I accept that the language of cl 30.4(c), if engaged, is broad enough to encompass an order for indemnity costs. The text is plain and unambiguous in this sense. This clause would be limited as a matter of construction by a reasonableness requirement, in the sense I have earlier explained, but it nonetheless provides a foundation for an indemnity costs claim.
I consider cl 30.5(b) is narrower in terms, though. This clause is expressly confined to costs 'reasonably incurred', which does not justify the making of an indemnity costs order. The clause is not, relevantly, plain and unambiguous.[155] The analysis of White J in Dee-Tech Pty Limited v Neddam Holdings Pty Limited (No 2),[156] which I respectfully adopt, supports the conclusion that the inclusion of language in a provision which limits recovery to costs 'reasonably incurred' means that an order for costs on a party/party basis would be in accordance with the contractual term.
[155] Kyabram Property [12] (Beazley JA).
[156] Dee-Tech Pty Limited v Neddam Holdings Pty Limited (No 2) [2012] NSWSC 517 [44] - [46], especially at [46] (White J) (Dee-Tech).
In Dee-Tech, the clause in the lease provided as follows:
4.10 The Lessee must pay on demand to the Lessor or as the Lessor directs: …
4.10.2 the reasonable costs payable or incurred by the Lessor for remedying a default by the Lessee;
4.10.3 the Lessor's reasonable legal costs relating to a default by the Lessee.
White J explained his reasoning on this issue as follows:[157]
If costs were ordered to be assessed on the indemnity basis, the lessor would be entitled to all its costs, other than those that appeared to have been unreasonably incurred, or appeared to be of unreasonable amount (r 42.5(b)). If costs were ordered on the indemnity basis and the costs assessor was in doubt as to whether a particular item of charge was reasonable, he or she would be obliged to allow it. However, under clause 4.10.3 of the lease, the lessor would be entitled only to those costs which were reasonable, not those costs which might be reasonable. It would not be in accordance with the lease to cast on the lessee the burden of proving that a charge was unreasonable. In other words, whilst contractual provisions may have the effect that costs should be ordered on the indemnity basis rather than the ordinary basis, whether that is so depends upon the terms of the particular contract. In the case of the present lease, an order for costs on the ordinary basis is in accordance with the contractual term.
[157] Dee-Tech [46] (White J).
I can therefore put cl 30.5(b) of the MRSLAs to one side. Whilst putting it to one side, I should nonetheless note that the terms of cl 30.5, within its chapeau, indicate the provision is limited to defaults of covenants 'other than the payment of money'. Both paragraphs within cl 30.5 are limited by the text of the chapeau. The draftsperson having confined the language of the provision in this express way, the operation of both paragraphs is accordingly to be confined to covenants other than for the payment of money. There is at least an argument available to Mineralogy that cl 30.5(b) might be engaged in the present matter given the proceedings also concerned expert determination matters, not only payments of money, but I need not address that issue given my earlier conclusion.[158]
[158] ts 149 - 150 (27 February 2024).
Focusing then on cl 30.4(c), the question which remains to consider is whether that provision is relevantly engaged in the present proceeding, on its proper construction. I have considerable difficulty accepting the submissions advanced by Mineralogy to this effect, as explained below.
Mineralogy submits that cl 30.4(c) addresses any action in respect of a breach of the MRSLA, and cl 30.5 is enlivened by a breach of any provision of the MRSLA, other than the payment of money, however the entitlement to costs is not so restricted.[159] Mineralogy invites a construction to be undertaken by reference to the whole of cl 30, not merely cl 30.4 and cl 30.5 in isolation.[160]
[159] PS2 [126].
[160] ts 147 - 150 (27 February 2024).
Further, Mineralogy submits that it may institute proceedings to enforce performance of 'any of the provisions of the' MRSLA and recover its costs for doing so. Accordingly, as a matter of construction, there is a contractual entitlement to indemnity costs.[161] As noted above, I can put cl 30.5(b) to one side and focus on cl 30.4(c).
[161] PS2 [126] - [127].
In my view, it is evident from the text I have extracted above that cl 30.4(a) and cl 30.4(b) deal with legal action by Mineralogy for specific performance or injunctions to address a failure to comply with the MRSLAs, where damages would be inadequate. The terms of cl 30.4(c) refer expressly to the costs 'of such action', which must be taken to be an action for an order for specific performance or for injunctive relief. In my view, a construction of cl 30.4(c) in the manner suggested by Mineralogy would need the final words of the provision to be ignored, and there is no warrant for doing so, whether for textual or contextual reasons, or to avoid any uncommercial construction or absurd outcome.
As I have noted above, the claims which were pursued at trial by Mineralogy were not claims for specific performance or injunctions. Rather, they were fundamentally claims for the payment of monetary sums alleged to be due.[162]
[162] See prayers for relief A(1), A(2) and B(1) in the Sixth Further Amended Statement of Claim dated 1 December 2017 (Folio 553).
I therefore conclude, on the above analysis, that cl 30.4(c) does not have application to the present action.
Ultimately, an order for indemnity costs requires the exercise of the Court's discretion. And so, even if am wrong in regard to the constructional analysis of the above provisions, I would in any event have declined to grant an order for payment of indemnity costs on the basis of the discretionary matters to which I have referred above. While a Court might ordinarily give effect to a contractual entitlement in this regard, the circumstances of this case, including the extreme delays involved, justify a departure from that position.
Disposition - Mineralogy's alternative claim for special costs
Mineralogy has, in the alternative, sought an order for special costs.[163] The form of the order sought demonstrates the very expansive nature of the assessment which is required. Mineralogy seeks an order that the limits in the scale, in Tables A and B, over the various scales in operation between 2013 and 2022, be removed.
[163] Plaintiff's amended minute of proposed orders dated 1 December 2023 [2] (Folio 45).
Similarly, the CITIC Parties have sought special costs orders, both in respect of their own costs as claimed in their amended minute and so as to extend to Mineralogy's costs, other than in certain respects.[164]
[164] Defendants' amended minute of proposed orders dated 15 February 2024 [3]. The CITIC Parties propose that a limit of double the various scale limits be imposed.
I have earlier explained the assessment which is required by the Court before orders under s 141(3) of the Uniform Law may be made by the Court.
The nature of these proceedings, in terms of their complexity and significance to the parties, renders it possible for the Court to form a view that the whole of the proceedings were unusually difficult, complex or important. However, whether that assessment can be made in relation to each and every step in the proceeding is more challenging given the passage of time. Even the assessment that the scale items are inadequate, which only requires a 'fairly arguable' assessment, is likely to be unreliable so many years after the proceedings have concluded, particularly when the assessment is required to be undertaken by a judicial officer who was not the trial judge.[165]
[165] Tzaneros [32] (Ball J).
Further, there were no doubt steps in the proceeding in respect of which it is fairly arguable the costs would tax out at an amount in excess of the scale. Both parties have adduced affidavit evidence as to the practitioners involved, their seniority and their charge out rates, although the evidence in Mr Mirza's second affidavit is extremely general in nature.
I have carefully reviewed the affidavit evidence presented, and the course of the proceedings before the primary judge (and prior to the primary judge's involvement). For my part, I would not be prepared, on the strength of the evidence which has been presented, to remove the scale limits across every item for every costs scale which has been in operation since 2013, nor make the additional special costs which have been sought in Mineralogy's amended minute.
In any event, even if I was so satisfied of the necessary criteria for the making of such orders, for the reasons I have set out earlier as to the delays and prejudice arising therefrom in this proceeding, I would not exercise my discretion in favour of making such orders in this matter. Orders of this nature ought to have been sought at a much earlier point in time, and certainly not following a grossly excessive delay such as is apparent here. While the primary judge granted the parties liberty to apply in December 2017, and so the 30‑day time limit in O 66 r 51 RSC does not present as an obstacle to the orders sought,[166] it does not follow that time was 'at large' thereafter, as I have earlier observed.
[166] ts 116 and ts 158 - 161 (27 February 2024).
I recognise that there is a degree of concurrence between these parties as to the making of special costs orders generally. That does not mean the order must be made. The Court retains a discretion in this regard. As I have said, I take into account the making of the orders sought by Mineralogy (and also by the CITIC Parties) would likely lead to a challenging, costly and time‑consuming assessment process in this Court.
The only exception to the foregoing which I consider is warranted, and an aspect of the respective claims in respect of which there is common ground and in respect of which I am able to form an assessment, is that the costs of the plaintiff be assessed on the basis that there be allowance for the costs of senior counsel including for attendance at all pre‑trial hearings and the trial.[167]
[167] See the final paragraph of order 2 of the plaintiff's amended minute of proposed orders dated 1 December 2023; and the final paragraph of order 3 of the defendants' amended minute of proposed orders dated 15 February 2024.
J. Disposition - the CITIC Parties' claims for costs
(1) Costs thrown away
The CITIC Parties seek an order that Mineralogy pay the CITIC Parties' costs of and occasioned by, and thrown away as a result, of various amendments to the statement of claim.
The CITIC Parties contend that Mineralogy made numerous changes to its case during the course of the RCB Proceeding. It is apparent that costs orders were made by Edelman J in respect of the pleading amendments in August 2014, but no costs orders were made in respect of the pleading amendments in 2016 and 2017 (referred to in the CITIC Parties' submissions as the 4FASOC and the 5FASOC).[168] It is submitted that a number of claims were introduced, or proposed to be introduced, by Mineralogy, which were subsequently abandoned and in respect of which costs orders should now be made.[169]
[168] DS1 [14] - [19] and [67] - [70].
[169] DS1 [71].
A list of the abandoned claims has been compiled by the CITIC Parties. Those claims are set out in Annexure A to their initial submissions.[170] I am unable to accept the force of the CITIC Parties' submissions in this regard, it being apparent that many of the claims which were abandoned by Mineralogy were subsequently picked up by the CITIC Parties themselves and incorporated into their own counterclaim.[171]
[170] DS1, Annexure A (which identifies 28 individual items said to have been abandoned by Mineralogy).
[171] PS2 [103] and [115], and Responsive Annexure A.
Further, I do not accept that each of these matters can be divorced from the overall result in the proceedings in the manner suggested by the CITIC Parties. Further still, some of the matters represent issues which were raised in a draft pleading but which were not the subject of the final pleading as filed. It is an ambitious exercise to single out individual paragraphs in a draft pleading, which may not ultimately have been pursued in the final pleading, and to ask the Court, some 8 years later, to assess the relative merit of those paragraphs in the context of this complex action, and impose an order for costs thrown away. Had that exercise been appropriate, it ought to have been initiated by the CITIC Parties many years ago, in proximity to the conduct in question.
Even if there was merit in the orders sought by the CITIC Parties in this regard, and I am extremely doubtful there is, I would in any event decline to exercise the discretion to make such orders now, after such an excessive delay on their part and in the context of proceedings in which they were wholly unsuccessful.
(2) Special costs
The application made by the CITIC Parties in respect of special costs orders will be rejected for the same reasons I have dismissed the claim of a similar nature advanced by Mineralogy, subject to the exception with respect to the allowance for senior counsel.
K. Conclusion and orders
The orders I will make are as follows:
1.The defendants are to pay the plaintiff's costs of the action, including all reserved costs, to be assessed on a party/party basis, if not agreed.
2.The plaintiff's and the defendants' costs of the action are to be assessed on the basis that there be allowance for the costs of senior counsel including for attendance at all pre‑trial hearings and at the trial.
3.The plaintiff's application, by chamber summons dated 23 August 2023, for indemnity costs, alternatively for special costs orders, is otherwise dismissed.
4.The defendants' application, by their amended minute of proposed orders, for various costs orders including special costs orders, is dismissed.
I will hear from the parties as to the costs of the plaintiff's application for costs, and the defendants' responsive claims for costs, which were heard on 26 and 27 February 2024. The provisional view I take in this regard is that there should be no order as to the costs of those matters.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
IR
Associate to the Hon Justice Lundberg
19 JUNE 2025
ATTACHMENT A
Litigation time line post-judgment
ATTACHMENT B
Schedule 1 to the Defendants' Minute of Proposed Orders
ATTACHMENT C
Schedule 2 to the Defendants' Minute of Proposed Orders
ATTACHMENT D
Schedule 3 to the Defendants' Minute of Proposed Orders
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