Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 2] - [2023] WASC 150

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   MINERALOGY PTY LTD -v- SINO IRON PTY LTD [No 2] [2023] WASC 150
CORAM:   KENNETH MARTIN J
HEARD:   9 MARCH 2023
DELIVERED          :   11 MAY 2023
FILE NO/S:   CIV 1424 of 2021
BETWEEN:   MINERALOGY PTY LTD
Plaintiff
AND
SINO IRON PTY LTD
First Defendant
KOREAN STEEL PTY LTD
Second Defendant
CITIC LTD
Third Defendant

Catchwords:

Practice and procedure - Pleading - Further strikeout application - Costs of administering recoupable by contract term - Inadequate explanation by lack of details as to claims - Ongoing failures to properly explain claims previously struck out save in minor respect

Legislation:

Rules of the Supreme Court 1971 (WA)

Result:

Impugned paragraphs substantially struck out permanently

Category: B

Representation:

Counsel:

Plaintiff	:	D Villa SC & K Byrne
First Defendant	:	S Free SC & R J Price
Second Defendant	:	S Free SC & R J Price
Third Defendant	:	S Free SC & R J Price

Solicitors:

Plaintiff	:	Hamid Mirza
First Defendant	:	Allens
Second Defendant	:	Allens
Third Defendant	:	Allens

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

Mineralogy Pty Ltd v Sino Iron Pty Ltd [2022] WASC 329

KENNETH MARTIN J:

Introduction

These reasons follow in the wake of the decision in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2022] WASC 329(delivered 30 September 2022) concerning the striking out of component paragraphs within the plaintiff's (Mineralogy's) Further Amended Statement of Claim of 25 March 2022 ('FASOC') (folio 33). The reasons to follow are to be read in conjunction with those 30 September 2022 reasons, explaining then the striking out of pars 13(a)(i), 13(b), 13(c) and 13(d) of the FASOC.
Notwithstanding those earlier strikeout conclusions, I allowed leave for Mineralogy to have a further brief opportunity to attempt to amend its statement of claim and rehabilitate parts of its pleading. At [93] of the reasons, I observed:
The expected level of detail to establish such a nexus is presently still inadequate regarding subpars 13(b), (c) and (d). The ongoing inadequacy of details as to providing and exposing to scrutiny some proper basis in fact for finding a linkage to 'costs in administering' is presently at a level of legal embarrassment - assessing the responses of Mineralogy proposed to be given under HM-04 for the par 13(b), (c) and (d) pleas.
Concerning a former plea under par 13(b) of the FASOC (read with its particulars at the time), I concluded at [99]:
Mineralogy should be given a last, brief opportunity to provide that adequate level of detail. Otherwise, the current plea must be permanently excised.
I rendered like observations concerning the potential rehabilitation of par 13(c) of the FASOC at [105] (see last sentence) and of par 13(d) at [110].
In the wake of those 30 September 2022 reasons, orders were issued on 6 October 2022 (folio 53) in the following terms:
Pleading and particulars
1.Paragraphs 13(a)(i), 13(b), 13(c) and 13(d) of the plaintiff's further amended statement of claim filed on 25 March 2022 (the Further Amended Statement of Claim) are struck out.
2.The plaintiff has leave to replead those parts of its pleading and the particulars thereof, by filing and serving an amended pleading and an amended document containing further and better particulars no later than 28 days [from] the date of this order.
Leave application
3.The plaintiff's application for leave to amend filed on 8 June 2022 (Leave Application) is stood over. …
I also ought to clarify, for the sake of capturing the state of the highly evolutionary position of Mineralogy, that, as seen, the strikeout order which issued on 6 October 2022 (being order 1) was directed against the FASOC pleading of 25 March 2022.
As the 30 September 2022 reasons also disclose, Mineralogy's instructing solicitor of record, Mr Hamid Mirza, filed an affidavit annexing at 8 June 2022 his minute of a further proposed amendment to Mineralogy's statement of claim. This was the minute of Second Further Amended Statement of Claim ('2FASOC') appended as part of attachment HM‑03 to Mr Mirza's affidavit of 8 June 2022 (folio 42).
By reason of order 3 of the prior orders of 25 March 2022 (folio 34), which issued as case management directions, Mineralogy was denied the opportunity to further amend its pleadings without first obtaining the leave of the court. Consequently then, reference in order 3 of the orders of 6 October 2022 to Mineralogy's application for leave to amend of 8 June 2022 being stood over becomes clearer, given that leave was then being sought by Mineralogy to amend the pleading in accord with the 2FASOC.
The strikeout application of the defendants (the CITIC parties) which I came to determine under the 30 September 2022 reasons was rightly directed at Mineralogy's existing statement of claim, namely the FASOC of 25 March 2022. Nevertheless, the strikeout arguments came to be evaluated for the purposes of resolving the 18 August 2022 hearing upon the basis of the changes to the statement of claim pleading that Mineralogy foreshadowed under its minute of 2FASOC of 8 June 2022.
However, the pleading position was further complicated by answers given to the CITIC parties' requests for further and better particulars of the 2FASOC, which have been respectively made and given by Mineralogy in this action over time. This information needed to be incorporated into the overall state of Mineralogy's pleading.
So then, at 18 August 2022 when the earlier strikeout application was argued, relevant answers to particulars to be incorporated were those contained as attachment HM-04 to Mr Mirza's 8 June 2022 affidavit, being the Plaintiff's Further Amended Response to the Defendants' Request for Further and Better Particulars of the Plaintiff's Statement of Claim Dated 21 May 2021 ('2FA Particulars'). Unlike the 2FASOC, those answers were not provided as a minute - they were provided in final form. They are lengthy.
The earlier strikeout application proceeded on the basis of evaluating Mineralogy's pleading position as particularised under the lengthy 2FA Particulars.
Tedious as it was to pin down, it was necessary to capture at a point in time the precise earlier pleading and particulars position applicable to the argument and for the identification of the subject matter of what was addressed in my reasons of 30 September 2022 on that earlier application.
My reasons for decision of 30 September 2022 and subsequent orders of 6 October 2022 effectively identified pleading deficiencies on the holistic basis of evaluating the existing statement of claim, along with the proposed amendments in respect of which leave was sought to amend the pleading (the 2FASOC) - evaluated in the context of the most recent iteration of further and better particulars (the 2FA Particulars) attached to Mr Mirza's affidavit.
In short, to assess the position of Mineralogy in aggregate at that time, there was vis-à-vis the four paragraphs mentioned by par 1 of these reasons an inadequate pleading, with a brief opportunity given to attempt to rehabilitate it by further amendment.

Subsequent events and current grievances

There ensued subsequent iterations of a minute of further amended statement of claim as supplied on behalf of Mineralogy - accompanied by further responses by way of particulars as regards those impugned paragraphs of the pleading - in respect of which Mineralogy pressed an application seeking leave to further amend the pleading (envisioned under order 3 of my orders of 6 October 2022).
Mineralogy's minute of further amended statement of claim was confusingly also labelled as the Second Further Amended Statement of Claim (folio 55). The document bears the date 7 November 2022, albeit it was filed a day later, on 8 November 2022. This minute of a proposed revised pleading, which I will refer to as the minute of '2A‑FASOC', displays proposed adjustments by amendments to par 13(a) highlighted by the colour purple, particularly as regards par 13(a)(i) and in ensuing subpars (A) through (O).
Happily, there would appear to be no further strikeout pleading grievances expressed by the CITIC parties against the reformulated par 13(a) of the 2A-FASOC.
But, less happily, the amendments are opposed by the CITIC parties in respect of pars 13(b), 13(c) and 13(d) - which I will expand upon in due course. I need to add, however, for proper context that Mineralogy also filed on 8 November 2022 some further requested responses to particulars, referred to as the Plaintiff's Second Further Amended Response to the Defendants' Request for Further and Better Particulars of the Plaintiff's Statement of Claim Dated 21 May 2021 (folio 56) ('2A-FA Particulars'). It is necessary, of course, to read Mineralogy's proposed 2A-FASOC pleading in conjunction with the 2A-FA Particulars as most recently provided in respect of pars 13(b), (c) and (d) in aggregate.
6

6

The CITIC parties have also now filed a further interlocutory application seeking to strike out pars 13(b) to (d) inclusive of the 2A-FASOC by their chamber summons of 29 November 2022 (folio 57). That application is expressed as made 'pursuant to O 20 r 19(1)(a) of the Rules of the Supreme Court 1971 (WA), or otherwise pursuant to the inherent jurisdiction of the Court'.
It is important to note that the CITIC parties' application is not brought upon the basis of any suggestion that the revised 2A-FASOC pleading of 8 November 2022 is deficient by failing to disclose a reasonably arguable cause of action. Instead, the core pleading grievance is directed at the content of the 2A-FASOC from the perspective of its suggested wholly inadequate detail or, in legal terms, that it is legally embarrassing by reason of the gross deficiency of required detail.
That application is pursued in the context of the observations rendered in the 30 September 2022 reasons - to the effect that Mineralogy was only to have a brief final opportunity to seek to rectify its prior pleading deficiencies, otherwise its deficient pleas were effectively to be permanently struck out.
In due course, given the pendency of the further application by the CITIC parties, I issued (essentially by consent) further programming order on 13 December 2022 (folio 60). By those orders, I programmed a hearing of the CITIC parties' further application for a special appointment on Thursday, 9 March 2023 and ordered the exchange of any outlines of written submissions or affidavits in the period leading up to that fixed special appointment.
To that end, a number of written materials were duly received from each side, which I will identify next.

Materials relied upon for the purposes of the further strikeout application

The CITIC parties' further strikeout application under its chamber summons of 29 November 2022 is, as mentioned, directed against Mineralogy's 2A-FASOC of 8 November 2022.
This pleading is an ongoing evolution in some respects beyond the pleas under the FASOC of 25 March 2022 and the minute of 2FASOC of 8 June 2022. (Pursuant to order 2 of the orders of 6 October 2022, Mineralogy was granted leave to replead the struck-out parts of its earlier pleading and particulars - so that the 2A-FASOC challenged under the present application is a pleading, rather than a minute of a pleading.) A further challenge was always envisaged if Mineralogy's efforts at rehabilitation by amendments were not accepted by the CITIC parties.
Further, there are now also the 2A-FA Particulars of 8 November 2022, given by Mineralogy to be incorporated into the overall evolved pleading horizon.
Because the situation is still something of a moving feast, I propose to set out the impugned pleas and their particulars for the purpose of precisely identifying what is in fact the subject matter of this further strikeout application.
First, however, I should note that the CITIC parties' strikeout application no longer directs a challenge against any of the amended pleas found under par 13(a) of the 2A-FASOC. Hence, whilst not accepting the ultimate merit of that plea, the CITIC parties no longer challenge its formulation (read with the 2A-FA Particulars provided on 8 November 2022).
The currently pressed challenges under the CITIC parties' strikeout application by its chamber summons of 29 November 2022 are directed at 2A-FASOC pars 13(b) to 13(d) inclusive.
For proper context, I will set out all of pars 13(a) through (d) in consolidated form, being the residual pleas pressed - whilst omitting the no longer impugned pleas under par 13(a)(i), (vii), (viii), (ix), (x), (xviii), (xix), (xxii), (xxiv) and (xxxii).

The relevant clauses as relied upon by Mineralogy

Still before that, however, I must point out that this contractual breach action is predicated upon arguments over the proper construction and application of a contractual provision - being cl 27(a)(xiii) as it manifests in essentially identical form in the Sino Iron Mining Right and Site Lease Agreement ('Sino Iron MRSLA') and the Korean Steel Mining Right and Site Lease Agreement ('Korean Steel MRSLA') (together, 'the MRSLAs').
Clause 27(a)(xiii) in each MRSLA reads:
(a)Sino[/Korean] hereby covenants with Mineralogy at all times during the Term:
...
(xiii)to pay all of Mineralogy's costs in administering this Agreement and Mineralogy's delegation thereunder.
Use of the word 'administering' vis-à-vis the noun 'agreement' presents immediate interpretive difficulties. The word 'administering' as defined in the New Shorter Oxford English Dictionary connotes a management task of some kind. Hence, the definition of 'administer' is given as:
Originally: to perform or execute (a task, office, etc.).
Later also (now more usually): to carry out or oversee the tasks necessary for the running of (an organisation) or to the effecting of (a state of affairs); to manage, run (an operation, affairs, etc.); to manage the affairs of (an institution, community, etc.).
Use of the word 'administering' rather than 'administer' suggests an active work function rather than something more passive. The phrase 'Mineralogy's delegation' thereunder also carries with it levels of opaqueness. By cl 29.1 in each of the MRSLAs, Mineralogy provides a number of warranties to the counterparty (either Sino Iron or Korean Steel), reading in the following terms:
29.1Warranties
Mineralogy represents and warrants to and for the benefit of Sino[/Korean] that:
(a)the Mining Leases and Other Tenements are legal, valid and subsisting, and no notice to cancel the Mining Leases or Other Tenements has been received by or on behalf of Mineralogy;
(b) Mineralogy is the sole registered holder and beneficial owner of the Mining Leases and Other Tenements free and clear of encumbrances;
(c)the Mining Leases and Other Tenements are in good standing and in full force and effect;
(d)the Mining Leases and Other Tenements are not liable to forfeiture or non-renewal and all obligations with respect to the Mining Leases and Other Tenements have been complied with; and
(e)the Mine Area contains Mineral Resources sufficient to enable Sino[/Korean] to obtain Magnetite Ore up to the Total Extraction Limit.
Subclause 29.2 of the MRSLAs then elaborates under subpars (a) and (b) concerning warranties that are not given by Mineralogy.
Plainly, the MRSLAs present as long-term agreements in character. They contemplate grants by Mineralogy of so-called sublease rights (see cl 2 - albeit its subject matter is statutory mining tenements in the character of personalty) and the grant of mining rights (see cl 3). 'Site Lease Area' (as defined in the MRSLAs) is the subject of grant under cl 4.
However, those grants all occurred when the MRSLAs were first perfected at 21 March 2006. With the subsequent acquisitions and takeovers of those Mineralogy subsidiary corporations, after 21 March 2006 there were further amendments and variations made to each of those instruments. The Sino Iron MRSLA was the subject of a deed of variation at 31 March 2006 and then a deed of amendment at 8 January 2008. The Korean Steel MRSLA was the subject of amendment and variation at 22 October 2008.
The structuring of the MRSLAs can be seen as broadly divided into two phases. First is the establishment phase, during which a Sino Iron Project is established by infrastructure works - essentially to create from very little a magnetite ore extraction and processing facility, along with an export port operation for the processed concentrate product from the port of Cape Preston.
After the establishment phase, the Sino Iron Project, with its established facilities, enters a production phase. At that point, Mineralogy essentially becomes a passive royalty recipient in respect of its Royalty Component A and Royalty Component B entitlements (as defined in cl 8.2(a) of the MRSLAs). Naturally, Mineralogy would then be personally interested to ensure it receives the correct level of payment in respect of its ongoing royalty entitlements under the MRSLAs. But whether monitoring to keep abreast of its own remuneration rights by royalty entitlements can amount to it 'administering' each MRSLA, is far from obvious.
As will be seen, Mineralogy appears to take the view that it litigating over, about or in relation to the MRSLAs is always enough to engage with cl 27(a)(xiii) in each MRSLA. Mineralogy also takes the view that its monitoring of compliance with the contractual entitlements of Sino Iron and Korean Steel regarding annual extraction limits of magnetite ore, maximum production and the total extraction limit of magnetite ore amounts to Mineralogy administering the MRSLAs. That interpretive position again is a matter for a trial determination.
For Mineralogy's contended interpretive position upon cl 27(a)(xiii), the current statement of claim (2A-FASOC) pleads affirmatively concerning an advocated interpretation of that clause, albeit in the alternative. This can be seen by the par 13B and par 13C pleas under the 2A-FASOC. The par 13B plea reads:
13BOn a proper construction of clause 27(a)(xiii), Mineralogy's costs of administering the MRSLAs are all costs incurred by Mineralogy, including legal costs incurred by Mineralogy in legal proceedings, by its activities in connection with the MRSLAs. (my emphasis in bold)
An alternative interpretation is further pleaded under par 13C, reading:
13CFurther or alternatively, on a proper construction of clause 27(a)(xiii), Mineralogy's costs of administering the MRSLAs includes all costs in connection with managing the MRSLAs, ensuring the MRSLAs are performed fairly and in the correct way and that their terms are given their proper effect at law, including by instituting and defending legal proceedings. (my emphasis in bold)
As may be appreciated, these pleas are pitched in very broad terms, particularly by use of the notoriously sweeping phrase 'in connection with'.
It is important to appreciate at the present time that I am not concerned at all with arguments challenging whether or not Mineralogy has raised a reasonably arguable cause of action - essentially for breach of the MRSLAs by Sino Iron or Korean Steel or for the enforcement of express contractual terms. Rather, the challenge, as before, is instead grounded on the alleged obscurity and lack of detail provided in the respective par 13 pleas.
I can finally turn to the presenting pleas under par 13 of Mineralogy's 2A-FASOC.

The par 13 pleas under the 2A-FASOC

For the purpose of identifying the targets of the CITIC parties' latest strikeout application of 29 November 2022, it is first necessary to view the par 13 plea as a whole. In an endeavour to assist the exercise I have also incorporated the latest relevant answers to particulars as have been provided for pars 13(b), 13(c) and 13(d) under the 2A-FA Particulars as amended and filed by Mineralogy on 8 November 2022.

I point out before setting down these pleas and their particulars that, as might be expected, some of Mineralogy's pleas changed yet again - or, more correctly, were sought to be revised by leave - during the course of the timetabling of this application.
That occurred by reference, first, to a minute of proposed Third Further Amended Statement of Claim provided by Mineralogy on 27 February 2023 ('3FASOC') (folio 63).
This minute seeks to deliver, in the wake of the CITIC parties' expressed challenges, further proposed amendments to par 13(b), par 13(c) and par 13(d).
Naturally, the CITIC parties object strongly to any further changes. They point out, correctly, that by the earlier strikeout reasons delivered 30 September 2022, I had effectively allowed Mineralogy one brief further opportunity to correct the identified deficiencies with its fallen par 13 pleas.
The CITIC parties now say, with some force, that the last rehabilitation opportunity was used up by Mineralogy under the position pleaded at 8 November 2022. They say that if what Mineralogy had proffered at that time is still evaluated as inadequate, then that should be the end of the matter.
When the strikeout application came on for argument in chambers before me on Thursday, 9 March 2023, I detected there to be a certain measure of equivocation expressed towards Mineralogy's position in it contending that the state of its 2A-FASOC (as particularised at 8 November 2022) was then unimpeachable. However, through senior counsel, Mineralogy also wished to contend at the same time that the marked-up amendments seen under its more recent minute of 3FASOC - read with even further amended responses to particulars of 27 February 2023 ('3FA Particulars') (folio 64) - could remedy any concerns that the court might still hold as exposed upon the present application.
That articulated stance, by my assessment, was unsatisfactory from Mineralogy in terms of failing to 'nail its colours to the mast'. Hence, I indicated to counsel that either Mineralogy was seeking to defend the position it had pleaded and particularised at 8 November 2022, or it was not. Clarity about that was important, particularly in the context of Mineralogy being offered a last opportunity to correct a potentially deficient position as explained in my reasons of 30 September 2022 and the orders of 6 October 2022 (which, unusually, were not the subject of any appeal).
In the end, the ostensible position reached was that senior counsel for Mineralogy, whilst making no concessions concerning the state of the pleading at 8 November 2022, was nevertheless affirmatively moving for leave to amend in accord with the later minute of 3FASOC of 27 February 2023, amplified by the 3FA Particulars filed 27 February 2023.
Given the position as stated at 30 September 2022 concerning those defective pleas and the brief further opportunity to attempt to remedy the deficiencies, it becomes necessary to form a view as to whether the amended position set down for Mineralogy under its pleading and particulars at 8 November 2022 remained defective or not. If that pleading position was defective, then the CITIC parties strongly contend that it should be the end of matters.
In the overall interests of justice, however, if I do reach the position of identifying an ongoing deficiency in any of Mineralogy's revised pars 13(b), 13(c) and 13(d) pleas then I will look at its further proposed minute (3FASOC) towards allowing those revised pleas to proceed to a trial. That, of course, is a further indulgence to Mineralogy. But my assessment is that any prejudice to the CITIC parties can, if necessary, still be remedied by an indemnity costs order.

The impugned pleas

13

13

It is finally necessary to set down and capture the position as pleaded by Mineralogy by par 13 at 8 November 2022. I do that below, whilst pausing at points along the way to explain.
By par 13 in the 2A-FASOC, introduced by its common chapeau, Mineralogy pleads:
13.As a result of administering the MRSLAs (properly construed as pleaded in pars 13B and/or 13C above), [Mineralogy] has incurred costs of $18,555,449.90 (to the date of filing this proceeding), as follows:
(a)$11,641,297.26 of legal costs in respect of the following legal proceedings commenced or opposed by some or all of the defendants pertaining to the MRSLAs and recoverable as comprising costs incurred by the plaintiff in administering the MRSLAs ...
As I earlier indicated, there is no longer any strikeout challenge directed against the amended content of par 13(a) for the purposes of the present strikeout application. Consequently, I do not set out its 10 remnant components. During argument it was said by counsel that the legal costs sought by reference to the identified civil actions in various superior courts were only sought to be recovered in circumstances where Mineralogy had been successful. There was some dispute over that, with the CITIC parties contending that for some of the remnant actions mentioned Mineralogy had not been successful. Those are disputes for another day.
I further observe that the plea would look by reference to par 13(a)(xxiv) to proceed on the basis of excluding any legal costs recovered by Mineralogy pursuant to a taxation or mediated outcome. Hence, the notion of any double recovery of costs looks to be (correctly) accepted as wholly inappropriate by Mineralogy.

2A-FASOC: par 13(b)

I move to expose the still-impugned par 13(b) of the 2FASOC of 8 November 2022. It reads, under the chapeau seen earlier:
(b)$2,923,942.72 of the plaintiff's internal costs incurred by it in administering the MRSLAs in that:
(i)As a mining company, Mineralogy employed personnel with expertise in mining, processing and shipping magnetite concentrate;
(ii)the plaintiff established an office in Perth, Western Australia;
(iii)in addition to personnel with technical expertise, Mineralogy employed personnel to provide managerial services and administrative support;
(iv)certain of the personnel were situated in the Perth office;
(v)the Perth office housed the plaintiff's employees, as follows:
AChaminda Abeyweera;
BJan Robert Banach;
CChunyan Chen;
DHongYan Chen;
EMichael John Dunham;
FRobert Brian Fiebig;
GGabriel Harfouche;
HPaul Robinson;
IVashil Sharma;
JVimal Sharma;
KChristopher Peter J Spielvogel;
LSoo Jin Tay;
MBaljeet Singh;
(vi)the employment of personnel situated in the Perth office enabled Mineralogy to perform its functions under the MRSLAs;
(vii)Mineralogy's principal operational and managerial function under the MRSLAs is to be the grantor of the mining right and of the site lease, to maintain the tenements and to receive a royalty;
(viii)the purpose and function of the Perth office and the employees based in the Perth office was to manage the relationship with the defendants under the MRSLAs and other contracts in the parties' suite of interconnected agreements, by ensuring performance of Sino and Korean's obligations and exercise of Mineralogy's rights under the MRSLAs;
(ix)the employees based in the Perth office conducted activities in connection with the MRSLAs by:
Apreparing and sending communications and notices under the MRSLAs to Sino and Korean;
Breviewing and considering reports, returns, communications and other information under the MRSLAs from Sino and Korean;
Cconducting and assisting in the conduct of legal proceedings in relation to the MRSLAs;
Dundertaking administrative and managerial activities in support of other employees in the plaintiff's Perth office and Brisbane office;
(x)the sum claimed under this category comprises wages and superannuation paid to the employees in the plaintiff's Perth office; …
The par 13(b) claim for internal costs has undoubtedly evolved since the earlier 25 March 2022 plea under the FASOC - which simply mentioned 'internal costs' and then later, the plea under the 2FASOC of 8 June 2022 which was little changed, save to increase the sum claimed up to the present level of $2,923,942.72.
How is that amount made up? It is claimed for with absolute precision down to the last 72 cents as expressed under par 13(b) of the 2A-FASOC. It looks to be attributable to wages and superannuation amounts paid to the previously identified 13 Mineralogy employees at Mineralogy's Perth office.
But the CITIC parties continue to complain that this par 13(b) plea is devoid of requisite detail because it fails to capture precisely how the work of any of those employees arguably falls within the embrace of 'costs in administering the [MRSLAs]'. They say that deploying vacuous phrases such as 'managing the relationship' or 'ensuring performance of obligations' do not deliver the necessary linkage details to 'administering' anything.
The CITIC parties allege that conducting and assisting in legal proceedings in undefined ways by persons who are not lawyers just poses further questions.
Undertaking administrative and managerial activities in support of other employees only regurgitates the primary content of cl 27(a)(xiii) of the MRSLAs vis-à-vis 'administering'.
It is necessary to unlock some components of Mineralogy's particulars as provided by the 2A-FA Particulars at 8 November 2022. Some responses directed to amplifying the content of the par 13(b) pleas emerge between page 176 (response 477) to page 180 (response 484). To avoid cluttering these reasons any further, I shall incorporate those responses concerning par 13(b) as Schedule 1 to these reasons. In short, however, they are ultimately found to be disappointing. Morsels of further details provided under response 478 reveal that the internal costs comprise staff costs 'except legal staff costs'.
Those staff costs are also said to be 'allocable' to Mineralogy's administration of the MRSLAs. However, I observe that the basis of the suggested allocation, if there was one, is left tantalisingly unstated from any empirical perspective.
Response 479 reveals that these were costs incurred by Mineralogy between 1 January 2014 and 10 February 2021. Under amended response 483, it is said:
…The whole of the employee's [sic] wages and super are claimed as the Perth Office and the employees situated there were employed to facilitate Mineralogy's performance of its obligations and exercise of its rights under the MRSLAs. ...
That detail tends to suggest that the entirety of the wages and superannuation entitlements paid out to the named employees is being claimed as Mineralogy's costs of administering the MRSLAs across essentially a period of seven years, one month and 10 days.
Response 483 then provides six tables of employee wages and super information across six different periods. The first period was for the six months between 1 January 2014 to 30 June 2014. The last period was for 1 July 2019 to 30 June 2020. Only Mr Christopher Spielvogel's wages and superannuation feature in the last three of the six tables provided. I have calculated the aggregate sum of those tables to reach $3,167,098.23. That amount does not align with the stated figure of $2,923,942.72.
By my assessment, even incorporating the recent information provided in the amended 2A-FA Particulars at 8 November 2022, there still remains an unacceptable information void concerning why it is that these internal wages and superannuation employee costs for the named staff of Mineralogy's Perth office can be assessed as Mineralogy's costs of administering the MRSLAs. More is called for than the deployment of vacuous phrases.
The mining tenements provided under the MRSLAs by way of grant from Mineralogy to Sino Iron and Korean Steel occurred back in 2006, with some amendments in 2008. As the principal tenement holder, Mineralogy would undoubtedly need to ensure the good standing of those tenements in order to comply with its own statutory tenement obligations. On the face of it, Mineralogy incurring costs to keep its tenements in good order does not amount to it administering the MRSLAs. Something more is required.
One possible example of engagement with cl 27(a)(xiii) might be costs incurred in the context of Mineralogy administering by oversight the site remediation work obligations as are identified under cl 20.4 of each MRSLA. But largely, the MRSLAs, once they reach the production phase (as they have), otherwise see Mineralogy as essentially a passive recipient of royalties during the production phase of the Sino Iron Project. Consequently, the claim for reimbursement of the wages and superannuation paid to those 13 employees in Mineralogy's Perth office, with most of those staff engaged in the 12-month period to 30 June 2016, presents as requiring far more empirical justification in order to connect the work of those staff with an activity that may be identified as arguably administering the MRSLAs.
By my assessment, the 2A-FASOC pleading, read with the 2A-FA Particulars provided at 8 November 2022, is still shrouded in fog. That assessment needs to be read with the long and wholly unsatisfactory prior pleading history as is collected under the 30 September 2022 reasons. What was a brief and final opportunity for Mineralogy to provide further information has been expended without fixing the underlying pleading problem for par 13(b).
A final question is whether anything provided (albeit late and out of time) under the minute of 3FASOC of 27 February 2022 and in the minute of 3FA Particulars of 27 February 2023 can assist in providing the missing clarity to that par 13(b) landscape.
Again, because it is cumbersome, I will incorporate responses 477 to 483C and 484 as Schedule 2 to these reasons - spanning pages 66 to 74 of the minute of the 3FA Particulars of 27 February 2023.
From that minute, significant augmentations marked in blue are seen for what is added as further content to response 482 as regards compliance aspects of the MRSLAs, excision of the words 'principal' and 'included' in response 483, deletion of the last line referring to a provision of expert reports in response 483 (prior to the provision of the table for the period 1 January 2014 to 30 June 2014), the added content of response 483A concerning communications and notices the subject of the par 13(b)(ix)(A) plea with subcomponents a to u and a new response 483B concerning the plea under par 13(b)(ix)(B).
Likewise, see new response 483C as to the par 13(b)(ix)(D) claim for internal costs. These became the subject of further submissions by the CITIC parties under their reply filed 7 March 2023 (folio 65). In particular, concerning the par 13(b) plea, see pars 12 to 19 of those submissions (pages 5 to 8) which, again for ease of reference, I incorporate as Schedule 3 to these reasons.
But this slow drip feed of morsels of information over time from Mineralogy, in my view, remains unacceptable. I am cognisant of the submission of senior counsel for Mineralogy to the effect that (correctly) its obligation is to plead only material facts, not evidence. Mineralogy has gone further and set down its contended alternative interpretations of cl 27(a)(xiii). Essentially, it is said, no more is required of Mineralogy.
On my assessment, when a party is relying upon a contractual provision to recoup its owned expended internal costs from another party in circumstances where the basis for that recovery is predicated upon a porous term - such as 'administering' a particular contractual agreement - then common sense and basic fairness dictates that the counterparty should know the case that it is being asked to meet before trial.
Here, the position has always been, and remains, a matter for speculation.
The final opportunity envisaged under the reasons of 30 September 2022 was provided in terms which communicated then to Mineralogy the unmistakable problems with the deficiencies of its pleading. The subsequent attempts at rehabilitation are inadequate.
Mineralogy carries an onus at the civil standard to establish at trial why it is that any of its outlaid internal wages and superannuation costs for 13 employees in its Perth office at one time are contractually capable of being recouped on a basis that apparently all activities of those employees were in, or were related to, Mineralogy's administration of the MRSLAs.
As to why or how that might be put to be engaged, the murky mist surrounding Mineralogy's position for a trial has not been lifted satisfactorily to allow a fair trial to proceed, notwithstanding ample opportunity for that to be explained. Enough is enough.
Consequently, I strike out par 13(b) in the 2A-FASOC of 8 November 2022 and I refuse Mineralogy leave to amend any further its par 13(b) pleading in accord with the late minute of 3FASOC of 27 February 2023.
The plea under par 13(b) will be permanently struck out. I assess it as legally embarrassing to the point of being so unclear that to allow any trial to proceed upon it would be unfair, indeed vexing, to the CITIC parties.

2A-FASOC: par 13(c)

This plea under the common par 13 chapeau came to be amended under the 2A‑FASOC to read:
13.As a result of administering the MRSLAs (properly construed as pleaded in paragraphs 13B and/or 13C above), the plaintiff has incurred costs of $18,555,449.90 (to the date of filing of this proceeding), as follows:
...
(c)$3,173,356.27 of other legal costs incurred by the plaintiff in administering the MRSLAs, in that:
(i)the plaintiff incurred legal costs as counsel's fees in relation to Supreme Court of Western Australia proceedings CIV 2338 of 2012 Mineralogy Pty Ltd v Sino Iron Pty Ltd & Korean Steel Pty Ltd, the 'Royalty A' litigation. The litigation concerned the payment of Royalty Component A under the MRSLAs;
(ii)the plaintiff incurred costs by service providers providing legal consultancy services in relation to disputes with the defendants, including in relation to Royalty Component A, Royalty Component B and Supreme Court of Western Australia proceeding CIV1808 of 2013;
(iii)the plaintiff incurred costs charged by an expert in iron ore pricing to validate payments of Royalty Component B under the MRSLAs;
(iv)the incurring of the other legal costs enabled the plaintiff to perform its functions under the MRSLAs;…
Under the later minute of 3FASOC of 27 February 2023, undoubtedly then in response to the CITIC parties' further strikeout criticisms, Mineralogy foreshadowed seeking leave to adjust the 2A-FASOC even further by excising the word 'including' from subpar (c)(ii). Given the relatively small magnitude of that change, I shall assess the par 13(c) plea on the basis of that excision now sought by Mineralogy.
Like the other pleas, par 13(c) must be assessed in the context of the 2A-FA Particulars of 8 November 2022. Relevantly, these responses are found at pages 181 to 193, under responses 485 to 501. For convenience, and to avoid clutter, I will incorporate those responses from the 2A‑FA Particulars as Schedule 4 to these reasons.
Again, it will be remembered that the CITIC parties' challenge is essentially upon the basis of a contended lack of detail to show a sufficient connection between the costs claimed and an activity on the part of Mineralogy in administering the MRSLAs. As for par 13(b), there is the minute of 3FA Particulars of 27 February 2023 which seeks in light of the criticisms of the CITIC parties on the present application to augment its responses to the requested particulars even further.
For those amended responses, see pages 76 to 86 - that is, Mineralogy's responses 485 through 501. I will incorporate those responses as Schedule 5 to these reasons.
In particular, I draw attention to the excision of the word 'include' in the chapeau to response 487, the identification of eight Mineralogy staff members under response 487b and the addition at the end of 487b of a statement reading 'the amount of the wages are matters for evidence'.

The changes to these responses from the perspective of adjustments to the tables are mainly found in table I ‑ by a deletion of the common phrase 'disputes with the CITIC Parties'.
The second tranche of written submissions from the CITIC parties, being their written submissions of 7 March 2023, engage with Mineralogy's evolved par 13(c) as at 27 February 2023 at pars 20 to 31 of those written submissions (see pages 8 to 11). Again, for convenience and to avoid clutter, I will collect that component of the CITIC parties' written submissions as Schedule 6 to these reasons.
Putting aside amounts referable to counsel fees, external service providers and for an expert witness (the Brierley Family Trust), the substantive component of a total amount of $3,173,356.27 claimed under par 13(c) is revealed under response 487b in Schedule 5 to be Mineralogy's legal staff costs of $2,795,397 for the period from 1 July 2006 to 10 February 2021. A given qualification, however, reads:
to the extent that those costs are not allocated to any of the proceedings listed in [13(a)] of the plaintiff's statement of claim.
The claim then looks to be for a proportion of the wages for staff of Mineralogy attributable to matters involving the CITIC parties and by reference to the eight named staff - Singh, Smith, Morgan, Robinson, Rose, Jones, Browning and Jacobson - accompanied by an observation that 'the amount of the wages are matters for evidence'.
Consequently then, the claimed amount, which is precise down to the last 27 cents under par 13(c), looks to relate to more of Mineralogy's staff costs (making the assumption that the identified persons concerned are legal practitioners or paralegals all working for Mineralogy as employees) but not to any of the 10 par 13(a) civil litigation actions as identified.
Response 487b states that Mineralogy is claiming a proportion of staff wages. However, the proportion and the mechanism of deriving any such proportion is left unstated. Presumably, this is said to be for evidence at trial.
Focusing upon Mineralogy's other legal costs for its staff under par 13(c) (ie, tables E, F, H, I and J) and reading the plea with the particulars, I would accept, as the CITIC parties infer, that this amount of almost $2.8 million is referable to the plea seen under par 13(c)(iv), reading:
the incurring of the other legal costs enabled the plaintiff to perform its functions under the MRSLAs;…
There is as well the amplification from the 3FA Particulars of 27 February 2023 for this plea - referable ultimately to the claim for almost $2.8 million. The residual basis for amplification under response 501 reads:
Legal costs were incurred with respect to ensuring the terms of the MRSLA were given their proper effect at law, Mineralogy contends that the other legal costs were costs incurred in the administration of the MRSLAs. Mineralogy's position will be advanced by way of evidence and legal arguments served during the course of these proceedings. The principal activities and conduct are those identified in paragraphs [488] to [500].
I must reject the assertion by Mineralogy that, in effect, anything beyond what has been provided by its minutes at 27 February 2023 are only matters for evidence. Essentially, a claim that almost $2.8 million of Mineralogy's legal staff costs are necessarily attributable to Mineralogy administering the MRSLAs on some residual basis - by reference to legal matters outside the 10 civil actions mentioned under par 13(a) - is grossly obfuscatory.
In relation to the $2.8 million amount, I would accept as correct the written submission by the CITIC parties, particularly at par 22 of their written submissions in reply of 7 March 2023. Here they contend:
Other than paragraph 487(b), the only part of the 3FA Particulars applicable to these staff costs is paragraph 501, which remains in the same form as paragraph 501 of the 2FA Particulars. The objections raised by the defendant to the pleading and particularisation of the $2.8M legal staff costs claim - set forth at [CITIC parties’ submissions] [33] - [35] - remain and are not addressed by the 3FASOC and the 3FA Particulars.
As the CITIC parties assert at par 24, the nature and content of the $2.8 million claim in the end, after too much digging, remains nebulous and embarrassing. Regrettably, I can only agree that there is a marked lack of any real information regarding the relevant activities undertaken by the eight named employees as identified under amended response 487b.
Likewise, the criticism of the rider concerning costs not being allocated to any of the proceedings in par 13(a) only renders matters more confusing.
As the CITIC parties say, that begs the obvious question: 'what are these legal costs and how is it said that the costs of Mineralogy's legal staff between July 2006 and February 2021 were costs incurred in administering the MRSLAs?'
I agree that there remains a legally embarrassing lack of detail in relation to that legitimate question. It needed to be addressed satisfactorily prior to trial and cannot be pushed away now on the basis that it is evidence for trial. Without the appropriate details, the CITIC parties have not been fairly appraised of the case they have to meet at a trial. Failure to disclose the proportionality reasoning said to have been applied to the costs is also unacceptable.
Essentially then, I strike out par 13(c) in part, other than to permit Mineralogy to amend by reference to amounts identified in tables E, F, H, I and J, and to pursue by reference to those tables the amount of $377,959.27 only under an amended par 13(c). I have calculated this amount by subtracting the $2,795,397 claimed by Mineralogy for legal staff costs from the total $3,173,356.27 claimed under par 13(c) as costs incurred in 'administering the MRSLAs'.

2A-FASOC: par 13(d)

Last, I reach par 13(d) concerning a claim for $816,853.70 of rent floor fees. Here the issue can be dealt with more briefly.
Arguments ultimately distilled to a position whereby the claim for Mineralogy's rent in respect of its leased West Perth premises for employees must stand or fall along with the fate of the pleas under par 13(b) and par 13(c).
I have allowed a remnant claim of $377,959.27 for barristers, external service providers and a trial witness expert amount to remain under par 13(c).
More significantly, however, I have disallowed and struck out the residually inadequate pleas concerning Mineralogy's endeavours to pursue a recoupment of its employees' wages as internal costs under par 13(b) and also legal staff costs under par 13(c) of the plea.
Consequently, the claim to recoup office premise rent across the period 20 July 2015 to 16 December 2020 (as detailed in the table the subject of Mineralogy's response 508 in the 2A-FA Particulars) is correlatively struck out as well.

Conclusion and orders

In the end, I strike out pars 13(b) and 13(d). I decline to grant leave to Mineralogy to amend those pleas any further. In relation to par 13(c), I strike it out, save for the claim to the amount of $377,959.27 - as I have explained in the reasons.
Orders should issue accordingly. Prima facie, the costs of this application should be borne by Mineralogy as the substantively unsuccessful party.

SCHEDULE 1 - 2A-FA Particulars: page 176 to page 180

SCHEDULE 2 - 3FA Particulars: page 66 to page 74

SCHEDULE 3 - CITIC parties' submissions in reply: page 5 to page 8

SCHEDULE 4 - 2A-FA Particulars: page 181 to page 193

SCHEDULE 5 - 3FA Particulars: page 76 to page 86

SCHEDULE 6 - CITIC parties' written submissions: page 8 to page 11

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
VC
Associate to the Honourable Justice K Martin
11 MAY 2023