Mining Standards International Pty Ltd v Atlantic Nickel Mineracao Ltda (No 2)
[2024] FCA 666
•24 June 2024
FEDERAL COURT OF AUSTRALIA
Mining Standards International Pty Ltd v Atlantic Nickel Mineracao Ltda (No 2) [2024] FCA 666
File number: QUD 355 of 2021 Judgment of: DERRINGTON J Date of judgment: 24 June 2024 Catchwords: PRACTICE AND PROCEDURE – whether proceedings ought to be permanently stayed as an abuse of process – where earlier proceedings had been brought against applicant by the cross-respondents – where complaints made that applicant did not bring claims now raised as a cross-claim in the earlier proceedings – where applicant was financially unable to pursue any cross-claim – where applicant was transparent about its intention to pursue further claims – where relief sought in earlier proceedings was confined – where two proceedings concern different issues – abuse of process not established Legislation: Constitution
Competition and Consumer Act 2010 (Cth)
Corporations Act 2001 (Cth)
Federal Court of Australia Act 1976 (Cth)
Federal Court Rules 2011 (Cth)
Evidence Act 1906 (WA)
Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, opened for signature 18 March 1970, 847 UNTS 231 (entered into force 7 October 1972)
Cases cited: Aavelaid v Dental Board of New South Wales (New South Wales Court of Appeal, Mason P, Meagher and Beazley JJA, 16 October 1998)
Ah Toy v Registrar of Companies (1985) 10 FCR 280
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Australian Commercial Research and Development Limited v ANZ McCaughan Merchant Bank Limited [1990] 1 Qd R 101
Blair v Curran (1939) 62 CLR 464
CBRE (V) Pty Ltd v Trilogy Funds Management Ltd (2021) 107 NSWLR 202
Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245
Deep Investments Pty Ltd v Casey (2018) 125 ACSR 564
Egglishaw v Australian Crime Commission (2007) 164 FCR 224
General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125
Gibbs v Kinna [1999] 2 VR 19
Henderson v Henderson (1843) 67 ER 313
Johnson v Gore Wood & Co [2002] 2 AC 1
Lantrack Holdings Pty Ltd v Yammine [2023] FCAFC 156
Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 2] [2021] WASCA 105
Minero Pty Ltd v Redero Pty Ltd (Supreme Court of New South Wales, Santow J, 29 July 1998)
Mining Standards International Pty Ltd v Atlantic Nickel Mineracao Ltda [2022] FCA 623
Mirabela Nickel Ltd (in liq) (receivers and managers appointed) v Mining Standards International Pty Ltd (No 5) [2023] WASC 62
Mirabela Nickel Ltd (in liquidation) (receivers and managers appointed) v Mining Standards International Pty Ltd [2020] WASC 4
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Re Mirabela Nickel Ltd (receivers and managers appointed) (in liq); ex parte Madden [2018] WASC 335
Redowood Pty Limited v Link Market Services Pty Limited (formerly known as ASX Perpetual Registrars Limited) [2007] NSWCA 286
Robinson v Deep Investments Pty Ltd (2018) 364 ALR 305
Secure Parking (WA) Pty Ltd v Wilson [2012] WASCA 230
Shephard v Chiquita Brands (South Pacific) Ltd [2002] FCA 466
Solak v Registrar of Titles (2011) 33 VR 40
Stokes v Toyne [2023] NSWCA 59
Timbercorp Finance Pty Ltd v Collins (2016) 259 CLR 212
Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507
Trilogy Funds Management Limited as trustee and responsible entity of the Pacific First Mortgage Fund v CBRE (V) Pty Ltd [2021] NSWSC 883
Tyne (Trustee of the Argot Trust) v UBS AG [2019] FCA 628
UBS AG v Tyne (2018) 265 CLR 77
Victoria International Container Terminal Ltd v Lunt (2021) 271 CLR 132
Williams v Spautz (1992) 174 CLR 509
A V Dicey, A Treatise on the Rules for the Selection of the Parties to an Action (William Maxwell & Son, 1870)
Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 289 Date of hearing: 9 – 10 October 2023 Counsel for the Applicant and the First and Second Cross-Respondents: Mr M Stewart KC with Mr M Doyle and Mr T Jackson Solicitor for the Applicant and the First and Second Cross-Respondents: Russells Counsel for the Respondent and the Cross-Claimant: Mr P Collinson KC with Mr M Hickey Solicitors for the Respondent and the Cross-Claimant: Allens and King & Wood Mallesons Counsel for the Third and Fourth Cross-Respondents: Mr S Wong with Ms B Kabel (on 9 October 2023) and Mr K Dharmananda SC with Mr S Wong and Ms B Kabel (on 10 October 2023) Solicitor for the Third and Fourth Cross-Respondents: Clayton Utz ORDERS
QUD 355 of 2021 BETWEEN: MINING STANDARDS INTERNATIONAL PTY LTD ACN 609 749 635
Applicant
AND: ATLANTIC NICKEL MINERACAO LTDA (CNPJ 74.127.010/0001-29)
Respondent
AND BETWEEN: ATLANTIC NICKEL MINERACAO LTDA (CNPJ 74.127.010/0001-29)
Cross-Claimant
AND: MINING STANDARDS INTERNATIONAL PTY LTD ACN 609 749 635 (and others named in the Schedule)
First Cross-Respondent
ORDER MADE BY:
DERRINGTON J
DATE OF ORDER:
24 JUNE 2024
THE COURT ORDERS THAT:
1.The respondent’s interlocutory application dated 9 June 2023 be dismissed.
2.The third and fourth cross-respondent’s interlocutory application dated 9 June 2023 be dismissed.
3.The parties are to be heard on the question of costs.
4.The matter be listed for a case management hearing at 10:30 am on 10 July 2024.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
DERRINGTON J:
INTRODUCTION
“And if you’re impecunious, well, you shouldn’t be litigating”. That was a submission made on behalf of Atlantic Nickel Mineração Ltda (Atlantic Nickel), a multimillion-dollar Brazilian mining company with substantial resources, in support of its claim that the present proceedings brought against it by Mining Standards International Pty Ltd (MSI) should be stayed for being an abuse of process. The substance of that submission was that MSI is not entitled to rely upon its previous financial inability to join Atlantic Nickel as a cross-respondent in earlier proceedings in which MSI had been sued, as an answer to Atlantic Nickel’s claim that MSI’s present action against it is an abuse of process. This, it was said, followed from the decision of the High Court in UBS AG v Tyne (2018) 265 CLR 77 (UBS v Tyne). Whilst it is possible to discern a suggestion of that in the decision, it is not clear that it goes so far. Rather, it would appear that a lack of funds can be relevant to assessing whether, in the totality of circumstances, a failure to bring certain claims, including a counterclaim or cross-claim, in earlier proceedings renders a subsequent action an abuse of process.
Central to this case is an agreement for the sale of the shareholding in the respondent company, Atlantic Nickel, to the applicant, MSI, which did not proceed. That agreement involved several parties including Atlantic Nickel, MSI and the two Australian companies that owned the shares (which are known as “quotas” under Brazilian law), being Mirabela Nickel Ltd and Mirabela Investments Pty Ltd (the Sellers). It also included the receivers of the Sellers’ property (which included the shares), being Mr Martin Madden, Mr Scott Langdon and Mr Richard Tucker of KordaMentha (the Receivers). On 22 November 2017, the Sellers and the Receivers purported to terminate the agreement in reliance on the non-fulfilment of a condition requiring MSI to obtain funding to pay the purchase price within 14 days of the exchange of signed copies of the agreement. When that occurred, MSI claimed that the agreement had not been terminated, and that it was entitled to specific performance of it. In response, the Receivers and the Sellers commenced somewhat confined litigation in the Supreme Court of Western Australia in which they sought a declaration that the agreement had been validly terminated. That action was brought against only MSI. Atlantic Nickel, which had an obvious interest in the matter, was not joined in any capacity. The proceedings were case managed to a trial, and while the scope of relevant issues both waxed and waned, the central point always remained the validity of the purported termination. Ultimately, the Court refused to make the declaration sought, holding, in essence, that the 14-day period which was required to elapse before the Receivers and Sellers could terminate the agreement had not expired as at the date of the purported termination.
Some time after judgment was reserved in that matter, MSI commenced the present proceedings in this Court seeking damages from Atlantic Nickel in respect of its alleged conduct which, MSI claims, prevented the sale agreement from being completed. Atlantic Nickel, which has not previously been sued on the agreement, now asks the Court to stay the proceedings as an abuse of process, as do the Receivers who have been joined as cross-respondents to the proceedings by Atlantic Nickel. In substance, those parties (who will be referred to collectively as the “stay applicants”) submit that MSI ought to have joined Atlantic Nickel to the initial proceedings for declaratory relief and pursued the claims brought in these proceedings at that time.
At all relevant times from the wrongful termination of the agreement, MSI was anxious to enforce its rights against the parties which it claims are in default. It made written demands upon the potential defendants and went so far as obtaining leave from the Supreme Court of Western Australia to serve Atlantic Nickel out of the jurisdiction. It was, however, unable to fund the pursuit of those claims, and that was despite having approached and negotiated with numerous litigation funders over an extended period. Whilst its attempt to raise funds continued, the Receivers and Sellers brought their proceedings seeking a declaration as to the validity of their purported termination of the agreement. Presumably, they did so believing that a declaration in their favour would relieve them from liability in respect of any of MSI’s claims. Though the Sellers and Receivers sought to provoke MSI into bringing all and any other claims it may have had against them and any other parties in those declaratory proceedings, MSI made it clear that the action should be confined to deciding the declaratory relief which the Sellers and Receivers sought, as that was, essentially, a preliminary issue which would determine the nature of some of the claims which MSI had and as against which parties. Although the judge managing the litigation expressed some concern about that approach, it appears that the proceedings progressed in that fashion.
Once MSI had a sufficient degree of confidence of obtaining funding, it commenced the current proceedings in this Court. It seeks no relief against the Receivers, but only against Atlantic Nickel. That said, the background facts on which it relies encompass many of those which underpinned the issues in the declaratory proceedings. Nevertheless, MSI’s claim does not involve any collateral attack on the ultimate finding in those proceedings — namely, that the agreement was not validly terminated. Rather, it proceeds on that assumption. Nor does MSI seek findings of fact which would give rise to an issue estoppel if the Sellers or Receivers were a respondent. The present proceedings are concerned with Atlantic Nickel’s breach of contract or unconscionable conduct in relation to its performance of the sale agreement. However, MSI does seek to support those claims in reliance on some factual allegations which are inconsistent with some obiter observations made in the reasons for judgment in the declaratory proceedings. That factor is exacerbated by Atlantic Nickel having joined the Receivers in the current proceedings, which is justified given MSI’s reliance, in part, on the Receivers’ conduct in relation to the performance of the agreement.
The determination of whether the present proceedings constitute an abuse of process requires a broad-based consideration of the facts of the case, taking into account the affected public and private interests. For the reasons that follow, the weight of relevant factors leads to the conclusion that no abuse arises and, for that reason, the applications to stay the proceedings should be dismissed.
BACKGROUND FACTS
Atlantic Nickel was formerly known as Mirabela Mineracao Do Brasil Ltda, and for that reason it is sometimes referred to in correspondence between the parties as “MMB”. It will be referred to as Atlantic Nickel in these reasons.
The major asset of Atlantic Nickel is the Santa Rita nickel mine in Bahia, Brazil.
Until about July 2018, more than 99.99% (being 1,284,076,317) of the quotas in Atlantic Nickel were held by Mirabela Nickel Ltd (MBN), and the balance (being 2 quotas) were held by Mirabela Investments Pty Ltd (MBI), which was, itself, wholly owned by MBN (together being the Sellers).
As at 10 November 2017, Atlantic Nickel owed substantial debts, including AUD12.7 million and USD488.7 million to MBN pursuant to various loan agreements, and as at July 2018, it owed approximately USD47 million to Banco Bradesco S.A. (Bradesco), a Brazilian bank. Additionally, it appears that Atlantic Nickel, MBN and MBI were indebted to Certes CT Pty Ltd (formerly AET Structured Finance Services Pty Ltd) (AET) as trustee for the Australian Mirabela Security Trust, in the sum of (at least) USD129.2 million, which debt was secured over all the property and undertakings of MBN and MBI (and is otherwise known as the “Noteholder Debt”).
On about 28 October 2015, the Receivers were appointed by AET to the assets of the Sellers, including the quotas and the loan to Atlantic Nickel (the Assets).
In late August 2017, the Receivers sought bids for the purchase of the quotas and the loan. Bids were subsequently received from, inter alia, MSI and Appian Capital Advisory LLP on behalf of the Appian Natural Resources Fund (Appian).
At all relevant times, Mr Walter Milbourne Junior was the director and controlling mind of MSI.
MSI was the successful bidder and on 1 November 2017, a written agreement was executed by the Sellers, the Receivers and Mr Milbourne on behalf of MSI for the sale of the Assets by MBN and MBI to MSI.
Atlantic Nickel, which was also a party to the agreement, executed that agreement on 10 November 2017.
For convenience, the agreement will hereinafter be referred to as the “ASA”.
The terms of the ASA
The terms of the ASA relevantly included the following:
(a)On the Completion Date, as identified in cl 7.1, the Sellers were to sell the Assets to MSI for USD50 million and MBN was to assign the loan to MSI.
(b)The Sellers’ obligation to transfer the Assets, and MSI’s obligation to pay for them, were subject to certain conditions precedent (the Conditions Precedent). They included:
(i)by cl 2.1(b), MSI obtaining the consent of Bradesco, being a lender to which Atlantic Nickel was indebted (the Bradesco Condition); and
(ii)by cl 2.1(f), MSI executing binding finance agreements for an amount equal to USD50 million, and satisfying all conditions precedent under those finance agreements (the Finance Condition).
(c)By cl 2.2(a), each party was obliged to use all reasonable endeavours to ensure that each Condition Precedent was satisfied as soon as practicable after the date of the ASA and, in any event, before the “End Date”, which was defined to mean 90 days after the date of the ASA or any other date agreed in writing between the Sellers and MSI.
(d)By cl 2.2(b), the Sellers and Atlantic Nickel were obliged to provide all reasonable assistance requested by MSI to satisfy the Conditions Precedent, including providing all reasonable access to the business and employees of Atlantic Nickel, and facilitating access by MSI to Bradesco.
(e)By cl 2.5, any party was entitled to terminate the ASA by notice to the other parties if:
(i)the terminating party had complied with its obligations under clause 2.2; and
(ii)the Finance Condition was not satisfied by the date which was 14 days after the date of the exchange of signed copies of the ASA.
(f)Clause 2.6(c) of the ASA provided:
Between the date of this agreement and the earlier of Completion and termination of this agreement the Sellers and the Company must not, and must procure that any employees of the Company do not:
(i) provide information regarding the Assets to any potential purchaser of the Assets other than the Buyer; or
(ii) solicit any offers for the Assets from any person other than the Buyer.
(g)Pursuant to cl 3, MSI was to pay MBN a deposit of USD100,000 within 7 days of the exchange of signed copies of the ASA.
Clause 9 is also important in the present case because it operated to exclude any personal liability of the Receivers under, or pursuant to, the ASA or in relation to it at the suit of MSI. It also provided that MSI released and discharged the Receivers in relation to any liability. It read:
9Exclusions and Acknowledgements
9.1No liability of Receivers and Managers
(a) The Buyer [MSI] acknowledges and agrees that:
(i)it is not contracting with the Receivers and Managers personally except in relation to this clause 9;
(ii)neither the Receivers and Managers nor any of their Representatives incur any personal liability to the Buyer on any account whatsoever under or pursuant to this agreement;
(iii) the limitations of the Receivers and Managers’ liability under this clause 9 will continue notwithstanding the Receivers and Managers ceasing to act as receivers and managers of the Sellers and will operate as waivers of any claims in tort and restitution as well as under the law of contract; and
(iv)the limitations under this clause 9 will be in addition to, and not in substitution for, any right of indemnity or relief otherwise available to any Seller, or the Receivers and Managers and will continue notwithstanding the transactions contemplated by this agreement being completed.
(b)In consideration of the Receivers and Managers executing this agreement on behalf of the Sellers, the Buyer:
(i) releases and forever discharges the Receivers and Managers, the Receivers and Managers personally and their Representatives to the fullest extent permitted by law from all Claims which (but for this clause 9) the Buyer has had, has now or may at any future time have against the Receivers and Managers or the Receivers and Managers personally on any account whatsoever arising out of or in connection with, flowing from or related to this agreement or any document or circumstance referred to in this agreement; and
(ii) covenants not to sue the Receivers and Managers personally in respect of any liabilities, Claims, demands, suits, causes of action, damages, debts, verdicts and judgments whatsoever whether at law or in equity or under statute which they have or which but for this clause 9 could, would or might at any time hereafter have or have had against the Receivers and Managers personally arising out of this agreement or any document or circumstance referred to in this agreement.
Relevantly, for the purposes of cl 9, cl 1.1 of the ASA defined the word “Claim” as meaning:
… any claim, demand or cause of action whether arising in contract, tort, under statute or otherwise in relation to:
(i) any provisions of this agreement; or
(ii) the Assets or their sale.
Clause 10 obliged the parties to keep confidential the existence and terms of the ASA and all related negotiations between them, subject to certain permitted exceptions.
Alleged non-performance of the Finance Condition
MSI required finance to complete the ASA and, indeed, was only capable of providing a relatively small deposit of USD100,000. It did so by applying a success fee payable by Atlantic Nickel to it under the terms of a pre-existing consultancy contract.
As a result of a delay in the payment of that success fee by Atlantic Nickel, on 8 November 2017, the date for the payment of the deposit was extended to 10 November 2017.
In the period following entry into the ASA, the parties disputed the date by which MSI was to obtain satisfactory finance for the purposes of cl 2.1(f) and, consequently, also disputed the date on which any party might terminate the ASA for failure of that condition.
On 22 November 2017, the Receivers and the Sellers issued a notice to MSI purporting to terminate the ASA. The notice asserted that the Finance Condition was required to be satisfied by 5:00 pm on 22 November 2017, and that, as this had not occurred, the entitlement to terminate was enlivened.
Shortly after giving notice to MSI of termination, on 27 November 2017, the Receivers, the Sellers and Atlantic Nickel entered into a contract to sell the Assets to Appian for a price of about USD65 million (the Appian Sale Agreement).
The contentious correspondence
Immediately following the purported termination, MSI retained Russells, a law firm, to act for it to preserve its rights under the ASA.
On 1 December 2017, Russells wrote to the Sellers and the Receivers, asserting that they and Atlantic Nickel had wrongly repudiated the ASA from the date on which it had been entered into and that they had done so in a number of different ways. Despite that, it was said that MSI waived the repudiatory conduct, was holding the parties to the agreement, and had instructed Russells to commence proceedings for specific performance and, if necessary, injunctive relief.
On 4 December 2017, Clayton Utz, the solicitors for the Receivers and the Sellers, asserted in a letter that, should MSI take any such action, it would need to provide immediate security for costs and the usual undertakings as to damages in relation to any injunctive relief.
Further correspondence followed in which MSI sought the agreement of the Sellers and the Receivers to complete the ASA, but those overtures were rejected on the basis of the latter’s assertion that the agreement had been terminated.
On 5 December 2017, Clayton Utz wrote to Russells concerning the allegations which MSI had raised about the alleged non-termination of the ASA and set out in detail their clients’ claims as to why the agreement had come to an end. Pointedly, the letter also stated as follows:
Your client has no claim against the Receivers – please refer to clause 9 of the ASA.
In about mid-March 2018, MSI became aware that the Sellers, the Receivers and Atlantic Nickel had entered into the Appian Sale Agreement. This caused Mr Milbourne some considerable consternation and, on 24 April 2018, he wrote to Appian indicating MSI’s intention to commence proceedings.
On 30 June 2018, Russells wrote to Appian to notify it that MSI held a continuing equitable interest in the Assets and that it intended to institute proceedings against the Sellers, the Receivers, Atlantic Nickel and the Noteholders. Similar correspondence was sent to other interested parties.
On 3 July 2018, Russells wrote to AET to notify it that MSI was the equitable owner of the Assets, or at least held a continuing equitable interest in them, and that it intended to commence proceedings in relation to the sale of the Assets to Appian.
By a letter dated 27 July 2018, Clayton Utz wrote to Russells to advise that the Appian Sale Agreement had completed that day. It sought confirmation that Russells held instructions to file proceedings and also indicated that it held instructions to commence proceedings if a response was not received to its letter.
The Receivers’ direction proceedings
On 3 August 2018, the Receivers made an application for directions in the Supreme Court of Western Australia pursuant to s 424 of the Corporations Act 2001 (Cth). Though their precise form altered as the application progressed, the Receivers sought three substantive directions. First, that they were justified in performing their obligations under the Appian Sale Agreement on the basis that, at the time of its completion, MBN and MBI were able to complete it in accordance with its terms thereby conveying the Assets, noting the claims asserted by MSI that the Receivers had not validly terminated the ASA and that it had an equitable interest in the Assets. Secondly, that they were justified in distributing to AET the amount payable under the security which it held over the Sellers. Thirdly, that they were justified in defending MSI’s claims or commencing proceedings against MSI for declarations that they validly terminated the ASA, and that MSI had no equitable or other interest in the Assets.
MSI appeared at the hearing of the application and opposed the making of the first two directions sought. In doing so, it relied upon an affidavit of Mr Milbourne sworn 14 September 2018, which stated that “MSI intends to institute proceedings in this honourable Court to challenge this purported termination and also the purported sale of the Assets” and for that purpose exhibited a “draft of the Statement of Claim for the proceeding which MSI intends to bring”. Mr Milbourne further stated that the draft statement of claim did not encapsulate all of MSI’s claims in respect of the Assets or the ASA or the conduct of the Receivers, Sellers and others.
A decision on the Receivers’ application for directions was given by Vaughan J on 5 November 2018: Re Mirabela Nickel Ltd (receivers and managers appointed) (in liq); ex parte Madden [2018] WASC 335. In a carefully reasoned decision, his Honour concluded that certain directions should be given to the Receivers. Relevantly, he made the following order:
Subject to the Receivers giving no less than 21 days’ written notice to MSI, Brazil Mining BV, Brazil Holding BV and ANR BR Investment BV of their intention to distribute, despite the MSI proceeding and MSI’s claims against MBN, MBI and the Receivers, the Receivers are justified in distributing to AET Structured Finance Services Pty Ltd (AET) amounts payable under the Amended General Security Deed dated 24 December 2013 as amended on 16 June 2014 between MBN and MBI (each as a Grantor) and AET (as Secured Party), perfected by registration on the Australian Personal Property Securities Register with registration number 201312240086006.
On that same day, the Receivers gave a notice as contemplated by the above order.
MSI did not commence the threatened proceedings to restrain the Receivers from distributing the proceeds of the Appian Sale Agreement to AET. For the reasons which are discussed below, it can be accepted that, at that time, it did not have sufficient funds to do so.
Subsequently, the Receivers distributed some of the proceeds but retained a portion for the purposes of funding their legal disputes and discharging any potential liabilities. It is uncontroversial that the Receivers are not likely to have sufficient funds of their own to meet a claim as might be made by MSI in the present proceedings, and are not suitable respondents in any action by MSI. In that latter respect, cl 9 of the ASA appears to protect them from many claims which MSI might otherwise make. Similarly, as the Sellers were in liquidation and their assets had been transferred to Appian, any proceedings against them for damages would be futile.
MSI’s draft writ proceedings
On 23 October 2018, MSI filed an ex parte originating motion in the Supreme Court of Western Australia seeking leave to issue a writ in the form exhibited to an affidavit of Mr Stephen Russell (the Draft Writ) and to serve it overseas on, inter alia, Atlantic Nickel and the Appian buyers. The Draft Writ named the Sellers, the Receivers, Atlantic Nickel, AET and the Appian buyers as defendants, amongst others.
The relief sought in the Draft Writ included a declaration that the ASA remained on foot, an injunction to restrain the Appian Sale Agreement from being completed, an order for specific performance of the ASA or, alternatively, damages for breach of it. As against the Receivers, damages were sought for procuring or inducing a breach of the ASA by the Sellers and Atlantic Nickel. The allegations of breach of contract were, in part, to the effect that certain of the parties acted in ways which prevented MSI from completing the ASA.
The Draft Writ was supported by a draft statement of claim which extended the relief sought in the writ but, relevantly, alleged that the Sellers, the Receivers and Atlantic Nickel had breached cl 2.2 of the ASA, which required them to use all reasonable endeavours to ensure that the Conditions Precedent were satisfied. It also alleged that the Sellers and Receivers had repudiated the ASA in several ways, including by soliciting offers from Appian for its purchase of the Assets and disclosing information to Appian. It made further allegations supporting the claim that the Receivers had procured a breach of the ASA.
For present purposes, it is relevant to note that in the present proceedings, the stay applicants emphasised that the draft statement of claim made substantial allegations against, inter alia, Atlantic Nickel and the Receivers to the effect that they had breached their obligations under cl 2.2 of the ASA.
Leave to issue the Draft Writ and to serve it overseas was given by Master Sanderson on 8 November 2018.
That same day, Clayton Utz wrote to Russells in relation to the issue of the Draft Writ indicating that substantial security for costs would need to be provided by MSI for the Receivers’ costs in the contemplated proceedings as their investigations had revealed that MSI did not have any significant assets, and nor did it have any litigation funding. It cannot be seriously in doubt that the Receivers and Sellers were aware of MSI’s financial difficulties at this point in time.
It can be expected that, had the Draft Writ been issued and served, the other parties would also have sought security for costs from MSI.
As matters transpired, neither the Draft Writ nor the accompanying statement of claim were issued or served because neither MSI, nor its directors and shareholders, had sufficient funds to pursue the proceedings.
The Receivers’ declaratory proceedings
On 9 April 2019, the Receivers notified MSI that they intended to seek a determination of their rights in relation to their obligations under the ASA. In a letter of that date, Clayton Utz said:
The Receivers now intend to seek final determination of the rights in respect of the assets the subject of the asset sale agreement dated 27 November 2017 [being the Appian Sale Agreement], such determination again afformed [sic] on 24 November 2017, and declarations regarding MSI in respect of the same, in the Supreme Court of Western Australia.
Subsequently, on 23 April 2019, Clayton Utz wrote to Russells requiring MSI to issue the Draft Writ proceedings, failing which the Receivers would seek that the Draft Writ be struck out or declared invalid and further, a declaration that the termination of the ASA by the Sellers was valid. The letter sought confirmation that Russells held instructions to accept service of the application for declaratory orders.
On 8 May 2019, the Receivers and the Sellers commenced proceedings, numbered CIV 1806 of 2019, against MSI in the Supreme Court of Western Australia. For convenience, these will be referred to as the “WA Proceedings”.
The issues in the WA Proceedings
The only relief claimed in the WA Proceedings was declaratory relief in the following terms:
The Plaintiffs’ claim is for declaratory relief that, by notice sent by email on 22 November 2017 and by prepaid post on 23 November 2017, the Plaintiffs validly terminated the Asset Sale Agreement (ASA) made on 1 November 2017 between the First Plaintiff, Second Plaintiff, Third Plaintiffs, Fourth Plaintiffs, Mirabela Mineracao do Brasil Ltda (MMB) and the Defendant, in relation to the acquisition of quotas held in MMB.
Though the declaration sought would, on its face, affect Atlantic Nickel, it was not joined, and it is not clear why that was the case.
A statement of claim was filed in the WA Proceedings on 4 June 2019. In it, it was asserted, amongst other things, that:
(a)the ASA was executed and exchanged on 1 November 2017, such that the Sellers were entitled to terminate it in the event that the Finance Condition was not satisfied by 15 November 2017;
(b)between 17 and 18 November 2017, the Sellers and MSI agreed to extend the date for satisfaction of the Finance Condition to 22 November 2017; and
(c)as MSI did not satisfy the Finance Condition by 22 November 2017, the Receivers and Sellers terminated the ASA by notice on 22 and/or 23 November 2017.
On 12 June 2019, MSI secured some limited litigation funding from Balance REV Limited (Balance REV) which provided $412,000 towards the costs of defending the WA Proceedings. The funder was given an exclusive option to fund any further proceedings in connection with any claims which MSI might have against the Sellers, Receivers, Atlantic Nickel, AET, the Noteholders, Appian or others in connection with Atlantic Nickel and/or the Santa Rita mine.
MSI filed its defence in the WA Proceedings on 3 July 2019. It included an allegation that the purported termination of the ASA was invalid because the Sellers and Receivers had failed to comply with their obligations under cl 2.2 which was a precondition to terminating under cl 2.5. In support of this, allegations were made that the Sellers and the Receivers did not facilitate access by MSI to Bradesco, hindered MSI from obtaining access to Bradesco, and failed to assist MSI with, and hindered MSI from, obtaining access to the mine site, and certain company information and documents. Allegations were also made that, in further breach of the ASA, the Sellers had, through the Receivers, procured offers from Appian to acquire the Assets.
On 15 October 2019, Clayton Utz wrote to Russells observing that there appeared to be a significant overlap of substance between the matters raised in MSI’s Draft Writ and the questions in issue in the WA Proceedings. It sought confirmation as to whether MSI accepted that, if the declaration sought by the Sellers and Receivers in the WA Proceedings was made, it would be estopped from bringing the claims in the Draft Writ or would be prevented from re-agitating matters relating to the validity of the termination of the ASA.
By a reply on 23 October 2019, Russells identified that:
…
It is clear that your clients have carefully defined and confined the relief they have sought in the proceeding including the identity of the plaintiffs (and the defendant(s) for that matter).
…
The proceedings present a valuable opportunity to have confined and important issues determined quickly and efficiently by the Court when that would not otherwise be the case. The Court has been able to provide trial dates promptly – assisted, no doubt, by the confined way in which the plaintiffs framed the issues and the defendant has responded.
Further, the position of the parties will be substantially clarified by a determination of those issues and its speedy determination is likely to advance the resolution of the dispute which exists between the parties.
With these matters in mind:-
1. MSI does not intend to issue a counterclaim in this proceeding; and
2. MSI rejects and declines otherwise to debate the propositions you make.
The strategic conference
In advance of the strategic conference which was held in the WA Proceedings, the Sellers and the Receivers delivered a written paper containing the points which they intended to make to the Court. In that paper, it was asserted that the WA Proceedings had been brought to quell the controversy between the parties so that the receivership could be terminated, but that MSI did not intend to file a counterclaim in the action in line with the claims in the Draft Writ. That was said to be “surprising” given the alleged substantial overlap of factual and legal issues between the two proceedings. It was said that, even if the Receivers were successful in the WA Proceedings, they would remain at risk of being joined into latter actions, with the result that the practical utility in proceeding with the WA Proceedings as framed at the time was substantially diminished. It was further said that the Sellers and the Receivers were considering what steps to take in the circumstances, including seeking orders “in line with” those made in Tyne (Trustee of the Argot Trust) v UBS AG [2019] FCA 628 (in which case, the Court prohibited an individual from instituting any proceedings against the respondent arising from the same substratum of facts as a number of existing proceedings), amending the pleadings to add further declaratory relief, investigating whether MSI was ever able to perform the ASA and whether any damages arise, and discontinuing the proceedings altogether.
The strategic conference was held on 31 October 2019, before Hill J. The following matters were advanced orally on the Sellers’ and the Receivers’ behalf:
(a)The claims which had been identified in the Draft Writ had not been brought in any proceedings by MSI and no explanation had been given for that omission. Hill J recognised that MSI was not seeking to advance in the proceedings then before the Court the claims which had been agitated in the Draft Writ, though some of the relief sought in that writ, such as specific performance, was no longer available.
(b)The absence of the claims by MSI raised questions about the utility of the proceedings because there was little point in a hearing which did not resolve all of the issues between the parties.
(c)The Receivers and Sellers wanted to give thought to bringing as many of the issues as possible into their proceedings.
(d)The Receivers and Sellers considered it inappropriate for a trial to be held in the 2019 calendar year because they wished to pursue further discovery, issue subpoenas in Singapore to lenders who might have provided funding to MSI for it to complete the ASA, and examine Mr Milbourne for the purposes of assisting them in the litigation.
(e)If MSI did not raise the claims referred to in the Draft Writ in the WA Proceedings, it ran the risk of being estopped from raising those claims in the future.
(f)The Receivers and Sellers wanted to explore ways of bringing all the claims to a head in the WA Proceedings.
Conversely, for MSI, the following propositions were advanced:
(a)The trial, which was provisionally set down for 11, 12 and 13 December, should proceed.
(b)The subpoena which the Receivers then sought to issue was not relevant to the question to be determined, namely whether the ASA had been validly terminated.
(c)The issue of whether MSI could have completed the ASA with the assistance of a Singaporean financier would be relevant to a later action for specific performance or damages, but was not relevant on the application for a declaration of whether the ASA had been validly terminated.
(d)The processes of issuing subpoenas or examining Mr Milbourne were unnecessary to the trial or were inappropriate and unrelated to the confined issue in the proceedings, which solely related to the validity of the termination of the ASA.
(e)The steps which the Receivers and Sellers wished to take could have been taken much earlier and there was no explanation for why they had not been taken until that point in time.
(f)The WA Proceedings would determine the issue of “liability”. The judge identified that there was a risk in splitting liability from damages, but it was accepted that the plaintiffs’ application was at the time confined to the validity of the termination.
(g)On the question of whether MSI raising issues subsequently would amount to an abuse of process, it was said that it was appropriate to determine the issue of “liability” first because if it were decided against MSI, the Court and the parties would not have to expend resources on the more complex issue of “relief”.
(h)There was a real opportunity to considerably shorten the proceedings by resolving the “liability” question, as that would benefit all the parties as well as the creditors of the Sellers. If the Receivers and Sellers were successful in obtaining their declaration, the claims in the Draft Writ would dissipate because they were based on the termination being invalid.
In the strategic conference, Mr Zappia KC, counsel for MSI, repeatedly referred to the issue of “liability” as being that to be determined first. Much was made of the use of this term by the stay applicants, however, it is apparent that this was not a reference to the determination of “liability” in a proceeding where that issue was separated from that of damages. Rather, it was a shorthand reference to the issue of whether the ASA had been validly terminated. In the context of the overall dispute between the parties, Mr Zappia KC was saying that if the termination was valid, one set of causes of action might be available to MSI and, if not, another set might be available. As Mr Zappia KC said:
This proceeding effectively will determine the issue of liability and for that reason the utility is evident, and it’s evident for this reason: if we are successful on liability – that is, if we are able to resist the declaration and your Honour makes findings that the termination was not valid, that will leave only the question of relief to be determined. What flows in terms of the relief that we would be entitled to for an invalid termination and in that respect the relief that we might seek might involve specific performance, in which case the receivers would necessarily need to be a party if we [sought] specific performance, because they were a party to the contract.
…
It might leave a question of damages. In which case, presumably the receivers probably don’t become involved, because it might be said that they weren’t the party that was obliged to provide the asset.
…
Your Honour, we accept – we accept that the issue in this proceeding is one of liability and what is effectively occurring is that there is a trial on liability and it is of great utility because if we fail on the question that has been raised – let’s assume that your Honour were to find that the termination was valid, then that is the end of our ability to claim any relief and the court will not need to go into that complexity and we will not need to deal with other parties potentially not involved in this litigation.
Subsequently, in response to concerns raised by Hill J about keeping separate the issues of liability and relief, and the risk of issue estoppel, Mr Zappia KC made the following point:
We’re dealing with a well resourced, well advised litigant. They must have known when they issued the proceeding that we weren’t obliged to do anything other than to defend the proceeding. To come along now and say, “Well, we’ve realised that it might not have utility when we’re six weeks out from trial and we’ve been preparing for trial is, we would say, not a justification for abandoning the trial. They must have given consideration to it. It would have been obvious that what we put by way of defence is a matter for us.
The result of the strategic conference was that Hill J acceded to the Receivers’ and Sellers’ wishes that the trial would not proceed in December 2019 on the provisionally allocated days, so that the Receivers and Sellers could consider whether they might make amendments to their claim.
An examination of the transcript of the strategic conference reveals the essential point of tension between the parties. MSI sought to have the WA Proceedings heard and determined as soon as possible so that the question of whether the ASA had been validly terminated would be decided. The furtherance of its claims based on that agreement could turn on the outcome of the Court’s determination. It would also determine who would be the parties to any further litigation. Conversely, the Receivers and Sellers wished to enlarge the proceedings to encompass as wide a range of issues as possible, so that as many matters as possible could be determined in the one proceeding.
It is now apparent that MSI did not have the funds to engage in protracted and extensive litigation at the time and, so it seems, for that reason opted for the more expedited process. Although that was not made explicit by MSI, as the prior correspondence between the parties reveals, the Receivers were, undoubtedly, aware of MSI’s lack of funds.
The war of correspondence continued
The 1980’s style of litigation of engaging in a war of attrition by lengthy correspondence continued between the parties following the strategic conference.
As referred to above, prior to the commencement of the WA Proceedings, in a letter of 23 April 2019, Clayton Utz demanded that MSI commence proceedings to prosecute the claims in the Draft Writ. The style of the letter is unusual for its references to the Rules of Court and relevant authorities garnered in support of the propositions which were sought to be made. This was a feature of the correspondence that passed between the parties and one which, in more civil and courteous times, would have attracted significant opprobrium.
Some time after the strategic conference, by a letter of 26 November 2019, Clayton Utz encouraged MSI to file a counterclaim in the WA Proceedings, by which the issues raised in the Draft Writ might be ventilated. On the other hand, the letter recognised that MSI’s approach was to use the declaratory proceedings as the vehicle for determining whether the ASA was validly terminated and what relief might follow in other proceedings. It provided:
For whatever reason, MSI in effect desires a splitting of issues, by using the current proceeding to determine liability with issues as to relief being determined in (presumably) the foreshadowed proceeding. This, at least, was the way in which your client’s Senior Counsel approached the matter at the strategic conference on 31 October 2019 …
That characterisation is inaccurate. There was no attempt by MSI to “split” the issues between the parties. The WA Proceedings only had one issue, being whether the ASA was validly terminated. In any event, by the abovementioned letter, the Receivers indicated that they were prepared to consider the possibility of a “split trial”, so long as all of the issues in question were raised in the pleadings. The letter also reiterated that cl 9 protected the Receivers from any liability at the suit of MSI.
On 30 November 2019, Russells wrote to Clayton Utz refuting many of the allegations made in the letter of 26 November. For present purposes, the following statements are relevant:
Again, MSI has not “refused” to bring a counterclaim. …
Your continued reference to “proceedings” as though our client has commenced proceedings is a mischief. There are no overlapping issues, because there is only one set of proceedings.
MSI earnestly hopes that there will be only one proceeding.
Surely, your clients must likewise hold that view: we repeat what MSI’s senior counsel submitted in the course of the strategic conference on 31 October 2019, namely, that MSI accepts that if your clients succeed in this proceeding, that will be the end of any litigation, certainly between the current parties, in relation to the MSI Asset Sale Agreement.
Equally, if MSI succeeds, it is confident that this will assist the parties, MMB, the noteholders – the receivers’ principals – and the Appian Buyers in evaluating their respective positions and responding in a commercially realistic fashion.
On 9 December 2019, the Receivers and the Sellers filed an amended statement of claim in the WA Proceedings. In it, it was alleged that it was reasonably foreseeable that MSI would bring the proceedings contemplated by the Draft Writ against the Receivers and, therefore, an additional declaration was sought that, by cl 9.1(b)(i) of the ASA, the Receivers were released and forever discharged in relation to any cause of action raised against them. In other words, they sought a negative declaration which appeared in the prayer for relief in the following form:
A declaration that, pursuant to clause 9.1(b)(i) of the MSI Sale Agreement, MSI has released and forever discharged the Receivers in relation to any cause of action pleaded against them in the draft statement of claim exhibited to the affidavit of Stephen Charles Russell filed on 23 October 2018 and marked “SCR 2”.
By way of a response, on 17 December 2019, Russells wrote a letter to Clayton Utz which stated the following:
In case it was not apparent to you from our previous correspondence, we confirm that MSI does not intend to issue proceedings against the Receivers in the form of the draft Statement of Claim exhibited to the Affidavit of Stephen Charles Russell filed on 23 October 2018 and marked “SCR-2” (the DSOC).
Further, absent any obligation to do so, MSI hereby irrevocably undertakes to the Receivers that it will not institute any proceedings in any court of competent jurisdiction in relation to any cause of action pleaded in the DSOC without giving to the Receivers care of your firm not less than 21 days’ notice in writing of their intention in that regard, any such notice to be accompanied by the draft proceedings which MSI may intend to issue.
MSI later amended its defence to indicate that it did not intend to bring proceedings in the form of the draft statement of claim with the result that there was no issue between the parties, and the plaintiffs were not entitled to the negative declaration which was sought.
The application to obtain evidence in Singapore
On 12 December 2019, the plaintiffs in the WA Proceedings filed a summons seeking an order, pursuant to the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, opened for signature 18 March 1970, 847 UNTS 231 (entered into force 7 October 1972) and s 110(1)(c) of the Evidence Act 1906 (WA), that the Court issue a letter of request to the judicial authorities of Singapore. This was directed to obtaining evidence from a Mr Socrates Economou (who resided in Switzerland), or alternatively, the Proper Officer of Trafigura Pte Lte (Trafigura), being the entity from which MSI claimed it would have been able to secure finance for the purposes of completing the ASA.
That application was refused by Hill J on 22 January 2020, who considered that it would involve “both parties incurring substantial costs and delay the resolution of the proceedings”: Mirabela Nickel Ltd (in liquidation) (receivers and managers appointed) v Mining Standards International Pty Ltd [2020] WASC 4.
On 6 February 2020, the Receivers filed an appeal from Hill J’s decision. Before this Court, MSI submitted that had the Receivers’ appeal been successful, and discovery proceedings were commenced in Singapore, the WA Proceedings would not have been set down for some time. In the circumstances, that submission is self-evidently correct and should be accepted.
An email from Russells to Mr Milbourne of 6 February 2020 reveals that MSI’s response to the plaintiffs’ appeal was that the relevant defence, which prompted the Receivers’ application to obtain evidence from Singapore, should be abandoned. The rationale given was that the defence would only arise if MSI was wrong about the date from which the Receivers were entitled to terminate the ASA, and that it was not worth the cost and delay associated with the appeal process.
On 12 February 2020, MSI filed an amended defence in which it elided the allegation that the purported termination of the ASA was invalid and of no effect because the Sellers and Receivers failed to comply with their obligations under cl 2.2. This had the effect of removing the issue which might have rendered the discovery from Singapore relevant.
The result of this was that the appeal was abandoned, and orders were made, by consent, to this effect on 4 March 2020.
Public examination of Mr Milbourne
A public examination of Mr Milbourne occurred between 24 and 26 June 2020. He was examined on a number of topics, including the financial position of him and MSI, MSI’s intention to seek specific performance of the ASA or damages, MSI’s litigation funding agreement in respect of the WA Proceedings, and several other matters.
The WA Proceedings listed for hearing and late discovery
On 17 July 2020, the WA Proceedings were listed for trial for three days, commencing on 12 October 2020.
On 9 September 2020, the Receivers discovered a document which was described as a file note of a teleconference on 6 November 2017 between Mr Tucker, Mr Carruthers and Mr Dey of the Receivers, and a Mr Rathborne and Mr Loftus-Hills of Moelis, the latter being Appian’s representative in bidding for the Assets.
It appears that the late discovery prompted MSI to issue subpoenas and apply for leave to amend its defence. Although that leave was opposed, Hill J granted it on 7 October 2020.
The hearing of the WA Proceedings then took place on 10, 11, 14, 15 and 23 December 2020.
The decision in the WA Proceedings
The decision in the WA Proceedings was handed down on 3 March 2023 and supported by very lengthy reasons. Although the central issue was whether the Receivers and the Sellers had validly terminated the ASA on 22 or 23 November 2017 for non-satisfaction of the Finance Condition, the reasons show that the parties raised an array of other issues which overly complicated the real issue in dispute — a tendency which repeated itself in the present application.
In Hill J’s very careful and thorough decision, her Honour held that: the ASA was entered into on 10 November 2017, when the last party executed it, such that the Finance Condition needed to be satisfied 14 days from that date; the time for satisfaction of the Finance Condition was not extended by agreement between the parties; MSI was not estopped from denying that the date on which the ASA was executed was 1 November 2017; the ASA had not been validly terminated; and MSI’s request for repayment of the deposit was not an acceptance of the validity of the purported termination. In substance, the conclusion was that the notice of termination issued by the Sellers and the Receivers was not efficacious.
As a result of those conclusions, it was unnecessary for Hill J to deal with a number of additional contentions which the parties had raised. Whilst this was recognised by her Honour, some obiter observations were made in relation to several issues.
On 19 May 2023, Hill J made orders dismissing the plaintiffs’ claims.
The current proceedings against Atlantic Nickel
Whilst the WA Proceedings were reserved before Hill J, on 1 November 2021, MSI filed an originating application and accompanying statement of claim in this Court to commence these proceedings (which will be referred to as the “current proceedings”). In general terms, MSI makes claims against Atlantic Nickel for:
(a)damages for Atlantic Nickel’s breach of contract;
(b)further or alternatively, damages for inducing a breach of contract by the Receivers and the Sellers;
(c)further or alternatively, damages under s 236 of the Australian Consumer Law (being Sch 2 to the Competition and Consumer Act 2010 (Cth)) for contravention by Atlantic Nickel of s 21, namely the prohibition against unconscionable conduct; and
(d)further or alternatively, damages under s 236 of the Australian Consumer Law for loss caused by Atlantic Nickel being involved in a contravention of s 21 by the Receivers and the Sellers.
An amended statement of claim was filed on 18 March 2022.
In substance, MSI’s allegations are to the effect that Atlantic Nickel, the Receivers and the Sellers failed to observe the obligations in the ASA to provide reasonable assistance to MSI or to act so as to give it the benefit of the agreed terms. It is specifically alleged that their conduct prevented MSI from securing finance to complete the purchase and, further, that they breached the obligation not to deal with third parties whilst the ASA was on foot. The pleading sets out, in some length, the terms of several letters, emails, text messages, and telephone conversations in support of the allegations.
The gravamen of the complaints made is that Atlantic Nickel breached the ASA or induced the Receivers and the Sellers to breach it in several respects. The same or similar conduct is also characterised as constituting unconscionable conduct, within the scope of s 21 of the Australian Consumer Law, by the Receivers and, especially, Mr Tucker. It is then said that Atlantic Nickel was a person involved in that unconscionable conduct or that it engaged in unconscionable conduct on its own behalf.
The substance of MSI’s alleged damage is its lost opportunity to complete the ASA to acquire the Assets, and the quantum of the damage may be around USD745 million.
A further claim for exemplary damages is made against Atlantic Nickel.
On 13 April 2023, Atlantic Nickel filed a cross-claim in the proceedings against MSI. It also makes claims against Mr Milbourne as the second cross-respondent, and the Receivers as the third and fourth cross-respondents. In part, it seeks a declaration that there was no binding agreement constituted by the ASA or, alternatively, that the date for satisfaction of the Finance Condition was 22 November 2017. As against the Receivers, it claims damages for breach of contract and an order that the Receivers are liable to MSI for any damages for unconscionable conduct, if the cognate allegations are made good against it by MSI.
On 9 June 2023, MSI lodged an interlocutory application seeking, inter alia, an order that Atlantic Nickel’s amended statement of cross-claim be struck out.
On the same day:
(a)Atlantic Nickel lodged an interlocutory application seeking to have the current proceedings stayed permanently pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) or in the Court’s inherent jurisdiction;
(b)the Receivers lodged an interlocutory application seeking to permanently stay the current proceedings; and
(c)the Receivers and the Sellers filed a notice of appeal seeking to appeal from the judgment of Hill J in the WA Proceedings.
RELEVANT LEGAL PRINCIPLES
The stay applicants relied upon several grounds in support of the contention that the current proceedings are an abuse of process or that MSI should otherwise be prevented from pursuing them. The submissions in relation to each overlapped considerably and though most attention was focused on broad principles of abuse of process, some reliance was also placed on Anshun and issue estoppel.
A prominent submission made on behalf of Atlantic Nickel was that the decision in UBS v Tyne had dramatically altered the range and scope of the doctrine of abuse of process. On that basis, it is appropriate to commence with a consideration of that decision.
UBS v Tyne
Aside from the High Court’s discussion of principle, Atlantic Nickel submitted that the facts of UBS v Tyne were important in revealing the new scope of the doctrine as articulated by the High Court. It is, therefore, appropriate to set them out in some detail.
In about 2007, Telesto Investments Ltd (Telesto), an investment company incorporated in Jersey, opened an investment account with UBS AG (UBS), which extended credit facilities to it. The investment which Telesto pursued was located in Singapore. Unfortunately, it failed and the Argot Trust (the Trust), being the family trust of a Mr Tyne, alleged that it had suffered loss upon the receipt of negligent advice from UBS, or that UBS had engaged in misleading or deceptive conduct in relation to the provision of financial services. The alleged conduct was constituted by representations said to have been made to Mr Tyne and, through him, to other entities, including ACN 074 971 109 Pty Ltd (ACN 074), being the former trustee of the Trust, and Telesto. Mr Tyne was, at all material times, the controlling mind of ACN 074 and Telesto. Those representations were alleged to have induced Telesto to acquire and retain bonds issued by financial institutions in Kazakhstan, the Bank Turan-Alem and Astana Finance (the Bonds), which ultimately proved to be worthless. After the value of the security provided by Telesto under its facilities fell, a margin call was made requiring Telesto to provide further security. Following some negotiations, ACN 074 executed a letter of undertaking in favour of UBS in relation to the security shortfall. That undertaking extended to include assets held in the Trust.
In their submissions on Anshun estoppel, the Receivers relied upon the observations of the Full Court in Robinson v Deep Investments at 330 – 331 [133] – [134], and claimed them to be applicable to the present circumstances. However, there, the relevant fact in issue had been concluded by the judgment in the earlier matter and was fundamental to it. No such issue arises in the present case. Certainly, issues may arise if MSI’s pursuit of the claim against Atlantic Nickel involved agitating a point which had been finally determined in litigation against other parties, though this is not the case. Those matters in respect of which there is a possibility of inconsistency were not finally determined in the WA Proceedings and were the subject of obiter commentary. Further, unlike the position in Robinson v Deep Investments, in this case the earlier proceedings were not brought by MSI. It was the defendant in those proceedings and the issues in question were framed by the Receivers and the Sellers. MSI is not in the position of having deliberately framed issues in the earlier proceedings as the plaintiff and, in doing so, omitted claims which it now seeks to pursue. Rather, in the earlier proceedings, it was responding to that which was advanced against it.
Specific claims of unjustifiable oppression
Although the potential oppression to the stay applicants is considered variously above, it is appropriate to lastly consider three specific claims made by the Receivers.
First, the Receivers submitted that the extent of the overlap between the current proceedings and the WA Proceedings means that they will be vexed by the unnecessary duplication of resources and increase in costs by having to deal with claims arising from the same three-week period that should have been resolved in the WA Proceedings, including dealing with much of the same evidence that was led in that proceeding, for a second time.
For a combination of the reasons given earlier, the Receivers will not be unduly vexed by the overlap between the two proceedings. For instance, the WA Proceedings resolved on mostly documentary evidence, and it is likely that the current proceedings will largely involve documentary evidence. Although there may be some duplication of evidence, it will be concerned with the issues raised by the current proceedings, which are necessarily different to those concerning the termination of the ASA. The mere fact that MSI’s claims are concerned with roughly the same period of time as the WA Proceedings does not mean that MSI should have brought those claims back in those proceedings.
Further, it must, again, be remembered that the Receivers brought about the WA Proceedings. Though they were of course entitled to do so, they must have understood that they could not control whether MSI brought a cross-claim or not. They were well-advised, and the evidence suggests that they would have known that MSI had minimal funds with which it might have brought a cross-claim at the time.
Secondly, the Receivers claimed that they were oppressed by reason of the fact that the proceedings will further delay the conclusion of their appointment. That is undoubtedly a significant factor to be taken into account. However, further delay to the conclusion of the Receivers’ appointment was not shown to be so oppressive that it ought to outweigh MSI’s right to ventilate its claims.
Finally, the Receivers claimed that they would be unduly oppressed by the significant expense of another proceeding in circumstances where MSI had submitted in the strategic conference that the WA Proceedings would determine the issue of liability.
As explained above, however, the references to “liability” in the strategic conference were a reference to the validity of the notice of termination being a pivotal question for the parties. Though it was an inexact term, its meaning was clear to the parties in the circumstances. As has been found, the Receivers were not labouring under any misapprehension that determination of the WA Proceedings would bring an end to all of MSI’s claims in connection with the ASA. This is a substantial factor in considering any oppression.
Conclusion
The necessary conclusion is that no abuse of process has been established in this matter. MSI was a defendant in the WA Proceedings and does not now seek to agitate against the Receivers or Sellers any matter which they might have, or should have, raised against them in those first proceedings. On the contrary, their claim is against a party which has never been the subject of litigation in relation to the ASA and is not a privy with coordinate interests of those who have been. Whilst there may be some risk of inconsistency between the current proceedings and the WA Proceedings, the matters in respect of which that risk arises were not fundamental to the conclusions of Hill J and nor will there be any risk of conflicting judgments. To the extent to which there is such a risk, it is of conflicting findings on underlying factual matters and in respect of which Hill J’s findings were almost all obiter. At no time did MSI suggest that the WA Proceedings would resolve all issues in relation to the controversy arising from the termination of the ASA. On the contrary, it made it pellucid that it intended to pursue its own substantive proceedings after the WA Proceedings had been completed. Though the Receivers and Sellers did not acquiesce in that, it would appear that the Supreme Court of Western Australia did and, it must be observed, it was right to do so. The WA Proceedings were focused on the particular issue of the purported termination of the ASA and only declaratory relief was sought in that respect. These proceedings would have been expanded well beyond their original scope were substantive cross-claims to be added along with potential third party proceedings. This is not a case where MSI has engaged in any inappropriate tactical manoeuvring in the sense contemplated in UBS v Tyne. Though it was anxious to advance the vindication of its rights, its financial circumstances prevented it from doing so and it was then forced to confront the Receivers’ and Sellers’ claims when they were made. A change in circumstances allowed it to proceed with its claims in the current proceedings and it advanced those claims as soon it was able to do so. Whilst it is true that it did not raise all of the defences which it might have done in the WA Proceedings and, indeed, abandoned some of them, it was reasonable for it to take those steps. Ultimately, neither the nature of its defence nor the matters raised or not raised will have made any significant difference to the current legal relationship between it and the plaintiffs in the WA Proceedings or in respect of Atlantic Nickel. The WA Proceedings were determined on the narrow point which was central to the rights of the parties, and rightly so.
It follows that, whilst MSI’s proceedings against Atlantic Nickel may raise factual matters and issues which arose in the WA Proceedings brought against it, or which might have been brought in those proceedings, none of the circumstances warrant preventing MSI from agitating its claims in the manner in which it now seeks to do in the current proceedings.
OTHER RELIEF SOUGHT
In their interlocutory application, the Receivers sought relief in the alternative that certain paragraphs of the amended statement of claim be struck out pursuant to r 16.21 of the Federal Court Rules 2011 (Cth). No oral or written submissions were advanced in support of the relief sought and the Receivers should be regarded as having abandoned it.
APPROPRIATE ORDERS
The applications to stay the proceedings should be dismissed and the parties should be heard in relation to the question of costs.
I certify that the preceding two hundred and eighty-nine (289) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington. Associate:
Dated: 24 June 2024
SCHEDULE OF PARTIES
QUD 355 of 2021 Cross-Respondents
Second Cross-Respondent
WALTER ROBERTSON MILBOURNE JNR
Third Cross-Respondent
MARTIN MADDEN, SCOTT DAVID HARRY LANGDON AND RICHARD SCOTT TUCKER AS JOINT AND SEVERAL RECEIVERS MIRABELA NICKEL LTD (IN LIQUDIATION) (RECEIVERS AND MANAGERS APPOINTED)
Fourth Cross-Respondent
MARTIN MADDEN, SCOTT DAVID HARRY LANGDON AND RICHARD SCOTT TUCKER AS JOINT AND SEVERAL RECEIVERS MIRABELA INVESTMENTS PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
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