Mirabela Nickel Ltd (in Liquidation) (Receivers and Managers Appointed) v Mining Standards International Pty Ltd [No 4]
[2020] WASC 449
•8 DECEMBER 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) -v- MINING STANDARDS INTERNATIONAL PTY LTD [No 4] [2020] WASC 449
CORAM: HILL J
HEARD: 13 NOVEMBER 2020
DELIVERED : 13 NOVEMBER 2020
PUBLISHED : 8 DECEMBER 2020
FILE NO/S: CIV 1806 of 2019
BETWEEN: MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
First Plaintiff
MIRABELA INVESTMENTS PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
Second Plaintiff
SCOTT DAVID HARRY LANGDON, RICHARD SCOTT TUCKER AND MARTIN MADDEN as joint and several receivers and managers of MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
Third Plaintiff
SCOTT DAVID HARRY LANGDON, RICHARD SCOTT TUCKER AND MARTIN MADDEN as joint and several receivers and managers of MIRABELA INVESTMENTS PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
Fourth Plaintiff
AND
MINING STANDARDS INTERNATIONAL PTY LTD
Defendant
Catchwords:
Practice and procedure - Whether plaintiffs should be entitled to split trial - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 34 r 5
Result:
Application for split trial refused
Orders for further and better particulars of defence and for defendant's opening address to follow plaintiffs
Category: B
Representation:
Counsel:
| First Plaintiff | : | S K Dharmananda SC and S C M Wong |
| Second Plaintiff | : | S K Dharmananda SC and S C M Wong |
| Third Plaintiff | : | S K Dharmananda SC and S C M Wong |
| Fourth Plaintiff | : | S K Dharmananda SC and S C M Wong |
| Defendant | : | L A Warnick |
Solicitors:
| First Plaintiff | : | Clayton Utz |
| Second Plaintiff | : | Clayton Utz |
| Third Plaintiff | : | Clayton Utz |
| Fourth Plaintiff | : | Clayton Utz |
| Defendant | : | Russells |
Case(s) referred to in decision(s):
Clayton Utz (a firm) v Dale [2015] VSCA 186; (2015) 47 VR 48
Dale v Clayton Utz (a firm) [No 2] [2014] VSC 517
Downs Irrigation Cooperative Association Ltd v National Bank of Australasia Ltd [1983] 1 Qd R 130
Protean (Holdings) Ltd v American Home Assurance Co (Unreported, VSC, 5 September 1985)
HILL J:
(This decision was delivered extemporaneously on 13 November 2020 and has been edited from the transcript).
Introduction
In these proceedings, the plaintiffs seek a number of declarations in respect of an asset sale agreement dated 1 November 2017. The trial is listed to commence before me on 10 December 2020 for four days.
On 2 November 2020, the plaintiffs filed a chamber summons for directions, seeking certain orders in relation to the conduct of the trial. Essentially, the plaintiffs seek orders for a split trial, either on all matters on which the defendant bears the onus of proof or, alternatively, in respect of [14(g)(ii)], [14(g)(iii)] and [22(f)(ii)] of the fourth further amended defence.
Pleadings
In order to consider the application by the plaintiffs, it is necessary first to consider the issues raised by the pleadings. I note that each of the pleadings in these proceedings has been amended by the parties on a number of occasions.
The current statement of claim is a further amended statement of claim, dated 10 July 2020. The statement of claim alleges that, on 1 November 2017, the plaintiffs and the defendant entered into an asset sale agreement. The relevant terms of the agreement are pleaded in [9]. These include a term that the plaintiffs were entitled to terminate the agreement by notice to the defendant in the event that the finance condition was not satisfied by a date which was 14 days after the date of the exchange of signed copies of the agreement.
The plaintiffs contend that the finance condition was not satisfied by 15 November 2017 and that they issued a notice under the agreement. Following the issue of this notice, the plaintiffs say that the parties agreed to extend the date for satisfaction of the finance condition until 22 November 2017. They contend that the defendant did not satisfy the finance condition by 22 November 2017 and that, accordingly, on 22 November 2017 a notice of termination was issued.
The plaintiffs seek orders, inter alia, for a declaration that the plaintiffs have validly terminated the asset sale agreement.
The defendant's current defence was filed on 8 October 2020, following leave being granted on 7 October 2020. The defendant accepts that the parties entered into the asset sale agreement but say that this occurred on 10 November. For this reason, the defendant denies that the plaintiffs were entitled to terminate the agreement prior to 25 November 2017.
In respect of the allegation that the parties agreed to extend the date for satisfaction of the finance condition until 22 November 2017, the defendant denies that the communications exchanged between the parties constitute an agreement. Alternatively, they plead that any agreement is not valid or enforceable because of representations made by Mr Tucker. These representations are pleaded to be 'false and/or misleading and known to be such'. These representations are said to have been made in an email from Mr Tucker to Mr Milbourne on 9 November 2017, and in a conversation between Mr Tucker and Mr Milbourne on 10 November 2017. The representations are said to be false because of emails and messages sent and received by Mr Tucker as well as a telephone conversation on 6 November 2017 between Mr Tucker, Mr Carruthers, Mr Rathborne and Mr Loftus‑Hills.
The defendant denies that the plaintiffs were entitled to terminate the agreement on a number of grounds. First, because the time for satisfying the finance condition had not yet expired. Second, because the plaintiffs were estopped from issuing the notice of termination. Third, because the plaintiffs were in breach of cl 2.6(c) of the asset sale agreement, as they provided information to, and solicited an offer from, the Appian Purchasers while the asset sale agreement was still on foot.
The plaintiffs filed a fourth further amended reply on 6 November 2020. In the reply, the plaintiffs plead what they consider to be the material parts of the relevant conversations between Mr Tucker and Mr Milbourne and deny that any representations were made which were false or misleading.
Orders have been made for the parties to file witness outlines. The plaintiffs have filed a witness outline of Mr Tucker. The defendant has filed witness outlines of Mr Milbourne and Mr Ford, together with a witness outline of evidence in reply of Mr Milbourne. Opening submissions were filed by both parties prior to the recent amendment to the defence. Following the amendment of the defendant's defence, the plaintiffs have served a further outline of evidence of Mr Tucker. This outline addresses the telephone conversations which occurred on 6 and 10 November 2017.
Legal principles
As a general principle, a plaintiff is not entitled to split their case. The usual order for trials is set out in O 34 r 5 of the Rules of the Supreme Court 1971 (WA).
As was noted by Thomas J in Downs Irrigation Co-operative Association Ltd v The National Bank of Australasia Ltd:[1]
Normally, when the issues raised by a defendant are known (as they are in all cases requiring pleadings) a plaintiff's counsel will call all the evidence he can relating to all disclosed issues in the case, whether they be plaintiff's issues or defendant's issues, and whether the onus of proof lies upon plaintiff or defendant. If it becomes necessary later, he will rely upon the Court's discretion as to the calling of rebuttal evidence, which he will obtain in appropriate cases. He will obtain such leave when some line emerges in the defendant's case which was not reasonably foreseeable; or when the plaintiff has been misled or taken by surprise; or generally when the interests of justice require it, even though the rebutting evidence may be confirmatory of the plaintiff's own case. In certain circumstances, the court will consider whether a plaintiff should be entitled to split its case.
[1] Downs Irrigation Cooperative Association Ltd v National Bank of Australasia Ltd [1983] 1 Qd R 130, 141.
In certain circumstances, the court will consider whether a plaintiff should be entitled to split its case.
In support of their application, the plaintiffs rely on what has come to be referred to as a Protean Holdings split. This refers to a ruling by the trial judge in Protean (Holdings) Ltd v American Home Assurance Co.[2] In that case, the owner of an abattoir which was damaged by fire sued its insurers under a fire policy. The insurer raised numerous defences by way of defence, including that the insured lit the fire and was guilty of fraud.
[2] Protean (Holdings) Ltd v American Home Assurance Co (Unreported, VSC, 5 September 1985).
The trial judge ruled that the plaintiff was entitled to split its case. In that case, the factors that the trial judge took into account in making the orders sought were:
(1)the requirement that the plaintiff would be required to prove the negative;
(2)the significant evidence that would be required to be called by the defendant to prove its case dealing with the deliberate lighting of the fire, the misrepresentation and the allegations of fraud; and
(3)in that case, there was no difficulty in separating out the issues on which the plaintiffs had the burden of proof. The plaintiffs were able to lead the whole of their evidence in support of their case without embarking on evidence to counter the anticipated evidence of the defendant.
A similar ruling was made by a judge at first instance in Dale v Clayton Utz (a firm) [No 2],[3] which was considered on appeal by the Victorian Court of Appeal in Clayton Utz (a firm) v Dale.[4] The primary reasons for the Court of Appeal were delivered by Tate JA. The dispute in those proceedings concerned a partnership dispute and the decision by the appellant to require the respondent to leave the partnership. The basis for this decision were allegations of criminal and unlawful conduct and breaches of fiduciary duties that were owed to the firm.
[3] Dale v Clayton Utz (a firm)[No 2] [2014] VSC 517.
[4] Clayton Utz (a firm) v Dale [2015] VSCA 186; (2015) 47 VR 48.
In that case, the trial judge allowed a split of the trial, which decision was upheld by the Court of Appeal, albeit on different grounds.
After summarising the relevant authorities, Tate JA held at [77] that:
In summary, the exercise of the discretion to oblige a defendant to lead its evidence in support of its defence first, before a plaintiff leads evidence on those issues, while guided by questions of whether the case for the plaintiff and the defendant are intertwined, is ultimately determined by matters of fairness. The question of who bears the onus of proof on any issue is important but not decisive. It is also important to consider the extent to which a plaintiff would otherwise be obliged to prove a negative.
Her Honour went on to state at [100] that:
[T]he discretionary rule of practice to make a direction to 'split' a trial must be exercised judicially and is to be determined ultimately by matters of fairness. As I have emphasised, the question of who has the burden of proof is not decisive; it is rather a matter of identifying the fairest and most effective means by which the issues in the trial can be resolved.
Submissions of the parties
The plaintiffs contend that, given the matters raised in [14(g)] and [22(c)] ‑ [22(f)] of the defence, the usual practice is no longer appropriate nor fair. In support of this submission, the plaintiffs prepared a table of the allegations in the defence on which the defendant bears the onus of proof.
In oral submissions before me this morning, senior counsel for the plaintiffs contended that the unfairness to the plaintiffs arose in a number of ways: first, the plaintiffs' response will require them to prove the negative; second, the defendant's case is, at least in part, sought to be proved through the cross‑examination of the plaintiffs' witness; and third, the plaintiffs will be denied the opportunity to make a no case submission at the conclusion of the defendant's case.
The defendant opposes the plaintiffs' application on two primary grounds. First, the defendant contends that the plaintiffs are apprised of the issues, of the documents that will be tendered at trial and of the oral evidence the defendant proposes to adduce. For these reasons, they submit that there is no element of surprise which creates the unfairness of which the authorities refer to. Second, they contend that the proposed orders will significantly disrupt the efficient conduct of the trial and may prejudice the defendant. Counsel for the defendant submits that attempting to separate cross‑examination of Mr Tucker will produce difficulty and confusion.
Counsel for the defendant emphasised that the factual compass of this case was relatively confined; it concerned events that occurred over a three-week period. In his submission, matters needed to be looked at as a sequential narrative as certain matters could only be properly understood in light of what had occurred before. Counsel for the defendant submitted that the unfairness of which the plaintiffs complain could be addressed in the manner proposed by the court during argument; namely, the provision of further and better particulars and by the defendant's counsel opening immediately at the conclusion of the plaintiffs' opening.
Disposition
In considering the application before me, the paramount question is how the interests of justice are best served. While the question as to who has the burden of proof is relevant, it is not decisive.
In this case, in order to prove their case at trial, the plaintiffs will need to adduce evidence of the asset sale agreement, the matters said to comprise the agreement to extend the date for satisfaction of the finance condition and the termination of the agreement. The plaintiffs propose to call Mr Tucker, who will give evidence both to prove the plaintiffs' case and to respond to the allegations raised by the defendant. The plaintiffs have not served any other witness outlines, which were required to be served by 6 November 2020. Mr Tucker's evidence will concern events that occurred from the signing of the asset agreement on 1 November 2017 until its termination on 22 November 2017. That said, I accept that the conversations on which the defendant relies do not form part of the plaintiffs' case, although they occur within this time period.
The effect of the plaintiffs' application is that they are requesting to split Mr Tucker's evidence. Having given the matter careful consideration, for the following reasons, I do not accept that the unfairness which the plaintiffs have identified should be addressed by allowing the plaintiffs to split their case.
First, I do not consider that the case the plaintiffs have to meet is of an overwhelming proportion. This is not a case where the plaintiffs do not know the material or evidence that has been gathered by the defendant or the evidence on which it relies. There has been discovery by the parties, subpoenas have been issued and a trial bundle prepared.
Second, the factual scope of this case is relatively limited. I accept the submission of counsel for the defendant that it involves events over a three-week period. While I accept to an extent that this ruling will require the plaintiffs to prove a negative, the matters which they are required to prove are matters that are within Mr Tucker's knowledge.
Third, in my view, to defer part of Mr Tucker's cross‑examination would cause substantial disruption to the orderly conduct of the trial. Given that issues of credit are involved, I consider it would not be in the interests of justice for the cross‑examination of Mr Tucker to be done in a piecemeal fashion.
Finally, in my view, the potential unfairness that has been identified by the plaintiffs can be addressed in two ways.
First, the defendant needs to properly particularise the representations it alleges were made and why each of these representations is false and misleading. In this regard, I consider that the particulars served by the defendant in respect of the allegations in [14(g)(ii)] and [22(e)] are inadequate in the following respects. It is necessary for the defendant to state whether the representations are oral or in writing and to identify with precision the matters it relies on in support of its allegation that certain representations were made. In addition, the defendant has not made plain whether it contends that there are one or two representations concerning the receipt of competing offers and discussions with any competing bidder. Finally, it is not apparent from [14] of the particulars that have been served whether the defendant relies on the fact of the conversation that occurred on 6 November 2017 or whether there are specific representations they say were made during this conversation. In my view, each of these matters must be clarified before the plaintiffs are required to open their case or lead any evidence.
Second, counsel for the defendant should open the defendant's case immediately at the conclusion of the plaintiffs' opening address and before the plaintiffs are required to call any evidence.
Otherwise, at this stage, it is my view that the usual practice should apply.
However, if at the conclusion of the defendant's opening address or at the conclusion of the defendant's case, the plaintiffs wish to renew any application or seek to call rebuttal evidence, I will hear and rule on that application at the time it is made.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SL
Associate to the Honourable Justice Hill8 DECEMBER 2020
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