Nu-Fortune Gold Ltd v Roxbury Trading Pty Ltd [No 5]
[2020] WASC 204
•11 JUNE 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: NU-FORTUNE GOLD LTD -v- ROXBURY TRADING PTY LTD [No 5] [2020] WASC 204
CORAM: ALLANSON J
HEARD: 13 MAY 2020
DELIVERED : 11 JUNE 2020
FILE NO/S: CIV 2354 of 2019
BETWEEN: NU-FORTUNE GOLD LTD
First Plaintiff
ECO MINERALS RESEARCH LTD
Second Plaintiff
AND
ROXBURY TRADING PTY LTD
First Defendant
PAUL JAMES KENNEDY
Second Defendant
(BY ORIGINAL ACTION)
ROXBURY TRADING PTY LTD
First Plaintiff by Counterclaim
PAUL JAMES KENNEDY
Second Plaintiff by Counterclaim
AND
NU-FORTUNE GOLD LTD
First Defendant by Counterclaim
ECO MINERALS RESEARCH LTD
Second Defendant by Counterclaim
PAUL RICHARD HANNA
Third Defendant by Counterclaim
(BY COUNTERCLAIM)
Catchwords:
Practice and procedure - Application to discharge interlocutory injunction - Whether material change in circumstances - Whether unjust to continue injunction
Legislation:
Property Law Act 1969 (WA), s 83C, s 135
Result:
Application granted
Category: B
Representation:
Original Action
Counsel:
| First Plaintiff | : | I R Gillon |
| Second Plaintiff | : | I R Gillon |
| First Defendant | : | M McKenna |
| Second Defendant | : | M McKenna |
Solicitors:
| First Plaintiff | : | Lawton Gillon |
| Second Plaintiff | : | Lawton Gillon |
| First Defendant | : | Gilbert + Tobin |
| Second Defendant | : | Gilbert + Tobin |
Counterclaim
Counsel:
| First Plaintiff by Counterclaim | : | M McKenna |
| Second Plaintiff by Counterclaim | : | M McKenna |
| First Defendant by Counterclaim | : | I R Gillon |
| Second Defendant by Counterclaim | : | I R Gillon |
| Third Defendant by Counterclaim | : | I R Gillon |
Solicitors:
| First Plaintiff by Counterclaim | : | Gilbert + Tobin |
| Second Plaintiff by Counterclaim | : | Gilbert + Tobin |
| First Defendant by Counterclaim | : | Lawton Gillon |
| Second Defendant by Counterclaim | : | Lawton Gillon |
| Third Defendant by Counterclaim | : | Lawton Gillon |
Case(s) referred to in decision(s):
Clairs Keeley (a firm) v Treacy (2004) 29 WAR 479
Grepo v Jam‑Cal Bundaberg [2015] QCA 131
Mercanti v Mercanti [2014] WASC 64
Nu-Fortune Gold Ltd v Roxbury Trading Pty Ltd [2019] WASC 307
Nu-Fortune Gold Ltd v Roxbury Trading Pty Ltd [No 2] [2019] WASC 332
Nu‑Fortune Gold Ltd v Roxbury Trading Pty Ltd [No 3] [2019] WASC 469
Nu-Fortune Gold Ltd v Roxbury Trading Pty Ltd [No 4] [2020] WASC 25
Zimmermann Investments Pty Ltd v Vanderplancke [2018] WASC 142
ALLANSON J:
These reasons deal with the application by Roxbury Trading Pty Ltd and Paul James Kennedy, to discharge an interlocutory injunction granted on the application of Nu-Fortune Gold Ltd and Eco Minerals Research Ltd.[1]
[1] In these reasons, except where it is necessary to specify an individual party, I will refer to plaintiffs/defendants by counterclaim as Nu-Fortune and the defendants/plaintiffs by counterclaim as Roxbury.
The injunction was granted on 21 August 2019. Initially, it restrained Roxbury, until 5 September 2019 or further order, from entering upon Crown Reserves 24144 and 24145, commonly known as the Menzies State battery (the Premises).
On 4 September 2019, Roxbury filed a counterclaim.
On 5 September 2019, after further argument, the injunction was continued until further order of the court. On 5 September 2019, I also admitted the matter to the CMC List for management.
The central issue in the main action is whether Nu-Fortune is entitled to possession of the Premises pursuant to a sublease from Roxbury. It is an issue that should be resolved as quickly as practicable. Since 5 September 2019, I have heard and determined an application to stay the matter and refer it to arbitration, an application for partial summary judgment on the counterclaim, and now this application. The underlying dispute is no closer to trial.
This application to discharge or vary the injunction was filed on 24 March 2020.
On 12 May 2020, two days before the hearing, Roxbury filed a fifth re‑amended defence and counterclaim, pleading that the Sublease had been terminated in March 2020, or alternatively expired on 17 May 2020, and pleading the breaches of covenant on which it now relies. The breach notices on which it relies were all issued after the counterclaim was filed.
Background
The background facts are set out in my earlier reasons,[2] and I will refer only to those that are necessary in the current application.
[2] Nu-Fortune Gold Ltd v Roxbury Trading Pty Ltd [2019] WASC 307; Nu-Fortune Gold Ltd v Roxbury Trading Pty Ltd [No 2][2019] WASC 332; Nu‑Fortune Gold Ltd v Roxbury Trading Pty Ltd [No 3] [2019] WASC 469; Nu-Fortune Gold Ltd v Roxbury Trading Pty Ltd [No 4] [2020] WASC 25.
Mr Kennedy, through Roxbury, acquired a lease (the Head Lease) over the Premises in about 2000. The head lessor is the Western Australian Mint.
In May 2015, Roxbury was placed into administration. Mr Kennedy was introduced to Mr Hanna as someone who might help.
In about March 2016, Mr Hanna, Mr Kennedy, Roslyn Kennedy, Nu‑Fortune Gold Ltd and Robert Jacobs, as administrator of Roxbury Trading Pty Ltd, entered into Heads of Agreement. The effect of the agreement was that Roxbury would come out of administration and Nu‑Fortune would acquire various mineral tenements. The Heads of Agreement also provided for the treating of ore and tailings at the Premises.
The Heads of Agreement
The parties to the Heads of Agreement acknowledged that it was 'a preliminary document only' and further documents may be prepared. The Heads of Agreement was, however, to be binding.[3]
[3] Heads of Agreement cl 13, cl 14. The Heads of Agreement is Attachment D to the affidavit of Paul Richard Hanna, sworn 12 August 2019.
Clause 3 provided for Nu-Fortune (referred to in the body of the agreement as 'Newco') to provide funds for 'due diligence' to ascertain whether it wished to commence Mining Operations on two named tenements, Oakley Mavis and Called Back.[4] If Nu-Fortune determined to commence Mining Operations, by notice to all parties, cl 4 to cl 13 of the agreement took effect.
[4] Defined in cl 1 of the Heads of Agreement.
Nu‑Fortune was to procure key drilling plant,[5] and commence Mining Operations at the Called Back and/or Oakley Mavis Tenements as soon as practicable, with Nu‑Fortune to meet all costs of exploration and Mining Operations.
[5] Heads of Agreement cl 6.
Clauses 7 and 8 provided for matters related to the Menzies Battery and the Battery Ore Stockpile:[6]
[6] Defined in cl 1 of the Heads of Agreement as 'the stockpile of approximately 40,000 tonnes of processed tailings containing minerals including an expected gold (Au) content of between 1 gram and 5 grams per tonne located on or about the Menzies Battery'.
7.MENZIES BATTERY
(a)Roxbury shall cause the Menzies Battery to be used for the treatment of gold ore mined at the Mining Operations at the actual cost for Newco. Newco will have first preference for the treatment of its ore.
(b)Gold ore from Called Back Tenements and Oakley Mavis Tenements will be treated as follows:
i.ore estimated at 10 grams of gold per tonne or more is to be processed at the Menzies Battery; and
ii.ore which is estimated less than 10 grams of gold per tonne is to be segregated into grade stockpiles for processing at another facility at a time to be determined.
(c)All operating (ie non-capital) costs of operating the Menzies Battery whilst treating ore for Newco will be met by Newco.
8.BATTERY ORE STOCKPILE
(a)Newco has the option until 31 December 2019 to elect to treat the Battery Ore Stockpile.
(b)If Newco exercises the option in clause (a) above it must cause an upgrade/modification to be made to Menzies Battery which is estimated to cost $350,000 to allow such treatment (ownership of such works will pass to Roxbury);
(c)All costs of treatment of the Battery Ore Stockpile will be met by Newco; and
(d)Proceeds from such treatment will first reimburse Newco for the costs of upgrade/modifications, then the operating costs and the balance will be shared equally between Roxbury and Newco.
In substance, the Heads of Agreement provided for the use of the Premises by Roxbury to treat ore mined by Nu-Fortune at the two tenements, and for Nu-Fortune to treat the Battery Ore Stockpile if it elects to do so. The agreement did not require, or provide for, a sublease of the Premises to Nu-Fortune.
It is now agreed that Nu-Fortune has not exercised the option to treat the Battery Ore Stockpile.
The agreements with CSIRO
In about 2017, Mr Hanna was introduced to CSIRO and its technology to extract gold without using cyanide.
Nu-Fortune and CSIRO made two agreements in August 2017: a Researcher Placement Agreement; and a Collaborative Project Agreement. I set out the terms of these agreements in greater detail in Nu-Fortune Gold Ltd v Roxbury Trading Pty Ltd [No 2]. Relevantly, Nu-Fortune was to make the Premises available for the demonstration of CSIRO's technology for leaching gold from problematic ore and tails, such as those at the Menzies battery site.
In the counterclaim, Roxbury alleges that, at a meeting with Mr Hanna at the offices of Nu-Fortune, Mr Hanna told Mr Kennedy that the CSIRO must have the right to test their plant on the Menzies Battery before they would go ahead. Mr Hanna said the right would not be long-term. Shortly afterwards, Mr Hanna gave the Sublease to Mr Kennedy for execution and represented that it was the document that CSIRO required Roxbury to sign.[7]
[7] Fifth amended defence and counterclaim [48].
Nu-Fortune and Roxbury executed the Sublease of the Premises in about November 2017. Roxbury alleges that it relied on Mr Hanna's representations in executing the Sublease.[8]
[8] Fifth amended defence and counterclaim [49].
Roxbury, by counterclaim, asserts that the representations made by Mr Hanna were false,[9] and claims relief pursuant to the Australian Consumer Law (Cth); and the Australian Consumer Law (WA), including a declaration that the Sublease is void.
The Sublease
[9] Fifth amended defence and counterclaim [53].
In 2017, the Western Australian Mint (Landlord), Roxbury (Tenant) and Nu-Fortune Gold (Sub-Tenant) entered into a deed by which Roxbury granted to Nu-Fortune a sublease of the Premises. The term of the Sublease was until 17 May 2020, with the option of two additional five year terms.[10] The options are exercisable by Nu‑Fortune giving notice of exercise not later than four months before the end of the current term, and take effect as a new sublease for the additional term.[11]
[10] Sublease cl 15.1 and schedule item 3 and 6. The Sublease is Attachment E to the affidavit of Paul Richard Hanna, sworn 12 August 2019.
[11] Sublease cl 15.7.
By cl 15.2:
If the Sub‑Tenant gives the notice referred to in clause 15.1(b), but on or prior to the date the notice is given or at any time between that date and the last day of the current Term, any default occurs by the Sub‑Tenant and it is not remedied to the satisfaction of the Tenant, acting reasonably, or waived, the Sub‑Tenant ceases to be entitled to extend this Sublease.
On the issues raised in the current application, the following provisions and covenants are also relevant:
(1)The provisions of the Head Lease, where they apply to the Premises and their use and occupation, are incorporated in the Sublease 'as if the terms of the Head Lease were provisions made between the Tenant as Landlord and the Sub‑Tenant as Tenant and with such modifications only as a necessary to make the Provisions of the Head Lease applicable to this deed'.[12]
(2)Nu-Fortune covenanted that it was to comply with and observe all of the provisions of the Head Lease 'so far as they are applicable to the Premises and as are imposed on [Nu-Fortune] pursuant to the provisions of clause 3.1'.[13]
(3)Nu-Fortune covenanted with the Western Australian Mint and Roxbury that it must use the Premises only for the purpose specified in the Head Lease and for no other purpose without the prior written consent of the Western Australian Mint and Roxbury.[14]
(4)Nu-Fortune covenanted not to assign, sublet or part with possession or occupation of the Premises or any part of it or any estate or interest in it.[15]
(5)Nu-Fortune covenanted not to do anything that may result or results in Roxbury being in breach of the Head Lease.[16]
[12] Sublease cl 3.1.
[13] Sublease cl 6.1(d).
[14] Sublease cl 8.1(a).
[15] Sublease cl 8.1(b).
[16] Sublease cl 8.1(c).
By cl 9, Roxbury covenanted that, Nu-fortune duly paying rent and performing and observing the covenants and conditions in the Sublease, Nu-Fortune shall peaceably and quietly hold and enjoy the Premises during the term without any interruption by Roxbury.
The Head Lease
Relevant terms of the Head Lease that were incorporated by cl 3.1 of the Sublease include cl 4.1, by which Roxbury must only use the Land for the purposes specified in cl 4.8.1 and Item 5 of the schedule to the Head Lease, and for no other purpose.
Item 5 of the schedule specifies the single use, 'mineral processing'. The permitted use in cl 4.8.1 'includes processing the Existing Tailings and ore from other ore bodies'. Existing Tailings is defined, relevantly, as tailings 'located on the tailings site on the Land as at the commencement of this lease'.[17] Clauses 4.8.2 and 4.8.3 impose conditions on the processing of tailings or other ore bodies.
[17] Head Lease, cl 1.1. The Head Lease is Attachment A to the Sublease and is at page 62 of the affidavit of Paul Richard Hanna, sworn 12 August 2019.
Read together, these provisions do not permit any use other than mineral processing. The word 'includes' in cl 4.8.1 does not expand the permissible uses, but is a reference to the ore which may be processed.
Clause 5 deals with 'land hazards and safety'. Relevantly, during the term, Roxbury must at all times use all reasonable endeavours to ensure the Land is kept free of hazards including drums of chemicals, rusted equipment, cables, and any other dangerous, toxic or hazardous substances or items.[18] Roxbury is also required to remove any rubbish or unsightly material including old vehicles, equipment, caravans or other obsolete items, to a suitable approved waste disposal area.[19] The obligations under cl 5 are applied to Nu-Fortune by cl 3.1 of the Sublease.
[18] Head Lease cl 5.2(a).
[19] Head Lease cl 5.2(g).
Clause 7 provides for early termination, including surrender of part of the Land that the Western Australian Mint bona fide requires to use for its own purposes where that part of the Land is not required by Roxbury for its operations. The procedure for early termination requires three months written notice.[20] It may be arguable whether cl 7 is incorporated in the Sublease.
[20] Head Lease cl 7(a).
The application to discharge the injunction
Roxbury submitted that:
(1)there have been several material changes in circumstances since the injunction was granted; and
(2)as a result of those changes, and Mr and Mrs Kennedy's reliance on the Premises as their main asset and source of income, the balance of convenience has shifted in favour of the Roxbury parties being allowed to access the Premises, and it would be unjust to continue the injunction.
Roxbury sought, as alternatives: the discharge of the injunction; a variation to the injunction to permit access to part of the Premises necessary for it to process ore at its processing plant; or a variation to permit access for the limited purpose of carrying out inspection of the Premises in accordance with the Head Lease.
The variation to permit inspection was, ultimately, not opposed and was made by consent following the hearing.
It was not disputed that an application to set aside, vary or discharge an interlocutory injunction should, as a general rule, be founded on a change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application, 'the effect of which is to demonstrate that the situation is materially different from when the order was made so that it would be unjust to continue the injunction'.[21]
[21] Mercanti v Mercanti [2014] WASC 64 [22]; Clairs Keeley (a firm) v Treacy (2004) 29 WAR 479 [7] ‑ [16].
Roxbury relied on five changed circumstances:
(1)the termination of the Sublease, either by notice of default, or by the expiry of the term;
(2)Nu-Fortune is not entitled to renew the Sublease because it remains in breach of the Sublease;
(3)Nu-Fortune elected not to exercise the option to process the Battery Ore Stockpile;
(4)the Premises are not being used for the purposes for which the Sublease was granted, being the CSIRO project, and there is no credible evidence that the project will continue; and
(5)the Premises are not being used as a mine site at all.
There was no factual dispute regarding the third factor - the election not to exercise the option to process the Battery Ore Stockpile. The effect of that change is that, by the terms of the Heads of Agreement, the Battery Ore Stockpile cannot presently be treated by either party: Nu‑Fortune does not have the right to treat it, and Roxbury is excluded from the Premises. If Nu-Fortune is entitled to renew the Sublease, to the exclusion of Roxbury, that asset may be rendered valueless for at least five years.
Roxbury's contentions regarding the termination of the Sublease and the continuing breaches were, however, in dispute.
The evidence
Roxbury relied on six affidavits:
(a)the affidavit of Paul James Kennedy, sworn 29 August 2019 (First Paul Kennedy Affidavit);
(b)the affidavit of Mr Kennedy, sworn 3 April 2020 (Second Paul Kennedy Affidavit);
(c)the affidavit of Roslyn May Kennedy, sworn 3 April 2020 (First Roslyn Kennedy Affidavit);
(d)the affidavit of Mrs Kennedy, sworn 29 April 2020 (Second Roslyn Kennedy Affidavit).
(e)the affidavit of Jessica May Edmeades, affirmed 3 April 2020 (First Edmeades Affidavit); and
(f)the affidavit of Ms Edmeades, affirmed 29 April 2020 (Second Edmeades Affidavit).
Nu-Fortune relied on an affidavit of Mr Hanna, sworn 20 April 2020. Mr Hanna deposed, relevantly:
(1)Nu-Fortune had allowed third parties to reside at the accommodation on the Premises, but the practice had ceased before 6 March 2020: [5(d)];
(2)Nu-Fortune had not prevented Roxbury from inspecting the Premises: [7(a)];
(3)Nu-Fortune remedied all of the defects identified in the site inspection report, between 16 September 2019 and 25 March 2020, and currently fully comply with their obligations under the Sublease: [7(c)] and [7(d)].
Objections to evidence
No objections were taken to the evidence relied upon by Roxbury.
Roxbury objected to part of Mr Hanna's affidavit, including [5(d)], [7(c)], [7(d)], and [12].
In [5(d)], Mr Hanna deposes that while Mr Kennedy was a director of Nu‑Fortune, Nu‑Fortune would from time to time allow third parties to remain overnight in accommodation on the Premises, and Mr Kennedy did not object. The objection to that evidence is upheld. The statement is both vague and irrelevant: it is not alleged that Mr Kennedy was aware of that practice; and Mr Hanna does not depose to whether the third parties were present for a purpose related to the permitted use of the Premises. The allegations on which Roxbury now relies go beyond whether third parties were allowed to stay overnight from time to time.
The objection to [5(d)] did not extend to Mr Hanna's statement that, since receiving correspondence from Roxbury's lawyers, the practice of 'allowing third parties to reside at the accommodation on the Menzies lease' has ceased.
In [7(c)], Mr Hanna states that, on various dates between 16 September 2019 and 25 March 2020, Nu-Fortune had rectified all defects identified in the records of a site visit by the Department of Mines, Industry Regulation and Safety, dated 29 July 2019, and there are currently no outstanding issues or orders. Mr Hanna attaches a document said to be a screen shot of the Department website, although the nature of the document is not made clear. It appears to be comments uploaded by Nu-Fortune.
The statement in [7(c)] is not said by Mr Hanna to be within his own knowledge, nor is it said to be a statement of information or belief. He simply states a conclusion which appears to be based upon the attached document, the provenance of which is not explained. The objection to this paragraph is upheld.
In [7(d)], Mr Hanna states that Nu-Fortune currently fully complies with all of its obligations under the Sublease and intends to do so in the future.
The statement in [7(d)] is not a matter of fact but is properly characterised in the submissions of Roxbury as a conclusion (the foundations for which are not in evidence) and a submission. I would also uphold that objection.
Paragraph 12 addresses Roxbury's contention that the Premises are no longer being used for the CSIRO project. Mr Hanna deposes that Eco Minerals Research has entered into an agreement with the CSIRO, and has an ongoing obligation under that agreement, 'whereby Eco Minerals Research is required to make available the Menzies Battery site to CSIRO to enable testing and commercial development of the gold or treatment process that has been developed by CSIRO'.
Nu-Fortune has not produced any ongoing agreement, and the Researcher Placement Agreement and Collaborative Project Agreement, referred to in earlier interlocutory proceedings, are not, on their terms, continuing. I also note that there is nothing in either agreement that requires Nu-Fortune or Eco Minerals to hold a lease of the Premises (if one was ever required).
The objection to [12] is upheld.
Are there material changes of circumstance
The expiry of the Sublease and exercise of the option to renew
It was agreed that Nu-Fortune gave notice purporting to exercise the option for an additional term on 25 September 2019. But for that renewal (if effective) the Sublease expired on 17 May 2020.
Roxbury alleges that the purported exercise by Nu-Fortune of the option to renew is not effective. It alleges that Nu-Fortune ceased to be entitled to extend the term of the Sublease because Nu-Fortune defaulted in the observance of covenants in the Sublease and has not remedied those defaults to Roxbury's satisfaction.
The exercise of the option to renew the Sublease raises two separate, although related questions: first, can Roxbury rely on breaches that preceded the exercise or purported exercise of the option; second, are there breaches that occurred between the date when Nu-Fortune gave notice of its exercise of the option and the last day of the current term and which have not been remedied.
Nu-Fortune relied on the failure by Roxbury to give a prescribed notice under s 83C of the Property Law Act 1969 (WA).
By s 83C(2), an act or omission that constituted a breach by Nu‑Fortune of its obligations under the Sublease shall be deemed not to have had the effect of precluding Nu-Fortune from exercising the option to renew unless, during the period of 14 days next succeeding the purported exercise of the option, Roxbury served prescribed notice of the act or omission. In effect, because Roxbury did not serve the prescribed notice, it cannot rely on any breach by act or omission that comes within that deeming provision.
Roxbury seeks to rely on alleged breaches that occurred more than 14 days after Nu-Fortune purported to exercise the option to renew. It seeks to rely on breach notices given to Nu-Fortune on 25 February 2020 and two notices dated 6 March 2020.[22] Roxbury contends that each breach identified in the notices is of sufficient gravity to justify termination of the Sublease, alternatively, collectively they justify termination.
[22] First Edmeades Affidavit JME 3, JME 7 and JME 10.
Nu-Fortune did not respond to any of the breach notices.
Roxbury submits that, but for the injunction it would be entitled to retake possession of the Premises, and it is entitled to terminate the Sublease. Alternatively, pursuant to cl 15.2 of the Sublease, Nu‑Fortune has ceased to be entitled to extend the term and Roxbury is entitled to possession of the Premises from 18 May 2020.
The alleged breaches
The breach notices were sent to the solicitors for Nu-Fortune, and not separately served on Nu-Fortune or Eco Minerals. Nu-Fortune takes issue with the method of service of the notices. I am satisfied that Nu‑Fortune, through its solicitors, was aware of the alleged defaults and the steps Roxbury required it to take to remedy them. But the method of service of the notices did not comply with cl 16.3 of the Head Lease or, if that clause was not applied to the Sublease, with s 135 of the Property Law Act. Given my findings on other matters, the issue of service is of little consequence. Whether Nu-Fortune was disentitled from renewing the Sublease under cl 15.3 does not depend on whether notice of default was given.
Nu-Fortune also submitted that Roxbury was relying on causes of action which arose after the counterclaim was filed. That might be a significant point in the action. In this application, I am not confined to the parties pleaded cases but am concerned with what position should be preserved pending the final determination of the parties' rights.
The first breach notice, dated 25 February 2020, alleged breach of cl 8.2 of the Head Lease (applied by cl 3.1 of the Sublease) by Nu‑Fortune denying Roxbury its right to enter upon the Premises to view the state of repair.[23] Roxbury, however, was lawfully prevented from entering onto the Premises by the injunction granted on 21 August and extended on 5 September 2019. Roxbury had not sought a 'carve out' of its right to inspect when the injunction was granted. It did not apply to the court to vary the injunction, until this application. Although it requested Nu-Fortune to agree to a variation of the injunction, as a 'remedy' for the default, I doubt that Nu-Fortune could be held to be in breach by relying on an existing court order, particularly when it was made in proceedings to which Roxbury was a party.
[23] First Edmeades Affidavit JME 3.
The second notice was dated 6 March 2020 and alleged breach of cl 8.1 of the Sublease.[24] It followed a notice on 21 February 2020, in which Roxbury alleged that Nu-Fortune had leased the single men's quarters on the Land to the employees of two companies that had not been engaged for the purposes of processing tailings on the Premises.[25] Roxbury gave notice that it required Nu-Fortune to cease leasing the single men's quarters to third parties, to remedy any damage to the Land, and to provide evidence of rectification.
[24] First Edmeades Affidavit JME 7.
[25] First Edmeades Affidavit JME 4.
By the second notice, Roxbury again required that Nu‑Fortune cease leasing the single men's quarters to third parties, to remedy any damage to the Land, and to provide evidence of rectification.
The evidence does not support a finding that the quarters were ever leased to third parties. Permitting someone to stay, even for more than one night, does not establish a lease, or any action by Nu-Fortune that would amount to Nu-Fortune parting with possession or occupation of the Premises.
There was (and is) no evidence that the alleged breach by Nu‑Fortune caused damage to the Land, that required rectification. The only feasible allegation of continued default by Nu-Fortune is the failure to provide evidence that it has remedied any breach. Mr Hanna has now said, on oath, that the practice of permitting third parties to stay has ceased.
The third notice relied on by Roxbury, also dated 6 March 2020,[26] followed an earlier notice by which Roxbury alleged breach of cl 5.2 and cl 8.1 of the Head Lease by failing to ensure that the Premises were kept free of hazards, by failing to comply with environmental and health and safety laws, and by failing to keep the land in a safe and tidy condition.[27] Roxbury referred to a Site Visit Record issued by the Department of Mines, Industry Regulation and Safety, and dated 29 July 2019. Roxbury required Nu-Fortune to ensure remedy of the recorded defects, to remedy any additional hazards or contamination issues, and to provide evidence of rectification.
[26] First Edmeades Affidavit JME 10.
[27] First Edmeades Affidavit JME 8.
The third notice alleged that Nu-Fortune had failed to rectify the breaches.
On 23 March 2020, Roxbury gave notice of termination of the Sublease.[28]
[28] First Edmeades Affidavit JME 14.
In her second affidavit, Ms Edmeades attached photographs said to have been taken by drone on 3 and 25 April 2020.[29] The photographs are said to show oil drums still on the Premises, oil or other spills still visible on the ground, and holes drilled in the cyanide dam. The drill holes had been observed in July 2019.
[29] Second Edmeades Affidavit JME 19, JME 20, JME 21, JME 22.
The alleged safety and contamination breaches are clearly more serious than the other alleged defaults, and there is evidence that they have not been remedied. For the purposes of cl 15.3 of the Sublease, Roxbury cannot rely on matters to which s 83C of the Property Law Act applies. Accepting for the present that s 83C does not apply to defaults that occurred between the purported exercise of the option and the expiry date of the Sublease,[30] while Roxbury cannot rely on the breaches that led to the issue in July 2019 of the Site Visit Record by the Department of Mines, Industry Regulation and Safety, it is at least arguable that it can rely on the continued default which was the subject of its notices in March 2020.
[30] See Grepo v Jam‑Cal Bundaberg [2015] QCA 131, and Zimmermann Investments Pty Ltd v Vanderplancke [2018] WASC 142 where the varying lines of authority are set out.
Nu-Fortune submitted that the allegations regarding contamination and safety have been remedied. It is generally neither possible, nor appropriate, to attempt to resolve disputed issues of fact on an application of this sort. But for the reasons set out above, I do not accept that Nu-Fortune has adduced admissible evidence that it has remedied the defects. There are disputed issues of fact which must be decided at trial but, for the purposes of the present application, I accept that Roxbury has put forward an arguable case that the Sublease was not renewed and has now expired.
That is a material change in circumstances since the grant of the injunction. I should consider the justice of continuing the injunction in that context.
It is not necessary to consider whether the notices issued by Roxbury were themselves effective to terminate the Sublease.
Other material changes
Nu-Fortune does not dispute that it elected not to treat the Battery Ore Stockpile. Nu-Fortune submitted that its decision not to exercise the option is not a sufficient reason to set aside the injunction. It submitted that the Sublease was not conditional or dependent upon the exercise of that option. It further submitted that the Stockpile has no value.
I accept that the Sublease was not conditional or dependent on the exercise of the option to treat the Stockpile. The option however, was a material circumstance in granting the injunction, and the decision not to exercise it is material in weighing the justice of continuing the injunction.
Nu-Fortune submitted that it will suffer significant prejudice if the injunction is discharged. Specifically, it relied on the arrangement with CSIRO and submitted that there is no evidence that the CSIRO agreement is not continuing. It relied on statements in the affidavit of Mr Hanna which, for the reasons I have given, were not admissible. It was open to Nu-Fortune to adduce evidence of its use of the Premises, or intended use or of any continued arrangement with CSIRO, but it has not done so.
Conclusion
The critical underlying fact on which the injunction was granted was the existence of the Sublease under which Nu-Fortune was entitled to possession and occupation of the Premises. The most material change in circumstance since the injunction was granted is that the term of the Sublease has expired, and there is an arguable case that Nu‑Fortune is not entitled to exercise its option to renew for a further term.
Further, Nu-Fortune has not adduced admissible evidence that it requires the Sublease for the purposes of the CSIRO arrangements, or has any other permissible use of the Premises in contemplation.
I also take into account Roxbury's reasonable apprehension that it will be in breach of the Head Lease by reason of Nu‑Fortune's failure to keep the Premises free of hazards, and in a safe and tidy condition.
In my opinion, the balance of convenience has altered. Pending determination of the parties' rights at trial, the greater potential injustice lies in excluding Roxbury from the Premises should it be held, at trial, to have been entitled to possession.
I remain of the view, which I expressed in September last year, that the underlying issue requires an early determination. Despite the time that has passed, the parties have not made any progress in completing necessary interlocutory processes directed towards taking the matter to trial.
I will allow the application and discharge the injunction.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CG
Associate to the Honourable Justice Allanson11 JUNE 2020
0
8
1