Palmer v CITIC Ltd [No 5] - [2023] WASC 44

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   PALMER -v- CITIC LTD [No 5] [2023] WASC 44
CORAM:   KENNETH MARTIN J
HEARD:   25 JANUARY 2023
DELIVERED          :   17 FEBRUARY 2023
FILE NO/S:   CIV 2072 of 2017
BETWEEN:   CLIVE FREDERICK PALMER
First Plaintiff
MINERALOGY PTY LTD
Second Plaintiff
AND
CITIC LTD
First Defendant
SINO IRON PTY LTD
Second Defendant
KOREAN STEEL PTY LTD
Third Defendant

FILE NO/S: CIV 1267 of 2018
BETWEEN: MINERALOGY PTY LTD
Plaintiff
AND
CITIC LIMITED
First Defendant
SINO IRON PTY LTD
Second Defendant
KOREAN STEEL PTY LTD
Third Defendant

Catchwords:

Practice and procedure - Directions hearing in civil actions managed together - Timetabling of further interlocutory disputes for hearing - New case manager required

Conferral - Written communications between lawyers prior to conferral objected to - Admissibility - Conferral communications - Consolidated Practice Directions - Need for leave to refer to conferral communications

Legislation:

Rules of the Supreme Court 1971 (WA)

Result:

Orders and directions issued for interlocutory disputes

Category: B

Representation:

CIV 2072 of 2017

Counsel:

First Plaintiff	:	P Dunning KC, M Karam, K Byrne & D Fawcett
Second Plaintiff	:	P Dunning KC, M Karam, K Byrne & D Fawcett
First Defendant	:	SK Dharmananda SC & J Sippe
Second Defendant	:	SK Dharmananda SC & J Sippe
Third Defendant	:	SK Dharmananda SC & J Sippe

Solicitors:

First Plaintiff	:	Robinson Nielsen Legal
Second Plaintiff	:	Robinson Nielsen Legal
First Defendant	:	Allens
Second Defendant	:	Allens
Third Defendant	:	Allens

CIV 1267 of 2018

Counsel:

Plaintiff	:	P Dunning KC, M Karam, K Byrne & D Fawcett
First Defendant	:	SK Dharmananda SC & J Sippe
Second Defendant	:	SK Dharmananda SC & J Sippe
Third Defendant	:	SK Dharmananda SC & J Sippe

Solicitors:

Plaintiff	:	Robinson Nielsen Legal
First Defendant	:	Allens
Second Defendant	:	Allens
Third Defendant	:	Allens

Case referred to in decision:

Palmer v CITIC Ltd [No 4] [2022] WASC 292
Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589

KENNETH MARTIN J:

These two actions raising some common legal issues are being case managed together. A further directions hearing was programmed for a special appointment on Wednesday, 25 January 2023.
Currently pursuant to my orders of 14 December 2022, there is, pending for determination at a one-and-a-half-day special appointment, an interlocutory application made by the defendants in each action (folio 147 in CIV 1267 of 2018 and folio 193 in CIV 2072 of 2017, both filed on 30 November 2022) seeking to strike out components in the plaintiffs' reamended reply (folio 146 in CIV 1267 of 2018 and folio 192 in CIV 2072 of 2017, each filed on 12 November 2022). In CIV 2072 of 2017, conceptual strike out challenges are directed against pars 33 to 97 of the plaintiffs' reamended reply pleading - presenting under the heading 'Disentitling conduct of the defendants'. There is a counterpart strike out application in CIV 1267 of 2018.
As explained, the challenged pleas under the respective reply pleadings raise the subject of the defendants allegedly holding so-called 'Fulcrum Purposes' - see par 70 of the impugned reply pleading in CIV 2072 of 2017.
It is said in effect that the plaintiffs' disentitling conduct pleas have been raised in response to earlier pleas made by the defendants under the most contemporary iterations of their defences. For CIV 2072 of 2017, this is the further reamended defence filed 14 October 2022 (folio 191) - which pleads defences of alleged abuse of process and Anshun estoppel against the plaintiffs. In CIV 2072 of 2017, amended defence pleas introduced as at 14 October 2022 commencing between pars 80 and 85, conclude:
…
86.In the circumstances set out in paragraphs 82 to 85 above:
(a)it was unreasonable for Mineralogy and Palmer not to have made the FCD QNI Claims in the RCB Proceeding, including for the purpose of seeking orderly case management directions to preserve the ability of Mineralogy and Palmer to pursue those claims;
(b)further or alternatively, the prosecution of this proceeding would serve to bring the administration of justice into disrepute or be unduly oppressive to the defendants or both.
87.As a result of the matters set out in paragraph 86 above:
(a)this proceeding should be dismissed as an abuse of process;
(b)further or alternatively, Mineralogy and Palmer is estopped, under the principles in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, from bringing or maintaining the FCD QNI Claims.
(Counterpart amended defence pleas in CIV 1267 of 2018 are found under defence paragraphs 72 and 73 of folio 145).
By my directions of 14 December 2022, timetabling orders were then made for the hearing before another judge of the defendants' strike out application put against the two reply pleadings. Since then, a special hearing appointment has been fixed for 8 and 9 March 2023 before Lundberg J.
There had been another aspect of those prior programming directions ‑ concerning what had been at 14 December 2022, a foreshadowed, but not then filed, application of the plaintiffs seeking to join Balmoral Iron Pty Ltd as a further defendant in the proceedings. That was also opposed.
Albeit that additional defendant joinder application had been programmed to be heard at the same appointment under my orders of 14 December 2022, the most contemporary materials put before me at the 25 January 2023 appointment explain that, post the rival lawyers' conferral, the plaintiffs no longer seek to pursue that foreshadowed joinder application. Consequently, that aspect of the 14 December 2022 programming orders is now redundant. But those developments do free up some hearing time.
As is always to be expected, further interlocutory disputed issues emerged in the leadup to the 25 January 2023 directions hearing.
The first issue to have more recently emerged is over some proposed further amendments to the statements of claim in each of CIV 2072 of 2017 and CIV 1267 of 2018.
Here, I refer to the respective pleading minutes as were filed by the plaintiffs in each of those actions. In CIV 2072 of 2017, this is the plaintiffs' minute of sixth amended statement of claim (folio 203, filed on 23 January 2023). In CIV 1267 of 2018, this is the plaintiff's minute of third amended statement of claim (folio 155, also filed on 23 January 2023).
As a consequence of my earlier orders of 19 March 2020, further amendments to the pleadings by Mineralogy require the leave of the Court.
Consequently, the plaintiffs in each of the two actions have duly filed chamber summons applications - made formally returnable for mention at the appointment hearing before me, on 25 January 2023 (see folio 154 in CIV 1267 of 2018 and folio 202 in CIV 2072 of 2017). Proposed order 1(a) under both chamber summons seeks further leave for the plaintiffs to amend the statement of claim. Leave is opposed.
Both applications, seeking leave to amend and some further interlocutory relief I will discuss shortly below, are supported by the affidavit of Minwoo Chun sworn 23 January 2023 (folio 205), read for the plaintiffs.
Ms Chun is a law graduate said to be employed by the lawyers of record for the plaintiffs in each action. Essentially, her affidavit only appends passing lawyer-to-lawyer correspondence, spanning the period between 20 December 2022 (Annexure MC-01) and 18 January 2023 (Annexure MC-10). Her affidavit is relied upon and read in both actions by the plaintiffs - but there are formal objections raised by the defendants against any receipt into evidence of her lawyer-to-lawyer correspondence annexures. I will put that issue aside for the moment and return to resolve it at the end of the reasons.
Essentially, the defendants say that the proposed pleading amendments to the statements of claim in both actions are significant, rather than insubstantial as the plaintiffs contend. Much of the written submissions of the defendants, filed 25 January 2023 in CIV 2072 of 2017 (folio 208), were directed to that end.
Under these submissions they say the disputed issue (of leave to amend) must be ventilated before the court. Problems in each minute of proposed amended pleading include, they say (at par 10):
(a)The proposed amendments to [37A] and [38] of the fifth amended statement of claim in the QNI proceeding (QNI SOC) remove the pleaded time period during which the plaintiffs allege that QNI required funding and the pleaded amount of funding required.
(b)The particulars to QNI SOC [39] and [44], provided on 8 December 2022 in support of the existing QNI SOC, do not adequately resolve the issue. They do not explain which payments of RCB would have been used to provide funding to QNI or when funding 'would have' been provided as alleged.
(c)There is uncertainty in the proposed third amended statement of claim in the [Palmer Petroleum] proceeding as well. The issues of the quantum of RCB funds that would have been available to provide to Queensland Nickel Pty Ltd and Palmer Petroleum Pty Ltd, and when funding could have been provided to each, are plainly relevant to the plaintiffs' case in both proceedings.

Other disputes

There are now further aspects to the interlocutory controversies, emerging more recently under the plaintiffs' respective applications by their chamber summons of 23 January 2023, including (under order 2 in each chamber summons) seeking either a discharge from, or interim temporal relief against, them giving discovery in respect of certain of the earlier ordered discovery categories - under the schedules attached to my discovery orders made in each action, at 22 October 2019.
Further, and concerning discovery obligations more generally, order 3 under the plaintiffs' respective applications of 23 January 2023 now seeks that a previous order, which I made on 31 May 2018 (in each action, as order 4), be vacated. My earlier orders in each action, in effect, had consensually relieved the defendants of any obligation to provide the plaintiffs with discovery in the two actions (note: a like order had been made without controversy in the previous Royalty Component B action to facilitate an early hearing of that trial). Albeit such orders had been made upon the application of the plaintiffs at the time, they now seek, in light of suggested changed circumstances, a varied order requiring that the defendants provide some categories of limited discovery - as are identified under schedule 1 of each application of 23 January 2023.
As is seen from each schedule 1, a number of those requested categories from the defendants seek discovery concerning documents said to be created by, or for, the 'CITIC Parties' and the so-called 'Fulcrum Group'. Items 6 and 7 in schedule 1 also seek documents concerning claims as a subject of issues relating to CIV 1915 of 2019 - another civil action heard by me at a primary trial between February to April 2022 and which is pending my reserved decision.
Plainly, under such prior circumstances it will not be appropriate for me to be curially involved at all in any determination of such applications for contested discovery categories extending to 'Fulcrum Purpose' documents. I have now ploughed the same Fulcrum field too many times.
It is no longer appropriate, then, that I be involved in any further interlocutory or final dispute involving issues concerning or relating to the Fulcrum Group or the Fulcrum Purposes. Such matters are a subject of part of the trial issues under consideration, albeit to a minor extent in CIV 1915 of 2019.
Furthermore, in my view all issues concerning discovery disputations should now await a determination of what are the currently opposed amendments proposed to the respective statements of claim, under the respective minutes filed by the plaintiffs on 23 January 2023.
There may be knock-on pleading repercussions concerning other aspects of the parties' pleadings - depending upon the outcome of those opposed leave applications. The fate of the defendants' pending strike out applications - concerning aspects of the plaintiffs' pleaded replies in each action - also carry capacity to bear upon the ambit of discovery, particularly if the strike out applications are successful concerning Fulcrum Purpose pleas which are raised by the plaintiffs in those replies.
These evidently contested discovery issues await a resolution of the pending applications which bear upon the state of the pleadings. But the defendants also submit that, even when such pleadings issues are resolved, all further interlocutories in both actions ought then be determined by a new case manager and the putative trial judge, as I had foreshadowed in my reasons in Palmer v CITIC Ltd [No 4] [2022] WASC 292 at [60]. There is obvious force in that, given my prior involvements in earlier abuse of process pleading arguments and in earlier arguments concerning the Fulcrum Group and the Fulcrum Purposes. So, they inhibit me from any further involvement on disputed issues in the two actions hereon in. Henceforth, as from the publication of these reasons and the making of orders therein, Lundberg J will be the new case manager of these two actions in the Court's CMC List.
Under orders 4 to 7 in each of the most recent chamber summons filed by the plaintiffs on 23 January 2023, the plaintiffs also seek to advance challenges against some further aspects of the amended defences (or alternatively to press applications for further and better particulars of those defences to be given). These matters were a subject of a limited number of communications between the parties' respective lawyers. But all currently remain in dispute.
Furthermore, at the appointment hearing on 25 January 2023, senior counsel for the defendants identified that the defendants were now actively considering bringing applications seeking to reverse aspects of my earlier orders made in both actions, effectively hiving away quantum issues - to split the trials. As a result of these earlier orders, the two trials (of each action) would be heard together, but both would focus essentially, on issues of liability in the first instance.
The defendants now say however, under their written submissions of 25 January 2023 (folio 208) at par 15, as to those split trial orders made as order 1 in each action (on 14 September 2020):
15.…Further, the defendants have become aware of recent reports that Mr Palmer has sold the Yabulu Refinery for an amount in the order of $2 billion. The foreshadowed amendments to the QNI SOC do not address this significant development. The defendants are therefore considering amendments to their existing defence in the QNI proceedings to address it. The sale, coupled with the existing issue in the [Palmer Petroleum] proceeding as to whether Mineralogy has lost the PPLs as it alleges, has led the defendants to reconsider the appropriateness and utility of the existing split between the hearing of liability and quantum in the FCD Proceedings.
16.That may necessitate another application by the defendants. Any application by the defendants should be heard and determined by the putative trial judge, and at the same time as the plaintiffs' applications to vary the existing discovery orders.
17.For the reasons set out above, all of these are matters best considered by the putative trial judge. In the circumstances, the defendants consider this to be the appropriate course to case manage these matters in the most efficient, orderly and cost effective way.
Since the hearing, two applications by chamber summons have been filed by the defendants in each action on 10 February 2023, seeking such foreshadowed changes.

Further programming orders

In light of the fact that the plaintiffs' foreshadowed application seeking leave to join Balmoral Iron Pty Ltd as a further defendant in both actions is no longer to proceed, the capacity may present for Lundberg J to hear, at the pending special appointment across 8 and 9 March 2023, the currently opposed applications of the plaintiffs to further amend their statements of claim - in accord with the respective minutes as filed on 23 January 2023. His Honour has agreed, if there is time, to address that further aspect of the parties' interlocutory disputes - in addition to the already programmed strike out applications advanced by the defendants raised against the plaintiffs' replies in both actions.
Consequently, my chambers has advised the parties to proceed to prepare outlines of written submissions and file any affidavit materials concerning the hearing of the opposed applications of the plaintiffs for leave to make the further proposed amendments to the statement of claim – on a timeline that accords with former orders 3(a), 4(b) and 5(a) of my previous timetabling orders and directions of 14 December 2022, akin to the applicable dates under my earlier timetabling for hearing of the now redundant joinder application concerning Balmoral Iron Pty Ltd as an extra defendant.
Resolution of the applications made concerning the controversial aspects of the reply and the proposed further amendments to the statement of claim will be at least a step towards resolving some of the interlocutory obstacles inhibiting progress of these two actions to a trial.
In relation to the other tranches of disputed issues I have now canvassed from each side, it is evident that I cannot be the case manager who determines most of those issues. They should be determined by the new case manager.

Objection to Ms Chun's affidavit

I have mentioned the affidavit of law graduate, Ms Minwoo Chun filed 23 January 2023 by the lawyers for the plaintiffs and proposed to be read in each action.
The defendants raise a formal objection (see folio 207) against parts of Ms Chun's affidavit - effectively objecting to the admissibility of most of the attachments to her affidavit under Annexures MC-01 to MC-10. The objection was based on their suggested irrelevance - but also on a basis that the attachments in passing lawyer correspondence 'contains reference to conferral contrary to [Practice Direction] 4.3.2(9)'.
That Practice Direction presents in a context of a section of this Court's Consolidated Practice Directions - under the heading 'Conferral prior to making an application'.
The importance of meaningful pre-application verbal dialogue conducted between opposing parties, usually through their legal representatives, prior to the bringing of, or indeed the hearing of, a contested interlocutory application - particularly in this Court's CMC List - is a vital aspect of day-to-day case management protocols required within the Court.
Conferral is a process that eliminates, or at least greatly minimises the number of interlocutory disputes that might otherwise present for formal determination due to often seen failures - by one side or the other, or sometimes on both sides - to fully appreciate the stance of a counterparty taken upon a particular interlocutory dispute. That is so even though the required conferral usually takes place under open and 'on the record' communications - unless the parties' representatives otherwise mutually agree, as they may in certain circumstances, to confer on a 'without prejudice' basis. That step, of course, should be communicated and agreed upon expressly.
Here, the defendants object to an annexed assembly of 56 pages of passing lawyer-to-lawyer written materials found annexed to Ms Chun's affidavit - as violating subpar 9 of Practice Direction 4.3.2.
That Practice Direction says that affidavits filed in connection with proceedings should not contain any reference to the conferral without leave of the court. It adds, 'in the past the practice of including this material in affidavits has discouraged the making of concessions in the course of those communications'.

There is a potential for some confusion of terminology here, particularly by reference to 'conferral' correspondence.
Conferral between legal representatives, as has been said many times now, ought to take place verbally, not by writing. Optimally, this should be by a face-to-face physical meeting in person by the senior legal representatives. In COVID-19 impacted times, face-to-face electronic communications via Zoom or by Microsoft Teams were used to good effect, and remain convenient to this end. Where that cannot occur then, at minimum, there ought to be at least one verbal conferral by way of telephone communication between the legal practitioners, as a less optimal fallback methodology.
So, where in that scheme of communications does so-called written conferral correspondence sit?
In the leadup to a meaningful process of conferral, experience has shown that the rival lawyers will often exchange some open correspondence, setting down clearly their clients' positions - upon a disputed issue or issues in a pending action. There may be considerable written leadup to aid an eventual meaningful oral conferral. Not infrequently, this will be all that is needed to resolve an interlocutory dispute. But if it does not, the correspondence will usually at least focus the counterparties' attention upon the essential aspects of the dispute. Where dispute persists, the prior written communications are not a substitute for some required verbal conferral to take place, between the senior legal representatives, as the final steps necessary towards 'giving peace a chance'.
That is the context in which the Court's Practice Direction is to be assessed. Usually, there must be a formal memorandum of conferral filed explaining (briefly) the conferral steps that have unfolded between the parties, see Rules of the Supreme Court 1971 (WA) Order 59 rule 9(1). In most instances, no more is required. But, where a party does discern a genuine forensic need to refer to some aspect of the prior written lawyer-to-lawyer communications which have been an earlier part of the conferral process, then Practice Direction 4.3.2 subpar 9 says that leave to refer to that document (or parts of it) must first be obtained from the Court a fortiori for a disclosure of the verbal communications contents - assuming they were not conducted on a 'without prejudice' basis.
On my view, the objection presently raised by the defendants is technically correct. Leave must first be obtained in order to refer to the passing lawyer correspondence appended to Ms Chun's affidavit.
The wasteful and indiscriminate practice of assembling all passing written lawyer-to-lawyer correspondence leading up to a particular interlocutory application and attaching it all to an affidavit is time consuming, expensive and, more often than not, unhelpful. It erects a forest of trees, rather than identifying the (usually) few 'leaves' which are to be focussed upon.
Practice Direction 4.3.2 subpar 9 must be read and evaluated in the context of preceding subpar 8 and ensuing par 10. Assembled in context, these three Practice Directions are seen to provide:
8.A memorandum of conferral must follow Form 108. It is not acceptable to include a note regarding conferral at the foot of an application. A separate memorandum must be filed. The memorandum must set out briefly the facts relied upon to show conferral. It is not acceptable to note simply that conferral has occurred and that the parties are unable to agree.
9.Affidavits filed in connection with the proceedings should not contain any reference to the conferral without leave of the Court. In the past, the practice of including this material in affidavits has discouraged the making of concessions in the course of those communications.
10.In the event the parties are unable to resolve the matters in dispute between them, there must be conferral with a view to agreement being reached as to the programming of the application for a case management conference. This may enable the Court to make programming orders or to deal with the application entirely without the need for any appearance by the parties. Paragraph 3 of Form 108 deals with this.
There will be occasions where some legitimate forensic purpose can be demonstrated in an assembly of some limited aspects of passing first phase written communications between the parties' lawyers. But to that end, some good reason first needs to be identified to support a required grant of leave from the Court to allow a permissible reference to that material.
Good reason might be briefly identified in the accompanying conferral memorandum, or briefly again in the written submissions accompanying a disputed application.
Routinely as well, there will be little or no controversy over the Court's grant of leave - as all parties will seek to identify limited aspects of such written material. But the Practice Direction is otherwise clear that there is to be no plenary assembly of all the pre-conferral passing lawyer correspondence casually appended to an affidavit.
Too often the affidavit preparation is a task delegated on an unthinking basis down to a clerk, without enough thought or direction as to the required (and much more limited) assembly aspects of the submitted evidentiary materials that are truly relevant and necessary to be referred to. The assembly of electronic forests of such materials is, invariably, wasteful and unnecessary.
For present circumstances, I do no more than note the need for leave to be obtained to refer to aspects of this material at the contested application before Lundberg J.

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