Roseland Capital Pty Ltd v Neometals Limited
[2022] WASC 132
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: ROSELAND CAPITAL PTY LTD -v- NEOMETALS LIMITED [2022] WASC 132
CORAM: REGISTRAR WHITBREAD
HEARD: 18 OCTOBER 2021
DELIVERED : 22 APRIL 2022
PUBLISHED : 22 APRIL 2022
FILE NO/S: CIV 2016 of 2020
BETWEEN: ROSELAND CAPITAL PTY LTD
First Plaintiff
MURRAY THOMAS WARD
Second Plaintiff
AND
NEOMETALS LIMITED
First Defendant
REED INDUSTRIAL MINERALS PTY LTD
Second Defendant
JIANGXI GANFENG LITHIUM CO., LTD. (REGISTRATION NO. 360500110000305)
Third Defendant
GFL INTERNATIONAL CO., LTD. (REGISTRATION NO. 1580183)
Fourth Defendant
Catchwords:
Practice and procedure - Application to strike-out parts of amended statement of claim - Tortious conspiracy - Turns on its own facts
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Application dismissed
Category: B
Representation:
Counsel:
| First Plaintiff | : | S K Dharmananda SC & S Nadilo |
| Second Plaintiff | : | S K Dharmananda SC & S Nadilo |
| First Defendant | : | G R Donaldson SC |
| Second Defendant | : | |
| Third Defendant | : | M D Cuerden SC |
| Fourth Defendant | : | M D Cuerden SC |
Solicitors:
| First Plaintiff | : | Mills Oakley |
| Second Plaintiff | : | Mills Oakley |
| First Defendant | : | Herbert Smith Freehills |
| Second Defendant | : | Allen & Overy |
| Third Defendant | : | Dentons Australia |
| Fourth Defendant | : | Dentons Australia |
Case(s) referred to in decision(s):
Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552
Australian Wool Innovation Ltd v Newkirk [2005] FCA 290; (2005) ATPR 42-053
Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers - Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157
Banks v Alphatise Pty Ltd [2014] NSWSC 1437
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82
Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256
Betfair Pty Ltd v Racing New South Wales [2010] FCAFC 133; (2010) 189 FCR 356
Built Environs WA Pty Ltd v Perth Airport Pty Ltd [No 4] [2020] WASC 382.
CC Containers Pty Ltd v Lee [2011] VSC 537
Central Exploration Pty Ltd v Zuks [2020] WASC 46
Charlie Carter Pty Ltd v The Shop, Distributive & Allied Employees' Association of Western Australia (1987) 13 FCR 413
Chong v CC Containers Pty Ltd [2015] VSCA 137
Culleton v Permanent Custodians Ltd [2018] WASC 251
Del Borrello v Friedman and Lurie (a firm) [2001] WASCA 348
DM Drainage & Constructions Pty Ltd v Karara Mining Ltd [2014] WASC 170
Dresna Pty Ltd v Misu Nominees Pty Ltd [2003] FCA 1537
Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169
EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23
English v Vantage Holdings Group Pty Ltd [2021] WASCA 47
Great Southern Finance Pty Ltd (in liq) v Rhodes [2014] WASC 431
HartRoach v Public Trustee (Unreported, WASC, Library No 980044, 11 February 1998)
Jensen v Nationwide News Pty Ltd [No 2] [2018] WASC 129
Johnston v Smith [2002] NSWSC 409
Kidd v Mitchell Frederick Artus t/as Downings Legal [2013] WASC 264
Kimberley Downs Pty Ltd v Western Australia (Unreported, WASC, Library No 6414, 25 August 1986)
Kingsfield Holdings Pty ltd v Sullivan Commercial Pty Ltd [2021] WASC 289
Lindon v The Commonwealth [No 2] [1996] HCA 14; (1996) 70 ALJR 541
Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173
Lonsdale Investments v OM (Manganese) Ltd [2009] WASC 188
McKernan v Fraser (1931) 46 CLR 343
Mutual Life & Citizens' Assurance Co Ltd v Evatt (1970) 122 CLR 628
Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405
R v Associated Northern Collieries (1911) 14 CLR 387
Ron Hodgson (Trading) Pty Ltd v Belvedere Motors (Hurtsville) Pty Ltd [1971] 1 NSWLR 472
Stobart Group v Tinkler [2019] EWHC 258
Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398
Ward v Neometals Ltd [2018] WASC 175
Wenlock v Moloney [1965] 1 WLR 1238
REGISTRAR WHITBREAD:
On 20 November 2020 the first defendant (Neometals) filed a chambers summons (the Application) seeking to the strike out pars 63 - 68, and pars 1(d), 2(f) and 3(a) of the prayer for relief of the amended statement of claim filed on 17 November 2020 (ASOC). The Application seeks to strike out pleas of conspiracy (pars 63 - 68 of the ASOC).
The Application was heard on 18 October 2021, the delay in hearing the Application arising out of other procedural matters which occurred in the interim, including service of the third and fourth defendants out of the jurisdiction and a security for costs application. The third defendant (Ganfeng) and the fourth defendant (GFL) have both been served, both have entered unconditional appearances and both support Neometals' application. Written submissions were addressed and expanded upon at the hearing.
Factual allegations
I adopt and adapt the following summary of allegations of material facts (as to the conspiracy pleas in pars 63 - 67 of the ASOC) from the written submissions of senior counsel for Ganfeng and GFL:
(1)On 4 December 2009, an agreement was entered into, which (subject to subsequent novations as pleaded), subsists as between the first plaintiff (Roseland) and the second defendant (RIM) (the Offtake Introduction Agreement), pursuant to which Roseland and RIM agreed that RIM would pay Roseland a fee for introducing any party to RIM that purchased offtake from the lithium project which RIM owned near Kalgoorlie under a long-term offtake agreement (LTO) (pars 7 - 16). RIM is (or was at material times) a subsidiary of Neometals (pars 3 (g) and (h));
(2)On 5 March 2015, Roseland and Neometals entered into an agreement (the Equity Arrangement Agreement) under which Neometals agreed to pay Roseland a fee (the Introduction Fee) in respect of any party introduced by Roseland (or any of its subsidiaries) to Neometals that purchased equity in RIM from either Neometals or RIM itself (pars 18 - 21);
(3)On 10 March 2015, both the Offtake Introduction Agreement and the Equity Arrangement Agreement were varied/ supplemented by agreement (the Exclusivity Provision) that, relevantly, Roseland would deal exclusively with Ganfeng and Ganfeng would be deemed a party introduced by Roseland, neither Neometals nor RIM would deal directly with Ganfeng, and Neometals or RIM would immediately inform Roseland if Ganfeng attempted to contact Neometals or RIM directly (par 22);
(4)From around 2 March to around 2 May 2015, Roseland in fact proceeded to facilitate entry into an LTO by Ganfeng or another (China Gold), and the purchase of equity in RIM by Ganfeng. For this purpose Roseland negotiated with Neometals and RIM, and with Ganfeng, and provided information in relation to the Project and RIM to Ganfeng, which contained reference to the Introduction Fee. At around the same time, Roseland discussed with Neometals and RIM a fee payable by RIM to China Gold (pars 24 - 27);
(5)On or around 27 April 2015, Ganfeng informed China Gold, acting as agent for Roseland, that Ganfeng was not interested in entering into an offtake agreement or purchasing equity in RIM (par 28);
(6)Ganfeng in fact remained interested in an offtake agreement with, and an equity purchase in, RIM, and from around 5 May 2015 Neometals and RIM commenced negotiating directly with Ganfeng in that respect (par 30);
(7)On 15 July 2015, Neometals, RIM, Ganfeng, GFL (a subsidiary of Ganfeng) and another (PMI) entered into a binding memorandum of understanding (the Ganfeng MOU) which provided for: (i) entry into a long-term offtake agreement between Ganfeng (through GFL) and RIM; (ii) the sale of, and subscription for, equity in RIM to Ganfeng (through GFL); and (iii) other matters (the Ganfeng Agreements) (pars 31 - 34); and
(8)On or around 19 September 2015, Neometals and RIM entered into formal binding agreements with Ganfeng on terms substantially consistent with the terms of the Ganfeng MOU, and the transactions the subject of the Ganfeng MOU subsequently became unconditional (pars 37 - 38).
It is not alleged that either Ganfeng or GFL were parties to, or even knew about, the Exclusivity Provision (noting that the Exclusivity Provision was a variation/supplementation to underlying agreements to which neither Ganfeng nor GFL were parties).
Further, although it is alleged that Ganfeng received information containing reference to the Introduction Fee, it is not alleged that Ganfeng (or GFL) knew that the receipt of that information was contrary to any agreement between Neometals/RIM and Roseland.
Roseland makes the following claims.
(1)Against Neometals, for breach of the alleged Equity Arrangement Agreement and for monies the Arrangement Fee purportedly due under it.
(2)Against RIM, for breach of the alleged Offtake Introduction Agreement and for monies the Introduction Fee purportedly due under it.
(3)Against Neometals and RIM, for alleged misleading or deceptive conduct in respect of the alleged Roseland Exclusivity Undertaking.
(4)Against all defendants, for conspiracy, both by unlawful means and by lawful means. The unlawful means conspiracy allegations are pleaded at pars 63 - 66 of the ASOC. The lawful means conspiracy allegation is pleaded at par 67, and, as was conceded by counsel for the plaintiffs on the application, the lawful means conspiracy relies on the same material facts as the alleged unlawful means conspiracy.
Roseland's case is that each of Neometals, RIM, Ganfeng and GFL were parties to this conspiracy.
Neometals submits that the action should be confined to a claim for breach of, and monies purportedly due, under two alleged contracts: the Equity Arrangement Agreement and the Offtake Introduction Agreement. There is no claim against Ganfeng and GFL except on the conspiracy claims. Only the first plaintiff (Roseland) sues on the conspiracy claims, as the second plaintiff (Ward) makes no claims against Ganfeng or GFL.
Principles for determining a strike out application
Where an allegation of no reasonable cause of action is raised, all of the facts alleged in the statement of claim must be accepted as true, and it must be taken for granted that on all other points the pleading is unassailable: Kimberley Downs Pty Ltd v Western Australia (Unreported, WASC, Library No 6414, 25 August 1986) (Staples M).
The principles applicable on a strike out application were summarised by Smith J in Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398 [60]. Her Honour's summary was recently adopted, and endorsed as a 'valuable guide', by the Court of Appeal in English v Vantage Holdings Group Pty Ltd [2021] WASCA 47 [56] (Murphy and Vaughan JJA) [163] (Mitchell JA).
In Vantage Holdings, at [60], her Honour stated the principles relevant to strike out applications as follows:
(a)the essential functions of a pleading are to define and limit the issues for decision, to provide the basis for determining discovery and the admissibility of evidence for trial, and to ensure a fair trial by putting the other side on notice of the case it must meet;[1]
[1] EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23 [124] (Buss JA, Owen & Newnes JJA agreeing); Betfair Pty Ltd v Racing New South Wales [2010] FCAFC 133; (2010) 189 FCR 356 [49] (Keane CJ, Lander & Buchanan JJ); Great Southern Finance Pty Ltd (in liq) v Rhodes [2014] WASC 431 [28] - [29] (Beech J).
(b)a statement of claim must not plead allegations at too high a level of generality. A pleading must be sufficiently particular to conform with one of the primary objects of pleadings, to inform the opposing party of the case that it must meet;[2]
[2] DM Drainage & Constructions Pty Ltd v Karara Mining Ltd [2014] WASC 170 [32], applying Charlie Carter Pty Ltd v The Shop, Distributive & Allied Employees' Association of Western Australia (1987) 13 FCR 413, 417, Lonsdale Investments v OM (Manganese) Ltd [2009] WASC 188 [5].
(c)a statement of claim must state specifically the relief or remedy claimed;[3]
[3] Rules of the Supreme Court 1971 (WA) O 20 r 2(1).
(d)the court should proceed with caution before striking out a pleading on the ground that it does not disclose a reasonable cause of action.[4] While the court may determine a difficult question of law on such an application, it would usually be appropriate to leave the determination of such questions for trial;[5]
[4] Great Southern Finance Pty Ltd (in liq) v Rhodes [26] (Beech J) applying Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57] (Gaudron, McHugh, Gummow & Hayne JJ); Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46] (Gleeson CJ, Gummow, Hayne & Crennan JJ).
[5] Great Southern Finance Pty Ltd (in liq) v Rhodes [26] (Beech J).
(e)in alleging no reasonable cause of action:
(i)the question to be decided is not whether the facts pleaded are in themselves sufficient to give rise to a cause of action. Rather, the question is whether it would be open to the party (on its pleadings) to prove facts at the trial which would constitute a cause of action;[6] and
(ii)'reasonable' means reasonable according to law. If the facts pleaded conceivably give rise to relief, then the cause of action should be held to be reasonable;[7]
(f)the mere fact that a case appears weak is not of itself sufficient to strike out the action;[8]
(g)in considering a strike out application, it is now necessary to consider the role of pleadings in the context of case management techniques. Case management considerations are not, however, necessarily antithetical to the observance of pleading rules. The objects of O 1 r 4A and 4B of the Rules of the Supreme Court 1971 (WA) are often promoted by a clear and precise statement of the issues for decision;[9]
(h)provided a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action (or defence), and apprising the parties of the case that has to be met, the court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the court to be spent extensively debating the application of technical pleading rules that evolved in, and derive from, a very different case management environment;[10]
(i)pleadings may be struck out on the ground that they may prejudice, embarrass or delay the fair trial of the action because they are evasive, they conceal or obscure the real questions in controversy, they are ambiguous or not reasonably intelligible, they raise immaterial or irrelevant issues, they fail to confine the issues or state the case of the party in question with reasonable particularity, or they raise a case in terms which are simply too general;[11] and
(j)irrelevant or unnecessary pleas in a statement of claim will be struck out on the grounds that they will prejudice, embarrass or delay the fair trial of the action where the defendant must traverse the allegations and, thereby, raise false issues.[12]
[6] Mutual Life & Citizens' Assurance Co Ltd v Evatt (1970) 122 CLR 628, 631; Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405, 414; Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers - Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157 [54] (Roberts-Smith JA).
[7] Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers - Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [54] (Roberts-Smith JA).
[8] Wenlock v Moloney [1965] 1 WLR 1238, 1243 - 1244 (Danckwerts LJ); Lindon v The Commonwealth [No 2] [1996] HCA 14; (1996) 70 ALJR 541, 545 (Kirby J); Del Borrello v Friedman and Lurie (a firm) [2001] WASCA 348 [61] (Kennedy J)
[9] Culleton v Permanent Custodians Ltd [2018] WASC 251 [33] (Allanson J).
[10] Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 [7] (Martin CJ).
[11] DM Drainage & Constructions Pty Ltd v Karara Mining Ltd [2014] WASC 170 [34], applying HartRoach v Public Trustee (Unreported, WASC, Library No 980044, 11 February 1998) 8 - 9, Kidd v Mitchell Frederick Artus t/as Downings Legal [2013] WASC 264 [26].
[12] Ron Hodgson (Trading) Pty Ltd v Belvedere Motors (Hurtsville) Pty Ltd [1971] 1 NSWLR 472, 477.
Pleading tortious conspiracies
I adopt and adapt the submissions of senior counsel for Neometals as to pleading of the tortious conspiracy as follows below. I do not understand there to be any significant dispute between the parties as to those principles.
The elements of the tort of conspiracy, and the matters which must be pleaded, were set out by Ferguson J in CC Containers Pty Ltd v Lee [2011] VSC 537 [11] - [14] (citations omitted):
Conspiracy may take one of two forms:
(1)an 'unlawful means' conspiracy in which the participants combine together to perform acts which are themselves unlawful; and
(2)a combination to perform acts which, although not themselves unlawful, are done with the sole or predominant purpose of injuring the claimant.
The learned authors of Bullen & Leake & Jacob's Precedents of Pleadings identify the necessary elements that must be pleaded where the tort of conspiracy is alleged:
(a)a combination or agreement between two or more individuals (required for both types of conspiracy);
(b)an intent to injure (required for both types of conspiracy but must be shown as the sole or predominant purpose for type (2) above);
(c)pursuant to which combination or agreement and with that intention certain acts were carried out;
(d)resulting loss and damage to the claimant.
A conspiracy can be proved without evidence of an express agreement:
A court is entitled to have regard to the overt acts pleaded, and to infer from those acts that there was an agreement to further the common object of the combination. All of those said to be parties to the conspiracy should be sufficiently aware of the surrounding circumstances, and share the same object, for it properly to be said that they are acting in concert.
An intention to injure is an important part of establishing the tort of conspiracy. In this regard, a conspiracy to injure a person is distinguishable from an agreement to do an unlawful act that results in damage to that person.
This formulation was cited with approval by Allanson J in Central Exploration Pty Ltd v Zuks [2020] WASC 46 [119]. His Honour went on to note the dicta of O'Keefe J in Johnston v Smith [2002] NSWSC 409 [25]:
A pleading in conspiracy … should set out facts which show the making of an actual agreement between the conspirators, on one occasion or on a number of occasions, or show acts done by them pursuant to a common purpose or with a common end from which the making of the agreement is to be inferred.
Alternatively, the facts pleaded may show that the conspiracy was constituted by the doing of acts with the necessary common purpose. Whatever the basis on which the conspiracy is sought to be established, the plaintiff must allege and prove common purpose between the alleged conspirators.
All parties to an alleged conspiracy must be sufficiently aware of the surrounding circumstances, and share the same object, for it properly to be said that they are acting in concert: see Australian Wool Innovation Ltd v Newkirk [2005] FCA 290; (2005) ATPR 42-053 [62], cited with approval in Central Exploration [119].
Neometals', Ganfeng's and GFL's submissions
Each of the participating defendants on the Application delivered detailed written submissions. Neometals filed submissions on 30 July 2021 (Neometals’ submissions) and Ganfeng and GFL filed submissions on 17 August 2021 (Ganfeng’s and GFL’s submissions). In the following paragraphs I paraphrase those submissions.
Neometals' submissions
Neometals submits that the conspiracy claims have been added to this action simply to enable the plaintiffs to proceed against Ganfeng and GFL and, in respect of Neometals and RIM, that the conspiracy claims add nothing to the contractual, and misleading or deceptive conduct, causes of action. It is contended that because of the enhanced standard of proof that the conspiracy claims will attract, they would be more difficult to prove as against Neometals and RIM than the other causes of action.
Neometals contends that, having regard to the elements prescribed in Bullen & Leake & Jacobs, as referred to in the extract from CC Containers Pty Ltd above, in respect of the unlawful conspiracy case, it must be pleaded that each of Neometals, RIM, Ganfeng and GFL were parties to a plan to do (or omit to do) acts, the doing (or not doing) of which is unlawful. Here the acts and omissions must be that:
(i)Neometals, RIM, Ganfeng and GFL negotiated with a view to reaching what became the Ganfeng Agreement without advising Roseland of those negotiations;
(ii)they must have done this with the intention of injuring Roseland;[13]
(iii)the plan was implemented; and
(iv)this caused loss to Roseland.
[13] Although Neometals' submissions (at [15]) list this as an element of the unlawful means conspiracy, it appears from other parts of the submissions that Neometals accepts that an intention to cause harm is only required for the lawful means conspiracy.
At par 63 of the ASOC, the plan (or 'Combination') is pleaded, and, in Neometals' submission, its 'obvious difficulties' are sought to be addressed by particulars.
It is useful at this point to set out paragraph 63 in full to facilitate an understanding of the submissions that follow:
63.In or about April 2015, or early May 2015, Ganfeng, GFL, Neometals and RIM (Conspiring Parties) agreed or combined with the common design (Combination) to enable the negotiation and conclusion of an agreement to the effect of the Ganfeng MOU (and later the Ganfeng Agreements) without:
(a)giving notice to Roseland of the direct negotiations between Ganfeng (including on behalf of GFL), on the one hand, and Neometals and RIM through Reed, on the other hand (Avoidance Plan); and
(b)the further involvement of Roseland.
Particulars
The Combination can be inferred from the concurrence of time, character, direction and result of the following conduct:
(a)each of the Conspiring Parties giving no notice of their negotiations to Roseland, being aware of the Offtake Introduction Agreement and the obligation to pay the Introduction Fee;
(b)Neometals and RIM were aware of the Offtake Introduction Agreement and the obligation to pay the Introduction Fee by reason of matters including:
(i)the matters pleaded in paragraphs 7, 19, 22, 24 and 26 above;
(ii)the provision of the Financial Model, as described in the particulars to paragraph 26 above; and
(iii)further particulars will be provided after discovery, issue and return of subpoenas;
(c)Ganfeng and GFL were aware of the Offtake Introduction Agreement and the obligation to pay the Introduction Fee by reason of matters including:
(i)the matters pleaded in paragraph 24 above;
(ii)the provision of the Financial Model, as described in the particulars to paragraph 26 above;
(ii)the matters pleaded in paragraphs 28, 30 to 34 above from which the awareness of Ganfeng and GFL can be inferred; and
(iii)further particulars will be provided after discovery, issue and return of subpoenas;
(d)the matters pleaded in paragraphs 28 to 36 above; and
(e)the matters pleaded in paragraph 64(a) to 64(d) below
Neometals submits that, although it is well understood, and confirmed by O'Keefe J in Johnston v Smith, that an agreement to injure can be inferred, and can be pleaded as arising by inference, the plea of this inferred agreement must address 'acts done by [the defendants] pursuant to a common purpose or with a common end from which the making of the agreement is to be inferred'. Neometals submits that no such acts are pleaded in par 63.
Neometals submits that, prior to amendment, the only relevant plea was in par (b) of the particulars given in par 63 of the ASOC (the particulars). On Neometals' view, par (b) of the particulars pleaded nothing that could give rise to an inference that Ganfeng and GFL acted pursuant to a purpose common to them and Neometals and RIM to negotiate with a view to reaching what became the Ganfeng Agreements without advising Roseland.
Neometals submits that the plaintiffs have sought to overcome the 'obvious defect' with the plea by adding subpar (c) to the particulars in the amended writ of summons filed on 17 November 2020 (the amended writ).
Neometals contends, as to par (c)(i) of the particulars, that there is nothing in par 24 of the ASOC that resembles an allegation, or could found an inference, that Ganfeng and GFL acted pursuant to a purpose common to them and Neometals and RIM to negotiate with a view to reaching what became the Ganfeng Agreements without advising Roseland. Paragraph 24 does not plead that Ward, Chai or China Gold informed Ganfeng and GFL about the Offtake Introduction Agreement or RIM's obligation to pay the Introduction Fee. Nothing pleaded in par 24 could found an inference that Ganfeng or GFL were aware of these matters.
As to (c)(ii) (the first one) (it should be noted that there are two paragraphs labelled c(ii) in the particulars), firstly, nothing in par 26 could give rise to a relevant inference. Even if Ganfeng saw a document that 'contained a reference to the Introduction Fee', how does this prove that Ganfeng negotiated with Neometals and RIM to come to the Ganfeng Agreements without advising Roseland for the purpose of avoiding Neometals and RIM having to pay the Introduction Fee? Even at its highest, Neometals submits that Ganfeng may have understood that the Neometals and RIM would pay the Introduction Fee, or Ganfeng was indifferent as to whether they would do so.
As to (c)(ii) (the second one), the pleas in par 28 and pars 30 - 34 come to this: Ganfeng informed China Gold, an agent of Roseland, that it was not interested in dealing with Neometals and RIM with a view to reaching what became the Ganfeng Agreements, when in fact Ganfeng was interested.
China Gold's involvement is first pleaded at par 8 of the ASOC. At par 24 it is pleaded that China Gold assisted Roseland in its efforts. At par 27 it is pleaded that there were discussions with Neometals and RIM concerning RIM paying a fee to China Gold. There is no plea that Ganfeng or GFL knew of this.
The sole reference to China Gold being an agent of Roseland is found at par 28 of the ASOC. There is no plea of what the terms of the agency were. Critically, in Neometals' submission, there is no plea that Ganfeng knew that China Gold was 'acting as agent of Roseland' and nothing in par 24 or par 25 can be understood to establish this.
Neometals contends that, if all of those matters are accepted then the plea at its highest is as follows:
(1)Ganfeng told China Gold that it was no longer interested in negotiating with Neometals and RIM about what became the Ganfeng Agreements;
(2)Ganfeng was in fact interested;
(3)Ganfeng had seen a document that 'contained a reference to the Introduction Fee' but knew nothing else about it; and
(4)Ganfeng lied to China Gold because it had an arrangement with Neometals and RIM to enable RIM to avoid paying the Introduction Fee.
Neometals submits that this conclusion is 'bizarre'; that there is no plea that Ganfeng knew that China Gold was 'acting as agent of Roseland'; and that if China Gold was, as pleaded at par 8, a 'substantial Chinese state owned mining company' it would be astonishing that it was acting as an agent of Roseland in trying to get a fee for Roseland out of Neometals and RIM. Further, even if, as pleaded, Ganfeng lied to China Gold about its interest, the inference that it did so because it had an arrangement with Neometals and RIM to enable Neometals and RIM to avoid paying the Introduction Fee could never be drawn.
Neometals submits that nothing in (d) or (e) of the particular add to the second (c)(ii).
Neometals contends for a further critical and terminal defect with the conspiracy pleas. As noted above, an unlawful conspiracy requires that participants combine together to perform acts which are themselves unlawful. The alleged unlawful acts here are pleaded at par 64 of the ASOC. The alleged unlawful act is breach of the 'Exclusivity Provision' which is pleaded at par 22, and par 22(b) and (c) are of particular relevance. On the plaintiffs' pleaded case, they are entitled to the fees. If they succeed in their contract case they will be paid the fees. If they do not, it can only be because par 22(b) and (c) are not terms of the agreements. If they are not terms of the agreements, what could Neometals and RIM and Ganfeng and GFL be conspiring about?
Finally, Neometals submits as to the lawful means, or common, conspiracy plea at par 67 of the ASOC, that a common conspiracy requires proof of a combination to perform acts which, although not themselves unlawful, are done with the sole or predominant purpose of injuring the claimant. The plea at par 67(b) is that Neometals and RIM and Ganfeng and GFL performed the particularized acts for the dominant purpose of injuring Roseland by depriving it of the fees. Neometals notes that the plea in par 65 is not that this was the sole or predominant purpose of the alleged conspirators. Neometals submits that this discloses why this case can never succeed, because no inference can be drawn that Neometals and RIM and Ganfeng and GFL performed the particularized acts for the sole or predominant purpose of injuring Roseland when a part of the purpose of acting as they did could be explained by them simply not requiring Roseland to be involved.
Ganfeng’s and GFL's submissions
Ganfeng and GFL join Neometals in the application and also challenge the basis for both the unlawful means conspiracy and lawful means conspiracy claims.
As to the alleged unlawful means conspiracy, Ganfeng and GFL submit that it is apparent from par 64A that the alleged unlawful acts or means are said to have been the conduct pleaded in sub-pars 64(a), (b) and (c), although Ganfeng's and/or GFL's alleged conduct is limited to that pleaded in sub-pars (b) and (c) (as sub-par (a) does not contain any allegation of any conduct by Ganfeng or GFL). However, Ganfeng and GFL point out that the unlawful conduct pleaded therein is conduct by Neometals and RIM, i.e., the alleged breach by Neometals or RIM of the Offtake Introduction Agreement, including breach of the Exclusivity Provision, and the alleged contravention by Neometals or RIM of s 18 of the ACL, i.e., misleading or deceptive conduct.
Ganfeng and GFL submit that there is simply no allegation of any unlawful conduct, unlawful acts or unlawful means by Ganfeng or GFL. For example, they say, there is no allegation of any breach of contract by either Ganfeng or GFL, neither of whom were parties to the alleged agreements, nor is there any allegation that either Ganfeng or GFL were parties to, or even knew about, the Exclusivity Provision.
Ganfeng and GFL note that there is no plea of any interference with contractual relations by Ganfeng or GFL, and say that there could not be, because there is no allegation, or pleaded facts to support an allegation, that Ganfeng or GFL knew of any alleged breach by Neometals or RIM.
Ganfeng and GFL say that the only misleading or deceptive conduct that Roseland alleges is alleged misleading or deceptive conduct by Neometals and RIM, not Ganfeng or GFL. They point to the fact that there is no allegation of any knowing involvement by Ganfeng or GFL in the alleged misleading or deceptive conduct of Neometals and RIM, or even that Ganfeng or GFL knew about the alleged representation which forms the basis of the claim against Neometals and RIM for misleading or deceptive conduct.
In summary, Ganfeng and GFL submit that there is simply no plea of any facts to support any allegation that either Ganfeng or GFL agreed to effect any unlawful means or purpose. For these reasons, they say, the unlawful means conspiracy claim should be struck out on the ground that the pleading fails to disclose a cause of action.
At the very least, Ganfeng and GFL submit, they should not be left to guess what its alleged unlawful acts or means are said to have been; the pleading should be struck out on the ground that it may prejudice, embarrass or delay the fair conduct of the proceedings.
As to the alleged lawful means conspiracy Ganfeng and GFL submit that the critical question for present purposes is whether the alleged conspirators acted for the predominant purpose of causing loss to Roseland (see par 67(b)). They say that this is a fundamental element of the tort of lawful means conspiracy, because it is the existence of a sole or dominant purpose of causing loss to the plaintiff which renders a defendant liable for the consequences of its lawful conduct.
They submit that the alleged loss to Roseland, which is alleged to have been the dominant purpose, was depriving Roseland of any fee, i.e. under its agreements with Neometals and RIM (see par 67(b)). Therefore, the conspiracy claims necessarily arise only if Roseland did not earn the fees alleged to be payable to it under the Offtake Introduction Agreement and the Equity Arrangement Agreement as pleaded in pars 41 - 43, 47, 52 and 56. If Roseland earned those fees, then nothing in the alleged conspiracy deprived it of them, and by definition it suffered no loss because on its own case it is in fact entitled to receive exactly that which it claims to have been deprived of by the alleged conspiracy.
Hence, they submit, the conspiracy claims necessarily arise only if Roseland fails in its claim to be contractually entitled to the fees under the Offtake Introduction Agreement and the Equity Arrangement Agreement, being agreements to which neither Ganfeng nor GFL were party.
Ganfeng and GFL submit that nothing in the ASOC reveals how it could possibly be said that for Ganfeng and GFL to act in a lawful manner, with the intention (which may be assumed for this purpose) that Roseland would not earn fees under its agreements with Neometals or RIM, could be said to constitute an intention to cause loss to Roseland in any relevant sense for the purpose of the tort of lawful means conspiracy. Such a proposition is submitted to be unsustainable. Indeed, it is said, a moment's reflection reveals it to be incompatible with the most elementary assumptions of everyday economic life.
Ganfeng and GFL seek to illustrate this submission with an analogy. They submit that if that were the case, then every time a customer bought goods from seller A, in which case both the customer and seller A intend that the customer will thereby not purchase those goods from seller B so that seller B will not become entitled to receive a profit on that sale, on the plaintiffs' case the customer and seller A would be involved in a lawful means conspiracy to cause loss to seller B. This example is said to illustrate that the concept of an intention to cause loss to another necessarily entails more than merely depriving that other person of the profit (or in this case, fee) that it would have earned had the alleged conspirators not (lawfully) done business together.
I interpose that the situation in this action is not quite as simple as is submitted by Neometals, because the example ignores Roseland's assertion that a cost advantage was obtained as a result of the conspiracy (a deduction consequent on removal of the introduction fee).
In conclusion, Ganfeng and GFL submit the facts as pleaded do not reveal any arguable claim for lawful means conspiracy. At the very least, they said, more must be pleaded than the bare intention to deprive Roseland of earning any fee under agreements to which Ganfeng and GFL were not party.
Participating defendants' submissions as to leave to re-plead
Neometals, with the support of Ganfeng and GFL, submits that if the court accepts that the plea of conspiracy ought to be struck out, then leave to replead should be refused.
They say that these issues have been ventilated between the parties, and the plaintiffs have already sought to remedy the deficiencies through amendment. The plaintiffs cannot simply say they will provide further particulars after discovery and subpoenas. If the plaintiffs do not have a proper basis to plead the very grave allegations, they should not have done so. This is particularly so since the plaintiffs already have the benefit of pre-action discovery from Neometals.
Participating defendants' submissions as to appropriate orders and costs
Neometals submits, with the support of Ganfeng and GFL, that the court should:
(1)strike out pars 63 - 68 and 1(d), 2(f) and 3 of the prayer for relief, of the ASOC; and
(2)order the plaintiffs to pay Neometals' costs of this application.
The Plaintiffs' submissions
The plaintiffs oppose the application, and the basis of that opposition is set out in the plaintiffs' submissions filed on 2 September 2021 (plaintiffs’ submissions).
Although the paragraphs of the ASOC under challenge only concern claims made by the first plaintiff, the opposing submissions were made on behalf of both plaintiffs. This may ultimately have some relevance on costs, but in the absence of any objection by the participating defendants, I will proceed, for present purposes, on the basis that both plaintiffs had an interest in, and were entitled to be heard on, the Application.
I paraphrase the plaintiffs' submissions below.
Procedural matters
The plaintiffs accept that no evidence is admissible on an application on the ground that a pleading fails to disclose a cause of action, but say that the court may refer to documents mentioned in the pleading: Built Environs WA Pty Ltd v Perth Airport Pty Ltd [No 4] [2020] WASC 382 [10] (K Martin J). On the hearing of Neometals' application, the plaintiffs relied on the affidavit of Samuel Hagdorn affirmed on 2 September 2021, which affidavit annexes documents mentioned in the ASOC (Hagdorn Affidavit).
The plaintiffs note that Ganfeng and GFL support Neometals in the strike out application but that Ganfeng and GFL have filed no application of their own. The plaintiffs assert that despite this, Ganfeng and GFL advance contentions beyond those raised by Neometals in its application.
Although termed a strike out application, the plaintiffs submit that the application by Neometals and its supporters is an attack on the merits of the plaintiffs' conspiracy claims, and they say that the merits of those conspiracy claims should be determined at trial. The plaintiffs submit that Neometals' chamber summons should be dismissed with costs.
The plaintiffs respond to Neometals' submissions on the procedural history of this action by putting that history into the context that, whilst the plaintiffs commenced the action by a writ of summons and statement of claim and served it on Neometals and RIM in October 2020, even before the writ and statement of claim was served, the solicitors for Neometals had foreshadowed that Neometals would seek to strike out the conspiracy claims. Conferral ensued between the plaintiffs and Neometals about that potential strike out application.
On 17 November 2020, to address matters raised during the parties' conferral, the plaintiffs filed and served an amended writ of summons indorsed with the ASOC. Neometals proceeded to file its strike out application on 20 November 2020.
It was not until June 2021 that Ganfeng and GFL, who are persons outside of Australia, filed unconditional appearances and were formally joined to the proceeding.
The plaintiffs provided security for costs for the benefit of Neometals and RIM in March 2021 and are concerned to get the matter to trial where no substantive steps have been taken in the action for some 12 months.
Application of the principles for determining a strike out to the present case
The plaintiffs say that, Neometals, in its written submissions, raises or challenges factual matters that are pleaded in the ASOC. They say that this is contrary to the principle that, where an allegation of no reasonable cause of action is raised, all of the facts alleged in the statement of claim must be accepted as true, and it must be taken for granted that on all other points the pleading is unassailable: Kimberley Downs Pty Ltd v Western Australia (Staples M).
The plaintiffs emphasise that the principles set out above require that the court proceed with caution before striking out a pleading on the ground that it fails to disclose a reasonable cause of action. They say that the appropriate course is to leave the determination of difficult questions of law for trial and, certainly, for factual questions to be left for trial. The mere fact that a case may appear weak is not, of itself, sufficient to strike out the action: Vantage Holdings [60(d), (f)].
The plaintiffs submit that the only question to be determined is whether it would be open to Roseland, on the ASOC, to prove facts at the trial which would make good a cause of action. They say that the question to be decided is not whether the facts pleaded are in themselves sufficient to give rise to a cause of action: Vantage Holdings [60(e)], and they distinguish this application from an application for summary judgment: cf. Kingsfield Holdings Pty Ltd v Sullivan Commercial Pty Ltd [2021] WASC 289 [99] (Allanson J).
Overview of the conspiracy claims and factual background
The plaintiffs summarise Roseland's claims in pars 14 - 16 of their written submission in the following terms:
14.Roseland claims that Ganfeng, GFL, Neometals and RIM – defined by the plaintiffs as the Conspiring Parties – agreed or combined with the common design (Combination) to enable the negotiation and conclusion of certain agreements between them, to the exclusion of Roseland: ASOC, par 63. It is pleaded that such conduct was intended to injure Roseland by depriving it of fees payable under the Offtake Introduction Agreement or, alternatively, was for the dominant purpose of causing loss to Roseland by, in effect, boycotting Roseland and depriving it of any fee whatsoever:[14]
[14] ASOC pars 7, 65, 67(b).
15.The Combination is said, by the plaintiffs, to arise from the facts summarised below, which are in part drawn from documents mentioned in the ASOC:
(1)From around 2 March 2015 to around 2 May 2015, there was engagement between Roseland, by Ward, assisted by Chai and China Gold, with Ganfeng, to facilitate entry into a long-term offtake agreement by Ganfeng or China Gold and the purchase of equity in RIM by Ganfeng:[15]
[15] ASOC par 24.
(2)By March 2015, China Gold had been involved in negotiations in relation to the Project (defined in ASOC, par 4) for over 5 years, had an existing relationship with Ganfeng and was willing to assist Roseland in the facilitation of a long-term offtake agreement:[16]
(3)Roseland, in furtherance of its engagement with Ganfeng and China Gold, negotiated with Neometals and RIM, on the one hand, and with Ganfeng on the other, including by the provision of a Financial Model which contained reference to certain fees that would be payable by RIM to Roseland should Ganfeng or China Gold enter into a long-term offtake agreement:[17]
(4)On or around 27 April 2015, Ganfeng informed China Gold, acting as agent for Roseland, that Ganfeng was not interested in entering into an offtake agreement or purchasing equity in RIM:[18]
(5)Contrary to its stated intention described in (d), Ganfeng remained interested in an offtake agreement or purchasing equity in RIM and, from around 5 May 2015, Neometals and RIM commenced negotiating directly with Ganfeng:[19]
(6)Those negotiations culminated in the agreement and execution of various agreements, namely the Ganfeng Agreements:[20]
16.For the purposes of this application all of these facts must be accepted as true. This is not the occasion to resolve disputed questions of fact. These pleaded facts provide a sound basis for the relief sought by Roseland.
Plaintiffs' response to Neometals' submissions
[16] ASOC par 25.
[17] ASOC pars 26 and 27; Hagdorn Affidavit at 'SJH-2', 'SJH-3', 'SJH-4', 'SJH-5' and 'SJH6'.
[18] ASOC par 28.
[19] ASOC par 30; Hagdorn Affidavit at 'SJH-7', 'SJH-8'.
[20] ASOC pars 31 to 34.
The plaintiffs say that the gravamen of the strike out application, as appears from the submissions of Neometals, is the awareness and knowledge of Ganfeng and GFL and their participation in the Combination.[21]
[21] Neometals’ submissions filed 30 July 2021 pars 21 to 28.
They also say that two further attacks, which they describe as 'peripheral', are made:
(1)First, based on an asserted tension between Roseland's claims for damages for breach of contract and for tortious conspiracy;[22] and
(2)Secondly, based on the fact of Roseland pleading, in the alternative, both forms of tortious conspiracy.[23]
Awareness or knowledge of Ganfeng and GFL as pleaded
[22] Neometals’ submissions filed 30 July 2021 par 29.
[23] Neometals’ submissions filed 30 July 2021 par 30.
The plaintiffs submit that Neometals' primary submissions can be distilled to the following propositions:
(1)ASOC par 63, itself, fails to plead acts done by the defendants pursuant to which the Combination can be inferred;[24]
(2)The facts set out in the particulars adjoined to ASOC par 63 – in particular sub‑pars (c)(i), (ii) and (ii) – cannot found an inference as to the awareness or knowledge of Ganfeng and GFL and give rise to a cause of action for conspiracy;[25]
(3)The ASOC does not plead the terms of the agency agreement between China Gold and Roseland and, critically, there is no plea than Ganfeng knew that China Gold was acting as agent of Roseland;[26]
(4)The conspiracy claim raises an obvious question: why would Ganfeng and GFL, who were not paying fees to the plaintiffs, care to enable Neometals and RIM to avoid paying fees?[27]
[24] Neometals’ submissions filed 30 July 2021 pars 18 to 20.
[25] Neometals’ submissions filed 30 July 2021 pars 21 and 22.
[26] Neometals’ submissions filed 30 July 2021 pars 25 and 27.
[27] Neometals’ submissions filed 30 July 2021 par 8.
As to (1), the plaintiffs say that ASOC par 63, when read with the particulars, identifies the issues to be determined and appraises the defendants of the case that has to be met. They say that no submission is advanced to the contrary, and that the criticisms advanced by Neometals as to ASOC par 63 do not significantly impact upon the preparation of the defendants' case: Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 [8] (Martin CJ).
As to (2), the plaintiffs say that the attacks on sub‑par (c)(i), (c)(ii) (the first one) and (c)(ii) (the second one), proceed from the premise that the facts pleaded must themselves be sufficient to establish, and finally prove, a cause of action. That premise, properly analysed by reference to the principles applicable to this application, is false, in the plaintiffs' submission.
The plaintiffs say that the pleas in:
(1)ASOC par 24, being the prior engagement between Roseland, assisted by Chai and China Gold, and Ganfeng from 2 March 2015 to 2 May 2015;
(2)ASOC par 26, being the provision of the Financial Model by Roseland, which would have alerted Ganfeng and, in turn, GFL as to the existence of fees payable by RIM to Roseland; and
(3)ASOC par 28 and pars 30 - 34, being, in effect, Ganfeng's lie to China Gold that it was not interested in entering into an offtake agreement or purchasing equity in RIM,
enable Roseland to prove facts at the trial from which the necessary inferences can be drawn. Thus, they submit, applying the correct test by reference to the authorities, the pleading is reasonable: Vantage Holdings [60(e)].
The plaintiffs seek to illustrate by pointing to Neometals' raising as fatal the fact that ASOC par 24 does not plead that Ward, Chai or China Gold informed Ganfeng and GFL about the Offtake Introduction Agreement or RIM's obligation to pay the Introduction Fee: cf. ASOC par 21. But, the plaintiffs say, the conspiracy claims are reasonable without such a plea. They say that the circumstances pleaded in ASOC par 63 must be considered as a whole: each proven fact may gain support from the others and the combination of all facts might provide a compelling basis from which to draw that inference: Chong v CC Containers Pty Ltd [2015] VSCA 137 [132] - [136] (Redlich, Santamaria and Kyrou JJA).
The plaintiffs submit that the circumstances relevantly include the fact of the existing relationship between China Gold and Ganfeng,[28] and the express reference in the Financial Model to Roseland and China Gold and the fees payable to them.[29] They say that the fact of a fee being payable to Roseland and China Gold must have revealed to Ganfeng and GFL the existence of a contractual obligation on RIM to pay those fees. On the plaintiffs' case, no reader of the Financial Model would conclude that RIM intended to pay those fees gratuitously or without an obligation to do so. It is inappropriate, they say, on a strike out application, for the court to resolve disputed questions of fact. They note that no evidence has been filed by the defendants denying these matters.
[28] ASOC par25.
[29] ASOC pars 26 and 27.
The plaintiffs say that the facts 'go to the knowledge of Ganfeng and GFL and the clandestine negotiations that subsequently took place'. They submit that the facts as pleaded in ASOC par 63 are sufficient to enable the plaintiffs to prove the knowledge of Ganfeng and GFL at trial.
The plaintiffs raise a further point concerning O 20 r 13(1)(b) of the Rules and their plea as to the knowledge of Ganfeng and GFL. By that rule, a party pleading a condition of mind, except knowledge, is obliged to provide particulars of the facts on which the party relies. Conversely, the plaintiffs say the Rules do not require Roseland to provide particulars of Ganfeng and GFL's knowledge of the Offtake Introduction Agreement or RIM's obligation to pay the Introduction Fee. Ganfeng and GFL – to whom the plea is directed – do not need particulars to know whether or not to admit knowledge of the Offtake Introduction Agreement or RIM's obligation to pay the Introduction Fee. The pleading, as is, exceeds what is required by the Rules and informs Ganfeng and GFL of the case they are to meet: see e.g. Banks v Alphatise Pty Ltd [2014] NSWSC 1437 [17] (Brereton J); Jensen v Nationwide News Pty Ltd [No 2] [2018] WASC 129 [29] (Tottle J).
As to (3) above, the plaintiffs say that Neometals makes much of the plea of an agency relationship between China Gold and Roseland: referring to the Neometals’ submissions at pars 25, 27. The proper starting point for this strike out application, on the authorities, is that the existence of the agency relationship between China Gold and Roseland, as pleaded in ASOC par 28, must be accepted as true. The plaintiffs submit that Neometals' attack on that plea as 'astonishing'[30] is against this principle and should not be accepted.
[30] Neometals’ submissions filed 30 July 2021 par 27.
The plaintiffs submit that the court should likewise dismiss the complaint in Neometals’ submissions at par 25 that there is no plea of what the terms of the agency were. They say that a request for further and better particulars may be made pursuant to which answers will be given. It is submitted that the absence of a plea as to the terms of the agency is not a standalone basis to strike out ASOC par 28.
The plaintiffs respond to Neometals' assertion that the absence of a plea that Ganfeng knew that China Gold was acting as agent of Roseland is critical by saying that Neometals' position proceeds from a false premise; it assumes that Ganfeng must be aware of all surrounding circumstances pleaded. [31] The plaintiffs say that it is plain on the authorities, including those cited by Neometals in Neometals’ submissions at par 12, that the parties to the alleged conspiracy must be shown to have been sufficiently aware of the surrounding circumstances, and share the same object: Australian Wool Innovation Ltd v Newkirk [62] (Hely J), citied in Central Exploration Pty Ltd v Zuks [2020] WASC 46 [119] (Allanson J).
[31] Neometals’ submissions filed 30 July 2021 par 25.
In the plaintiffs' submission it is sufficient for the purposes of Roseland's case that each of the Conspiring Parties was aware of the Offtake Introduction Agreement and the obligation to pay the Introduction Fee, and that the Avoidance Plan, if achieved, would have the effect of injuring Roseland by depriving it of the fees payable in accordance with the Offtake Introduction Agreement. They say that Ganfeng was made aware of the involvement of Roseland and China Gold in the Project, and the fees that were payable to them, at least by its receipt of the Financial Model.[32] It is submitted by the plaintiffs that it is not necessary for Roseland to plead, nor prove at trial, that Ganfeng and GFL knew that China Gold was acting as agent of Roseland.
[32] ASOC pars 26 and 27.
As to (4) above, the plaintiffs say that Neometals raises a question of fact, being why would the Conspiring Parties, other than RIM, care about the payment of the Introduction Fee? That is a matter which should be addressed by way of defence and ultimately determined at trial on the evidence. The plaintiffs say that the answer, if relevant, is relatively simple: RIM, being the party with the payment obligation, directly benefited from the Introduction Fee not being paid, and that the other Conspiring Parties were existing or incoming shareholders of RIM[33] with an obvious interest in its financial position.
Whether any defect arises from pleading alternative causes of action
[33] ASOC pars 3(h), 5, 6, 32(b), 34.
As to Neometals' second basis for the application, namely an alleged tension or inconsistency between the plaintiffs' claims for breach of contract and the conspiracy claims. The plaintiffs say that Neometals' description of this as a 'critical and terminal defect' is an 'overshot'.
The plaintiffs explain that the ASOC pleads that the conduct of the Conspiring Parties was intended to injure Roseland by depriving it of the fees payable upon the conclusion of each transaction: not its entitlement to the fee. Roseland has, to date, been deprived of that fee and will continue to be deprived unless and until RIM pays or is ordered to pay.
The conspiracy claims are advanced by Roseland as further or alternative causes of action to the contractual and statutory claims made by the plaintiffs. The plaintiffs say that there is nothing defective or 'terminal' in the advancement of alternative causes of action, and that none of what is raised in Neometals’ submissions at par 29 renders the pleading unreasonable for the purposes of O 19 r 1(a) of the Rules.
As to Neometals' third basis for the application, namely that the omission from ASOC par 65 of a plea that the conduct of the Conspiring Parties was for the sole or predominant purpose of injuring Roseland, the omission, and the asserted inconsistency between ASOC par 65 and par 67(b), is the only basis upon which the plea in ASOC par 67(b) is attacked.
The plaintiffs' answer to the asserted inconsistency is that the plea in ASOC par 65 reflects the elements of the tort of conspiracy to injure by lawful means. That is, the plaintiffs say that the differences in how the two conspiracy causes of actions are pleaded reflects the fact that the causes have different elements. There is no bar to pursuing both conspiracy claims in the alternative.
The plaintiffs say that the only question for the court to determine, on this Application, is whether it is open to the plaintiffs, on the facts pleaded, to prove at trial the allegation made in ASOC par 67(b) that the conduct of the Conspiring Parties was for dominant purpose of causing loss to Roseland by depriving Roseland of any fee whatsoever. The plaintiffs submit that the facts pleaded are sufficient to enable the plaintiffs to prove these matters at trial.
Plaintiffs' response to Ganfeng's and GFL's submissions
The plaintiffs summarise Ganfeng's and GFL's attacks on both the unlawful means conspiracy and lawful means conspiracy claims as advancing four primary contentions:
(1)The ASOC does not allege that either Ganfeng or GFL were parties to, or even knew about, the arrangements between Neometals/RIM and Roseland;[34]
(2)There is no allegation of any unlawful conduct, unlawful acts or unlawful means by Ganfeng and GFL;[35]
(3)The conspiracy claims necessarily arise only if Roseland fails in its claim to be contractually entitled to the fees under the Offtake Introduction Agreement and the Equity Arrangement; and
(4)There are no facts pleaded in the ASOC to support a claim that Ganfeng and GFL acted lawfully but with the intention that Roseland would not earn fees that were payable to it by Neometals or RIM.[36]
[34] Ganfeng’s and GFL’s submissions filed 13 August 2021 pars 10 to 12.
[35] Ganfeng’s and GFL’s submissions filed 13 August 2021 pars 10 to 12 and 13 to 21.
[36] Ganfeng’s and GFL’s submissions filed 13 August 2021 pars 26 to 29.
As to (1), the plaintiffs repeat the submissions in pars 69 - 74 above and say that the awareness or knowledge of Ganfeng and GFL is adequately pleaded.
The plaintiffs submit that, contrary to Ganfeng's and GFL's submissions, ASOC pars 28 and 30 do more than hint that Ganfeng was not genuine when it informed China Gold, acting as agent for Roseland, that it was not interested in entering into an offtake agreement or purchasing equity in RIM. ASOC par 30 squarely pleads that Ganfeng remained interested in a deal with respect to RIM despite what it told China Gold on 27 April 2015 (as pleaded in ASOC par 28).
As to (2), the plaintiffs submit that the attack by Ganfeng and GFL on the unlawful means conspiracy proceeds on the premise that Roseland, to be successful, must prove either that Ganfeng and GFL knew that conduct by Neometals and RIM was unlawful, or that Ganfeng and GFL themselves engaged in unlawful conduct. These contentions raise questions of law that ought to be determined at trial.
The plaintiffs refer to the statement of the elements of the tort of conspiracy as set out at par 13 above and say that, against that statement of principle, Ganfeng and GFL appear to assert, in par 11 of their submissions, a further essential element as to the state of mind of Ganfeng and GFL – namely, that it is necessary for Roseland to plead and to prove that Ganfeng and GFL had knowledge that the resulting conduct, taken pursuant to the Combination, was unlawful.
The plaintiffs submit that, consistent with the statement of principle in par 13 above, it is enough for Roseland to show, for Ganfeng and GFL to be liable, that they had sufficient knowledge of the essential facts that acts which were unlawful were to be carried out. A cause of action for unlawful act conspiracy does not require that Ganfeng and GFL realise the impropriety of their behaviour: Stobart Group v Tinkler [2019] EWHC 258, [549] - [573] (Judge Russen QC).
The plaintiffs say that it is not fatal to Roseland's case that not all parties engaged in the alleged unlawful activity, and that, in principle, there is no difficulty with the notion that a party may conspire with another to breach its own contract with a third party. Such a notion is not untenable: see Dresna Pty Ltd v Misu Nominees Pty Ltd [2003] FCA 1537 [141] - [142] (Weinberg J) (Dresna).[37]
[37] The plaintiffs' submissions footnote this reference as follows: 'The decision of Weinberg J was reversed in part in Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169 (Kiefel and Jacobson JJ), but not in respect of his Honour's reasons for decision relied on by the plaintiffs in [par 45 of the plaintiffs' submissions]. The decision of Kiefel and Jacobson JJ in Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169 [20] – [29] and [30] – [36], in granting leave to amend in respect of the 'false suggestion' and 's 52' claims as unlawful means, lends further support to the plaintiff's position.'
The plaintiffs note that the principles that govern the striking out of a claim require that the court have a 'a high degree of assurance' before summarily dismissing a claim: Great Southern Finance Pty Ltd (in liq) v Rhodes [2014] WASC 431 [26] (Beech J).
As to (3), the plaintiffs respond that pars 24 - 25 of Ganfeng's and GFL's submissions overlook the fact that the loss and damage suffered by Roseland, as pleaded in ASOC par 66, is not limited to the failure of RIM to pay the Introduction Fee when it was due and payable: see, for example, the matters pleaded in ASOC pars 58 and 62. Further, even if it is determined that the Introduction Fee is payable to Roseland, that does not mean that RIM can or will ultimately pay. Roseland is entitled to hold Ganfeng and GFL liable for its involvement in the conduct of the Conspiring Parties even if it is successful as against Neometals and RIM.
As to (4), the plaintiffs note that pars 26 - 28 of Ganfeng's and GFL's submissions overlap with the submission of Neometals summarised at par 33 above, which (the plaintiffs submit) seek to obfuscate the real question to be determined on this application. The question is not whether the civil tort of conspiracy by lawful means is 'incompatible with the most elementary assumptions of everyday economic life'. Rather, the plaintiffs say, liability for tortious conspiracy arises because of concerted action taken pursuant to an agreement. It is the combination between two or more parties that renders the conduct unlawful. A claim based on this well-established tort ought not be thrown out merely because it appears to one party to be anomalous in the context of modern economic business: Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173 at 188-189 (Lord Diplock).
Likewise, the plaintiffs say, the question is not whether the facts pleaded are in themselves sufficient to give rise to a claim for lawful means conspiracy. The plaintiffs note that there is no evidence from the defendants as to their motives.
The plaintiffs submit that. more fundamentally, Ganfeng's and GFL's submissions fail to engage with the complex facts pleaded in this case. The 'simple example' relied on by Ganfeng and GFL in par 45 above - involving seller A, seller B and a customer common to both - bears little relation to the parties and business relationships which are the subject of this case. The plaintiffs respond that, for a start, the example does not account for:
(1)the business relationship between Neometals/RIM (who presumably is seller A) and Roseland (who presumably is seller B). This is not a case involving two rival street corner grocers: Roseland sought to facilitate entry into a long-term offtake agreement by Ganfeng and the purchase of equity in RIM by Ganfeng for the benefit of Neometals/RIM;[38]
(2)the existing relationship between China Gold and Ganfeng (who presumably is the customer) and the fact that China Gold was willing to assist Roseland in its efforts to facilitate a deal;[39]
(3)the fact that Ganfeng commenced negotiating with Neometals and RIM directly, without notice to China Gold or Roseland, despite having told China Gold that it was not interested in entering into an offtake agreement or purchasing equity in RIM.[40]
[38] ASOC pars 24 and 26.
[39] ASOC par 25.
[40] ASOC pars 28 and 30.
The plaintiffs conclude that even on the 'simple example', where the customer and seller A combine to boycott seller B, liability for tortious conspiracy can arise. The particular facts of this case sustain the conclusion that the defendants agreed to put Roseland out of the picture and deprive it of any fee.
Plaintiffs' submissions as to whether leave to replead should be granted
The plaintiffs note that no authority is advanced by the defendants for the 'extreme' proposition at par 48 above that, if the court accepts that the conspiracy claims should be struck out, leave to re-plead should be refused. When regard is had to the procedural history of this matter, they say that on no rational basis could leave to replead be refused.
The plaintiffs submit that, contrary to par 49 above, there was limited conferral between the plaintiffs and Neometals about the issues the subject of this strike out application. The plaintiffs rely on the Hagdorn affidavit in support of this submission. The plaintiffs accept that there has been no conferral as between the plaintiffs and Ganfeng and GFL, but explain that lack of conferral on the basis that the Application had been filed before they were joined to the action (and I note again that Ganfeng and GFL have not themselves applied to strike out the claims made against them; they have merely made submissions in support of Neometals' application).
The plaintiffs say that the various documents pleaded in the ASOC, from which the conspiracy claims are drawn, were obtained by Roseland via the preaction discovery from Neometals. For the purposes of its preaction discovery application, Roseland did not raise the conspiracy claims as a potential claim against Neometals or others: Ward v Neometals Ltd [2018] WASC 175 [5] - [20] (Registrar Boyle). The plaintiffs argue that there is now a (more than) sufficient basis to allow the plaintiffs to seek to prove their case, including by discovery and inspection of documents from RIM, Ganfeng and GFL and through the issue of subpoenas.
The plaintiffs close by submitting that the court ought not conclude, as the defendants contend, that there is no claim available to the plaintiffs for tortious conspiracy.
Disposition
I preface my conclusion on the Application by adopting some important statements of principle from the authorities to which I have helpfully been referred by counsel:
(1)First, I bear in mind what was said by Weinberg J in Dresna at [135] – [144], that I must approach the present application on the basis of whether the plaintiff's case is arguable, not on the basis that I am to resolve in a final way (as will the trial judge) the questions of law as to the degree of knowledge, intent and object that Ganfeng and GFL must have held in order to be liable on the conspiracy claims.
(2)Secondly, I note what Evatt J said in McKernan v Fraser (1931) 46 CLR 343 (McKernan) at 398:
It is seldom that any criminal [or, I interpose, civil] conspiracy can be proved by direct evidence of the making of the agreement; usually, the inference as to the fact of agreement, must be drawn from the proved actions of the defendants.
(3)Similarly, the Court of Appeal of Victoria said in Chong v CC Containers Pty Ltd[2015] VSCA 137 at [135]:
As conspirators will ordinarily conceal their unlawful agreement, it will often be the case that there is no direct evidence of the combination. The conspiracy may be proved without direct evidence of an express agreement or understanding as to the common design. It is generally a matter of inference deduced from certain acts of the parties done in pursuance of the apparent purpose in common between them. The overt acts done in furtherance of the combination may support the inference that there was such an agreement or understanding to further the common unlawful object of the combination. Separate acts of co-conspirators may be relied upon which have such a concurrence of time, character, direction and result as naturally leads to the inference that these separate acts were the outcome of pre-concert or some mutual contemporaneous engagement evidencing the common object of the combination. A mere co-incidence of separate acts however, which by their conjoined effect cause damage, will not suffice. The evidence must be such as to permit it to be inferred that the acts were undertaken in pursuit of the common object so that it may be said that the actors acted in concert towards the common end.[41]
[41] The phrase 'concurrence of time, character, direction and result' is from the decision of Isaac J in R v Associated Northern Collieries (1911) 14 CLR 387, 400.
I agree with the plaintiffs' submission that, on the present Application, the defendants' submissions have obfuscated the real question to be determined, although I expressly do not adopt the plaintiffs' suggestion that the defendants sought to do so. The tort of conspiracy raises difficult questions of law, and those questions are far from settled. I accept that the defendants' submissions have been raised in good faith.
Nonetheless, two matters in particular stand out to me as to why the Application should not be allowed:
(1)First, by their focus on the issues relating to the form of the pleading as to the knowledge, intent and objects of Ganfeng and GFL in their dealings with Neometals and RIM, the defendants have diverted attention away from the more fundamental question of why Ganfeng and GFL were acting in combination with Neometals and RIM (to the exclusion of the plaintiffs) in the first place.
In particular, as set out in par 21 above, Neometals has submitted that no acts have been pleaded from which an agreement to a common purpose or end may be inferred. That submission passes over the fact that Neometals / RIM and Ganfeng and GFL are alleged to have begun negotiating directly with each other for the very same types of agreements that would have entitled the plaintiffs to earn fees only a week or so after Ganfeng told the plaintiffs that it was not interested.
Specifically, the plaintiffs allege at ASOC pars 28 - 30 (which I must accept for the purposes of the present Application) that Ganfeng and GFL expressly disclaimed interest in entering into an offtake agreement or purchasing equity in RIM as at 27 – 29 April 2015, but they negotiated directly with Neometals and RIM for such agreements from 5 May 2015. This is said to have occurred in the context, as pleaded at ASOC par 26, that the plaintiffs had provided to Ganfeng, in the weeks leading up to these events, a Financial Model that disclosed the plaintiffs' entitlement to fees.
Those are, in my view, sufficient material facts from which an inference may be drawn that the purpose of Ganfeng and GFL engaging in combination with Neometals and RIM to the exclusion of the plaintiffs from 5 April 2015 was to cut the plaintiffs out of the deal. There is sufficient 'concurrence of time, character, direction and result' to permit the plaintiffs to contend for the drawing of the necessary inference. It is sufficiently arguable, at this stage of the proceeding, both that such an inference may be drawn and that such an inference, if drawn, may establish the pleaded torts, that the paragraphs in issue should not be struck out.
Whether such an intention will be drawn, and if so whether their intention was to induce a breach of contract and/or misleading or deceptive conduct by Neometals / RIM (such as to ground an unlawful means conspiracy), or otherwise to cause injury to the plaintiffs (to ground a common conspiracy), are matters for trial.
(2)Secondly, I accept the plaintiffs' submission that the defendants' attack on the conspiracy claim is an attack on the merits of the case, rather than on the form of the pleading or the sufficiency of the material facts alleged to support the cause of action. I note, in particular, the submission of Neometals set out in par 30 above as to the necessary conclusion being 'bizarre'. That is not a submission as to whether the pleaded material facts cannot sustain the necessary inference; rather, it is a submission that such a conclusion should not be drawn, which is clearly a merits issue for trial, nor a basis for a strike-out application.
To similar effect is Neometals' submission at par 30 above that it would be 'astonishing' if a 'substantial Chinese state owned mining company' such as China Gold was acting as agent of the plaintiffs. That is not a submission that the pleaded material fact is incapable of proof or is otherwise susceptible to striking-out as an allegation that is frivolous, vexatious or an abuse of process. Rather, it is a submission that should properly be made in closing submissions at trial as to a finding of fact to be made on the merits of the evidence led at trial.
Likewise, Neometals' submission set out at par 33 above that 'no inference can be drawn that Neometals and RIM and Ganfeng and GFL performed the particularized acts for the sole or predominant purpose of injuring Roseland when a part of the purpose of acting as they did could be explained by them simply not requiring Roseland to be involved' raises a merits issue for trial. These are competing inferences, and it is not for me on a strike-out application to determine whether the defendants' purpose 'could be explained by them simply not requiring Roseland to be involved'. That is a matter to be pleaded in defence, and to be the subject of evidence led at trial. On the present Application, I am satisfied that the material facts pleaded by the plaintiffs are (on the assumption that they will be proven at trial) sufficient to ground the drawing of the necessary inference, unless there is evidence led at trial to support a contrary inference.
Similarly, I do not accept the submission of Neometals set out in par 30 above that the inference could 'never' be drawn that Ganfeng lied to China Gold about its interest because it had an arrangement with Neometals and RIM to enable Neometals and RIM to avoid paying the Introduction Fee. Such an inference may be open from the material facts pleaded, depending on the evidence that is led at trial. More importantly though, an inference as to Ganfeng's reason for lying to China Gold about its interest (if it did lie – which is a matter for trial), may ultimately not be probative of its intention or object in combining with Neometals and RIM to effect transactions without the plaintiffs' involvement. The submission does not support striking out of the pleaded cause of action.
I do not accept the analogy proffered by Ganfeng and GFL, as set out in par 45 above. The scenario set out there is one of competing vendors. The criticism there that legitimate competition cannot found the necessary intent for the tort of conspiracy is well-founded. Indeed, the exception for legitimate competition is discussed extensively Evatt J in McKernan at 385 and 391. But that is not the situation in this case. Here, the choice was not between two vendors offering competing products; rather it was between a purchase of the same legal property, with or without fees payable to the plaintiffs.
I also do not accept the defendants' arguments that the pleading is sufficiently deficient to warrant striking-out because it does not allege that Ganfeng and GFL knew of the terms of the Exclusivity Provision or the terms on which Roseland would be entitled to fees under the Equity Arrangement Agreement or the Offtake Introduction Agreement. In my view, it is sufficient to support the pleaded cause of action that the plaintiffs have alleged that Ganfeng and GFL knew that a fee would be payable to the plaintiffs, and that they acted in concert with Neometals / RIM to avoid those fees by excluding the plaintiffs. That much is pleaded. Again, I reiterate that whether such an intention is made out at trial, and whether it was implemented by unlawful or lawful means, are separate questions for the trial judge. However, for present purposes, I accept the plaintiffs' submissions that it is arguable that the cause of action does not require knowledge of impropriety on the part of Ganfeng and GFL, as opposed to mere knowledge, intent or object that their actions in giving effect to the alleged conspiracy would avoid such a payment.
I have set out above the defendants' criticisms of the plaintiffs' failure to plead the terms of the alleged agency of China Gold. I do not accept the defendants' submissions in that regard. It seems to me that the terms of the alleged agency are, on the current state of the pleadings, irrelevant. At most, they may be the subject of a request for further and better particulars. The essential material fact, which is pleaded, is that when Ganfeng told China Gold that it was not interested in proceeding with an offtake agreement and equity investment on or about 27 April 2015, it was in effect saying that to the plaintiffs because China Gold was receiving that information in its capacity as agent. Whether Ganfeng knew that China Gold was the plaintiffs' (or either plaintiff's) agent at that time goes to the question of whether Ganfeng was intending to mislead the plaintiffs, and may be relevant evidence probative as to the inferences to be drawn as to the purpose, intent and object of the Combination. However, even if Ganfeng did not know of the alleged agency, that does not negate the inference otherwise open, as discussed above, that the purpose of the Combination (of Ganfeng, GFL, Roseland and RIM, to the exclusion of the plaintiffs) was to cut the plaintiffs out of the deal. The failure to plead the terms of the alleged agency, or Ganfeng's knowledge of the alleged agency, is not a basis for striking-out the pleaded cause of action, because they are not essential material facts to establish the cause of action.
Finally, I do not accept the defendants' submissions that the conspiracy claims are surplusage or otherwise susceptible to striking-out on the basis that, if the plaintiffs succeed in establishing an entitlement to the Arrangement Fee and the Introduction Fee, then they have suffered no loss by reason of the alleged conspiracy. As the plaintiffs have submitted, there is no guarantee that the plaintiffs will recover those fees, even if their claims for them result in a judgment. In that circumstance, there is no reason why Ganfeng and GFL should not have a concurrent liability, to the extent that their involvement in the alleged conspiracy has denied the fees to the plaintiffs. Further, on my reading of the pleading, the loss claimed by the plaintiffs on the conspiracy plea is a different form of loss. Whilst the Arrangement Fee and the Introduction Fee are defined and claimed by reference to the specific terms of the transactions that were, in fact, entered into between Neometals / RIM and Ganfeng / GFL, the loss alleged to flow from the conspiracy claims is a loss of opportunity to earn fees from transactions brokered by the plaintiffs. Those transactions may have been more or less lucrative than those that were ultimately executed without the involvement of the plaintiffs. That is a matter for trial. At this stage, I am not satisfied that the causes of action are inconsistent to the extent that success on the former completely negates the latter, such that the latter (i.e., the conspiracy pleas) should be struck out.
Conclusion
The Application should be dismissed.
Unless the parties wish to make submissions for any alternative costs order, I would propose to order that the defendants pay the plaintiffs' costs of and incidental to the Application, fixed at the maximum amount provided by the scale for an interlocutory application in chambers. Having regard to the extent of the written and oral submissions provided to me, the complexity of the issues, and the involvement of senior counsel on both sides, I am satisfied that the parties are likely to have incurred costs in excess of the scale limit, and I am also satisfied that this is not a matter in which it is appropriate to apply the suggested amounts in PD 4.7.1.1. I propose to so order unless any party applies within 14 days for an alternative costs order.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
LR
Associate to Registrar Whitbread
22 APRIL 2022
2
33
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