Sino Iron Pty Ltd v Mineralogy Pty Ltd
[2020] WASC 311
•1 SEPTEMBER 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: SINO IRON PTY LTD -v- MINERALOGY PTY LTD [2020] WASC 311
CORAM: KENNETH MARTIN J
HEARD: 18 MAY 2020
DELIVERED : 1 SEPTEMBER 2020
FILE NO/S: CIV 1915 of 2019
BETWEEN: SINO IRON PTY LTD
First Plaintiff
KOREAN STEEL PTY LTD
Second Plaintiff
CITIC LIMITED
Third Plaintiff
AND
MINERALOGY PTY LTD
First Defendant
CLIVE FREDERICK PALMER
Second Defendant
STATE OF WESTERN AUSTRALIA
Third Defendant
Catchwords:
Practice and procedure - Pleadings - Strikeout application - Alleged abuse of process - Alternate claim of failure to disclose arguable defence or embarrassment by unintelligibility - Defence as to past breaches of terms of Agreements by plaintiffs - Argued relevance - Agreements not terminated for breach and fully on foot - Defence pleas said to have been 'claims' abandoned expressly and the subject of inter partes undertakings to not pursue again - Question of construction as to dependency of performance term and breached term - Dependency of terms of one Agreement considered - Construction of Agreements to be implemented on a one off and final basis only - Asserted non-dependency of terms in Agreement not suitable for interlocutory determination save as to CPOA Agreement
Legislation:
Iron Ore Processing (Mineralogy Pty Ltd) Agreement Act 2002 (WA)
Rules of the Supreme Court 1971 (WA)
Result:
Plaintiffs' application to stay or strike out the first defendant's further amended defence pleas is substantively allowed, save for SRF pleas
Category: B
Representation:
Counsel:
| First Plaintiff | : | Mr J H Karkar QC, Mr J H Kirkwood & Mr T Maxwell |
| Second Plaintiff | : | Mr J H Karkar QC, Mr J H Kirkwood & Mr T Maxwell |
| Third Plaintiff | : | Mr J H Karkar QC, Mr J H Kirkwood & Mr T Maxwell |
| First Defendant | : | Mr P Dunning QC & Mr K S Byrne |
| Second Defendant | : | Mr P Dunning QC & Mr K S Byrne |
| Third Defendant | : | Mr E Fearis |
Solicitors:
| First Plaintiff | : | Herbert Smith Freehills |
| Second Plaintiff | : | Herbert Smith Freehills |
| Third Plaintiff | : | Herbert Smith Freehills |
| First Defendant | : | Kane Jones |
| Second Defendant | : | In person |
| Third Defendant | : | State Solicitor's Office |
Case(s) referred to in decision(s):
Arentus Cranbourne Thompsons Road Pty Ltd v Home Consortium Leasehold Pty Ltd (Formerly Masters Home Improvement Australia Pty Ltd) [2020] VSCA 199
Australian Hardwoods Pty Ltd v Commissioner of Railways [1961] 1 WLR 425
Carter v Scargill (1875) 10 LR (QB) 564
CITIC Ltd v Mineralogy [2012] WASC 252
CITIC Ltd v Mineralogy [2020] WASC 223
CITIC Ltd v Mineralogy Pty Ltd [2020] WASC 223
CITIC Ltd v Mineralogy Pty Ltd [No 2] [2020] WASC 252
Fullers' Theatres Ltd v Musgrove [1923] HCA 12; (1923) 31 CLR 524
General Steel Industries Inc v Commissioner for Railways [1964] HCA 69; (1964) 112 CLR 125
Green v Somerville [1979] HCA 60; (1979) 141 CLR 594
Hillam v Iacullo [2015] NSWCA 196; (2015) 90 NSWLR 422
James Point Pty Ltd v The Minister for Transport [No 3] [2018] WASC 277
JC Williamson Ltd v Lukey (1931) 45 CLR 282
Kay v Playup Australia Pty Ltd [2020] NSWCA 33
Kimberley Downs Pty Ltd v Western Australia (Unreported, WASC, Library No 6414, 25 August 1986)
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115
Masters Home Improvement Australia Pty Ltd v Arentus Cranbourne Thompsons Road Pty Ltd [2019] VSC 428
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2017] FCAFC 55
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2020] WASC 40
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2020] WASC 40 (S)
Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16] [2017] WASC 340
Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 6] [2015] FCA 825; (2015) 329 ALR 1
Mount Bruce Mining Pty Ltd v Wright Property Pty Ltd [2015] HCA 37; (2015) 256 CLR 104
Neilson v City of Swan [2006] WASCA 94
Newcombe v Newcombe [1934] NSWSR 44; (1934) 34 SR (NSW) 446
Palmer v CITIC Ltd [No 2] [2019] WASC 14
Palmer v CITIC Ltd [No 2] [2019] WASC 14 (S)
Palmer v CITIC Ltd [No 3] [2019] WASC 424
Photo Production Ltd v Securicor Transport Ltd [1980] AC 827
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] FCA 675
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2020] HCATrans 10 (14 February 2020)
Sydney Consumers' Milk and Ice Co v Hawskesbury Dairy and Ice Society Ltd (1931) 31 SR (NSW) 458
TABLE OF CONTENTS
Introduction
Leave is required
Overview of the application
Overview of outcomes
Background to the application
The parties
The agreements
The pleadings
The SOC
The defences
The litigious landscape which currently presents
CPOA Proceeding
Two FCD Proceedings
SRF Proceeding
Completed proceedings
The CITIC Plaintiffs' present interlocutory application
Materials filed by the CITIC Plaintiffs
Materials filed by Mineralogy
Overview of the CITIC Plaintiffs' claims under the SOC
Contractual breaches
The SOC prayers for relief - specific performance
Legal considerations - specific performance
The SOC prayers for relief A through D
The 2017 MCP pleas
SOC par 166
SOC pars 141, 143 and 145
Summary of terms breached by Mineralogy under the SOC
Breaches of other terms
The application - disposition
Mineralogy's SoW breach defensive pleas under its FAD
MRSLA terms said by Mineralogy to have been breached and be dependent as to performance
MRSLA cl 15
MRLSA cl 16
MRSLA cl 20
Mineralogy's breach of MRSLA pleas
An abuse of process challenge taken against the SoW pleas in the FAD
Previous abuse of process determination - Permanent Stay Decision
SoW pleas - abuse of process challenge
Mineralogy's response
Evaluation
SoW pleas - untenable defence challenge
The SoW defence pleas
FAD par 1A
The SoW defences by Mineralogy - no reasonable defence
Interdependence of MRSLA terms plea - arguments
Mineralogy's argument for final trial determination
Whether interdependency issues can be determined at this time
Interdependence of Term Obligations
Interdependency of obligations in one contract
The CITIC Plaintiffs' written submissions
Mineralogy's written submissions
Contractual term interdependency - evaluation
Conclusions as to dependency of terms approach
Strike out determinations
The SoW plea (no reasonable defence)
Conclusion upon the SoW plea in the FAD
The SRF pleas (no reasonable defence)
Conclusion upon the SRF plea in the FAD
The CPOA plea
No reasonable defence
CPOA plea and the JDA
The FCD pleas (no reasonable defence)
Conclusion upon FCD plea in the FAD
Conclusions
KENNETH MARTIN J:
Introduction
I am dealing with the plaintiffs' application (I generally refer to the three plaintiffs as 'the CITIC Plaintiffs') made by chamber summons of 24 April 2020 (the application). By the application, the CITIC Plaintiffs seek to strike out parts of the Further Amended Defence (FAD) of the first defendant (Mineralogy) filed 10 March 2020. By way of early orientation, the conclusions which I have reached upon the application may be seen at [10] - [15] below.
Leave is required
Before I proceed any further, as a preliminary point, I should note that no objection was raised by Mineralogy against the application being made well out of time - see the Rules of the Supreme Court 1971 (WA) (RSC) O 20 r 19(3)(a).
I will grant leave and extend time to allow for the application to be substantively determined, notwithstanding that it was brought out of time. I do so particularly because the application demonstrably raises weighty issues of ostensible merit, as I will come to explain.
Overview of the application
The application brought by the CITIC Plaintiffs on its face is simply an application to have various aspects of the FAD struck out. The CITIC Plaintiffs argue if those parts are left unchallenged they will occasion unnecessary and wasteful delay to this proceeding and to an eventual trial.
However, as may come to be appreciated, the application must be approached with a complete mindfulness of the entirety of the litigious history between the parties to this proceeding. The pleas that are sought to be struck out are, to an extent, readily identifiable in the FAD. Yet without an understanding of the past, and current, disputes resulting from the 'unhappy' contractual marriage between the parties which has led to the unfolding of an unfortunate landscape of the litigation, an appreciation of the arguments underlying the current application is incomplete.
The strikeout application embodied in the CITIC Plaintiffs' chamber summons reads as follows:
1. The parts of the First Defendant's Further Amended Defence (Mineralogy's FAD) filed 10 March 2020 described further below and identified in Schedule 1 hereto be struck out (with no grant of leave to re-plead) or permanently stayed:
(a)the pleas that the First Plaintiff and the Second Plaintiff had failed (principally during the period 2008 to 2011) to carry out their activities in connection with the design and construction of the Project to the standard of care required by clause 16.1 of the Mining Right and Site Lease Agreements (MRSLAs) in the respects pleaded in Schedule A to Mineralogy's FAD (SoW pleas);
(b)the pleas concerning the China Project Option Agreement (CPOA) (CPOA pleas);
(c)the pleas that the Plaintiffs are in breach of the Fortescue Co‑ordination Deed (FCD) (FCD pleas); and
(d)the pleas that the First Plaintiff and the Second Plaintiff are in breach of the MRSLAs for allegedly failing to provide adequate security into the Site Remediation Fund (SRF pleas).
2.No further amendments to the defences of the First Defendant or Second Defendant be permitted without leave.
(Paragraphs 3 and 4 omitted.)
To comprehend the exact paragraphs of the FAD that are challenged and sought to be struck out, it is necessary to see Schedule 1 to the chamber summons. I have set out Schedule 1 at [52] below.
Given the nearly decade long litigation between these parties, there is a certain degree of 'short hand' at play. To fully understand the application and the implications of striking out any of the pleas as identified above, I will need to undertake something of a decoding process before I can then evaluate the application as sought.
However, in the interests of ensuring that those who wish to be able to identify my ultimate conclusions as to the application are readily able to do so, I will at this early stage set out an overview of outcomes upon the present application of the CITIC Plaintiffs.
Overview of outcomes
As to the CITIC Plaintiffs' application towards striking out what are referred to as the Standard of Works (SoW) pleas as an abuse of process, I ultimately conclude that those pleas do not constitute an abuse of process. I reject the submission by the CITIC Plaintiffs that the SoW pleas are to be viewed, in effect, as akin to pleas the subject of the adverse assessment I reached elsewhere - concerning the Mining Right and Site Lease Agreement (MRSLA) based minimum royalty (the 'MRP money claims' - as the subject of my reasons in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2020] WASC 40. See [10] of those reasons for definition of 'MRP money claim' based on MRSLA cl 6.3). But here the same abuse of process challenge is not, I find, ultimately sustainable. Mineralogy's SoW pleas in this action will not be struck out on that basis.
I do not accept that the current position concerning the SoW pleas is one by which Mineralogy gave an earlier undertaking to the court and then, by pleading the SoW pleas in its defence pleading in the present action has breached any undertaking to the court. As I seek to explain, I do not assess the inter partes undertaking position presenting here as being factually akin to that as was evaluated by Vaughan J (as his Honour then was) in James Point Pty Ltd v The Minister for Transport [No 3] [2018] WASC 277 (see particularly [77]).
Whilst I discuss a contended undertaking by Mineralogy in further detail below, by early overview I say that I assess any such undertaking, at its highest, as merely an inter partes undertaking given by Mineralogy on 12 January 2017. The CITIC Plaintiffs argue that this 2017 communication constitutes an enforceable undertaking (given to them) in the way of Mineralogy then promising, in effect, never to raise its SoW claims again, either offensively or defensively (such as has occurred under Mineralogy's present FAD). But that contended position, on my end assessment, is not unequivocally clear. Rather, the true end position, I assess, is insufficient to sustain a permanent stay -supported on a basis of alleged abuse of process - by reason of an attempted deployment of the SoW component pleas under its FAD by Mineralogy. So, I do not strike out the SoW component pleas in the FAD as an abuse of process by Mineralogy.
However, there was a second aspect to the CITIC Plaintiffs' challenge to the SoW pleas in the FAD. This was articulated on the basis of a suggested failure to disclose any reasonably arguable defence, and also for various pleading embarrassment challenges, grounded essentially on what are lack of coherence arguments. On these second aspect challenges I reach a different conclusion. I am left satisfied at the end that the SoW pleas as they stand presently must be struck out as failing to disclose any reasonably arguable defence. Furthermore, there should be with no further opportunity for Mineralogy to obtain leave to replead such SoW issues.
Further strike out challenges are grounded on the same substantive reasonable defence (ie, lack of) and pleading deficiency are directed against Mineralogy's attempted defences fashioned around the China Project Option Agreement (CPOA) and as well, the Fortescue Coordination Deed (FCD). I am satisfied that those pleas by Mineralogy should be struck out as failing to disclose reasonably arguable defences. However, as I also conclude, there should be at least one opportunity for Mineralogy to seek leave to amend to try and remedy those COPA and FCD defence pleading deficiencies in the FAD, if possible.
As to the challenged Site Remediation Fund (SRF) defence pleas, as I explain below, I conclude in the end that those pleas should not currently be struck out, given the pendency of the proceeding in CIV 2840 of 2018 which is to be finally determined after a trial scheduled for November 2020. But, as I also explain, that SRF position may be revisited in the aftermath of the outcome of that litigation and the pending trial.
Background to the application
I commence the process of unpacking the present application by laying out the landscape upon which it unfolds.
The present action, referred to as the 'Mining Continuation Proposal (MCP) Proceeding', began its life in the Federal Court of Australia, before being transferred to this court under the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) by Banks-Smith J in May 2019: see Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] FCA 675.
Following its transfer to this court, the action was admitted to my CMC List for case management. Here, it joins related actions I discuss below, involving essentially the same protagonists.
The parties
As with most of the prior litigation between these same protagonists, there are two richly resourced rival corporations, their subsidiaries and, for this proceeding, a third party is involved (the State of Western Australia).
As mentioned, I refer to the plaintiffs collectively as the CITIC Plaintiffs. CITIC Ltd (who, to avoid confusion, I refer to in full), as the third plaintiff, is the Hong Kong-based parent company of the first plaintiff, Sino Iron Pty Ltd (Sino Iron), and second plaintiff, Korean Steel Pty Ltd (Korean Steel).
The CITIC Plaintiffs are involved in iron ore mining, processing and export activities taking place in the north of Western Australia upon mining tenements (in the locality of Cape Preston) owned by the first defendant, Mineralogy. Mr Clive Palmer, the second defendant, for all intents and purposes, is the controlling mind and director of Mineralogy. As I come to explain, Mr Palmer has been joined as a second defendant, as an alleged personal accessory to the impugned actions of Mineralogy. Relief is claimed against Mr Palmer under the Australian Consumer Law (Cth) (ACL) in respect of what is alleged overall to be the statutory unconscionable conduct by Mineralogy vis-à-vis the CITIC Plaintiffs.
The State of Western Australia (the State) is joined as the third defendant to this action. However, this is essentially as a formality to facilitate the CITIC Plaintiffs in obtaining the final relief which they ultimately seek, if successful, against Mineralogy and Mr Palmer. The State has not sought to take any proactive steps in this proceeding to date and, indeed, was represented at the hearing of the strike out application without making substantive submissions. As a result, my general references to 'the parties' within these reasons will not be intended to include the State.
So much for the parties to the action. There are, of course, various other actors involved that I will refer to as necessary as the reasons proceed.
The agreements
As an elementary decoding step, I need to set down below the key contractual agreements from out of whose provisions much of the underlying disputation between the parties arises. To that end I mention:
(i)The Mining Right and Site Lease Agreements (MRSLAs). As has been canvassed in a number of my previous reasons delivered as between the same protagonists, the MRSLAs are two largely identical wholly written agreements, respectively entered as between Mineralogy with Sino Iron and with Korean Steel on 21 March 2006 (then subsequently varied on 31 March 2006 and then amended on 8 January 2008). As their names suggest, the MRSLAs identify various rights afforded by Mineralogy to Sino Iron/Korean Steel and concerning large scale envisaged iron ore mining operations over magnetite ore deposits at Cape Preston. In return for the mining rights, the MRSLAs relevantly confer substantial royalty payment rights upon Mineralogy which are payable to it over many years into the future from Sino Iron and Korean Steel. In material aspects, the terms of the Sino Iron and Korean Steel MRSLAs are identical. So, in that respect, a reference to a MRSLA of Sino Iron or Korean Steel will carry a reference to a mirror provision in the other MRSLA.
(ii)The Fortescue Coordination Deed (FCD). The FCD is a key agreement entered as between CITIC Ltd (then known as CITIC Pacific Limited), Sino Iron, Korean Steel and Mineralogy on 22 October 2008. Relevantly, by the terms of the FCD, CITIC Ltd (as parent company) provided certain guarantees and indemnifications for the benefit of Mineralogy and to Mr Palmer (albeit he is not a party to the FCD) in relation to its subsidiary corporations Sino Iron and Korean Steel and their promised performances of obligations under the MRLSAs, including as to making royalty payments.
(iii)The China Project Option Agreement (CPOA). The CPOA was entered as between CITIC Ltd (again, known as CITIC Pacific Limited) with Mineralogy and with Mr Palmer on the same day as the FCD was perfected, namely, on 22 October 2008. Subsequently, this wholly written agreement also came to be varied on 30 March 2012. The CPOA provided a mechanism by which CITIC Ltd could elect to obtain from Mineralogy (or from Mr Palmer) control over all the shares in a so-called Further Company (as defined). This corporation would hold when acquired, essentially, the same mining and processing of ore rights as had Sino Iron and Korean Steel enjoyed from Mineralogy, enabling it to engage in more ore extraction at Cape Preston. Effectively, the option arrangements, if exercised, would grant CITIC Ltd mining rights over even greater volumes of magnetite ore in Area A, over at Mineralogy's Cape Preston tenements. CITIC Ltd exercised the first (of four) options it was given under the CPOA on 13 April 2012. But substantive inaction followed as regards the attainment and enjoyment of those extra rights by CITIC Ltd.
(iv)The 'Facilities Deeds' is a collective term used towards two further agreements perfected as between Mineralogy and Sino Iron and Mineralogy and Korean Steel. The deeds were originally perfected at 26 October 2001, then amended by a further deed on 21 March 2006.
(v)The Iron Ore Processing (Mineralogy Pty Ltd) Agreement Act 2002 (WA) (State Agreement). The State Agreement is made between Mineralogy (as principal proponent) with the State of Western Australia and with numerous other entities (as co‑proponents), including Sino Iron and Korean Steel, and was ratified by correlative State legislation. Perfected in December 2001, the State Agreement facilitates and regulates identified projects and the mining and processing of iron ore (predominantly as magnetite) on the nominated tenements as held by Mineralogy. The State Agreement outlines a process for implementation of expanded projects, including by a submission for proposals and for the necessary approvals when required from the designated State Minister. Relevantly to this proceeding, under the terms of the State Agreement, what are referred to as Mine Continuation Proposals (MCPs) may be submitted to the State by Mineralogy for approval. The MCPs relevant to this litigation they would, if granted by the relevant State Minister, carry the required approval for an extension of the work and Mineralogy's mining tenement operations at Cape Preston.
(vi)The Joint Development Agreement (JDA) is said to be an anterior agreement (2005) between parties including Mineralogy and Mineralogy Mine Management Pty Ltd (MMM) and Sino Iron. This written agreement addressed (among other things) how Mining Operations (as defined) were to be conducted in the Mine Area (as defined). Various rights and powers were conferred on MMM in relation to the management of Mining Operations in the Mine Area. On 31 March 2006, Mineralogy assigned its right, title and interest under the JDA to CITIC Ltd and there was an agreement between parties including MMM, CITIC Ltd and Sino Iron that, among other things, MMM's rights and powers under the JDA were suspended. A potential reinstatement of the JDA in identified circumstances is the subject matter of various clauses within the FCD.
The pleadings
The SOC
To date the CITIC Plaintiffs have only filed one pleading. This is their statement of claim (SOC) of 23 October 2018 (originally filed in the Federal Court).
The SOC is an intricately assembled document spanning some 172 pages. It displays dense pleas made across 204 paragraphs accompanied by elaborate particulars and at the end displays some 11 as orders sought under various prayers for relief.
Perhaps as an attempt to render as otherwise confronting SOC more user‑friendly, the pleading commences rather uniquely, with a four page Executive Summary (pages 6 - 9) and which generally seeks to outline the claims being made by the CITIC Plaintiffs.
From the index to the SOC (pages 2 - 5), at page 4, there is reference to alleged breaches by Mineralogy of eight various contractual terms, all defined. There follow multiple contended contractual breaches by Mineralogy against so-called:
(i)MCPs Approval and Submission Terms;
(ii)MCPs Performance Terms;
(iii)Tenure Terms;
(iv)Tenure Performance Terms;
(v)Re-purposing Terms;
(vi)Re-purposing Performance Terms;
(vii)Programme of Works (PoW) Submission Terms; and
(vii)PoW Performance Terms.
But to gain any reliable level of insight towards the contract term breach claims pleaded against Mineralogy, one must grind through a remaining 150 plus pages of the SOC. The task, daunting enough by length, is rendered agonisingly more difficult by a plethora of incorporated defined terms, abbreviations and acronyms all deployed together. At Annexure 12 (spanning pages 162 - 172 of the SOC) are found approximately 160 distinct as there defined terms all listed so as to be referenced back to each relevant preceding SOC paragraph where such a term might be referred. A significant SOC decoding commitment towards an attempted understanding of the present application requires working through all of the defined SOC terms to decode an underlying meaning. Some understanding of the SOC of the CITIC Plaintiffs is necessary in order to move to the next phase of evaluating what Mineralogy has put up against it - by way of its pleaded defences under its FAD - a number of which are presently challenged. This is the task I confront later in these reasons.
Accompanying the SOC are also the Annexures 1 through 11, which are maps of various areas.
The defences
For this action, although there is only one SOC, Mineralogy and Mr Palmer have filed various iterations of pleaded defences over time. The aspects of the FAD as challenged on the present application stands as the third (and current) iteration of a defence pleading by Mineralogy.
By his separately pleaded defence, Mr Palmer essentially repeats and relies on all the defence pleas of Mineralogy under the FAD. By par 1 of his Further Amended Defence filed 10 March 2020, Mr Palmer pleads this:
The second defendant repeats and relies on the matters pleaded by the first defendant in its further amended defence to the statement of claim filed on 19 October 2018 as if they were set out in this pleading.
By pars 2 - 5 of that defence, Mr Palmer pleads out a defence against the CITIC Plaintiffs' claims made towards his accessorial liability for the alleged statutory unconscionable conduct of Mineralogy and which are put against him personally.
However, unlike Mr Palmer's defence, Mineralogy's pleaded FAD presents as a direct challenge to the SOC.
Mineralogy's FAD spans 105 pages, unfolding over 203 paragraphs and adopting and utilising the same defined terms as in the SOC. Attached to the FAD as Schedule A, is a list of a 'Breach of Legal Requirements' traversing pages 93 - 105. Schedule A to the FAD is the subject of an aspect of the present challenges by the CITIC Plaintiffs' present application.
The litigious landscape which currently presents
Still for orientation purposes, it is also necessary to say something about other proceedings on foot between, essentially, the same protagonists and pending in this court. As I have had occasion to say before, I have case managed these actions within the CMC List in this court since 2016.
CPOA Proceeding
CIV 1514 of 2016 has been referred to as the 'CPOA Proceeding', given it concerns a claim by CITIC Ltd (as first plaintiff) concerning the exercise of its so-called 'First Option' under the CPOA. As background to that action, I mention my relatively recent interlocutory reasons delivered in CITIC Ltd v Mineralogy Pty Ltd [2020] WASC 223 published 18 June 2020 and then, in CITIC Ltd v Mineralogy Pty Ltd [No 2] [2020] WASC 252 published 3 July 2020. The CPOA Proceeding is set currently down for a ten day trial commencing before me on 7 December 2020.
Two FCD Proceedings
CIV 2072 of 2017 and 1267 of 2018 are case managed together. They have been referred to as the 'FCD Proceedings' or the 'Indemnity Proceedings'. In those two actions, Mr Palmer and Mineralogy (as the respective plaintiffs) contractually invoke a contended promised indemnification by CITIC Ltd (in effect, as regards obligations of the other CITIC Plaintiffs) as regards loss or damage allegedly sustained by Mineralogy, or by Mr Palmer, and said to follow from the unmet Royalty B payment obligations by Sino Iron or Korean Steel - under what are identified as the so-called Project Agreements. The Sino Iron and Korean Steel MRSLAs of March 2006 are two such Project Agreements the subject of the indemnification covenants of CITIC Ltd.
The FCD Proceedings remain at relatively early discovery stages of progression having been the subject to various interlocutory steps. The FCD Proceedings are the subject of my interlocutory reasons Palmer v CITIC Ltd [No 2] [2019] WASC 14, Palmer v CITIC Ltd [No 2] [2019] WASC 14 (S) and Palmer v CITIC Ltd [No 3] [2019] WASC 424.
At this stage, the pending FCD Proceedings brought by Mineralogy and Mr Palmer are not yet set down for trials.
SRF Proceeding
CIV 2840 of 2018 is referred to as the 'Site Remediation Fund (SRF) Proceeding'. As plaintiff in that action, Mineralogy claims substantial security payments due to it (to be held on trust) and said to be payable to Mineralogy by the CITIC Plaintiffs concerning the SRF (as established under the MRSLA cl 20.5). Mineralogy says SRF security monies are payable, but have not been paid as demanded from Sino Iron and Korean Steel. The SRF Proceeding is listed for a trial before me due to commence on 16 November 2020.
The SRF monies claim advanced by Mineralogy under CIV 2840 of 2018 is, of course, strongly resisted. Amongst other things, relief has been counterclaimed by the CITIC parties in that action - on the basis of their assertion that the MRSLA nominated trustee of the Site Remediation Fund (ie, Mineralogy) ought be removed by the court and replaced.
Completed proceedings
There have of course already been prior determinations reached in other actions between the same parties in this court. Of relevance to the present application are my final reasons for judgment delivered after the trial in CIV 1808 of 2013: see Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16] [2017] WASC 340 (Mineralogy v Sino Iron [No 16] - and referred to as the Royalty Component B or 'RCB Proceeding'). That decision was appealed, but the payment obligation result favouring Mineralogy was essentially affirmed by the Court of Appeal in Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80. Special leave to appeal was later refused by the High Court of Australia in February 2020: see Sino Iron Pty Ltd v Mineralogy Pty Ltd [2020] HCATrans 10 (14 February 2020).
CIV 3129 of 2018 is a later action commenced by Mineralogy again out of this court, but which I have permanently stayed as an abuse of process in 2020. The CITIC defendants (to that action) had brought an application to permanently stay that proceeding as an abuse of process. I ultimately acceded to that application: see Mineralogy Pty Ltd v Sino Iron Pty Ltd [2020] WASC 40 (the Permanent Stay Decision). That decision is pending appeal.
Various other disputes between the parties have also resolved by interlocutory steps, discontinuance or consent. For a full history of these actions, including prior decisions between the same protagonists by Edelman J, Chaney J and Tottle J in this court: see my reasons in the Permanent Stay Decision.
The CITIC Plaintiffs' present interlocutory application
Having set the scene, I can turn back to the application at hand.
At this point, I need to incorporate Schedule 1 to which I referred at [7]. Schedule 1 identifies the limited paragraphs from the FAD pleas currently challenged. It reads:
Mineralogy's FAD plea
Paragraphs affected
SoW pleas
[1A(a)(i) and (ii)]; [1A(c)(i) and (iii)] [Note: following my inquiry with counsel at the hearing, I was informed that this should correctly read '(ii)' and not (iii)]; particular (f) to [17(e)(vi)]; particular (d) to [38(d)] by reference; [42(b)] by reference; particulars (b) and (e) to [140(b)(ii)]; [166A(a) and (b)]; Schedule A
"[17(e)(vi)] References" (all by reference): particular (a) to [132(f)]; [133] and [134]; particular (a) to [137(f)]; [138]
"[140] References" (all by reference): [166]-[181]; [182]-[183]; [188]; [190]
"[141] References" (all by reference): [141]-[146]; [147(d) and (g)]; [149(e)]; [150(a)]; [151(a)]; [152(a)]; [153(a)]; [154(a); [155(a)]; [156(a)]; [157(a)]; [158(a)]; [161(e)]; [162(a)]; [163(a)]; [164(a)]; [165(a)]; [184]-[188]; [191]-[192]; [194]-[200]
CPOA pleas
[1A(a)(iv), (c)(i) and (ii)]; particular (b) to [1A(c)(i)]; [8(h)]; [14(a)] by reference; [16]; [17(b)-(aa)]; [18(b)]; particular (c) to [38(d)]; [42(b)] by reference; [44(a)] by reference; [44(bB)]; [45(a)] by reference; [46(a)] by reference; [47(c)]; particular (d) to [58(c)] by reference; [59]; [140(b)(ii) and (e)]; [166A(iv)]; [140] References; [141] References
FCD pleas
[1A(a)(iii) and (c)(i)]; particulars (a) and (b) to [1A(c)(i)]; [47A(b)]; [140(b)(iii)]; [166A(a)(iii)]; [140] References
SRF pleas
[1A(a)(i) and (ii), (c)(i) and (ii)]; [14(a)] by reference; particular (b) to [17(e)(vi)]; particular (a) to [38(d)]; [42(b)] by reference; particulars (b) and (d) to [58(c)]; [59]; Particular (a) to [140(b)(ii)]; [149(c)]; [166A(a) and (b)]; [17(e)(vi)] References; [140] References; [141] References
The CITIC Plaintiffs challenge the FAD paragraphs as assembled above on various grounds - including by the charge of an abuse of process (but taken only as against the SoW pleas) and more generally, that these pleas in the FAD, on close examination, manifest no reasonably arguable defence. The CITIC Plaintiffs also raise a broad based challenge on the ground that the impugned parts of the FAD defence would, undisturbed, carry with them substantial and oppressively wasteful discovery obligation. As will become apparent, I have not found it necessary to consider that aspect of the CITIC Plaintiffs' application.
Materials filed by the CITIC Plaintiffs
Pursuant to programming orders made on 19 March 2020, the following documents were filed on 24 April 2020 in support of the CITIC Plaintiffs' strike out application:
(a)Outline of submissions.
(b)Affidavit of David William John sworn 24 April 2020.
(c)Chamber summons.
(d)Memorandum of conferral.
Materials filed by Mineralogy
In response (on 13 May 2020) the first and second defendants filed two documents:
(a)Outline of submissions.
(b)Affidavit of Kane Christopher Jones sworn 13 May 2020.
Resisting all aspects of the present strike out application, Mineralogy primarily responds, inter alia, that there are underlying defence questions around the interplay as between different contractual terms in various agreements and the suggested interdependence of such terms as regards their breaches and breach implications. That issue, it is said, requires issues of contractual construction to be determined, a task which Mineralogy says is only able to be conducted viably at a trial - and there on a once and for all and a final basis as regards contractual meaning.
Mineralogy's interdependence arguments as between various contractual terms address the obligations and contractual regimes involving each of the main protagonists and under various agreements and instruments I have now outlined. Hence, as a plenary response put, in effect, against the present pleading challenges taken against its FAD, Mineralogy says that final contractual determinations as to contractual interpretation and meaning as are suggested by the CITIC Plaintiffs, simply cannot be made at the interlocutory level.
To support their application, the CITIC Plaintiffs read and rely on an affidavit of Mr David William John, a partner of the CITIC Plaintiffs' solicitors, sworn 24 April 2020 (the John affidavit). Mr John's affidavit spans seven volumes and some 1,478 pages of materials annexing a deluge of prior litigation documents exchanged as between the two protagonists, including pleadings from the variously mentioned other proceedings, much desultory passing lawyer correspondence and old affidavits. Mr John annexes the key contractual agreements previously discussed, including the MRSLAs (DWJ1), the CPOA (DWJ26) and the FCD (DJW35).
The CITIC Plaintiffs have filed detailed written submissions over some 27 pages to support the relief as is pursued upon the present application.
In its resistance to that application, Mineralogy reads and relies on the affidavit of Mr Kane Christopher Jones, legal counsel of Mineralogy, sworn 13 May 2020 (the Jones affidavit) of a more modest 76 pages. Mineralogy has also filed 13 pages of written submissions resisting the present application.
Before I can proceed to an evaluation of the CITIC Plaintiffs' strike out application put against the FAD, it is necessary to gain a better insight towards the various claims as presently advanced by the CITIC Plaintiffs, to which the FAD of Mineralogy then seeks to respond. In this quarter I regret that the Executive Summary provided by the SOC does not expose enough of the underlying complexities of the issues arising.
Overview of the CITIC Plaintiffs' claims under the SOC
From the SOC it is evident that the CITIC Plaintiffs seek to expand the scale of their operations and their works at Cape Preston, under what they term the 'Sino Iron Project'. The mechanism by which they seek permission to do so are by MCPs, submitted by reference to the terms of the State Agreement. But under the State Agreement, it is Mineralogy that is to be the relevant party that may (essentially on behalf of the CITIC Plaintiffs) submit the MCPs for approval to the relevant State Minister. Therein lies the problem.
By intended proposed MCPs (known as the 2017 MCPs), the CITIC Plaintiffs are, in effect, seeking through Mineralogy, to obtain State approval to be able to undertake works which will allow them to more fully implement the Sino Iron Project, towards which, to date, they say they have already invested many billions of dollars in Cape Preston infrastructure. For current purposes, it is not necessary to delve too deeply into specifically what is sought to be done under the relevant 2017 MCPs, as has been proposed by the CITIC Plaintiffs. It is sufficient to say that the proposed expansion work involves enabling works associated with the continued sustainable mining of magnetite ore within the leased areas that are the subject of the current MRSLA contractual arrangements with Mineralogy.
The core dispute arises because the CITIC Plaintiffs say that by failing to submit the 2017 MCPs for approval to the State Minister in December 2016, and then again, at December 2017, Mineralogy has failed to co-operate with them, or to assist them (as was contractually proposed). They say that Mineralogy is contractually obliged to co-operate and to assist them and, to that end, was obliged to submit the 2017 MCPs as they were proposed by the CITIC Plaintiffs for ministerial consideration for approval. They say that Mineralogy was also required to take various other steps under the State Agreement, so as to facilitate, or to secure the tenure and the continued implementation of the CITIC Plaintiffs' Sino Iron Project.
It is said that Mineralogy's ongoing failures to co-operate with the CITIC Plaintiffs and to assist them with these MCPs violates contractual promises made by Mineralogy to various of the CITIC Plaintiffs to that end. It is also put that such omissions ultimately threaten the commercial future of the existing operations of the CITIC Plaintiffs under the Sino Iron Project.
As a result of the alleged omissions to co-operate and to assist, Mineralogy is said by the SOC to thereby be in breach of both express and implied contractual terms of the various 'Project Agreements' (as I will relate), but meaning essentially that Mineralogy has not honoured its contractual bargain with the CITIC Plaintiffs.
The CITIC Plaintiffs advance further statutory claims against Mineralogy (and against Mr Palmer personally as an accessory) under the ACL for alleged statutory unconscionable conduct but essentially raising the same underlying grievances. They also plead (equitable and conventional) estoppel claims grounded upon numerous asserted representations by Mineralogy seeking, essentially, to prevent Mineralogy from failing or refusing to take steps in furtherance of the 2017 MCPs being submitted and approved under the State Agreement.
A loss and damage claim is also raised under the SOC against Mineralogy on the basis of contended ongoing loss and the resultant future reduction in the scope, or the operations of, the Sino Iron project.
It is necessary now to attempt to 'unpack' from the SOC some of the alleged contractual terms and so, to focus upon the alleged contractual breaches of such terms, as is put against Mineralogy by the SOC.
Contractual breaches
The SOC contract breach contentions against Mineralogy are, of course, only one aspect of what are multiple causes of action sought to be raised against Mineralogy and Mr Palmer, as articulated across all of the SOC.
In an attempt to obtain a better insight towards the CITIC Plaintiffs' contractual and breach of express term arguments as made in the SOC against Mineralogy, I focus initial examination only on certain of what are multiple breach of contract term pleas - remembering in the background necessarily all the other causes of action also being run against Mineralogy.
Given Mineralogy's underlying dependency of interrelated contractual obligations defences which manifest around it resisting the present strike out application, I need to direct present attention at the contract based breach claims that each side puts here against the other. This is first by the SOC attacks of the CITIC Plaintiffs, but then, further alleged contract breaches raised defensively by Mineralogy via its FAD.
Of course, the CITIC Plaintiffs' wider pleas of statutory unconscionable conduct by Mineralogy remain relevant contextually in the strike out exercise as now raised under the present application. The exercise requires me to weigh whether certain material facts as to breach seen raised as a part of the current FAD pleas of Mineralogy can arguably be viewed as sustainable defensively when assessed at this interlocutory point, on a principled evaluation of what is put forward by Mineralogy to stand against the wide-ranging unconscionable conduct pleas that are directed against Mineralogy (and Mr Palmer as an accessory).
More simply, if the CITIC Plaintiffs under their SOC are aggregating multiple pejorative grievances concerning (allegedly dishonoured) Mineralogy representations, unconscionable conduct and violated rights based on estoppels so as to sustain the ultimate obtaining of equitable relief against Mineralogy, then a court would need to be very cautious before parsing away elements suggested by Mineralogy as relevant defensively from out of the parties' overall contractual relationship history at what is still an early point in this litigation and well before the trial. That must be so especially towards the task of assembling a reliable global view of presenting facts that is always required in weighing a broad based statutory unconscionability challenge run by the CITIC Plaintiffs under what is their expansive panoply of asserted unconscionable conduct all directed against Mineralogy.
So, I can turn back then to examine some bedrock aspects of the breach of contract causes of action as raised by the CITIC Plaintiffs under their SOC.
I have found it necessary, somewhat ironically, to start at the end of the SOC in focussing first at the end relief claimed by the CITIC Plaintiffs as regards contended breaches against multiple contractual terms by Mineralogy, in its alleged violation of variously derived contractual terms or promises.
The initial quest is to isolate the content of and the sources of a particular express term or terms in a particular contract and then, to see what obligation is contended to have been breached by Mineralogy, relevant to the equitable relief as is ultimately pursued against Mineralogy by the CITIC Plaintiffs. Regrettably, the term ascertainment quest was made harder than it should otherwise be, given the form of the SOC.
The SOC prayers for relief - specific performance
Relief claimed under SOC (pages 145- 146) under prayers A through D display a common preface, in seeking what, in legal substance, looks to be mandatory final 'injunctions' ordered against Mineralogy. Such final orders are sought to compel Mineralogy to forthwith implement certain positive conduct on its part.
This relief as referred to is identified in the SOC as 'orders for specific performance'. Such relief is sought as regards the CITIC Plaintiffs' 2017 MCPs. But they say they have been denied or not received to date, Mineralogy's assistance and co-operation as required under the State Agreement approval process.
Thus, the CITIC Plaintiffs seek relief in the nature of final mandatory injunctions that would, in effect, compel Mineralogy by the order of the court to provide the CITIC Plaintiffs with the reasonable assistance that Sino Iron and Korean Steel say they have been contractually promised and that they are entitled to receive, under the State Agreement.
Legal considerations - specific performance
The chosen SOC relief terminology of 'specific performance' is not used by the CITIC Plaintiffs in the so-called strict sense, as was explained by Dixon J in JC Williamson Ltd v Lukey (1931) 45 CLR 282, 297 - 298. The true order for specific performance is in the genre of a compulsive order issued by a court as relief in respect of the enforcing of an executory contract made between the parties, and which requires either an execution of their instrument, or a doing of an act which is needed by a party so as to implement the executory agreement. Clearly, that is not this case as regards Mineralogy's allegedly unmet promises under any of the underlying agreements that are the source of assistance or co-operation promises made by Mineralogy as referred to in the SOC. Those agreements are all long past their executory phases.
The conceptual legal distinction as regards specific performance in the true and somewhat narrow sense as regards executory contract stands in contrast to an affirmative equitable injunctive order by a court - that in some ways can be analogous, but in others may not - as explained by Meagher, Gummow & Lehane's Equity Doctrines and Remedies (5th ed, 2015) at [20-010] and [20-015]. Sometimes it is said that the appreciation of this conceptual relief distinction becomes vital in assessing whether the relief being pursued is open or available, within the underlying circumstances.
Here, as regards the MRSLAs as a primary contractual source of a co‑operation or assistance promise by Mineralogy, the MRSLAs were entered and perfected over 14 years ago, during March 2006. There can be no serious contention that they are to be viewed in mid-2020 as anything other than fully executed agreements then, perfected as between the contracting parties and, in their ongoing performance respects, are still being implemented in their ongoing mutual performances to the present.
Consequently, the SOC's relief references to 'specific performance' as regards a final court order compelling Mineralogy's promised co-operation or assistance as regards 2017 MCPs looks to instead be pursuing, in effect, final mandatory injunctive orders as the true final relief that is sought against Mineralogy - rather than specific performance in the true sense. By that relief the CITIC Plaintiffs, in effect, thereby seek to compel Mineralogy by court order to affirmatively perform its contended affirmative obligations (promises made under the MRSLAs as already fully perfected and live contracts) to Sino Iron and Korean Steel.
A pursuit of what is discretionary equitable relief to redress contended breach of contract by mandatory injunctions after trial, rather than the usual common law remedy of damages for breach of contract, is evident. This relief looks, via the SOC, to be conceptually grounded on a suggested inability of that normative common law damages remedy for breach of contract to deliver adequate redress to the CITIC Plaintiffs and the affected counterparty in the prevailing breach circumstances.
For the present context of rival arguments over an asserted interdependency subsisting as a matter of interpretation as between the multiple promised obligations found within, say, the MRSLAs of 2006, the observation in Meagher, Gummow & Lehane at [20-015] made there by reference to a 1931 New South Wales decision, Sydney Consumers' Milk and Ice Co v Hawskesbury Dairy and Ice Society Ltd (1931) 31 SR (NSW) 458, 462 - 463, presents as analytically helpful. At [20-015] the learned authors say:
[I]n all cases of true specific performance, it is necessary for the plaintiff to allege and prove performance of, or readiness and willingness to perform, the plaintiff's own obligations under the contract. This is not always necessary in cases of relief analogous to specific performance. Of more fundamental importance, however, are:
(a)the rule, applicable generally to cases of true specific performance, that an order of specific performance is an order that the whole of a contract, not individual obligations under it, be carried into effect; and
(b)the distinction between specific performance and injunctions in aid of contractual rights. (citations omitted)
The learned authors continue at [20-015], as regards the conceptual distinction, to observe as between what is true specific performance, in contrast to an issue of a mandatory (final) injunction in aid of the enforcement of a contractual right, that:
It can lead to a belief that, in the case of executed contracts, decisive weight should be given to matters which are not (for example, partial enforcement of a contract) or may not be (for example, readiness and willingness on the part of a plaintiff) really decisive or even relevant. It can lead to confusion where there is a defence that a decree would enforce the continuance of a personal relationship or would involve the continuous supervision of the court. Further, it can lend encouragement to the drawing of another distinction which, it is submitted, clearly does not exist: that between the supposed 'specific performance' of an executed contract and a mandatory injunction directing performance of certain of its terms. (citations omitted)
See again the further observations made in this same area by Meagher, Gummow & Lehane at [20-020].
The SOC prayers for relief A through D
With a key conceptual distinction between true specific performance and mandatory injunctive final relief understood for what is actually being pursued here against Mineralogy by the CITIC Plaintiffs, I will proceed next to extract from the SOC prayers for relief A, B, C and D. They read with, essential, a common chapeau.
The SOC relief by prayer A seeks:
A.Orders for specific performance, alternatively injunctions under s 232 of the ACL, alternatively orders under ss 237 and 243 of the ACL, alternatively injunctions under the general law, requiring Mineralogy to, forthwith:-
(a)jointly with Sino Iron, submit the 2017 Sino Iron MCP to the SA Minister [Minister administering the State Agreement] for approval under the State Agreement; and
(b)jointly with Korean Steel, submit the 2017 Korean Steel MCP to the SA Minister [Minister administering the State Agreement] for approval under the State Agreement.
Under the same chapeau, prayer B seeks that Mineralogy be ordered to:
(a)agree in writing with each of Sino Iron and Korean Steel that the Site Lease Area within the meaning of clauses 1.1 and 4.1 of each of the Sino Iron MRSLA and the Korean Steel MRSLA, comprises each of the areas outlined in the map in Annexure 11 to this statement of claim; and
(b)alternatively to (a), grant to Sino Iron and Korean Steel such further tenure as the court determines is reasonably required by Sino Iron and Korean Steel for the purposes of the 2017 MCPs, upon such terms as the court determines are reasonable.
SOC prayer C displays additional words at the end of the common chapeau as regards Mineralogy being required to forthwith:
... take the following steps to secure the re-purposing of G08/53, G08/54 and G08/63 to enable the establishment of the infrastructure and facilities provided for in the 2017 MCPs:
(a)conditionally surrender each of G08/53, G08/54 and G08/63, such surrender being conditional upon the grant of the general purpose leases referred to in sub-paragraph (b) below; and
(b)apply for the grant of general purpose leases over the areas presently covered by G08/53, G08/54 and G08/63, with purposes consistent with the proposed usage of those areas identified in the 2017 MCPs.
SOC prayer D again displays the common chapeau (as prayers A and B) but now coupled to further words that would require Mineralogy to forthwith:
submit the PoW [Programme of Works] to DMIRS [the Department of Mines, Industry Regulation and Safety of Western Australia] for assessment, or authorise CPMM [the CITIC Plaintiffs' agents] to submit the PoW to DMIRS for assessment on behalf of Mineralogy.
Having now exposed the SOC relief sought I can venture back in the SOC to locate the underlying contractual term source(s) for that breach relief - grounded over asserted cause of actions against Mineralogy for common law breach of contract.
I attempt to explore that issue concentrating on the relief sought under SOC prayer A above, as regards Mineralogy and a final injunctive order compelling a joint submission of the 2017 MCPs to the Minister for approval under the State Agreement.
The 2017 MCP pleas
SOC par 166
One of the multiple contended contractual performance failures (ie, breaches) by Mineralogy is a subject of the plea seen under SOC par 166 which appears under a heading 'Breach of Contract', then the subheading, 'Breach of the MCPs Approval and Submission Terms'.
SOC par 166 reads:
By:
(a)failing and refusing, between 9 December 2016 and 17 December 2017, to submit the 2016 MCPs;
(b)further or alternatively, failing and refusing, since 18 December 2017 to submit the 2017 MCPs,
Mineralogy has breached, and continues to breach, the MCPs Approval and Submission Terms and each of them. (my emphasis)
Particulars
The [CITIC Plaintiffs] refer to and repeat the matters pleaded and particularised in paragraphs 141, 143 and 145 above.
So, in what contract(s) are the allegedly (breached) par 166 'Terms' to be found? And is it an express term or an implied term that is being referred to? Something of a journey is required within the SOC to locate answers to these basic ingredients of a breach of contract cause of action.
By reference to the list of the many defined terms under the SOC at Annexure 12, it is eventually discovered (at page 167) that the phrase 'MCPs Approval and Submission Terms' carries a SOC paragraph reference back to SOC par 143. That, of course, aligns with one of the references as seen above, under the par 166 italicised particulars to SOC pars 141, 143 and 145.
So, I venture on in the SOC to those paragraphs.
SOC pars 141, 143 and 145
SOC par 141 is a long plea, with even longer particulars. I presently spare the reader any of my pain in trying to apprehend it it in full - at least until the trial.
For relevant purposes in the SOC journey to try and find (a) the text of the allegedly breached contractual term, and (b) its founding origins in some relevantly identified contract, I note that SOC par 141 says this:
At all relevant times:
(a)...
(b)...
(c)...
(d)Mineralogy is and was obliged, by the terms of the State Agreement pleaded in paragraphs 36 and 37 above, to submit the MCPs to the SA Minister for approval under the State Agreement, because the MCPs and the approval thereof by the SA Minister are and were required to:
(i)implement the Approved Proposals; and
(ii)ensure continuous operation of the Sino Iron Project.
So, via SOC par 141(d), at last I have found the home for this alleged contractual term in an agreement, namely, as a term of the State Agreement (as referred to at SOC par 36 and par 37).
Then at SOC par 143, there is reached, at last, a promised definition of 'MCPs Approval and Submission Terms'. This plea looks prima facie promising. It reads:
By reason of the matters pleaded in paragraph 141 above, Mineralogy has, in the period from 9 December 2016 to 17 December 2017, been obliged by the terms set out in subparagraphs 141(a) to (d) above (MCPs Approval and Submission Terms) and each of them to approve and submit to the SA Minister, for approval under the State Agreement the 2016 MCPs.
Alas, travelling further on to SOC pleas made under pars 141(a) through (c) only reveals a mention of even more SOC defined terms. At SOC par 141(a)(ii) can be found the 'MRSLAs Express Government Approval Terms'. At SOC par 141(b) is found the 'Takeover Agreements Express Reasonable Assistance Terms'. Then, at the end of par 141(c) will be found the so‑called 'Direct Agreement Express Terms'.
These definitions are all collected as defined phrases under the SOC Annexutre 12.
At Annexure 12, it is learned that so-called 'MRSLAs Express Government Approval Terms' are said to be linked to an earlier SOC paragraph, namely, to SOC par 47. So‑called 'Takeover Agreements Express Reasonable Assistance Terms' are represented to be revealed at SOC par 55. A 'Direct Agreement Express Term' is said to be revealed as having a source of origin at SOC par 58. The journey must continue.
At this point on any unfinished journey I need to pause to remind myself that I am trying to get some sort of handle on the essentials of the CITIC Plaintiffs' breach of contract case. This is necessary so I can then get to a position to sensibly weigh the arguments in the CITIC Plaintiffs' application about so‑called untenable defences that are put up against the SOC by Mineralogy, under its FAD. But finding the sources of the SOC breach of contract causes of action is no easy task. To attempt to comprehend the CITIC Plaintiffs' contended SOC par 143 contractual obligation (said to have been breached by Mineralogy), four different sets of terms, all seemingly designated in aggregate by SOC as so‑called 'MCPs Approval and Submission Terms', will need to be be found and then interrogated. The task requires, now that pars 141(a) through (d) have been exposed as possible sources of enlightenment, a journey back to SOC pars 47, 55 and 58 of the SOC and from there, onwards or backwards to other terms in the State Agreement as pleaded in SOC pars 36 and 37.
At SOC par 47 there manifests under a heading, 'Rights under MRSLAs', a reference (within the particulars to SOC pars 47(a) and (b)), to clauses 15.1(a) and 15.1(c) within each of the MRSLAs respectively. Those express MRSLA terms look to be invoked by the SOC as contended contractual obligations, first, of Sino Iron and Korean Steel to obtain all 'Government Approvals' required to implement each of Sino Iron's and Korean Steel's projects then, for those corporations to carry out each of their Activities (as defined), including 'approvals from the Minister of proposals for each of Sino Iron's and Korean Steel's projects under the State Agreement or any Act'.
Towards Mineralogy, however, and relevantly to be found only at SOC par 47(b) as regards MRSLA par 15.1(c), is a contractual term and breach allegation. The plea contends for an express MRSLA promise, that Mineralogy would
... give each of Sino Iron and Korean Steel assistance in obtaining Government Approval under clause 15.1 of each of the MRSLAs. (my emphasis)
That 'assistance' promise by Mineralogy looks to be the as defined 'MRSLAs Express Government Approvals Term' by SOC par 47.
I advance next to SOC par 55, as regards the so‑called 'Takeover Agreements Express Reasonable Assistance Terms', as there mentioned.
SOC par 55 displays reference to express terms contained in the 'Takeover Agreements', relevantly with (named) CITIC Ltd, Sino Iron and Korean Steel. The 'Takeover Agreements' (see SOC pars 8(d) and (e)) are the respective agreements for, first, the Sino Iron takeover of 31 March 2006 then, secondly, the Korean Steel takeover of 1 November 2007. By such dates it is evident the Sino Iron Takeover Agreement was entered approximately 10 days after the Sino Iron MRSLA. By contract, the Korean Steel Takeover Agreement was entered some 20 months after entry of the Korean Steel MRSLA.
From the particulars to SOC par 55 reliance is seen directed there at the Sino Iron Takeover Agreement express cl 7.3(i) and cl 19.1 (definition of 'Project') and at the Korean Steel Takeover Agreement cl 7.3(e) and in cl 19.1.
Out of all this, it might be deduced in the end that the express term relied upon by the CITIC Plaintiffs as being breached (outlined in SOC par 55), including a plea of reliance by CITIC Ltd, is as to Mineralogy's expressly promised 'reasonable assistance' as reasonably requested (and at CITIC Ltd's cost), to 'progress development of the Project' ('Project' being defined in each Takeover Agreement).
As ultimately exposed, SOC par 55 looks to show there the express 'reasonable assistance' terms from within the two Takeover Agreements, defined together as the 'Takeover Agreements Express Reasonable Assistance Terms'.
I can venture on then to SOC par 58, as regards locating the text of a so-called 'Direct Agreement Express Term'. SOC par 58 exposes that Direct Agreement, otherwise referred to at SOC par 8(g) as an agreement between certain parties, including Sino Iron and Mineralogy and by a deed given a generic reference under the particulars par 8(g), as merely '2008'.
At all events, an express term as is contended for under the particulars to SOC par 58 looks to derive from Direct Agreement cl 3.4.3 and cl 1.1 (as regards definitions of 'Project' and 'Project Documents'). From those clauses it is contended for a contractual promise by Mineralogy whereby it is said to have agreed, in respect of activities to be carried out or contemplated to be carried out on M08/123, M08/124 and M08/125, that Mineralogy would:
... exercise its rights under the State Agreement in relation to the Project in accordance with the reasonable requests of Sino Iron, subject to such requests being in compliance with the Project Documents and the Direct Agreement, including:
(a)submitting project proposals to any government authority; and
(b)requesting approvals by any government authority in connection with the Project as defined ...
Two of the 'Project Documents' mentioned are the MRSLAs and the FCD (see SOC par 58(d)).
For the State Agreement, it will undoubtedly be remembered that at SOC par 141(d) reference was made back to express terms of the State Agreement said to be pleaded at SOC pars 36 and 37.
But a journey to par 36 does not provide immediate enlightenment. It only refers to matters pleaded in SOC par 23 and at pars 25 - 27 contending, it is presumably to be inferred, for alleged joint and several obligations arising under the State Agreement, to:
(a)implement the Approved Proposals (as defined) in accordance with the terms thereof; and
(b)ensure continuous operation of the Sino Iron Project.
Advancing on from the SOC plea at par 36, an obligation next pleaded at SOC par 37 emerges as regards contended rights said to be enjoyed by Sino Iron and Korean Steel (not CITIC Ltd, it is observed).
SOC par 37 says:
By reason of the matters pleaded in paragraph 36 above, Sino Iron and Korean Steel have at all relevant times had rights, including contractual rights against Mineralogy, under the State Agreement to:
(a)implement, and to require Mineralogy to implement, the Approved Proposals in accordance with the terms thereof; and
(b)ensure, and to require Mineralogy to ensure, continuous operation of the Sino Iron Project.
Particulars to SOC par 37 are the key to unlocking these pleas. The given particulars read:
These rights are implied by the obligations pleaded in paragraph 36 above, and/or arise on a proper construction of the State Agreement and the SA Act. (my emphasis)
To ascertain such 'implied' rights asserted under SOC par 36, or rights that are said to arise as a matter of the proper construction of the State Agreement and its umbrella legislation, it is necessary to scrutinise SOC pars 23, 25, 26 and 27.
SOC par 23 manifests references to seven subparagraphs, all invoking via their particulars various express clauses from out of the State Agreement, including to:
(a)cl 6(1) and cl 6(2);
(b)cl 6(6)(b)(i);
(c)cl 8(1);
(d)cl 7(1), cl 7(2) and cl 8(2);
(e)cl 7(6) and cl 8(2);
(f)cl 4(3); and
(g)cl 2(g).
But the assembly of all those as mentioned express terms from out of the State Agreement under par 23 of the SOC looks largely directed towards events surrounding the commencement of the State Agreement, in terms of its overall implementation.
Nevertheless, SOC pars 25 - 27 then refer sequentially, to the relevant Minister in respect of the State Agreement approving a proposal on 2 May 2008, then to an as defined Approved Sino Iron Pellet Proposal (par 25), then a June 2009 approval of a Sino Iron Concentrate Proposal (a variation proposal submitted by Mineralogy with Sino Iron as a co‑proponent, similar to the approved Sino Iron Pellet Proposal) (par 26(a)) and lastly, to a further 22 April 2009 Korean Steel Concentrate Proposal (par 26(b)), said to be submitted by Mineralogy on that date with Korean Steel as a co‑proponent.
SOC par 27 displays reference to the State Agreement Minister's approval of further proposals relating to the Sino Iron Project at on or about 6 January 2010, all variously referred to as variation proposals submitted by Mineralogy with either Sino Iron or Korean Steel as co‑proponents.
These SOC pleas present as historic references to prior approvals being sought and obtained from the Minister under the State Agreement - for what that might ever ultimately be worth.
Summary of terms breached by Mineralogy under the SOC
Finally I can move closer to unveiling in the SOC the underlying contractual foundation(s) for the CITIC Plaintiffs' breach of contract cause(s) of action against Mineralogy for equitable relief by way of final mandatory injunctions.
I have laboured to unearth the SOC content and source(s) of so-called MCPs Approval and Submission Terms (as defined) said to have been breached by Mineralogy at SOC par 166.
By the definition of MCPs Approval and Submission Terms addressed at SOC par 143, there is ultimately exposed by unlocking SOC anterior pars 36, 37, 47, 55 and 58, the following to be relied upon:
(a)express terms in the two MRSLAs;
(b)express terms in the Direct Agreement;
(c)express terms in two Takeover Agreements (by reference to the provision by Mineralogy in generic terms of 'assistance' or 'reasonable assistance' or an exercise of rights under the State Agreement in relation to the Project in accordance with reasonable requests as regards governmental authorities and proposals and approvals by governmental authorities); and
(d)by certain express terms of the State Agreement which, put together, are said to give rise to Mineralogy's promised obligation, with Sino Iron and Korean Steel (SOC par 36), to jointly and severally 'implement approved proposals' and 'ensure continuous operation of the Sino Iron Project'.
Beyond those express terms are the contended implied contractual obligations found mentioned under SOC par 37 and put against Mineralogy for the benefit of Sino Iron and Korean Steel as regards those two corporations implementing approved proposals in accord with their terms and as to ensuring and requiring Mineralogy to ensure continuous operation of the Sino Iron Project.
That now partly exposed SOC arsenal of contractual express and implied terms looks to found the eventual term(s) said by the CITIC Plaitiffs to have been breached by Mineralogy, namely, the so‑called MCPs Approval and Submission Terms, at SOC par 166.
Breaches of other terms
More SOC journeys of discovery will be required at trial to derive the sources of the various other as defined SOC contractual terms all said, once again, to have been breached by Mineralogy. To such future quests, I note:
(i)under SOC par 167, breach of so‑called MCPs Performance Terms;
(ii)under SOC par 168, breach of the so‑called Tenure Terms;
(iii)under SOC par 169, breach of the so‑called Tenure Performance Terms;
(iv)under SOC par 170, breach of the so‑called Re‑purposing Terms;
(v)under SOC par 171, breach of the so‑called Re‑purposing Performance Terms;
(vi)under SOC par 172, breach of the so‑called PoW Submission Terms; and
(vii)under SOC par 173, breach of the so‑called PoW Performance Terms.
The pleas under all these provisions intersect and overlap.
Capturing from out of the SOC the parental sources of all these contractual terms is a challenging task. The chore, however, is merely the precursor to the required exercise, post unlocking, to comprehend for each of these contended terms, the acts or omissions relied upon as their alleged breach by Mineralogy.
The application - disposition
As mentioned at the start of these reasons, the CITIC Plaintiffs' application seeks to permanently stay as an abuse of process Mineralogy's SoW pleas under the FAD. Alternatively, it seeks to strike out under RSC O 20 r 19(1) for various reasons what are the four broad FAD categories of defence component pleas found within Mineralogy's FAD. This is essentially due to an asserted demonstrable non‑arguability of Mineralogy's FAD pleaded breach of contract defences. The challenged FAD categories may be identified under Schedule 1 to the CITIC Plaintiffs' submissions (see [47] above).
I can turn, finally, to those categories commencing with the SoW pleas that are challenged, in effect, on the core dual grounds of abuse of process and as well, a failure to plead out a reasonable defence by this aspect of the FAD.
Mineralogy's SoW breach defensive pleas under its FAD
Mineralogy's impugned FAD pleas made in responding to the SoW present, broadly speaking, as MRSLA term breaches by project construction delay grievances (largely suffered in calendar years between 2008 - 2013). These MRSLA breach grievances raised by Mineralogy are seen to be raised over the construction works undertaken to establish at Cape Preston what was be a massive magnetite ore processing plant. This plant was constructed at a 'greenfields' mining tenement location by the chosen project contractor for the CITIC Plaintiffs, namely, the corporation, Metallurgical Corporation of China (MCC).
By the FAD Mineralogy's SoW breach allegations pleas conclude on a basis of Mineralogy's end contention at FAD Schedule A. From pars 28 and 29 of Schedule A in the FAD it is seen pleaded there that 'in the premises' Sino Iron and Korean Steel each, by reference to allegations unfolding across the preceding 12 pages of Schedule A, had thereby 'breached clause 16.1' of their respective MRSLAs.
But how and why could such historic construction breaches (particularly delay related grievances) (which of course are denied), as regards MRSLA cl 16.1, be today at all presently potentially relevant as a possible defence for Mineralogy in this action? How could such breaches of contract, fully assumed for present purposes, be put against the co-operation and assistance contractual breach grievances as raised by the CITIC Plaintiffs against Mineralogy under the SOC? Even assuming for present arguability purposes on a strike out application these past SoW related breaches against the MRSLAs, how do such SoW construction delay breaches engage defensively in the present dispute? Would they not, at best, just sound in damages? That is the critical divide.
There is no dispute now that the MRSLAs duly entered in 2006 still remain fully alive and on foot in 2020. The MRSLAs are not presently said to have been ended (terminated for breach) in their ongoing mutual performance obligations, as between the MRSLA parties, even by Mineralogy. The MRSLAs have not been terminated over any alleged (presently assumed) SoW breaches of MRSLA cl 16.1, or, for that matter, for any other alleged serious breach of any other alleged MRSLA term.
Nor, as I would digest from the FAD, is any SoW related breach said to have been a breach in the character of a continuing breach of the MRSLAs. Nevertheless, the FAD pleas towards these SoW breaches are all contended by Mineralogy towards somehow defensively negating the SOC contractual based assistance or co‑operation breaches put against Mineralogy (under the MRSLAs and more generally) to obtain the relief presently sought by the SOC against Mineralogy as equitable final injunction relief. How is that so?
As earlier foreshadowed, a significant part of Mineralogy's FAD defensive argument towards the SoW breaches lies in Mineralogy's plenary contention that all, or at least most, of the contractual obligations (particularly express terms within each MRSLA such as cl 16.1) are express terms that by their nature are 'interdependent' with other express MRSLA terms. This, they say, is evident once the terms are assessed in their overall contractual character in each MRSLA, as regards their ongoing performances.
Hence, as its FAD defence against the allegations put against it by not providing to the CITIC Plaintiffs the required co‑operation or assistance, Mineralogy argues back that such past SoW breaches are a solid aspect of its defence. Mineralogy argues back that such a related term dependency character in the MRSLA contractual performance obligations (and in linked performance features) all bears relevantly against obtaining the equitable injunctive relief as sought by the CITIC Plaintiffs. The dependent MRSLA term relationship is said by Mineralogy to be a relevant factor against relief, even if the past MRSLA SoW delay breaches it raises all occurred in the distant past (2008 - 2013) and would today sound at best only in a remedy to Mineralogy for common law breach damages.
For all the space it has consumed, a 'tit for tat' like related dependent MRSLA terms breach defence by Mineralogy, essentially distils down to the FAD plea that Mineralogy does not, in 2020, have to perform its MRSLA co-operation or assistance promises made to Sino Iron or Korean Steel because Sino Iron and Korean Steel breached MRSLA cl 16.1. That result is said by Mineralogy to follow even though the MRSLAs remain fully alive and afoot in 2020 in their day to day ongoing performances.
MRSLA terms said by Mineralogy to have been breached and be dependent as to performance
As an attempted elucidation of the specifics of Mineralogy's suggested interdependency of MRSLA terms defence argument, I turn to examine more specifically some more of the express contractual terms of the two MRSLAs.
I pause at this point to make an observation as regards identifying any potential surrounding circumstances or extrinsic facts that may possibly bear upon an interpretation exercise to be undertaken when there arises some issue of a 'constructional choice' which bears upon an MRSLA term's true meaning. To date, by the SOC or the FAD, there are no potential surrounding circumstances or extrinsic facts pleaded as being relevant towards the exercise of interpretation of the MRSLAs as regards Mineralogy's MRSLA term dependency arguments. See generally, Mount Bruce Mining Pty Ltd v Wright Property Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 at [49] and [51] per French CJ, Nettle and Gordon JJ.
For all intents and purposes, as already said, the Korean Steel and Sino Iron MRSLAs read in identical terms.
MRSLA cl 15
Within of the SOC, under the ubiquitous par 141(a)(ii) plea, was seen reference to the as defined MRSLAs Express Government Approval Terms - which, as has now been exposed, needs to be tracked back to SOC par 47 (see [105] above). Once there, it is learned that Mineralogy's 'assistance' in the obtaining of government approval, is said to have been expressly promised by Mineralogy to Sino Iron (and Korean Steel) under MRSLA cl 15.1.
SOC pars 47(a) and (b) refer to express MRSLA terms, namely, cl 15.1(a) and cl 15.1(c) in each MRSLA.
These MRSLA terms as relied upon by the CITIC Plaintiffs, read:
15.GOVERNMENT APPROVALS AND LEGAL REQUIREMENTS
15.1Government Approvals
(a)Sino will be responsible for obtaining all Government Approvals required to implement Sino's Project and to carry out Sino's Activities, including approvals from the Minister of proposals for Sino's Project submitted under the State Agreement or any Act.
(b)Sino must comply strictly with the terms and conditions of all Government Approvals.
(c)Mineralogy will, at Sino's cost, give Sino assistance in obtaining Government Approvals under this clause.
The above MRSLA somewhat bland cl 15.1(c) express term promise assistance of Mineralogy, as regards Sino Iron (or Korean Steel) obtaining of 'Government Approvals' (as defined in each MRSLA), presents and subsists with many other clauses within each of the MRSLAs.
Mineralogy's FAD contends that other express MRSLA terms have been breached in the past by Sino Iron or Korean Steel and are promises that are interdependent with Mineralogy's promised assistance obligation under cl 15.1(c). In effect then it is being said that a past breach of one MRSLA promise affects or bears negatively upon the obligation of the MRSLA counterparty to perform the other promise.
MRLSA cl 16
The first of the MRSLA clauses said to be interdependent with cl 15.1(c), and which is said to have been breached in the past by Sino Iron, is the SoW clause. This presents as MRSLA cl 16, reading:
16.STANDARD OF WORK
16.1Standard of Work
Sino must carry out all Sino's Activities to the standard of care, skill and diligence that would normally be expected internationally of a professional and competent organisation implementing a project equivalent to Sino's Project, and in accordance with Good Industry Practices.
The as observed MRSLA cl 16.1 phrase 'Good Industry Practices' is defined in each of the MRSLAs under the Definitions cl 1.1, in terms:
(a)the exercise of that degree of skill, diligence, prudence and foresight that reasonably would be expected from a reputable and prudent contractor in performing work similar to that work and under conditions comparable to those applicable to that work; and
(b)compliance with those standards, codes and practices which would ordinarily be applied by reputable companies and contractors in the iron ore industry in Australia.
Other key MRSLA deployed phrases, including 'Sino's Activities' and 'Sino's Project' (and the Korean Steel analogies), may also be found as defined under the MRSLA interpretation definitions, in MRSLA cl 1.1.
Mineralogy contends MRSLA cl 16 has been breached as the processing plant was being constructed by Sino Iron or Korean Steel's contractor, MCC, in the earliest phase of the parties' MRSLA contractual relationship - essentially, between 2008 - 2013.
But as has now also been discussed, the two MRSLA contractual relationships remain alive and ongoing. Since 2013 the relationships have entered their production phases. And so their performance is generating Mineralogy's entitlement to receive substantial ongoing royalty payments from Sino Iron and Korean Steel under MRSLA cl 8. MRSLA cl 8.2(a) displays the key references to Royalty Component A and to Royalty Component B payable to Mineralogy. The problematic meaning of the Royalty Component B formula was, of course, the subject of my reasons in Mineralogy v Sino Iron [No 16] and an ensuing appeal.
The key point presently, however, is that the two MRSLAs entered in 2006, are very obviously long term agreements spanning potentially 30 years' duration, or more. They envisage, objectively assessed of course, a first construction phase of mining infrastructure, to establish an ore processing plant at Area A at Cape Preston prior to the following envisaged production of 'Product' (as defined in MRSLA cl 8.2(a)). The construction phase to establish the processing plant at a greenfields mining location and any delays associated with getting that plant established to the point of readiness to generate Product for offshore shipment, are obviously now all events of the somewhat distant past as regard the ongoing performances of the two MRSLAs.
MRSLA cl 20
The next express term obligation within each MRSLA which Mineralogy also complains of as being breached in the past by the CITIC Plaintiffs is MRSLA cl 20. This alleged breach, by its asserted contractual interdependency, is used as a defensive obstacle against the present relief sought by the CITIC Plaintiffs.
MRSLA cl 20.5 appears in each MRSLA under a heading 'Environmental Obligations', and then, in the context of cl 20.4, cl 20.5 and cl 20.6, says this:
20.4Site Remediation Work
(a)As and when required by Legal Requirements, Sino will carry out all Site Remediation Work that may be required as a result of Sino's Activities. All Site Remediation Work must meet Legal Requirements.
(b)Following Mine Closure, Sino will remove and dispose of all Sino's Project Facilities in accordance with Legal Requirements, and will carry out all necessary Site Remediation Work. Sino will comply, and will continue to comply, with all ongoing Legal Requirements relating to Site Remediation Work on areas affected by Sino's Activities.
20.5Mineralogy may require security
Mineralogy may from time to time require Sino to provide reasonable security for the performance of its obligations under this Clause 20. Such security will be provided in the form of a Site Remediation Fund.
20.6Site Remediation Fund
(a)In order to make provision and to provide security for payment of future Site Remediation Costs as they become payable, Mineralogy will establish a Site Remediation Fund, and Sino will make payments into the Site Remediation Fund in the manner set out in this clause.
(b)The Site Remediation Fund is intended to provide security and certainty for the benefit of Sino, and for Mineralogy as the holder of the Mining Lease, that sufficient funds will be available at Mine Closure to meet Site Remediation Costs.
(c)The Site Remediation Fund will be maintained in a separate interest-bearing trust account controlled by Mineralogy as trustee, and which will be designated as a trust account. The interest earned on funds in the Site Remediation Fund will be retained in the Site Remediation Fund.
(d)The Site Remediation Fund may be used solely for the purposes of paying Site Remediation Costs as they become payable. The Site Remediation Fund may not be used or accessed for any other purpose.
(e)For each Operating Year, Mineralogy will determine an annual charge on account of future Site Remediation Costs to be made by Sino in that Operating Year. The amount of the annual charge is to be determined by Mineralogy, having regard to:
(i)Mineralogy's best prevailing estimate of the amount of future Site Remediation Costs, and the amount (if any) already contributed by Sino into the Site Remediation Fund; and
(ii)the number of years remaining until Mine Closure.
(f)At least 30 days prior to commencement of each Operating Year, Mineralogy will notify Sino of its annual charge in respect of the forthcoming Operating Year.
Consequently, even with dependency of MRSLA obligations arguments put wholly aside, the SRF pleas can remain in the FAD - although the position should be revisited in the wake of the outcomes of the November 2020 trial in the SRF Proceeding.
The CPOA plea
No reasonable defence
A penultimate group of FAD pleas is also challenged as disclosing no arguable defence by the CITIC Plaintiffs. This relates to the CPOA, a different agreement from the two MRSLAs considered so far.
Again, as I earlier mentioned, the CPOA itself is the subject of pending litigation, which is also listed for a trial commencing before me on 7 December 2020.
The scale of allegations and cross-allegations made by the parties against each under CITIC Ltd's claims and Mineralogy's counterclaims seem in the CPOA Proceeding is extensive. This pending litigation follows even earlier, now determined proceedings brought in this court against Mineralogy and Mr Palmer over the same CPOA agreement by CITIC Ltd, namely by CIV 3012 of 2012. That earlier action was essentially resolved under declarations uncontroversially issued by the Honourable Justice Chaney, on 1 October 2015. The determinative declarations issued in the earlier action at the time, were essentially made by consent (see my reasons in CITIC Ltd v Mineralogy [2020] WASC 223 and then my subsequent reasons in CITIC Ltd v Mineralogy [2012] WASC 252).
Those uncontroversially made declarations of Chaney J made at 1 October 2015 saw the CPOA then declared to be binding and in force as between its relevant parties.
As a broad summary of the pending CPOA Proceeding, the issues raised therein concern a 2008 CPOA Option arrangement afforded to CITIC Ltd. All up, some four (4) options were granted therein by Mineralogy and Mr Palmer to CITIC Ltd, for it to acquire control over shares in potentially four (4) further companies, all holding MRSLA like rights - each over a billion extra tonnes of ore in Area A of the Cape Preston Area. The taking up of one or more of such options would allow CITIC Ltd to effectively repeat another corporate takeover exercise, akin to what had already occurred with its obtaining control over Sino Iron and Korean Steel. An exercise of one or more of the four (4) CPOA Option rights would see CITIC Ltd obtain a further former Mineralogy subsidiary company that held MRSLA like rights to mine and process for a further billion tonnes of magnetite ore as the subject of each option and so then, once production began, to potentially generate even more 'Product'. That in turn would release a further billion tonnes of magnetite ore above the billion tonnes each of ore that Sino Iron and Korean Steel were respectively entitled to mine in Area A, to process and thereby generate Product under their respective contractual MRSLA rights with Mineralogy.
By the CPOA Proceeding (commenced on 31 March 2016), CITIC Ltd issued a process out of this court against Mineralogy claiming that CITIC Ltd had exercised its First Option (as defined) under CPOA cl 3.6, on 13 April 2012, but Mineralogy had failed to perform its CPOA promises to CITIC Ltd.
CITIC Ltd pleaded that subsequent to it exercising its First Option in 2012, Mineralogy over time had wholly failed to meet its CPOA commitments under CPOA cl 3, as regards Mineralogy failing to grant, in effect, further MRSLA like rights to a subsidiary corporation - over which CITIC Ltd might then acquire the control of all the shares via a CITIC Ltd controlled intermediary corporation namely, Cape Preston Resource Holdings Pty Ltd (as fourth plaintiff in the CPOA Proceeding).
CITIC Ltd's action is of course resisted, with Mineralogy counterclaiming various relief, on a basis inter alia that the CPOA has been breached by CITIC Ltd and has then terminated for breach in its performance, as a result.
Again by broad summary, within the CPOA Proceeding Mineralogy is counterclaiming that CITIC Ltd by its conduct after 1 October 2015, in effect, had repudiated, or seriously breached an essential term of the CPOA - and by which breach Mineralogy as the so-called innocent contracting CPOA party had subsequently elected to accept, thereby putting to an end all future performance obligations upon all sides, under the CPOA.
Whether an ending of the CPOA obligations contention by Mineralogy and a related counterclaim plea on liability for breach by CITIC Ltd, leading to Mineralogy's claims for damages by reason of its loss of the CPOA bargain at common law will be sustained or not - all present for their liability resolution at the December 2020 trial currently scheduled.
The end result of that CPOA trial, akin to the result of the looming SRF trial, may carry repercussions towards the FAD CPOA defensive pleas by Mineralogy under its FAD.
Of course, the presently relevant question towards this action and the application is whether anything in the FAD can be seen as arguably relevant for Mineralogy defensively, arising potentially out of the CPOA relationship. Is there to be found within the FAD some reasonably arguable defence for Mineralogy capable of being used as a shield against the present relief claims arising out of the CPOA, or in the CPOA Proceeding?
Broadly speaking, Mineralogy is charged by the CITIC Plaintiffs to have just cut and pasted and transplanted its defence from out of the CPOA Proceeding, or at least large chunks thereof, to plead most of it out again within this FAD (see FAD pars 16 - 17 and their allied pleas by reference).
The CITIC Plaintiffs again say this is just untenable as a defence to the current proceeding. Such pleas about the CPOA and its alleged termination do not engage, even arguably, against their present claims pursuing equitable relief seeking to enforce Mineralogy's MRSLA (by cl 15.1(c) as seen) assistance promises, along with like promises by Mineralogy in various other agreements, all listed in the SOC.
Towards my end conclusion, to the effect that the current FAD seen CPOA pleas of Mineralogy must be struck out as presently failing to disclose any arguable defence, is my evaluation that the CITIC Plaintiffs under the SOC do not seek to extract from out of the CPOA itself any express or implied terms said to be presently binding upon Mineralogy as regards the relief sought in this action against Mineralogy.
I assess that there is nothing in the SOC used to ground or assist the CITIC Plaintiffs in establishing any contractual assistance obligations of Mineralogy to them, and by which the CITIC Plaintiffs contend are engaged as against Mineralogy to ultimately found the final equitable relief sought as regards the 2017 MCPs and Mineralogy's assistance.
In other words, whatever other arguments are made by Mineralogy concerning dependently related breached terms found within each MRSLA, that is not the position as regards the CPOA.
My attempted unlocking of the SOC has located some references to the CPOA referred to as regards CITIC Ltd's claimed exercise of the First Option (see SOC at pars 16, 17, 20 and 41). But those pleas go no further in the SOC.
Conclusion upon CPOA plea (no reasonable defence)
Unlike for what is pleaded by the SOC for the MRSLAs (and also for the FCD) towards the contractual promises of Mineralogy said to have been mutually made (either expressly or impliedly) within those agreements and in other Project Agreements, as variously referred to in the SOC, that is not so for the CPOA. Express or implied terms going to support Mineralogy's allegedly promised assistance look to be called upon by the CITIC Plaintiffs within the SOC from out of various agreements - including from out of the Takeover Agreements, the Facilities Deeds, a so-called Direct Agreement and a General Arrangement Map Deed. But not from the CPOA as I read the SOC.
The CITIC Plaintiffs do not, as I unlock their SOC pleading and all its many alleged breaches of contract as put against Mineralogy (see for example SOC par 166), refer to any promised contended express or implied assistance terms arising on the basis that such terms are found in, or are grounded somehow upon the terms of the CPOA. Contractually speaking, therefore, any assumed ending of obligations on all sides under the CPOA, as Mineralogy would have it, even if proved at a trial by Mineralogy, here would be simply irrelevant.
That being the case, whatever outcomes might ultimately emerge following the December 2020 trial in the CPOA Proceeding, such outcomes do not appear to bear positively or negatively either way, for or against, on the relief as sought in the present action.
If there is some greater CPOA argument to that end being advanced by Mineralogy, then it is not presently ascertainable from anywhere within the FAD as regards a suggested shielding impacts of the CPOA being breached and terminated in performance by Mineralogy.
At minimum then that unclear CPOA position would render the FAD observed CPOA pleas of Mineralogy unintelligible and thus, legally embarrassing, from a pleading perspective.
A counter contention broadly asserted by Mineralogy during verbal arguments was to the effect that these issues are all questions for trial and only be determined there on a final basis. Respectfully, however, my assessment is to the contrary, because there is presently no discernibly pleaded linkage even attempted by the FAD from a relevance perspective as between pending breach issues under the CPOA action towards any such breach conduct providing a reasonably arguable defence against the equitable relief that is sought here by the CITIC Plaintiffs against Mineralogy in the present action. Different agreements and different terms or promises seem to be being addressed. So there does not in the end appear to be even the scope for a term dependency argument about CPOA terms in the same agreement.
As regards FAD CPOA pleas, there were indeed a number of key pleading deficiency concessions by Mineralogy within the present application as to terms of accepted pleading deficiencies which need to be fixed in any event. To that end, I record but do not repeat what was accepted under pars 45, 48 and 51 of Mineralogy's written submissions.
It also appears to be accepted by Mineralogy that its FAD at par 140(b)(ii) in respect of the contended contractual breach by Sino Iron and Korean Steel against some agreements as there mentioned, including as against the CPOA, is untenable. That follows axiomatically, as Sino Iron and Korean Steel were not, and have never have been, parties to the CPOA. Not being parties, they could hardly be in breach of the CPOA.
At the end, I conclude that the FAD CPOA pleas must be struck out, on the basis they fail to disclose presently an arguable defence. I do not finally inhibit Mineralogy against attempting in future to correct the present pleading position by obtaining leave of the court to amend under a subsequent and more intelligible FAD amendment addressing the primary defect as now identified - namely the lack of any relevant CPOA breach linkage with this action. Any proposed future amendments to that end in future by Mineralogy should be circulated as a proposed submitted minute. An amendment will require a grant of leave, if opposed. But under prevailing circumstances that exercise should only be undertaken after a determination of the CPOA Proceeding pending for December 2020.
CPOA plea and the JDA
There is a further related CPOA issue as regards the CPOA and an FAD plea concerning the CPOA - by a contention that an anterior agreement, namely a JDA (see [24(vi)] above) of 12 March 2005 is no longer suspended. That JDA consequence follows from Mineralogy's contention that CITIC Ltd's attempt to exercise its (First) Option under the CPOA was 'ineffective'. Just how the Option exercise attempt by CITIC Ltd is said to be ineffective, is left largely unexplained by Mineralogy in the FAD. The omission is complained about by the CITIC Plaintiffs. They say the broadly stated FAD legal conclusion by Mineralogy as to the CPOA Option being 'ineffective', is otherwise left wholly unexplained and thus is, at minimum, is legally embarrassing from a pleading perspective. I agree. The defect is demonstrable.
The Mineralogy contended legal conclusion of option exercise ineffectiveness in the FAD (see FAD par 17(w)(iii) and pars 17(aa)(ii) and (iii)), is inadequately founded. The plea assessed only at that level of coherency, is clearly embarrassing.
By the FAD, via par 17(aa)(iii) as to JDA now not being suspended, given particulars only say:
The JDA is not suspended by reason of the CITIC Option not being effective and deemed not to have been exercised.
Other grievances and deficiencies aside, that plea as to the JDA lacks sufficient accompanying material facts or, at minimum, some accompanying explanation to sustain the ineffectiveness legal conclusion. The plea is open currently, to wholesale speculation over how that asserted conclusion is arrived at. Needless to say that is unacceptable.
The lack of clarity as to the JDA plea (being out of suspension) must thus be assessed as embarrassing and sufficient to sustain a strike out of that plea in its own right, assessed alone and aside from the other CPOA pleading defects in the FAD as now canvassed. A cross‑contention of Mineralogy by its submissions that this is a matter of evidence for trial is an insufficient response.
Hence the CPOA and JDA pleas as currently seen in the FAD will be struck out. Leave to amend by reference to a circulated proposed minute of amendment would need to be obtained for any future attempt at rehabilitating all pleas around the CPOA and JDA in the FAD.
The FCD pleas (no reasonable defence)
The last tranche of FAD pleas challenged by the CITIC Plaintiffs on the present application concerns the pleas made about the FCD.
The strike out pleading challenge, essentially, is that yet again the FAD pleas of Mineralogy as to the FCD display no reasonably arguable defence.
Unlike with my conclusion for the CPOA, my unlocking of the SOC discloses that it does seek to ground certain terms to be found against Mineralogy within the FCD. Th SOC raises allegedly unfulfilled FCD promises by Mineralogy by express or implied terms which the CITIC Plaintiffs contend for under the SOC - in order to obtain the ultimate equitable relief as to the MCPs and the assistance they ultimately seek to compel concerning Mineralogy from the present action.
As discussed, in the FCD Proceedings Mineralogy and/or Mr Palmer seek to rely contractually on a contended promised indemnification to them in the FCD by CITIC Ltd as regards it meeting, in effect, unmet obligations of Sino Iron and Korean Steel (see [41] above). See FCD cl 11.5(c), reading in the following terms:
CITIC indemnifies Clive F Palmer and Mineralogy against any loss suffered, paid, or incurred by it in relation to the failure of Sino Iron and/or Korean to perform its obligations under this Deed or the Project Agreements or the failure of CITIC to cause Sino Iron and/or Korean to performs its obligations under this Deed or the Project Agreements.
Under my reasons in the FCD Proceedings in Palmer v CITIC Ltd [No 2] and Palmer v CITIC Ltd [No 3] [2019] WASC 424, I summarised there the character of those shareholder derivative loss claims, being pursued either by Mr Palmer, or by Mineralogy. Such loss claims are said to arise by reason of various matters, including the failures by Sino Iron and Korean Steel (guaranteed or indemnified by CITIC Ltd) over time to pay over the MRSLA cl 8.1 Royalty Component B amounts, when those amounts had originally fallen due to Mineralogy (that dispute ended in an eventual trial determination upon that issue under my reasons in Mineralogy v Sino Iron [No 16]).
The non-receipt of Royalty Component B funds when otherwise payable to and receivable by Mineralogy is then alleged to have delivered foreseeable and adverse economic repercussions against the worth of the shareholding interest of Mineralogy and/or Mr Palmer as was then held in other various subsidiary or controlled corporations. This is all said to be the cause of large financial and asset losses by those corporations - all the result of Mineralogy not having the benefit of funds to be loaned or provided by Mineralogy to them, when needed. Hence, it is argued that a loss of the asset values associated with the closure of a Townsville nickel refinery and the eventual loss of a valuable petroleum exploration asset in the Torres Strait generated, in the end, the loss of those valuable assets. As a result, 'up the line' shareholders then experienced value losses - all of which losses are said to engage against CITIC Ltd's promised indemnification obligations under the FCD made to Mineralogy and Mr Palmer.
Once again that is a very simplistic summary of what is highly complex and strongly contested litigation.
But the presently impugned FCD plea seen in Mineralogy's FAD is that the failure by CITIC Ltd to so indemnify under the FCD (which is the very disputed subject matter of those two pending FCD Proceedings) operates against the CITIC Plaintiffs' present capacity under this proceeding to ultimately obtain the equitable relief they seek. Of course it is now tedious to repeat that this relief is sought against Mineralogy for many breaches of contract to, in effect, compel the performance of Mineralogy's assistance promises made to them as found in various agreements, including in the MRSLAs and, indeed, within the FCD itself (but as now seen, not in the CPOA).
In illustration again, of the shielding FAD argument of Mineralogy, I point to express term in FCD 4.1(b). It reads in the following terms:
Each Sino Iron and/or Korean will, in relation to the Project, prepare further proposals for submission to the Minister under Clause 6 of the State Agreement as required to further progress and implement the Project. All proposals for submission under the State Agreement will be prepared by Sino Iron and/or Korean and will be subject to the approval of Mineralogy (which shall not be unreasonably withheld). In accordance with the terms of the State Agreement, proposals to be submitted under the State Agreement will be submitted jointly by Mineralogy and Sino Iron and/or Korean. (my emphasis)
Possibly also relevant to the relief as sought in this action is FCD cl 26.1, as regards those certain circumstances under which Mineralogy promises to allow Sino Iron or Korean Steel to increase its MRSLA production quantity limits (see MRSLA cl 3.7 and MRSLA Schedule item 4) by up to 15% - above the yearly production limits as set by the MRSLAs - subject to various matters including complying with the requirements of the West Australian Government.
I also note FCD cl 25.1, as regards collective agreements covered in terms of joint and several obligations as accepted by CITIC Ltd, Sino Iron and Korean Steel with Mineralogy as regards the 'Project Agreements'.
By the SOC, contractual rights from the FDC as regards express contractual promises, or implied terms binding Mineralogy are sought to be enforced by this proceeding can be discerned. See, for instance, SOC par 40 by reference to FCD cl 26.1, then via SOC par 44, in reference to FCD cl 4.1(b).
Those FCD pleas are the basis within the SOC of the as pleaded FCD express approval and submission terms as contended for by the CITIC Plaintiffs against Mineralogy. See also SOC par 45 for the FCD Implied Good Faith Term and SOC par 46 for the FCD Implied Co‑operation term.
For the CITIC Plaintiffs, the as described FCD Express Approval and Submission Terms (see SOC par 44) as regards the providing of assistance, is contended to be required to be given by Mineralogy to Sino Iron and Korean Steel to obtain a government approvals, etc.
The further FCD Implied Co-operation Term manifesting under the amended SOC at par 46, does not look to be developed any further by the SOC.
Likewise, the FCD Implied Good Faith Term does not appear to feature as regards any express contention of a breach by Mineralogy under the SOC.
Conclusion upon FCD plea in the FAD
Again, the strike out question at hand is whether a possible FCD dependency of terms and obligations breach defensive argument by Mineralogy can be ascertained to raise an arguably reasonable defence vis-à-vis the FCD. My assessment is that as currently formulated this result simply cannot be ascertained clearly enough. Mineralogy's FAD leaves all this to an unacceptable state of pure speculation.
My negative conclusion arises out of the oblique way in which the FCD defence in the FAD is currently constructed.
Consequently, I will strike out the present FCD defence pleas in the FAD, as embarrassing.
I will reserve the liberty to Mineralogy to apply for leave to re‑amend the FAD as regards the FCD, essentially by making it a lot clearer why any contended failure by CITIC Ltd to indemnify Mineralogy or Mr Palmer under the FCD, might possibly bear against the FCD's express or implied obligations of good faith, or the co-operation by Mineralogy said to be implied. More particularly, how any of that can bear against the express term FCD obligations of Mineralogy contended for under the SOC par 44, arising out of FCD cl 4.1(b), needs to be made clear.
One of the substantive challenges of the CITIC Plaintiffs raised against the FAD towards the FCD pleas is that within the FCD proceedings neither of Mineralogy and Mr Palmer contend there for any actual breach of the FCD. The CITIC Plaintiffs only plead there that Mineralogy and Mr Palmer merely seek to enforce the FCD indemnification covenant given by CITIC Ltd, by calling upon that indemnity of CITIC Ltd as given under FCD cl 11.5(c). At the literal level, that is correct as regards those proceedings in those two actions. They do not use the terminology of 'breach' of the FCD.
As a matter of substance, however, it is evident that under the FAD FCD plea, CITIC Ltd's express FCD indemnity promises made to Mineralogy and to Mr Palmer are said to be engaged, but not honoured. Whether that is conduct to be correctly characterised as an FCD 'breach', or whether it is only a demand for CITIC Ltd to meet its indemnification obligations under the FCD (which is still on foot and binding as between the parties) is not presently as issue of substance, as I would assess matters here.
The question is whether CITIC Ltd's failure to indemnify under the FCD, is as contended, might conceptually be capable of bearing against Mineralogy's performance of its own promised obligations to CITIC Ltd under the FCD.
I cannot eliminate at this stage as completely untenable conceptually, a future dependency of FCD term argument made by Mineralogy as regards the FCD, if such a defensive plea is better explained.
Consequently, I would not rule out a future amendment by Mineralogy of its FAD under leave, in circumstances where CITIC Ltd has failed to honour its own FCD grounded obligation to Mineralogy made under the same FCD agreement - and which failure to indemnify conduct remains extant by CITIC Ltd.
An amendment by Mineralogy might potentially reveal some more arguable basis to contend that the equitable relief as is now sought against Mineralogy, ought be denied to the CITIC Plaintiffs as a matter of discretion, as regards the court making future orders against Mineralogy to compel its performance of FCD as promised obligations to the CITIC Plaintiffs.
As presently structured, however, the FAD pleas made concerning the FCD dependency of terms shield that is attempted to be raised by Mineralogy lack a sufficient coherence in their formulation to be sustained as a reasonably arguable defence. I strike them out on that basis, as embarrassing.
Conclusions
In the end then, I summarise the outcome position upon the CITIC Plaintiffs' application, as follows:
(a)Leave is granted for the application to be brought out of time.
(b)The SoW pleas in the FAD will not be stayed as an abuse of process.
(c)The SoW pleas in the FAD (as outlined in Schedule 1) concerning MRSLA terms, are struck out as failing to disclose a reasonably arguable defence and leave to replead any future defence by reference to such SoW matters is refused.
(d)The CPOA pleas in the FAD (as outlined in Schedule 1) are struck out as failing to disclose any arguable defence and as embarrassing. However, Mineralogy may seek leave in future to replead by a minute of amendment relating to those CPOA pleas.
(e)The FCD pleas in the FAD (as outlined in Schedule 1) are struck out as embarrassing. However, Mineralogy may seek leave in future to replead by a minute of amendment relating to those FDC pleas.
(f)The SRF pleas in the FAD (as outlined in Schedule 1) may presently remain, but should be revisited following the determination of CIV 2840 of 2018.
(g)There are to be no further amendments to the FAD pleas mentioned in (c) - (f) above, without leave of the court.
By my assessment the CITIC Plaintiffs have been substantially successful upon the present application, save essentially, in relation to the abuse of process attack on the SoW pleas. Prima facie costs should follow that result but with an adjustment to reflect the abuse of processes outcome. I suggest a 25% reduction to take account of that portion of the application which was argued at length, but rejected in the end.
Nevertheless, I will reserve all issues as to costs to allow for possible disputations to follow. Any such applications may be brought in 14 days from the publication of these reasons, if the parties are otherwise unable to agree as to costs orders.
This action is listed for a directions hearing before me on Thursday, 3 September 2020. I will hear from the parties as to appropriate orders to give effect to these reasons then.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DW
Associate to the Honourable Justice Martin1 SEPTEMBER 2020
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