Sino Iron Pty Ltd v Mineralogy Pty Ltd
[2014] WASC 406
•31 OCTOBER 2014
SINO IRON PTY LTD -v- MINERALOGY PTY LTD [2014] WASC 406
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 406 | |
| 31/10/2014 | |||
| Case No: | CIV:2164/2013 | 30 OCTOBER 2014 | |
| Coram: | EDELMAN J | 30/10/14 | |
| 23 | Judgment Part: | 1 of 1 | |
| Result: | Application allowed in part | ||
| B | |||
| PDF Version |
| Parties: | SINO IRON PTY LTD KOREAN STEEL PTY LTD MINERALOGY PTY LTD |
Catchwords: | Practice and procedure Application to make amendments to defence and to introduce counterclaim 9 working days remaining until trial Minor amendments not opposed Other categories of amendments involving serious threat to trial dates or certain vacation of trial dates Potential lengthy delay before the action is heard Background of numerous changes to pleadings by defendant Lack of explanation for why some amendments were brought late Undertakings offered by plaintiffs to ameliorate much of the defendant's prejudice Prejudice to plaintiffs if the trial is vacated All contested parts of the application dismissed |
Legislation: | Rules of the Supreme Court 1971(WA) |
Case References: | Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175 Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296 MTI v SUL (No 3) [2012] WASCA 145 Soia v Bennett [2011] WASC 59 Water Corporation v Cardno Bsd Pty Ltd [2009] WASCA 212 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
KOREAN STEEL PTY LTD
Second Plaintiff
AND
MINERALOGY PTY LTD
Defendant
Catchwords:
Practice and procedure - Application to make amendments to defence and to introduce counterclaim - 9 working days remaining until trial - Minor amendments not opposed - Other categories of amendments involving serious threat to trial dates or certain vacation of trial dates - Potential lengthy delay before the action is heard - Background of numerous changes to pleadings by defendant - Lack of explanation for why some amendments were brought late - Undertakings offered by plaintiffs to ameliorate much of the defendant's prejudice - Prejudice to plaintiffs if the trial is vacated - All contested parts of the application dismissed
Legislation:
Rules of the Supreme Court 1971(WA)
Result:
Application allowed in part
Category: B
Representation:
Counsel:
First Plaintiff : Mr S K Dharmananda SC & Mr S C Wong
Second Plaintiff : Mr S K Dharmananda SC & Mr S C Wong
Defendant : Ms R J Lee
Solicitors:
First Plaintiff : Allens
Second Plaintiff : Allens
Defendant : Michael John Dunham
Cases referred to in judgment:
Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296
MTI v SUL (No 3) [2012] WASCA 145
Soia v Bennett [2011] WASC 59
Water Corporation v Cardno Bsd Pty Ltd [2009] WASCA 212
- EDELMAN J:
Introduction
1 This action was commenced on 26 July 2013 by the plaintiffs who are described in submissions as the Citic parties (a reference to their parent company). The trial of this action is listed to be heard on 12 and 13 November 2014. That is in nine working days' time. There is a related trial listed to be heard on 14 November 2014. The trial dates have been set for more than two months. Any informal discovery and inspection has long been completed. Witness statements from both parties have been filed. Written opening submissions from both parties have been filed.
2 This application is brought by Mineralogy for leave to make radical amendments to its defence and to file a counterclaim. This will be Mineralogy's eighth pleading in just over a year.1 Mineralogy says that consequent upon its amendments the trial dates should be vacated. Mineralogy also seeks to stay the matter. If Mineralogy is successful then the related judicial review application on 14 November 2014 may also need to be vacated. It is not clear whether an additional party to that proceeding was given notice of this application.
3 It is convenient to deal in these reasons with Mineralogy's application to amend because some of the amendments proposed are so substantial that it is common ground that allowing the application would require the trial dates to be vacated.
4 Some of Mineralogy's proposed amendments are not controversial. Those amendments involve matters of law which will not have any substantial effect on the trial. Mineralogy should have leave to make those amendments. However, in all the circumstances of this case, leave is refused in relation to all the remaining proposed amendments.
The Citic parties' case has not substantially changed since July 2013
5 Since one of Mineralogy's submissions relies upon an allegation that the Citic parties have changed their case in their opening submissions before trial, it is necessary to deal with the Citic parties' statement of claim in some detail. The summary which follows is, however, in broad terms. It is not an attempt to deal with the nuances of each contractual provision which will be the subject of argument at trial.
The Citic parties' primary case
6 On 26 July 2013, the Citic parties commenced this action by writ with an indorsed statement of claim. In their pleaded claim, the Citic parties set out the matters which follow below.
7 Mineralogy is the 'proponent' under Ministerial Statement 635, as amended by Ministerial Statement 822, under the Environmental Protection Act 1986 (WA).2
8 Under the Ministerial Statements, the Minister for the Environment granted Mineralogy approval for its proposal for the construction and operation of an iron ore mine, power station, desalination plant, processing plant, accommodation, and port facilities in the Cape Preston area.3
9 The Ministerial Statements included terms that if Mineralogy (as proponent) wishes to relinquish the nomination, it shall apply for a transfer of the proponent and provide information to the Office of the Environmental Protection Authority. The information to be provided is (i) details about the proposed replacement proponent, and (ii) an endorsement by that proposed person that the proposal will be carried out in accordance with the Ministerial Statements.4
10 The relief sought by the Citic parties has always been as follows:5
A declaration that pursuant to clause 20.1 of the Fortescue Coordination Deed, clause 4A and schedule 8 clause 13.1 of the Korean Steel Takeover Deed and clause 7.3(g) of the Sino Iron Takeover Deed, Mineralogy is required to transfer the EPA Approval to Sino Iron and Korean Steel in accordance with condition 3-2 of the Ministerial Statements as outlined at [9] above by:
(i) signing a letter substantially in the form of that provided by CPM with its letter dated 23 November 2012 and lodging it with the Office of the Environmental Protection Authority; and
(ii) lodging with the Office of the Environmental Protection Authority documents substantially in the form of those provided by CPM with its letter dated 23 November 2012.
11 Although the declaration sought by the Citic parties speaks of a transfer of the EPA Approval, this appears to mean a transfer of the 'proponent' of the EPA Approval. No issue was raised about this difference and I will refer interchangeably to the transfer in either manner in these reasons.
12 The Citic parties assert three sources for their claimed right to a declaration that Mineralogy is required to make this transfer. These sources can be described as the three Project Agreements. They are (i) the Sino Iron Takeover Deed; (ii) the Korean Steel Takeover Deed; and (iii) the Fortescue Co-ordination Deed.
13 As to (i) —the Sino Iron Takeover Deed—the Citic parties rely particularly upon an obligation in that Deed (cl 7.3(g)):
The Seller must (at CITIC's request), with effect from Completion (subject only to receipt of any necessary government approvals), assign or otherwise make available to the Company (at the election of the Seller) any benefits available to the Seller under environmental approvals relating to production of 12,000,000 (twelve million) tonnes of concentrate per annum, 7,000,000 (seven million) tonnes of pellets per annum and 1.7 million tonnes of HBI per annum, on the conditions that the Company:
(i) complies with any conditions of those approvals (including relating to Product types and volumes) and indemnifies the Seller for any loss, damage, cost or charge as a result of a failure to do so, such indemnity to survive termination of this agreement for so long as the Company carries on activities under such environmental approvals;
(ii) will give the Seller copies of any studies and environmental reports undertaken by the Company; and
(iii) will forthwith commence development of the Project.
14 The meaning of this clause is of central importance to the trial because, as senior counsel for the Citic parties accepted, the Citic parties must succeed in relation to their submissions concerning construction or operation of this clause in order to succeed at trial. If they succeed in relation to this clause then they say that they will be entitled to a declaration concerning transfer of the EPA Approval irrespective of the meaning of the other Project Agreements.6
15 In broad summary, and without expressing any conclusion on matters of construction (such as the subject matter of the 'election'), cl 7.3(g) involves the following:7
(i) Mineralogy must ... assign or otherwise make available to Citic Pacific Ltd,
(ii) (at the election of Mineralogy),
(iii) any benefits available to Mineralogy under environmental approvals,
(iv) relating to production of 12 mtpa of concentrate, 7 mtpa of pellets, and 1.7 mt of hot-briquetted iron (HBI),
(v) on various conditions.
16 In an amendment in November 2013, the Citic parties pleaded that even if Mineralogy could elect between 'making available' the benefits and 'assigning' the benefits then that election was required to be undertaken reasonably and in good faith, and Mineralogy's failure to transfer the EPA Approval is a breach of this obligation.8
17 As to (ii)—the Korean Steel Takeover Deed—the Citic parties rely on an obligation upon Mineralogy9
(i) to transfer to Sino Iron the 'Environmental Approval' (which they say includes the EPA Approval),
(ii) as that benefit may apply to the Project, and
(iii) in accordance with the Sino Iron Takeover Deed.
18 As to (iii)—the Fortescue Co-ordination Deed—the Citic parties rely on an obligation upon Mineralogy to transfer to the Citic parties the 'Environmental Approval' in accordance with the Sino Iron Takeover Agreement and the Korean Steel Takeover Agreement.10
19 Apart from the November 2013 amendment described above, which was made nearly a year ago, none of these allegations has changed since 26 July 2013.
The Citic parties' alternative cases
20 On 18 September 2013, I held a strategic conference in these proceedings. In light of the manner in which each case was explained by counsel, I suggested that the Citic parties amend their statement of claim to include all alternatives, even if those alternatives might properly be matters for reply. This would avoid the multiplication of pleadings beyond a reply.
21 The Citic parties amended their pleading in November 2013. They pleaded two alternative claims:
(i) if Mineralogy is not obliged to transfer the EPA Approval, then Mineralogy is required to, and has failed to, make available to Sino Iron the benefits of being a proponent of the EPA Approval (see cl 7.3(g) of the Sino Iron Takeover Agreement above);
(ii) alternatively, Mineralogy is required to nominate Sino Iron as the proponent of a proposal under clause 3-2 of the EPA Approval, in circumstances in which there is no prejudice to Mineralogy in nominating Sino Iron as proponent.
Mineralogy's primary defence
22 There have been numerous alterations to Mineralogy's defences over the last year. But, as counsel for Mineralogy submitted this morning, Mineralogy's primary defence has remained constant. That primary defence is that those benefits that it is required to assign or make available under cl 7.3(g) of the Sino Iron Takeover Agreement have been made available.11
23 Mineralogy accepts that the EPA Approval, as it relates to the amount of concentrate, pellets and HBI, is a benefit that it is required to make available to the Citic parties.12 But it says that this benefit does not include being proponent.13
24 None of the proposed amendments by Mineralogy will affect its ability to run this primary defence.
The prejudice to the Citic parties if the trial is vacated
25 The Citic parties relied on evidence of the continuing effect upon them of the failure to be recognised by the Office of the Environmental Protection Authority (OEPA) as the proponent.14 That evidence was not disputed on this application. It includes the following:
(i) Staff of the OEPA will only accept formal submission of documents from the proponent of a pt IV approval and not a third party.15
(ii) The OEPA will only discuss 'significant compliance issues' with representatives of the proponent.16
(iii) Accordingly, each time the Citic parties want to submit a compliance report to the OEPA,17 liaise with the OEPA about amendments to pt IV approvals,18 and manage other environmental aspects of the Sino Iron Project, including applications for the approval of an expanded environmental footprint,19 it must do so through Mineralogy, the proponent.20 This causes delay in the submission of documents to the OEPA.21
(iv) It is more difficult for the Citic parties to liaise directly with the OEPA about compliance issues or proposed applications to amend the pt IV approvals.22 There has been 'a number of times' when the Citic parties have been excluded from meetings with the OEPA.23
The legal principles to be applied to leave to amend
26 Order 21 of the Rules of the Supreme Court 1971 concerns the amendment of pleadings.
27 Order 21 r 3 permits a party to amend a pleading without the leave of the court at any time up to seven weeks prior to the commencement of the trial. Order 21 r 3 was introduced in July 2010. It involved a significant change to the procedure relating to amendments. Although amendments without leave might possibly be disallowed, the effect of O 21 r 3 was, with respect, accurately described by Corboy J as being that the court's supervision over amendments to pleadings is now primarily concerned with the period shortly prior to and at trial.24
28 Even putting to one side the orders that I made requiring Mineralogy to seek leave to amend its pleadings, this case is one where the Rules contemplate the necessary attention of the court.
29 Order 21 r 5 provides that the court may allow the amendment of a pleading, on such terms as to costs or otherwise as may be just and in such manner as the court may direct. The principles concerning whether the amendment should be allowed are not prescribed by O 21 r 5. They involve the exercise of discretion in the interests of justice.
30 The overarching principles concerning amendment of pleadings were considered by the High Court of Australia in Aon Risk Services Australia Limited v Australian National University.25 That was a case which considered the principles in the context of the Court Procedures Rules 2006 (ACT). In the joint judgment of Gummow, Hayne, Crennan, Kiefel and Bell JJ, their Honours said that26
An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend.
31 The principles in Aon were also applied by Beech J, and summarised, in the context of the Rules of the Supreme Court 1971 (WA), in Hightime Investments Pty Ltd v Lungan [No 2]27as follows:
(i) the effect of an amendment on the court and on other litigants is relevant;
(ii) there is no right to amend to introduce an arguable case and it is wrong to say that only in extreme circumstances would a party be shut out from litigating an arguable case;
(iii) justice requires that parties have a proper opportunity to plead their case, but limits may be placed on repleading when delay and cost are taken into account;
(iv) a just resolution does not mean that a party will always be permitted to raise any arguable case at any point in the proceedings, on payment of costs, even indemnity costs;
(v) the inevitable strains of litigation must be taken into account in weighing the adverse consequences of delay - this applies to natural persons and other litigants;
(vi) the nature and importance of the amendment to the party amending must be taken into account;
(vii) attention must be given to the extent of the delay, and the costs associated with it, the prejudice which might reasonably be assumed to follow from it and any prejudice that is shown;
(viii) the point in the litigation relative to the trial may be an important consideration;
(ix) where a discretion is sought to be exercised in favour of a party, an explanation will be called for; and
(x) the point can be reached where a party has had a sufficient opportunity to put its case.
32 To these ten points, the following matters of particular context in the Rules of the Supreme Court may be added:
(xi) Order 1 r 4A provides that a goal of the Supreme Court practice and procedure is the elimination of delay;
(xii) Order 1 r 4B provides for the principles of case flow management including (a) the just determination of litigation, as well as the following (which are, in any event, aspects of (a)): the efficient disposition of the Court's business, the efficient use of judicial resources, the timely disposal of business, and proportionality.
Mineralogy's arguments for leave to amend
33 Mineralogy's application to amend is in the form of a minute of proposed third further re-amended defence and counterclaim. Mineralogy proposes substantial amendments to its defence as well as the introduction of a counterclaim. I will describe this as its application to file an eighth pleading.
34 Mineralogy requires leave to amend its pleading for two reasons. The first, as I have explained above, is that the matter arises fewer than seven weeks before trial. In any event, the second reason is that, on 20 March 2014, I ordered that Mineralogy be prohibited from making any further amendments without leave. This order was made without opposition from Mineralogy's senior counsel in a related matter, or from counsel in this matter, after Mineralogy following one of a series of significant changes of position by Mineralogy in this and related matters.28 I will say more about Mineralogy's changes of position later in these reasons.
35 The proposed eighth pleading was filed on 21 October 2014. It appears to have been prepared rather rapidly. The numbering of paragraphs is incorrect and inconsistent in places. On two occasions29 the proposed eighth pleading says that particulars of the pleading will be provided after discovery (which has been completed). Counsel for Mineralogy also accepted in oral submissions that particulars were missing from par 22A.30 There was also confusion, discussed late in these reasons, about important dates in par 22E.
36 The amendments in Mineralogy's proposed eighth pleading were helpfully divided into three categories by the Citic parties. Those categories are as follows:
(i) Category 1: Paragraphs that raise no new factual issues (22A(a), 22A(b), 24(iv), 25A(a), 25A(b)).
(ii) Category 2: Paragraphs that raise new arguments that could easily have been raised before and which will require further factual investigation jeopardising trial dates (18B, 18C, 22A(c), 22A(d), 25A(c), 25A(d)).
(iii) Category 3: Paragraphs that raise radical new factual matters that significantly expand the nature and scope of the dispute (6A, 6B, 14A - 14L, including the misnumbered 14E and 14F, 22A - 22H, 24(v), 25B - 25I, 30 - 31).
The category 1 amendments: No new factual issues
37 As to category 1, these paragraphs raise no new factual issues. In part they are based on evidence that both the counsel and solicitor for Mineralogy had thought that it was common ground that Mineralogy was entitled to elect between assigning the EPA Approval or making the benefits of the approval available to the Citic parties (see cl 7.3(g) the Sino Iron Takeover Agreement set out above).31
38 The counsel and solicitor for Mineralogy effectively submit that they were caught by surprise to find from the October 2014 written submissions for trial of the Citic parties that this was not the position of the Citic parties. Their alleged surprise was to discover that the Citic parties would submit that the election had already been made by Mineralogy's agreement to various clauses in the Korean Steel Takeover Agreement.32
39 The Citic parties do not oppose the introduction of these amendments. They will not threaten the trial dates. They will not require any further discovery. And my assessment is that they will not add to the length of trial.
40 The amendments in category 1 should be allowed.
The category 2 amendments: new factual issues
The nature of any election by Mineralogy
41 As to category 2, the amendments in this category raise two broad issues.
42 The first issue, in the manner it is drafted, appears to be a pleading concerning the manner in which Mineralogy elected to make available the benefits under the EPA Approval relating to production, described as 'Production Benefits' (which are production of 12 mtpa of concentrate and 7 mtpa of pellets).33
43 As to this first issue, Mineralogy proposes pleading that it made available these Production Benefits of the EPA Approval by approving the proposals of Sino Iron under cl 3 of the 2001 Facilities Deeds (pleaded at pars 6A and 6B) and becoming the proponent of the proposals under cl 6, sch 1 of the Iron Ore Processing (Mineralogy Pty Ltd) Agreement Act 2002 (WA), or alternatively, when Sino Iron commenced construction of processing facilities and other facilities relating to the Production Benefits.
44 An inference can be drawn from the affidavit filed in support of Mineralogy's application that, in part, the reason for Mineralogy's failure to plead these matters was its failure to appreciate the Citic parties' case concerning election. Mineralogy's evidence is that neither its counsel nor its solicitor appreciated the nature of the Citic parties' case concerning election until 9 October 2014 when they received the written submissions from the Citic parties for the trial.
45 Since November 2013, at the latest, the primary case for the Citic parties has been clear on the point of election. The primary case for the Citic parties is that Mineralogy cannot elect to make available the benefit of the EPA Approval. Mineralogy is required to transfer it.34
46 The Citic parties' alternative case on election is less clear from the pleadings. The position of the Citic parties on this point, as is now clear from the written submissions from the Citic parties and oral submissions from their senior counsel this morning, is that Mineralogy's election occurred by its entry into, and its agreement to various terms in, the Korean Steel Takeover Agreement and Fortescue Coordination Deed.35 The Citic parties say that this election by Mineralogy required it to transfer the entirety of the EPA Approval.
47 If the alternative case for the Citic parties falls to be considered then one legal question will be the relevant benefits that are required to be provided at the election of Mineralogy in cl 7.3(g) of the Sino Iron Takeover Agreement and whether Mineralogy made that election by its entry into the two Project Agreements pleaded. Mineralogy can make submissions on this point at trial, including alternative constructions about the meaning of 'at the election of Mineralogy' and the meaning of the benefits concerned.
48 It is, for example, open to Mineralogy to submit that, as a matter of law, the provision of the relevant benefits 'at the election of Mineralogy' is concerned with Mineralogy's decision to make Production Benefits available by doing things described above (such as approving the proposals of Sino Iron and becoming the proponent or, alternatively, commencing construction of processing facilities).
49 Mineralogy's proposed amendments on this point go further than just raising this question of law. Mineralogy seeks to introduce factual issues concerning whether, as a matter of fact, it did make an election by doing these things.
50 It is difficult to understand why Mineralogy considers that it needs to introduce these additional factual questions. If Mineralogy is correct as a matter of law (so that Mineralogy's election was not concerned with the transfer of the entire EPA Approval), then it is difficult to see how these additional factual matters could advance Mineralogy's case in opposition to the proposed declaration that Mineralogy is required to transfer the EPA Approval.
51 In oral submissions, counsel for Mineralogy said that the proposed pleading was concerned with other factual issues involving whether the benefits (excluding the transfer of the EPA Approval) had actually been made available.36 This is not apparent from the terms of the relevant paragraphs which are expressed as involving an election.37At the very least, the proposed amendment would have to be re-expressed.
52 Mineralogy also submitted that the proposed amendments in this category responded to the Citic parties' alternative pleading for relief. That alternative pleading alleges that the declaration can be made even if Mineralogy is not required to transfer the EPA Approval.38 It is, again, necessary to see how Mineralogy's proposed paragraphs concerning election could be responsive to this issue.
53 The alternative pleading of the Citic parties seeks to support the declaration on the basis that even if Mineralogy is not obliged to transfer the EPA Approval, it is required to make available to Mineralogy the benefits of being a proponent (and has not done so),39 or it is required to nominate Sino Iron as a proponent.40 It may be that these two alternatives, if successful, would require a declaration to be expressed in different terms from those claimed. But, irrespective of this, Mineralogy's proposed pleaded paragraphs concerning election are not responsive to this issue.
54 For these reasons alone, concerning the lack of clarity about the effect of these proposed amendments and the unclear relevance of them, I would refuse leave to amend in relation to the paragraphs concerning this election issue.
55 In any event, there is another reason why, in all the circumstances, I would refuse leave to allow this amendment. This independent reason is the circumstances in which the amendment is sought, even taking into account Mineralogy's evidence concerning its lack of appreciation of the case which is run by the Citic parties on election. Those circumstances include that
(i) the amendments have been proposed in very close proximity to trial,
(ii) against a background of numerous previous amendments by Mineralogy (which I consider below), and
(iii) in circumstances in which the Citic parties' primary case that no election was required and that the relevant benefits of the EPA Approval had not been provided, did not prevent Mineralogy from raising this point about election at any time after November 2013.
56 In addition,
(iv) I accept the submission by senior counsel for the Citic parties that by Mineralogy raising this point now, there will be potential for loss of the trial dates.41
57 As to (iv), the trial dates could be lost because this issue, assuming it to be relevant, would require the Citic parties to investigate whether there is any subsequent conduct by Mineralogy which is inconsistent with such an election so that it involved a revocation of the election.42 This would potentially involve consideration of documents and correspondence over a period of up to two years.
58 Leave is refused for the proposed amendments in pars 22A(c) and 25A(c).
The limitation issue
59 The second broad issue raised by the amendments in Category 2 is an allegation that the relief sought by the Citic parties is time-barred under the Sino Iron Takeover Agreement (pars 18B, 18C, 22A(d), 25A(d)).
60 The proposed pleading of time-bar relies upon cl 18.3 of the Sino Iron Takeover Agreement. This is the first time this point has been raised. It was not raised in any of the many previous iterations of Mineralogy's pleadings. It was not raised on the numerous occasions when the Citic parties requested a transfer of the EPA Approval.
61 The Sino Iron Takeover Agreement contains only 19 clauses and 30 pages (excluding the schedule). Clause 18.3 of the Sino Iron Takeover Agreement is entitled 'Time limits'. It is one of only three sub-clauses in cl 18 which clause is entitled 'Claims'. It is replicated in near identical terms in the Korean Steel Takeover Agreement. It provides as follows:
18.3 Time limits
(a) The Purchaser cannot make any claims under or in connection with this document (including for breach of any provision, of any of the Seller Warranties or of any covenant, or for indemnity or for misrepresentation, negligent or not), and the liability of the Seller for such a claim is absolutely barred, unless within:
(i) 7 years after Completion in the case of any Tax Warranties or a claim under clause 6; or
(ii) 5 years after Completion in the case of any other claims,
the Purchaser gives to the Seller prompt notice of the Purchaser's intention to make the claim specifying in detail the matter which gives rise to the claim, the nature of the claim, the amount claimed, and how the amount is calculated; and legal proceedings for the claim have been properly issued and validly served upon the Seller within 12 months from the date on which the Purchaser became aware of the matter giving rise to the claim.
(b) This clause operates to the fullest extent permitted by law.
63 The legal issue that Mineralogy seeks to raise is clear but the answer is not straight-forward. It would involve consideration of the meaning of cl 18.3 including whether a declaration is a 'claim under or in connection with' the Sino Iron Takeover Agreement. That consideration would involve the context of the remainder of the sub-clause including the inclusive examples given in brackets and the references to 'liability'.
64 The limitation issue would also involve consideration of the context of this provision in the Sino Iron Takeover Agreement and (on one view, requiring ambiguity to be present) the surrounding circumstances. A consideration of the surrounding circumstances may not be a simple exercise in light of the size and nature of the multi-billion dollar project, and the number of contracts involved between the parties.
65 Further, this limitation issue would not merely be an issue of law. The Citic parties say that they would need to investigate possible defences including estoppel and waiver of Mineralogy's right to rely on the limitation provision. They point, for example, to the near-identical limitation clause in the Korean Steel Takeover Agreement that was entered into on 1 November 2007, a year and seven months after the Sino Iron Takeover Agreement. Was there any correspondence prior to the Korean Steel Takeover Agreement between the parties concerning their understanding of the near-identical cl 18.3 of the Sino Iron Takeover Agreement? Was there any other conduct from which inferences concerning estoppel and waiver could be drawn in the context of all the agreements between the parties and all the litigation between the parties?
66 Even apart from the need for the Citic parties to investigate these issues, no orders for discovery have been made, and no discovery even given, on this issue. My assessment is that it is an understatement by senior counsel for the Citic parties to suggest that the grant of leave for Mineralogy to introduce this limitation issue would jeopardise trial dates. Trial dates would be in severe peril and would, in all likelihood, be lost.
67 In all the circumstances, and particularly having regard to (i) the legal issue involved in relation to this limitation point, (ii) the delay in raising it, (iii) the timing of when it was raised, (iv) the lack of any substantial explanation for the delay, and (v) the possible effect on the forthcoming trial, I consider that the proper exercise of discretion to be a refusal of leave to Mineralogy to make these amendments.
68 Leave to amend in terms of the proposed eighth pleading is refused in relation to paragraphs pars 18B, 18C, 22A(d), and 25A(d).
Category three amendments: the alleged termination of Project Agreements
69 The category three amendments are the most radical. The essence of these amendments raise the issue of whether other transaction documents between the parties (Mining Right and Site Lease Agreements or MRSLAs, and a China Project Option Agreement, or CPOA) have terminated. If so, then Mineralogy says that the Fortescue Coordination Deed will have terminated. If so, then Mineralogy says that any accrued right that the Citic parties have to the transfer of the EPA Approval will have come to an end. Mineralogy also seeks leave to bring a counterclaim for declarations that the MRSLAs, the CPOA, and the Fortescue Coordination Deed have terminated.
70 There is no dispute that if Mineralogy is given leave to make these amendments the trial dates will need to be vacated, potentially for a lengthy period of time. Counsel for Mineralogy accepted that if Mineralogy is correct, that period of time could be more than a year, and could potentially be years.44
71 There are three reasons why, in my discretion, the application to amend in relation to the paragraphs in the proposed eighth pleading must be dismissed.
72 First, to allow the application would cause the dates set down for trial to be vacated, and no trial to be listed for months and even possibly (on Mineralogy's argument) years. This is in a context where the matter is otherwise ready for trial in nine working days' time. In Water Corporation v Cardno Bsd Pty Ltd,45 the Court of Appeal said the following:
As with any other application to amend a pleading, where an application is made late in the day and requires that dates set down for trial be vacated, the applicant bears a heavy burden to show why leave should be granted. In such a case the public interest in the timely and efficient resolution of legal proceedings and the effective use of court resources is also a relevant consideration
73 Secondly,the principal reason advanced by Mineralogy for why the amendment should be allowed, and the trial adjourned, is that its rights may be defeated. Mineralogy relies on a statement by the Court of Appeal in MTI v SUL (No 3)46that 'it is seldom that an appellate court will review [a decision to grant or refuse an adjournment]. Usually, it is necessary to show that the refusal of an adjournment defeats the rights of the parties or a party'.
74 If Mineralogy is successful at trial in its construction arguments then its rights will not be defeated. But Mineralogy says that if it is unsuccessful on these points then its rights might be defeated unless the proposed amendment is allowed. Mineralogy says that its rights will be defeated if the following occurs:
(i) if it is ultimately unsuccessful after the trial of this matter and any appeals;
(ii) if, in other proceedings, after all appeals are exhausted, it ultimately establishes that the MRSLAs or the CPOA have terminated;
(iii) if the termination of the MRSLAs or China Project Option Agreement leads to the termination of the Fortescue Co-ordination Deed; and
(iv) if any accrued right to the transfer of the proponent under the three Project Agreements comes to an end by the termination of the MRSLAs.
75 It can immediately be seen that the possible defeat of Mineralogy's rights is highly speculative, very contingent, and dependent upon matters that might not arise for years. But, even if these matters occur, an undertaking proffered by the Citic parties substantially removes the remaining, contingent, effect on Mineralogy's rights.
76 Shortly before the hearing of this application, my associate emailed the parties indicating that I wished to hear oral submissions on the following question:
Whether, if
(i) it is held (finally, after all appeals are exhausted) in [these proceedings] CIV 2164 of 2013 that the Citic parties are entitled to a transfer of the EPA Approval, and
(ii) after such a transfer occurs, in other proceedings it is held (finally, after all appeals are exhausted) that all relevant project agreements have been terminated and 'the Citic parties are no longer able to produce ore [and] have no need of either being the proponent or having the benefits of the Ministerial Statement 635 available to them' (Mineralogy's submissions [11])
then either (a) Mineralogy would be entitled (by any express or implied term in any project agreement) or by principle of general law, or by term of the declaration sought, to a re-transfer of the EPA Approval, or (b) an undertaking to that effect would be given by the Citic parties.
The CITIC Parties undertake that they will (unless restrained by lawful order) apply for a re-transfer of the EPA Approval to Mineralogy if the Supreme Court holds (finally, after all appeals are exhausted) that:
1 each of the Mining Right and Site Lease Agreements, the Fortescue Coordination Deed and the Facilities Deed have been terminated on the basis of the termination notices issued by Mineralogy that are extant at the date of this undertaking, being those issued on 12 and 18 September 2014 and 22 September and 1 October 2014; and
2 the CITIC Parties are no longer able to produce ore and have no need of either being the proponent or having the benefits of the Ministerial Statement 635 available to them.
78 This undertaking was crafted as a response to the matters of prejudice asserted by Mineralogy in its submissions. In other words, even if all the contingent events ((i) to (iv) above) occurred as described above, and as a result of the court proceedings to which Mineralogy referred in its submissions, then the Citic parties would, unless lawfully restrained, propose a re-transfer of the EPA Approval to Mineralogy.
79 Counsel for Mineralogy submitted that there was still some residual prejudice. She submitted that there could be no right to any re-transfer, nor any utility in an undertaking, because the ultimate decision about whether to re-appoint Mineralogy as proponent is a matter for the Minister for the Environment. Counsel pointed to the terms of Ministerial Statement 635 which provides as follows:
3 Proponent Nomination and Contact Details
3-1 The proponent for the time being nominated by the Minister for the Environment under section 38(6) or (7) of the Environmental Protection Act 1986 is responsible for the implementation of the proposal until such time as the Minister for the Environment has exercised the Minister's power under section 38(7) of the Act to revoke the nomination of that proponent and nominate another person as the proponent for the proposal.
3-2 If the proponent wishes to relinquish the nomination, the proponent shall apply for the transfer of proponent and provide a letter with a copy of this statement endorsed by the proposed replacement proponent that the proposal will be carried out in accordance with this statement. Contact details and appropriate documentation on the capability of the proposed replacement proponent to carry out the proposal shall also be provided.
3-3 The nominated proponent shall notify the Department of Environmental Protection of any change of contact name and address within 60 days of such change.
81 It is not necessary finally to decide this point for the purposes of this interlocutory application. It is sufficient to say that even if Mineralogy's construction is correct, the undertaking proffered by the Citic parties leaves only the possibility of prejudice if the Minister refuses to allow a re-transfer. Counsel was unable to give any hypothetical example of a circumstance where the Minister would not have exercised power to cancel Mineralogy's status as proponent (assuming that Mineralogy stayed as proponent) but would refuse consent to a re-transfer. Counsel's submission, which can be accepted, was simply that once something has been taken away, it may well be harder to get it back. But this is only an insubstantial, hypothetical, prejudice based upon contingent events.
82 Thirdly,another factor that militates against allowing these amendments and vacating the trial dates is that amendments to the same effect as those now sought (ie based on termination of the CPOA and MRSLAs) could have been made at any time. Indeed, amendments to that effect were made previously. The effect of amendments of this nature is a matter that has undoubtedly been considered carefully by Mineralogy, for many months, with numerous changes of mind.
83 As to the allegations that the CPOA has terminated, a pleading to that effect was made in Mineralogy's Defence on 22 August 2013.47 That plea was revoked on 25 September 2013.48 In an email to the court on 25 November 2013 the solicitors for the Citic parties were told that the plea would be made again.49 But it was not made in Mineralogy's pleading on 22 December 2013.50 But it was made again on 21 January 2014.51 It was revoked again on 17 April 2014.52
84 In summary, for various different reasons and in pleadings or correspondence over the last year, Mineralogy made the claim that the CPOA was terminated, revoked it, made it, revoked it, made it, and then revoked it again. Now it wants to make it again.
85 Counsel for Mineralogy submitted that the reason that Mineralogy wanted to make the claim again was due to matters that have only arisen very recently. But the proposed eighth pleading relies on matters in the period between September 2012 and October 2014.53 Initially counsel for Mineralogy submitted that these dates in her eighth proposed pleading were incorrect. But eventually her position was that the dates were correct but that the emphasis would be on the latter months.54 Even if recent matters have given rise to the points of emphasis, the issue is hardly a new one.
86 As to the allegation that the MRSLAs have terminated, Mineralogy had made that allegation in an email as early as 25 November 2013 (for different reasons),55 then revoked it,56 then made it again,57 then revoked it.58 And now it wants to make it again.
87 Mineralogy says that the reasons why it wants to make this claim again in relation to the MRSLAs is new. Counsel for Mineralogy relies on termination notices that Mineralogy issued on 12 September 2014. But those termination notices rely on breaches alleged to have been continuing from 12 July 2012.59 Counsel for Mineralogy accepted that the 12 September 2014 termination notice could have been issued at any stage after 12 July 2012 subject to any good faith requirements.60 Counsel for Mineralogy was unable to point to any evidence concerning why this termination notice was not issued for more than two years, only submitting that it was now 'time' that the termination notices were issued. The timing of that decision is unfortunate.
Conclusion
88 Apart from the amendments which were not in dispute, Mineralogy's application to amend in the terms of its proposed eighth pleading is refused.
89 If I had not decided after the hearing to refuse the application then it may also have been necessary to call for submissions from a third party in a related hearing which is to be heard immediately after the trial in this matter. That related hearing is an application for judicial review that concerns issues that may overlap with the issues in this trial and hence may have required the dates for the judicial review application to be vacated if the trial dates were vacated. The other party in the judicial review application (the Chief Executive Officer of the Department of Environmental Protection) was not represented at this application and may not even have been given notice of this application.
1 Defence (22 August 2013), Amended Defence (25 September 2013), Amended Defence to Amended Statement of Claim (18 October 2013), Re-amended Defence (31 October 2013), Further Re-amended Defence (22 December 2013), Further Re-amended Defence (21 January 2014), Second Further Re-amended Defence (17 April 2014).
2 Statement of claim, 26 July 2013, [7].
3 Statement of claim, 26 July 2013, [8].
4 Statement of claim, 26 July 2013, [9].
5 Statement of claim, 26 July 2013, [29].
6 ts 83 (30 October 2014).
7 Statement of claim, 26 July 2013, [17] - [18].
8 Further amended statement of claim, 5 November 2013, [18A].
9 Statement of claim, 26 July 2013, [21], [22].
10 Statement of claim, 26 July 2013, [24(b)].
11 ts 47 (30 October 2014).
12 ts 45 (30 October 2014).
13 ts 46 (30 October 2014).
14 Affidavit of Mr Watson sworn 27 June 2014.
15 Affidavit of Mr Watson sworn 27 June 2014 [38].
16 Affidavit of Mr Watson sworn 27 June 2014 [38].
17 Affidavit of Mr Watson sworn 27 June 2014 [39].
18 Affidavit of Mr Watson sworn 27 June 2014 [40] - [46].
19 Affidavit of Mr Watson sworn 27 June 2014 [47] - [60].
20 Affidavit of Mr Watson sworn 27 June 2014 [37].
21 Affidavit of Mr Watson sworn 27 June 2014 [39].
22 Affidavit of Mr Watson sworn 27 June 2014 [61].
23 Affidavit of Mr Watson sworn 27 June 2014 [63].
24 See also Soia v Bennett [2011] WASC 59 [53] - [54] (Corboy J).
25Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175.
26Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175, 217 [111].
27Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296 [52].
28 Affidavit of Mr McKenna, sworn 24 October 2014, MTM 16, pages 130, 140.
29 Minute of proposed third further re-amended defence and counterclaim [14C(a)], [14C(c)].
30 ts 72 (30 October 2014).
31 Affidavit of Mr Dunham, sworn 21 October 2014, MJD 1, page 7 -8.
32 Mineralogy's submissions, 23 October 2014, [21(b)].
33 Minute of proposed third further re-amended defence and counterclaim [22A(c)], [25A(c)].
34 Further amended statement of claim [18A].
35 ts 86 (30 October 2014).
36 ts 96 (30 October 2014).
37 Minute of proposed third further re-amended defence and counterclaim [22A(c)], [25A(c)].
38 Further amended statement of claim [27A], [27B]. See ts 99 (30 October 2014).
39 Further amended statement of claim [27A].
40 Further amended statement of claim [27B].
41 ts 87 (30 October 2014).
42 ts 91 (30 October 2014).
43 Affidavit of Mr Dunham, sworn 21 October 2014 [10].
44 ts 58 (30 October 2014).
45Water Corporation v Cardno Bsd Pty Ltd [2009] WASCA 212 [21].
46MTI v SUL (No 3) [2012] WASCA 145 [38].
47 Mineralogy's Defence (22 August 2013) [21] - [22].
48 Mineralogy's Amended Defence (25 September 2013) [21] - [22].
49Affidavit of Mr McKenna, sworn 24 October 2014, MTM 6, page 72.
50 Mineralogy's Further re-amended Defence (22 December 2013).
51 Mineralogy's Further re-amended Defence (21 January 2014) [40] - [49].
52 Mineralogy's Second Further re-amended Defence (17 April 2014) [40] - [49].
53 Minute of proposed third further re-amended defence and counterclaim [22E].
54 ts 105 - 106 (30 October 2014).
55 Affidavit of Mr McKenna, sworn 24 October 2014, MTM 6, page 72.
56 Mineralogy's Further re-amended Defence (22 December 2013).
57 Mineralogy's Further re-amended Defence (21 January 2014) [30] - [39].
58 Mineralogy's Second Further re-amended Defence (17 April 2014) [30] - [39].
59 Minute of proposed third further re-amended defence and counterclaim [14C] - [14E].
60 ts 56 (30 October 2014).
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