Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 10] - [2025] WASC 130

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   SINO IRON PTY LTD -v- MINERALOGY PTY LTD [No 10] [2025] WASC 130
CORAM:   LUNDBERG J
HEARD:   16 APRIL 2025
DELIVERED          :   18 APRIL 2025
PUBLISHED           :   22 APRIL 2025
FILE NO/S:   CIV 2336 of 2023
BETWEEN:   SINO IRON PTY LTD
First Plaintiff
KOREAN STEEL PTY LTD
Second Plaintiff
CITIC LIMITED
Third Plaintiff
AND
MINERALOGY PTY LTD
First Defendant
STATE OF WESTERN AUSTRALIA
Second Defendant

Catchwords:

Practice and procedure - Application by Mineralogy for leave to amend defence and add a substantial monetary counterclaim - Late application brought in close proximity to trial - Whether explanation for late application justified - Strength of proposed defences and claims considered - Consideration of prejudice including necessity to vacate the listed trial - Amendments refused - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 1 r 4A, O 1 r 4B, O 21 r 5

Result:

Application for leave to amend defence and add counterclaim dismissed

Category: B

Representation:

Counsel:

First Plaintiff	:	N C Hutley SC, L A Warnick SC, J H Kirkwood SC, T B Maxwell, Dr S Hartford-Davis & R O'Brien
Second Plaintiff	:	N C Hutley SC, L A Warnick SC, J H Kirkwood SC, T B Maxwell, Dr S Hartford-Davis & R O'Brien
Third Plaintiff	:	N C Hutley SC, L A Warnick SC, J H Kirkwood SC, T B Maxwell, Dr S Hartford-Davis & R O'Brien
First Defendant	:	P J Dunning KC, Dr C Ward SC, M Karam, T March, H Cooper & D Fawcett
Second Defendant	:	No appearance

Solicitors:

First Plaintiff	:	Herbert Smith Freehills
Second Plaintiff	:	Herbert Smith Freehills
Third Plaintiff	:	Herbert Smith Freehills
First Defendant	:	Robinson Nielsen Legal
Second Defendant	:	State Solicitor's Office

Case(s) referred to in decision(s):

Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82
DFD Rhodes Pty Ltd v Hancock Prospecting Pty Ltd [2022] WASCA 97
English v Vantage Holdings Group Pty Ltd [2021] WASCA 47
Fairfield Pastoral Holdings as the trustee of the Piney Ridge Trust v Van Niekerk [2025] FCAFC 25
Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296
Mann v Bankwest - A Division of Commonwealth Bank of Australia [2020] WASCA 35
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2013] WASC 194
Nyoni v Patterson [2012] WASCA 171
UBS AG v Tyne [2018] HCA 45; (2018) 265 CLR 77
Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398

Table of Contents

A. Introduction

B. Prompt determination of this application

C. Relevant principles

D. The application

E. Evidence relied upon by Mineralogy

(1) The evidence relied upon by Mineralogy

(2) Application to cross-examine Mr Palmer

(3) Evidence relied upon by the CITIC Parties

F. An explanation of the catalyst for the amendments

G. An analysis of the proposed pleadings

(1) Unprocessed Magnetite Ore

(2) Utilised Low Grade Material

(3) Annual Extraction Limit

(4) Failure to provide reports, investigations etc.

(5) Inefficient Mine Plan

H. Consideration

(1) The new allegations are not relevant on the current pleadings

(2) The allegations are raised very late in the day

(3) The explanation for the delay is extremely weak

(4) The new claims are contractually weak

(5) The allegations would require months to prepare for trial

(6) The grant of leave would occasion prejudice to the plaintiffs

I. Disposition

J. Conclusion and orders

LUNDBERG J:

A. Introduction

These reasons concern a contested interlocutory application in the 2023 MCP Proceeding which has been filed by the first defendant (Mineralogy) in the 'home stretch' before the trial, and which has produced a large volume of material for consideration by the Court.[1] That trial is due to commence on Monday, 28 April 2025. The trial dates were set by the orders of the Court made on 11 September 2024.
[1] I will generally use the definitions employed in previous interlocutory decisions of the Court in this action.
The issues raised by the application are quintessentially procedural in nature, but have serious implications for the running of the trial of this action.
The application was filed on 25 March 2025,[2] seeking leave to amend Mineralogy's defence and to add a counterclaim to the action. The application is opposed by the CITIC Parties. The State of Western Australia did not seek to be heard.[3] I will refer to this application as the Second Pleading Application to distinguish it from the earlier pleading application filed by Mineralogy which was heard on 22 January 2025.[4] The Second Pleading Application was heard on 16 April 2025.
[2] Folio 156.
[3] The State is a party to the action but has not taken an active role in the proceedings to date. Nonetheless, the Court specifically communicated with the State's solicitor on 15 April 2025 to ensure it was aware of the nature of the extant applications. The State indicated, in response, that it did not seek to be heard.
[4] See orders made on 3 and 11 February 2025.
The current version of the defence is the Further Amended Defence dated 5 February 2025 (FAD). By the proposed amendments, which are set out in the Minute of First Defendant's Second Further Amended Defence dated 3 April 2025 (Proposed 2FAD),[5] Mineralogy seeks to add further allegations of contractual breach by the CITIC Parties (in proposed pars 1(eB) and 1(eC) of the defence) arising from the manner in which those parties are said to have treated the ore removed from the Sino Iron Project, having regard to the definition of 'Magnetite Ore' in the MRSLAs[6] and the meaning of 'taken' and 'mined', among other aspects of the contractual provisions. Mineralogy also seeks to amend its plea in par 23 of the FAD.
[5] Folio 189.
[6] Mining Right and Site Lease Agreements, for Sino Iron and Korean Steel.
An earlier version of the minute was filed on 25 March 2025.[7] Senior counsel identified the differences between those versions at the hearing on 16 April 2025, including the change in reliance upon cl 11 of the MRSLAs to a reliance upon cl 27(b) of the MRSLAs (see proposed par 1(eB)(ii) of the Proposed 2FAD), and the removal of express references to Mr Palmer's affidavit evidence as particulars to certain of the the new pleas.
[7] Folio 157.
Further, Mineralogy seeks leave to add a counterclaim, built upon the same factual substratum as the amendments to the defence. There are several species of claim therein, but in general terms Mineralogy wishes to advance, in this action, a claim against the plaintiffs for loss and damage of royalty payments in the amount of A$56m and US$556m, together with a claim for loss and damage of the market value of certain ore material in the vicinity of A$5bn. On any view, these are substantial sums of money.

B. Prompt determination of this application

By this action, the CITIC Parties seek orders compelling Mineralogy to submit to the State the '2023 MCPs', being a set of mine continuation proposals for the large-scale magnetite iron ore mine situated near Cape Preston, in the Pilbara.
The proceeding largely seeks non-monetary relief which is said to require a relatively urgent determination. As the case manager of the action, I have proceeded on the basis that the action is reasonably urgent and that there is a real public interest in the ongoing dispute between the parties regarding the submission of new MCPs being resolved as soon as possible.
It was submitted on behalf of Mineralogy at the hearing on 16 April 2025, and resisted by the CITIC Parties, that I should defer final consideration of the present applications until next week. The explanation for this was that the application to adjourn the trial has a connection in some respects to the Second Amendment Application and the Expert Evidence Application, in the sense that an adjournment of the trial on independent grounds may lessen the asserted prejudice relied upon by the CITIC Parties in opposing the present applications.
At the conclusion of the hearing on 16 April 2025 I indicated to the parties that I did not consider it appropriate to defer further consideration of the Second Amendment Application or Mineralogy's application to extend time for filing expert evidence, both of which had been fully argued and the subject of detailed affidavits and submissions.
The view I adopted was that these applications were capable of being determined on their merits at this stage, and it was in the best interests of the orderly management of the action that a determination be made once the Court had affirmatively formed the view that it was in a position to reach that determination. I was particularly concerned to ensure that this action did not 'sleep walk' into an adjournment, in that to delay a decision further may well see the adjournment of the trial become a self-fulfilling prophecy.
As I made clear, that was not a criticism of the parties in any respect, but a reflection on my part on the practical reality that the building weight of interlocutory applications in a pre-trial environment can gather momentum. There is a need for the Court to ensure the parties and their solicitors have the necessary direction as to the pathway of the proceedings and the further steps which must be attended to ahead of trial, which can be left as being too uncertain if interlocutory matters are not resolved promptly.
For the reasons which follow, I dismissed the Second Pleading Application at the conclusion of the hearing on 16 April 2025 and indicated that it would follow from that conclusion that the expert evidence on which Mineralogy sought to rely which is intended to support the amendments to the defence would necessarily be disallowed.
I then made orders on 17 April 2025 concerning the expert evidence, in essence to permit an extension of time to allow Mineralogy to rely on only portions of the expert reports of Mr Turner and of Mr Hartman, and disallowed Mr O'Callaghan's evidence in its entirety. The Court will publish separate reasons concerning those orders.

C. Relevant principles

The Court has a discretion to grant leave to permit amendment of pleadings, including to add a counterclaim. The express power is found in O 21 r 5 Rules of the Supreme Court 1971 (WA) (RSC).[8]
[8] This summary of principles is adapted from my previous reasons in this action and action CIV 2072 of 2021 between substantially the same parties.
The principles concerning whether an amendment should be allowed are not prescribed by O 21 r 5 RSC. Rather, they involve the exercise of discretion in the interests of justice: Mann v Bankwest – A Division of Commonwealth Bank of Australia.[9]
[9] Mann v Bankwest - A Division of Commonwealth Bank of Australia [2020] WASCA 35 [78] (Mitchell, Beech and Vaughan JJA) (Mann v Bankwest).
It is well‑accepted that leave to amend will not be given where the amended pleading is in a form which ought to be struck out.[10] Thus, the court should not give leave to amend a pleading where to do so would leave that pleading susceptible to being struck out pursuant to one of the grounds stated in O 20 r 19(1) RSC.
[10] Nyoni v Patterson [2012] WASCA 171 [38] (Pullin JA, with whom Buss JA (as his Honour then was) and Murphy JA agreed).
Provided a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action (or defence), and apprising the parties of the case that has to be met, the Court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the court to be spent extensively debating the application of technical pleading rules that evolved in, and derive from, a very different case management environment.[11]
[11] Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398 [60(h)] (Smith J), approved on appeal by the Court of Appeal in English v Vantage Holdings Group Pty Ltd [2021] WASCA 47 [56] (Murphy, Mitchell and Vaughan JJA) and also in DFD Rhodes Pty Ltd v Hancock Prospecting Pty Ltd [2022] WASCA 97 [226] (Quinlan CJ, Beech and Vaughan JJA).
Criticisms of the adequacy of a proposed pleading may properly be raised by the opposing party at the leave stage. However, to the extent such criticism is directed to the generality of the pleading, the opposing party ought be mindful of the 'basic function of the pleading' proposition referred to above, and be mindful of the other interlocutory steps which are under way in the proceeding, or which may be deployed by the parties ahead of trial. These other steps assist to apprise a party of the case they need to meet at trial, and minimise the opportunity for surprise.[12]
[12] Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 [5] ‑ [8] (Martin CJ).
None of the foregoing means that the need for a proper pleading can be ignored. The pleading must still fulfil its basic functions. It remains important for a pleading to inform the opposing party of the case it must meet at trial and it will not do so unless it includes every material fact which, if not pleaded, might take an opposing party by surprise. I refer in this regard to, but need not extract, the terms of O 20 r 9(1)(b) RSC.
As to the importance and relevance of case management considerations in determining a pleading amendment application, the applicable principles are those set out in Beech J's decision in Hightime Investments Pty Ltd v Lungan [No 2].[13] His Honour made reference in that decision to the principles expressed by the High Court in Aon Risk Services Australia Ltd v Australian National University.[14]
[13] Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296 (Hightime Investments).
[14] Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 (Aon Risk).
The concluding paragraphs of the joint judgment of the plurality in Aon Risk at [111] ‑ [114] (Gummow, Hayne, Crennan, Kiefel and Bell JJ), contain the following important statement of principle:
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.[15]
[15] Aon Risk [111].
In Hightime Investments, which dealt with pleading amendments, Beech J also made reference to the goals and objects respectively stated in O 1 r 4A and r 4B RSC. The goal in O 1 r 4A and the objects in O 1 r 4B(1) are to be borne in mind when exercising the power to permit amendment to pleadings, and to disallow such amendments.
The relevant passage from Beech J's decision is as follows:
[52]In Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 the High Court made observations about the considerations relevant to the exercise of a discretionary power to allow or refuse amendment to a pleading in the Australian Capital Territory. Notwithstanding some differences in the language of the relevant rules, their Honours' observations are of valuable assistance in Western Australia and have been applied by courts in Western Australia. Those observations include the following:
(a)the effect of an amendment on the court and on other litigants is relevant;
(b)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;
(c)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;
(d)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;
(e)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;
(f)the nature and importance of the amendment to the party amending must be taken into account;
(g)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;
(h)the point in the litigation relative to the trial may be an important consideration;
(i)where a discretion is sought to be exercised in favour of a party, an explanation will be called for;
(j)the point can be reached where a party has had a sufficient opportunity to put its case.
[89] ‑ [103]; [111] ‑ [112].
With particular regard to the goal in O 1 r 4A and the objects in O 1 r 4B(1), the Court of Appeal in Mann v Bankwest further emphasised the following propositions from the High Court's decision in Aon Risk, namely:
(a)that the point may be reached where a party has had a sufficient opportunity to plead his or her case such that it is too late for further amendment so as to do justice to the other party and other litigants;
(b)much depends on the point the litigation has reached relative to the trial; and
(c)it has been recognised that when 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 a relevant consideration.
The foregoing considerations are amplified by the statement of the plurality in the High Court's decision of UBS AG v Tyne[16] that the 'timely, cost effective and efficient conduct of modern civil litigation takes into account wider public interests than those of the parties to the dispute'.[17] The Court continued:
These considerations inform the rejection in Aon of the claimed "right" of a party to amend its pleading at a late stage in the litigation in order to raise an arguable claim. The point is made that a party has a right to bring proceedings but that choices are made respecting what claims are made and how they are framed. Their Honours speak of the just resolution of the dispute in terms of the parties having a sufficient opportunity to identify the issues that they seek to agitate. The respondent's argument in Aon, that the proposed amendment to raise the fresh claim was a necessary amendment to avoid multiple actions, did not avail. As their Honours observe, if reasonable diligence would have led to the bringing of the claim in the existing proceedings, any further proceeding might be met by a stay on Anshun grounds. (footnotes omitted, original emphasis)
[16] UBS AG v Tyne [2018] HCA 45; (2018) 265 CLR 77.
[17] UBS AG v Tyne [38] (Kiefel CJ, Bell and Keane JJ).
The goal and objects in O 1 r 4A and O 1 r 4B(1) RSC, and the principles explained above, cannot be gainsaid. They must be applied in a manner which ensures they are given appropriate effect. I applied the foregoing principles to the resolution of the Second Pleading Application.

D. The application

The application is for leave to file the Proposed 2FAD, on the basis that the issues raised in the amended defence (and any response to those matters from the CITIC Parties) would be required to be determined at the trial of the action.

All parties accepted that a grant of leave to permit the amendments would necessitate a vacation of the listed trial.
There would be undoubted prejudice flowing from such an outcome.
Mineralogy submitted that the counterclaim could be heard separately to the primary trial of the action. The CITIC Parties nonetheless opposed leave to add the counterclaims, submitting that:[18]
Insofar as the counterclaims are concerned, Mineralogy is not ready to proceed upon them and accepts that they cannot be heard at the upcoming trial: DS[7]. Subject to any Anshun defence, Mineralogy is free to pursue those claims for damages in separate proceedings. There is no suggestion that the Plaintiffs lack sufficient financial resources to meet the damages claims. As such, Mineralogy will be fully compensated for the alleged breaches even if the conduct continues following approval of the 2023 MCPs.
[18] PS [48].
I pause to note the reference to the Anshun defence. The CITIC Parties cited the relatively recent decision of the Full Federal Court in this regard, Fairfield Pastoral Holdings as the trustee of the Piney Ridge Trust v Van Niekerk.[19] The proposition accepted by the judge at first instance in that case, effectively endorsed on appeal, was that an Anshun estoppel may be erected not only on the basis of a failure to raise a claim in earlier proceedings, but also upon the lateness in doing so.[20]
[19] Fairfield Pastoral Holdings as the trustee of the Piney Ridge Trust v Van Niekerk [2025] FCAFC 25 [44] (Cheeseman, Goodman and McEvoy JJ) (Fairfield Pastoral).
[20] Fairfield Pastoral [27], [28] and [44] (Cheeseman, Goodman and McEvoy JJ).
The Full Federal Court in Fairfield Pastoral naturally emphasised that the application of the Anshun defence is fact-dependent.
In essence, I proceeded on the basis that the CITIC Parties were laying down a marker of their intention to rely upon an Anshun defence in the future should that be necessary. I should therefore take into account the prospect of there being prejudice to the first defendant by not being permitted to assert the fresh claims in this proceeding, given the prospect of an Anshun defence being asserted in due course. As explained below, I do not consider that prospect outweighs the other matters pointing against the grant of leave.

E. Evidence relied upon by Mineralogy

(1) The evidence relied upon by Mineralogy

Mineralogy relied upon two affidavits sworn by Mr Clive Palmer on 24 March 2025 and 29 March 2025 (the First Palmer Affidavit and the Second Palmer Affidavit).[21] Mr Palmer is, of course, a director of Mineralogy. The First Palmer Affidavit is extensive, running to over 450 pages. The Second Palmer Affidavit is a more modest affair, and seeks to correct and clarify matters deposed to in the earlier affidavit, which he deposes was prepared and sworn in urgent circumstances.
[21] Folio 160 and Folio 177.
Objections were raised by senior counsel for the plaintiffs to Mr Palmer's affidavits, on the basis the affidavits contained argumentative and other objectionable material. The objections were put in broad terms, and I proceeded on the basis that I would not regard any argumentative material in the affidavits as rising any higher than that.
Mineralogy also relied upon two affidavits sworn by Mr Paul Matthew O'Callaghan, on 25 March 2025 and 9 April 2025 (the First O'Callaghan Affidavit and the Second O'Callaghan Affidavit).[22] Mr O'Callaghan is a mining engineer at Xenith Consulting and engaged as an expert for the purposes of this action.
[22] Folio 159 and Folio 199.
By the First O'Callaghan Affidavit, Mineralogy adduced an expert report dated 25 March 2025 which in substance is very brief, containing only an executive summary of a little over one page. The opinions expressed are preliminary at best. Mr O'Callaghan explains that he was instructed to calculate the amount of tonnes of magnetite ore with at least 17% magnetite iron that had been taken and extracted from the pit at the Sino Iron Project since mining operations commenced in 2008 until 31 December 2024. Mr O'Callaghan undertook the analysis using the Geological Resource Block Model provided to him, calculating a total Measured, Indicated and Inferred figure of 542.2 Mt of ore at 22.28% MagFe, 31.75% Fe H and 69.22 Fe C.
The Second O'Callaghan Affidavit attaches the final expert report, explained by the deponent as being in the same terms as the earlier report with the title to the report modified to reflect it is final. Within the body of the affidavit, Mr O'Callaghan deposes that without the Geological Resource Block Model it was not possible to produce an estimate of all the material that had been mined out of the pit for a MagFe grade of greater than 17%.[23] Mr O'Callaghan deposes that the model was first provided to Mineralogy's solicitors on 14 February 2025 with the relevant 'Pit File' delivered on 18 March 2025, and he deposes that it would not have been possible to produce the estimate until after 18 March 2025.[24]
[23] Second O'Callaghan Affidavit [6].
[24] Second O'Callaghan Affidavit [7] - [8].
Finally, Mineralogy relied on the short affidavit sworn by Mr Robinson on 10 April 2025.[25] Ms Robinson is a solicitor for Mineralogy. That affidavit addresses compliance with the confidentiality protocol ordered by the Court, in answer to a point raised by the CITIC Parties. The point was not the subject of any submissions at the hearing and can be put to one side.

(2) Application to cross-examine Mr Palmer

[25] Folio 206.

At the commencement of the hearing on 16 April 2025 there was an application to cross-examine Mr Palmer on his affidavits. The Court has a discretion to permit cross-examination in interlocutory applications but it is a discretion which is exercised sparingly. The Court will permit cross-examination where the interests of justice require it. I declined to grant leave in that regard as explained in the brief oral reasons I gave at the time.
It was accepted by senior counsel for Mineralogy that no issue would be taken to preclude senior counsel for the plaintiffs putting orally by way of address to the Court the matters which he had explained were intended to be put to Mr Palmer in cross-examination.
The intended challenges to Mr Palmer's explanations were duly put by senior counsel for the plaintiffs. Indeed it was strongly submitted, on more than one occasion, and strongly rejected by senior counsel for Mineralogy, that the amendment application was in effect a 'concoction which has been put together as a desperate last act to try and defeat this hearing'.[26] I will address this below.

(3) Evidence relied upon by the CITIC Parties

[26] ts 1756, 1788, 1807, 1815, 1830.

The plaintiffs relied upon the affidavit of Mr David William John sworn on 4 April 2025 (the John Affidavit).[27] Mr John is a solicitor for the plaintiffs. The John Affidavit runs to almost 450 pages.
[27] Folio 193.
The John Affidavit includes evidence as to the following matters:
(a)a procedural history of the action;
(b)the circumstances by which the Second Pleading Application was notified to the plaintiffs by the first defendant's solicitor;
(c)the evidence and further discovery which Mr John assesses would be necessary to respond to the new allegations in the defence;
(d)the evidence and investigations which Mr John assesses would be necessary to respond to the allegations in the counterclaim;
(e)the prejudice to the plaintiffs if the trial were to be vacated; and
(f)the material upon which the plaintiffs rely to show that the allegations in the Proposed 2FAD are not based on new information.
As to the further evidence, discovery and investigations required, Mr John details those matters in two tables at [26] and [27] to the affidavit. I am satisfied those matters represent a fair assessment of the work which would be required in response to the allegations, which would be extensive and time consuming.
At [28] and [29], Mr John deposes that it would take at least 3 months to undertake the investigations and prepare the evidence:
[28]As a consequence, in order to properly consider and respond to the allegations raised in the Proposed Amended Defence and the Counterclaim, the CITIC Parties would be required to:
(a) undertake investigations to determine the factual matters set out above;
(b) identify appropriate lay witnesses for the purpose of giving that evidence and obtain responsive evidence;
(c) with the benefit of such lay witness evidence, determine the appropriate areas of expertise for the required expert evidence (which issue is discussed further below) and identify the facts and assumptions necessary to any brief expert witnesses;
(d) identify appropriate expert witnesses; and
(e) brief those expert witnesses and obtain relevant expert reports.
[29] In my experience, having regard to the complexity of the issues raised and the technical analysis required to be carried out, in the ordinary course of litigation it would likely take at least 3 months to carry out the investigations contemplated above, and to prepare the relevant responsive lay and expert evidence.
Again, I am satisfied these matters represent a fair assessment of the work likely to be required and the time involved. I did not understand Mineralogy to contest these assessments.
Mr John deposes to the potential need for expert evidence to be prepared in relation to the new issues, and the further discovery collation processes which would be required, both from the CITIC Parties' perspective and in terms of discovery being sought from Mineralogy (at [30] to [34]). I pause to observe that extensive time has already been spent by the Court in this action in determining the discovery categories which are appropriate and in supervising disputes arising from asserted (and identified) deficiencies in the discovery process.
Drawing the above matters together, I accept the opinion expressed by Mr John at [34] that the CITIC Parties could not be ready for trial on 28 April 2025 if leave was granted to permit the amendments to the defence. This point was not seriously challenged by Mineralogy.
Mr John deposes at [35] and [36] to the prejudice which the CITIC Parties would likely suffer if the trial was vacated. The prejudice is said to include the impact on the overlap hearing and the trial of CIV 2072 of 2017 set to commence following the primary trial of the 2023 MCP Proceeding.
Mr John deposes to the other material impacts if the trial in these proceedings does not proceed as scheduled, and therefore if any decision in relation to the submission of the 2023 MCPs to the State is further delayed. Mr John draws attention to the matters deposed to by Mr Goodwin in his affidavit sworn on 15 February 2024 in support of the CITIC Parties' expedition application. That evidence included impacts on the ongoing operations of the Project, the State royalty revenues, Mineralogy's royalty revenues, the large workforce supported by the Project, and the capital and operational costs of the Project, shipping and logistics, and reputational damage to the Project and its managers.
Finally, Mr John deposes at [44] to [66] to various factual matters said to demonstrate that the claims in the Proposed 2FAD are 'not based on new information or have not been identified as a consequence of materials recently provided by the CITIC Parties to Mineralogy' (at [44]). I will address these matters below.

F. An explanation of the catalyst for the amendments

I will now turn to provide some context for the amendments, in brief terms. To do this, I will need to briefly address the plaintiff's statement of claim, the statement of Mr Goodwin's evidence which has been filed and which is to be relied on at trial by the plaintiffs, and some of the terms and definitions within the contractual suite of instruments which govern the relationship between these parties and the bargain struck concerning the operation of the Sino Iron Project.
Starting with the statement of claim, there has been considerable recent focus by the parties on [23] of the SOC, which has been unchanged since the pleading was first filed. This paragraph assumed no prominence in the Court's management of the action until recent weeks.
The terms of [23] are as follows:
[23] The Sino Iron Project generates significant volumes of waste, in the form of tailings and waste rock, which are required to be moved and managed.
Particulars
Tailings are a waste product arising from the processing of magnetite ore to produce magnetite concentrate through magnetic separation. Waste rock includes overburden and rock which does not meet the definition of Magnetite Ore, being ore containing 17% or more MagFe. The Plaintiffs estimate that:
(i) of the 2 Bt of magnetite ore which Sino Iron and Korean Steel are contractually entitled to extract, approximately two thirds will be deposited as tailings (i.e. 1.33 Bt) and approximately one third will ultimately comprise magnetite concentrate (i.e. 0.67 Bt); and
(ii) approximately 2.43 Bt (dry) of waste rock will need to be extracted in order to mine the 2 Bt of magnetite ore from the mine pit. (emphasis added)
As the pleadings stand, Mineralogy admits [23] of the SOC, but 'does not admit the accuracy of the plaintiff's estimates in the particulars'.[28]
[28] Further amended Defence dated 5 February 2025 [23].
The statement of Mr Goodwin was served on 23 November 2024. Mineralogy contends there is a disconformity between his proposed evidence and the pleading at SOC [23]. Indeed, the catalyst for the current amendments is said by Mineralogy to emerge from the evidence contained in that statement.
The evidence to be adduced from Mr Goodwin is that CPM (as the manager and operator) has extracted material containing more than 17% magnetite iron (or MagFe), but which has been classified as waste because it was not economic to mine and process.[29]
[29] Goodwin Statement dated 23 November 2024 [160(b)(iii)].
Mr Goodwin's statement distinguishes between, on the one hand, ore which contains 'economically profitable rock' with more than 17% MagFe and, on the other hand, the large quantities of waste which includes the material with more than the requisite MagFe content but which is uneconomic to mine and process.
The requisite MagFe content of the ore is an issue addressed in the contractual instruments.
The definition of 'Magnetite Ore' in the MRSLAs is 'ore mined from the Mine Area and containing a magnetite content of at least 17% magnetite Fe' and 'includes any Low-Grade Material used by Sino [or Korean Steel] to produce Iron Ore Concentrate'.[30] The term 'Low-Grade Material' is defined to mean 'any material mined from the Mine area and which has a magnetite content of less than 17% magnetite Fe'.[31]
[30] MRSLAs, cl 1.1 (emphasis added)
[31] MRSLAs, cl 1.1 (emphasis added).
These definitions find voice in several clauses of the MRSLAs which were traversed in argument, and which I will now extract:
7.OWNERSHIP AND USE OF MAGNETITE ORE TAKEN BY SINO
7.1Ownership of Magnetite Ore
All Magnetite Ore taken by Sino pursuant to the exercise of Sino's Mining Right will be owned by Sino.
7.2Processing of Magnetite Ore
Sino must process all Magnetite Ore taken by Sino from the exercise of Sino's Mining Right into either Iron Ore Concentrates, Pellets or HBI.
…
8.MINERALOGY ROYALTY
8.1Mineralogy Royalty
(a)Sino will pay to Mineralogy a royalty ("Mineralogy Royalty") in respect of Magnetite Ore taken by Sino pursuant to the exercise of its Mining Right.
…
11.LOW GRADE MATERIAL
(a)Sino is not obliged to take Low-Grade Material, but may elect to do so.
(b)If Sino elects to take a quantity of Low Grade Material, then the quantity of Low Grade Material taken by Sino will be treated as Magnetite Ore for the purposes of this Agreement and Sino will pay the Mineralogy Royalty and State Government Royalty accordingly in respect of that material.
Much ink has already been spilt by the Judges of this Court examining these provisions. Importantly, Edelman J, sitting in this Court as his Honour then did, examined the text of the MRSLAs in a case brought by Mineralogy in 2012, being CIV 2338 of 2012. The case initially involved the potential exercise by Mineralogy of the power to terminate the project, but resolved into a dispute as to the interpretation of the provisions of the MRSLAs and when the royalty under cl 8.1 was payable by the relevant plaintiffs.
His Honour delivered comprehensive reasons on the interpretation of the instrument which are found in Mineralogy Pty Ltd v Sino Iron Pty Ltd.[32] To distinguish the decision from the numerous other similarly styled decisions, I will refer to the authority as the 2013 Royalty Decision. The Sino Iron Project, in 2012 and 2013, was in its relative infancy from an operational perspective, although billions had already been spent developing the mine. The factual setting of the dispute was the 'pre-stripping' phase of the mining operations.
[32] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2013] WASC 194.
The 2013 Royalty Decision is relevant to the present amendment application in at least two respects. First, for its potential precedential effect on the meaning of the provisions in the MRSLAs. Second, because it reveals as a matter of fact the history of the issues between these parties and is relied upon by the plaintiffs to attack the contention by Mineralogy that the amendments are fresh issues which have arisen between the parties, which are deserving of leave for inclusion into the present action and which would justify the adjournment (if necessary) of the listed trial.
His Honour's description of the competing constructions and his conclusions, are expressed at [8] to [10] as follows:
[8]Mineralogy's interpretation: The royalty is payable by Sino Iron and Korean Steel when Magnetite Ore comes into Sino Iron or Korean Steel's possession or control by being moved from its natural place of occurrence and either (a) placed on a run of mine stockpile prior to it being loaded into a primary crusher, or (b) moved directly to the primary crusher.
[9] The Defendants' interpretation: The royalty is payable when Magnetite Ore is delivered to Sino Iron and Korean Steel, and taken by them, at their delivery point, being the primary crusher.
[10] For the reasons explained below, the better construction is Mineralogy's. But that construction must be clarified. The royalty becomes payable by either Sino Iron or Korean Steel or by both jointly when the relevant person takes possession or control of Magnetite Ore either by stockpiling for the purposes of possible future processing or future use (as opposed to placing it on the waste piles) or by moving it directly to the primary crusher. It is the duty of Sino Iron or Korean Steel to inform Mineralogy which of them has taken the Magnetite Ore.
As to the factual context, his Honour's reasons record the following:
[25] During the prestripping process it is not always economically feasible to separate prestripping waste from any ore. Consequently, some ore with more than 17% magnetite iron, as well as some with less than 17% magnetite iron, is removed with the waste and sent to the waste stockpiles.
[26] Once productive mining commences there is further 'waste' material which is not suitable for processing. That waste must be removed as the magnetite ore is extracted for processing. This waste material generally comprises rock types which contain no recoverable magnetite.
[27] It is possible to have two separate stockpiles of ore in addition to the waste dump, with one stockpile of ore which contains more than 17% magnetite iron and another stockpile of ore containing less than 17% magnetite iron.
[28] Once stockpiled, the ore is subsequently transported to, and tipped into, the primary crusher without further sampling or sorting.
[29] The ore is then processed, resulting in the desired ore concentrate, and the byproduct of tailings (the nonmagnetic material), which is transported to the tailings storage area. As Mr de Kruijff explained, almost all iron ore is used in blast furnaces to make pig iron, which is the main material for steelmaking.
The mining process at the Mine Site
[30] In 2008, Sino Iron and Korean Steel commenced prestripping operations in accordance with a Project Management Plan under the Mining Act 1978 (WA).
…
[33] In the course of prestripping operations, some quantities of magnetite iron which were suitable for processing were encountered and extracted. Quantities containing more than 17% iron ore were found in the transition zone between the oxidised upper 40 m layer and the ore body where there is not a clear delineation between those zones.
[34] The magnetite ore extracted in the course of prestripping operations was not extracted specifically for the purpose of processing. It was stockpiled in the mine pit to be used for trial production on the first grinding mill line. Approximately 50 tonnes of the material was also used for metallurgical testing in China.

Turning to the contractual provisions, Edelman J summarised the effect of the principal clauses of the MRSLAs and the fundamental question falling for his consideration, as follows:
[142] The combined effect of these clauses means that, for the purposes of the Mineralogy Royalty, Magnetite Ore is: (i) any material with a magnetite content of at least 17% Fe; (ii) any material with a magnetite content of less than 17% Fe which is used by the respective party to produce Iron Ore Concentrates; (iii) any material with a magnetite content of less than 17% Fe which the respective party elects to take. In these reasons, when Magnetite Ore is capitalised (as it is in the 2006 MRSLAs) it is used to mean magnetite ore in any of these categories.
[143] The fundamental question is when Magnetite Ore is 'taken' for the purposes of cl 8.1.
After addressing the competing interpretations, his Honour described the common ground between the parties:
[150] It was common ground between the parties that on any construction not all Magnetite Ore which is mined must be taken. An example of a circumstance in which Magnetite Ore which is mined, but not takenis that described above at [25], in which Magnetite Ore is mined as part of the prestripping process (which falls within the definition of Mining Operations in the MRSLAs), but sent to the waste stockpiles because it is not economic to remove any Magnetite Ore. (original emphasis)
His Honour next address cl 7.1, explaining that it was also common ground that 'magnetite ore is owned by Mineralogy, as the owner of the leases, when the ore is removed from the ground' ([152]). Further, his Honour noted that cl 7.1 provides that title to Magnetite Ore passes to the relevant party to the MRSLA when it is taken by it, and explained that there were six reasons why Sino Iron and Korean Steel 'cannot simply be assumed to have taken jointly any Magnetite Ore which is removed from the ground and stockpiled by CPMM' ([152]).
Edelman J later returned to the example of a circumstance where Magnetite Ore is not 'taken' under the MRSLAs, namely where 'the Magnetite Ore is possessed in order to be moved to a waste pile' (at [161]).
Ultimately his Honour concluded that the terms 'mining' and 'processing' in relation to Magnetite Ore were different from the concept of 'taking' it ([167]) and that 'taking' precedes 'processing' ([168]). His Honour concluded that:
[247] Although the word 'taken' in cl 8.1 is ambiguous, the best interpretation of that word, and the clause, is a construction similar to that proposed by Mineralogy. Clause 8.1 in the 2006 MRSLAs has the effect that a royalty becomes payable by either Sino Iron or Korean Steel or by them jointly when the relevant person takes possession or control of Magnetite Ore, either by stockpiling for the purposes of possible future processing or use (as opposed to placing it on the waste piles) or by moving it directly to the primary crusher.
[248] Neither the natural meaning of 'taken', nor its meaning in the 2006 MRSLAs as a whole, nor its meaning in the 2006 MRSLAs in the context of the previous agreements, supports a construction that the royalty is payable only when Magnetite Ore is 'delivered to Sino Iron and Korean Steel, and taken by them, at their delivery point, being the primary crusher'.
The plaintiffs submit before me that 'taken' must have a corresponding meaning in cl 7.1 of the MRSLAs. Within their submissions, the plaintiffs explain that:
[11]It was established in 2013 that “taken” in cl 8.1 of the MRSLAs requires, in effect, a positive election to take ore to a stockpile for future processing or use, or directly to the primary crusher. “Taken” must have a corresponding meaning in cl 7.2, so material containing at least 17% Mag Fe content is not “taken” if it is not economically recoverable and so is not processed, but sent to waste. Thus, until the CITIC Parties elect, through their mining and planning decisions, to stockpile or crush the relevant material, such material has not been ‘taken’ within the meaning of clauses 7.2 and 8.1.
I will return to this issue later.
For its part, Mineralogy contends that the true implication of the evidence in Mr Goodwin's statement has become apparent to it, and Mr Palmer, only in recent months. This has precipitated a deeper consideration of this issue, including a comparison with Mr Goodwin's previous witness statement in the 2017 MCP Proceeding, and led to the amendments which are now proposed.[33]
[33] DS1 [20] – [22].
Mineralogy now seeks leave to modify its response to [23] of the SOC, and include allegations of breach of the MRSLAs by the plaintiff. At [23] of the Proposed 2FAD, Mineralogy seeks leave to amend the pleading to read:
23. As to paragraph 23, the first defendant:
(a) ~~does not admit~~ denies the ~~accuracy of the plaintiffs’ estimates in~~ the particulars subscribed to paragraph 23;
(aa) says that the plaintiffs designate as waste rock as including “rock containing more than 17% MagFe but is classified as waste because it is not economic to mine and process”;
(b) otherwise admits the allegations therein.
It will be immediately apparent that the proposed plea raises an issue which appears to have formed part of the case, at least at a factual level, before Edelman J in 2013.

G. An analysis of the proposed pleadings

I will now briefly analyse the terms of the Proposed 2FAD. At a broad level, it should be noted that the new alleged breaches are identified to be relied upon, within the defence, as objective matters upon which Mineralogy is entitled to have regard in considering the 2023 MCPs.[34]

(1) Unprocessed Magnetite Ore

[34] Proposed 2FAD [1(h)].

Mineralogy seeks leave to allege in this action that the CITIC Parties have breached cl 7.2 of the MRSLAs by 'taking' approximately 113 Mt of ore containing at least 17% MagFe which has not been processed into Iron Ore Concentrates, referred to in the pleading as the Unprocessed Magnetite Ore.[35]
[35] Proposed 2FAD [1(eB)(i))]. See also the allegation of breach of cl 6.2 found at [1(eB)(vi)] of the Proposed 2FAD which applies to all of the new allegations of breach.
It is thus alleged that Sino Iron and Korean Steel have taken 'Magnetite Ore' and not processed it into 'Iron Ore Concentrates' as required by cl 7.2 of the MRSLAs and thereby breached clause 7.2 of the MRSLAs.
Mineralogy asserts that the obligation in cl 7.2 to process all 'Magnetite Ore' taken by Sino Iron / Korean Steel includes an obligation to process 'Magnetite Ore' which has come into their possession by way of extraction from the mine pit, and they have taken a quantity of 'Magnetite Ore' from the exercise of the Mining Right under cl 3.2 and have not processed it.
Further, Mineralogy seeks leave to allege that the CITIC Parties have not paid royalty on this Unprocessed Magnetite Ore or on the Products which have been 'notionally produced from the Unprocessed Magnetite Ore.[36]
[36] Proposed 2FAD [1(eB)(iv))].
The counterclaims which flow from the above are found at [128] to [135] of the Proposed 2FAD. By reason of the breach of cl 7.2, Mineralogy alleges that it has suffered losses totalling AU$56m and US$556m, comprising the Mineralogy Royalty that would have been paid on the Unprocessed Magnetite Ore.[37] There is an alternative which is pleaded, that Sino Iron and Korean Steel have converted Mineralogy’s goods, with a similar loss claimed, alternatively market value of the unprocessed ore.[38]
[37] Proposed 2FAD [128] and [129].
[38] Proposed 2FAD [134] and [135].
The quantification of the volume of ore is the subject of the expert report of Mr O'Callaghan, which on any view is preliminary in nature. Plainly much more work is needed to responsibly present the allegation at trial, and to allow the plaintiffs an opportunity to respond. The plaintiffs' note that the calculation of the royalty claims is dealt with in the First Palmer Affidavit, yet it is no longer intended for Mr Palmer to be a witness in the proceedings and the particulars have been modified accordingly.
The claim is therefore embryonic at best, at this stage.

(2) Utilised Low Grade Material

The next aspect of the new pleading is the allegation as to the 'use' of ore with less than 17% MagFe content, said to be used by the CITIC Parties for construction of roads and tailings dams and other similar purposes associated with the Sino Iron Project. I will refer to this as the Utilised Low Grade Material.[39]
[39] Proposed 2FAD [1(eB)(ii))].
It is alleged that Sino Iron and Korean Steel have taken and utilised 134 Mt of this 'Low Grade Material', using the definition in the MRSLA, for building tailings storage facility walls and roads. in breach of cl 27(b) of the MRSLAs.
Clause 27(b) strikes me, ex facie, as an unusual clause to rely upon in this respect, being merely an acknowledgement rather than an express covenant. The sub-clause provide that 'Sino hereby acknowledges that Sino will not act or contemplate any act that would adversely affect the interest of Mineralogy in the Project Area or in any property, license or title, to which Mineralogy is the beneficial or legal owner' (emphasis added). In contrast, cl 27(a) sets out express covenants given by Sino Iron to Mineralogy, but that provision is not relied upon in this respect.
There are counterclaims which flow from the allegations, which are substantial in monetary terms. The first claim is for the loss of the market value of the material, pleaded as A$4.9bn.[40] An alternative claim in conversion is then pleaded,[41] followed by an alternative claim of unjust enrichment on a quantum valebat basis.[42]

(3) Annual Extraction Limit

[40] Proposed 2FAD [137] and [138].

[41] Proposed 2FAD [143].

[42] Proposed 2FAD [149].

Mineralogy also seeks leave to allege that Sino Iron and Korean Steel exceeded the 'Annual Extraction Limit' identified in cl 3.7 of the MRSLAs.[43]
[43] Proposed 2FAD [1(eB)(iii))].
There are complex calculations particularised in the new pleading to support the allegation, which I have not mastered but which would plainly require detailed expert evidence to support. The expert report of Mr O'Callaghan is particularised in the pleading, but does not on its face contain material which justifies the plea. As I say, I apprehend that far more work and material is required to develop the allegations at a trial.

(4) Failure to provide reports, investigations etc.

Next, there is a proposed allegation that Mineralogy seeks leave to agitate, to the effect that Sino Iron and Korean Steel have not provided the information requested by Mineralogy as required by cl 25.1, 25.2 and 27(a)(x) of the MRSLAs.[44] A counterclaim follows on from the allegation, found at prayer for relief M, with declarations and orders sought.[45]
[44] Proposed 2FAD [1(eB)(iv))].
[45] Proposed 2FAD [153].
A similar allegation, concerning the alleged failure by the plaintiffs to provide reports, surveys or investigations concerning the Sino Iron Project, is pressed by Mineralogy in the Proposed 2FAD.[46] The provision relied upon is cl 12.4 of the FCD instrument, with the relief pleaded at prayer for relief M.

(5) Inefficient Mine Plan

[46] Proposed 2FAD [1(eC)(ii))].

Finally, there is an allegation that Sino Iron and Korean Steel have carried out 'Mining Operations' under a 'Mine Plan' that does not optimise the efficient and economic exploitation of all 'Magnetite Ore' resources in the Mine Area.[47] A counterclaim is associated with the allegation, set out in prayer for relief K which is based on a breach of Annexure 1 to the FCD instrument, specifically cl 8.1(c) and cl 8.3.
[47] Proposed 2FAD [1(eC)(i))].
On any view, the plea is rather broad with no particularisation. The assertion that the plaintiffs have carried out mining operations, in a generalised sense, which do not 'optimise the efficient and economic exploitation of all Magnetite Ore resources' presents a large canvas on which to fight an action at trial.

H. Consideration

The application for leave to amend the defence and add the counterclaim is supported by the detailed submissions filed by Mineralogy,[48] and opposed in the similarly detailed submissions filed by the plaintiffs.[49] The primary issues raised by the parties are discussed below. In the time available, it is not possible to address in detail every issue raised by the parties, and so I have focussed on what appeared to be the primary matters raised.

(1) The new allegations are not relevant on the current pleadings

[48] Mineralogy submissions dated 9 April 2025 (DS1) and 12 April 2025 (DS2).

[49] CITIC Parties' submissions dated 14 April 2025 (PS).

First, I do not accept the submission advanced by Mineralogy that allegations as to whether rock containing more than 17% MagFe has been treated as waste by the plaintiffs arise on the pleadings as they stand. The classification of rock, whether wrongful or otherwise, and whether described as being uneconomic to mine or whether it is classified as Utilised Low Grade Material, is not an issue which arises on the pleadings.
To be aired at trial, the classification issue plainly ought to have been the subject of an express plea, not introduced on the basis of some broader plea, and certainly not through an admission such as appears in the defence at [23]. The imperative that surprise be avoided in civil litigation is well understood.
Indeed, this is precisely why the pleading amendment application has been brought. The issue, which is characterised as a significant one by Mineralogy giving rise to substantial issues, ought to have been articulated through an express plea.

(2) The allegations are raised very late in the day

Second, the allegations are advanced at a very late stage in the life cycle of these proceedings. The trial of the action has been listed since September 2024 and there have been numerous interlocutory applications brought in the period since then, but the present application was not brought forward until the back end of March 2025.
In the context of an action which this Court found ought be listed for trial in a speedy fashion, given the issues involved including the public interest issues associated with the Sino Iron Project, there was a heightened responsibility on the litigants to raise new issues as soon as possible.

(3) The explanation for the delay is extremely weak

Third, the explanation for the delay in bringing the application is extremely weak, and thus not one I am able to accept on the materials before the Court. An examination of the proffered explanation which appears in Mr Palmer's affidavits indicates that it is not entirely consistent with objective facts which are apparent to the Court from undisputed material.
To be clear, I do not accept, and I do not find, that this application was developed as a device by the first defendant or Mr Palmer in order to forestall the trial of the action.
I recognise that spirited submissions were made in this regard by senior counsel for the plaintiffs. Indeed, it was submitted that Mr Palmer 'has form' for seeking late adjournments and that this application was a 'confection' or a 'concoction which has been put together as a desperate last act to try and defeat' the trial.[50] I do not make findings to that effect and do not consider it open to draw such inferences in the present circumstances.
[50] ts 1788, 1829 - 1830.
But the leave application under O 21 r 5 RSC is supported by an explanation from Mr Palmer which the Court must necessarily evaluate as part of its consideration of this interlocutory application. Indeed, I regard myself as bound to do so. That evaluation exercise is necessarily limited given it is based on documentary material, without having seen and heard any witnesses to explain these matters.
Nonetheless, some matters can be safely noted, which I address below:
(a)In an affidavit filed in CIV 2338 of 2012, being the proceedings heard by Edelman J in 2013, the General Manager – Mining for CPM deposed that 'it is not always economically feasible to clearly separate the prestripping waste from any Magnetite Ore encountered during the pre-stripping process' and so 'a quantity of Magnetite Ore and Low Grade Material is inevitably removed along with the waste material and sent to the waste-stockpiles'.[51]
[51] Affidavit of Scott Dr Kruijf affirmed 22 March 2013 [26], attached to the John Affidavit as Attachment DWJ-14.
(b)During the trial before Edelman J, then counsel for Mineralogy acknowledged that the plaintiffs could put magnetite ore on the waste dump in circumstances in which Mineralogy would not thereby claim a royalty. There was a lengthy interchange between counsel and Edelman J regarding this issue, which has been extracted in the John Affidavit.[52]
[52] John Affidavit [50].
(c)It was common ground during the proceedings before Edelman J which led to the 2013 Royalty Decision that not all Magnetite Ore which is mined must be taken, including Magnetite Ore which may be sent to waste stockpiles because it is not economic to remove any Magnetite Ore.[53]
[53] 2013 Royalty Decision [150].
(d)Moving to a more recent document, in an affidavit filed in the present action, sworn by Mr Goodwin in support of expedition, Mr Goodwin deposed that 'rock containing more than 17% MagFe may also be classified as waste produced when excavating the mine pit, if that rock is not economically profitable to mine and process'.[54]
[54] Affidavit of Robert Bruce Goodwin sworn 15 February 2024 [50].
(e)There is thus a sound basis to conclude, as the CITIC Parties invite the Court to do, that Mineralogy has been aware, for many years, that not all Magnetite Ore exposed during mining is processed into product and that some material containing greater than 17% MagFe is sent to waste stockpiles for the reason that it is not economic to process it.[55]
[55] PS [26(c)].
(f)As to Mineralogy's knowledge of the conduct by which Low Grade Material has been utilised by the plaintiffs, for civil construction works, the forcefulness of Mr Palmer's statements in the First Palmer Affidavit have been eroded by his own concessions which can be found in the Second Palmer Affidavit. As one might expect, the plaintiffs have emphasised the modification by Mr Palmer of his position as between the two affidavits. Mr Palmer initially deposed that:[56]
[100]The Goodwin Statement lays bare a situation where the Citic parties have breached clause 7.2 by failing to "process Magnetite Ore" (i.e. ore mined from the Mine Area and containing a magnetite content of at least 17% magnetite Fe) "taken by [Sino /Korean] from the exercise of Korean's Mining Right into either Iron Ore Concentrates ... " but instead, labelling the Magnetite Ore as 'waste rock' and sending it to waste rock dumps. Indeed, the Citic parties seek absolution from any future breaches of that obligation. It further reveals the previously unknown practice of taking and using Low Grade Material for civil construction works without payment of any consideration.
[101]The Citic parties have never, until the Goodwin Statement, either adverted to or disclosed these practices….Had the Citic parties complied with their fundamental obligations under the State Agreement and the MRSLAs to process Magnetite Ore, they would have processed the Magnetite Ore into Iron Ore Concentrates and Mineralogy would have received the Mineralogy Royalty attributable to the tonnes of Magnetite Ore improperly sent to the waste rock dump. (emphasis added)
(g)Mr Palmer has clarified his position in this regard, in the Second Palmer Affidavit. Mr Palmer has deposed that, during 2018, there was an 'extensive exchange of communications' between Mineralogy and the CITIC Parties regarding their use of Low-Grade Materials for civil works purposes and the construction of the tailing dam.[57] Mr Palmer also refers to admissions made by the CITIC Parties in this regard. Mr Palmer has further deposed that:
[26]…At the time, I determined that Mineralogy would not pursue a claim because the Citic parties were refusing to provide access to books and records and information which Mineralogy needed to quantify its claim and Mineralogy did not have a good understanding of what quantities of Law Grade Material were and what the quantification of its claims were.
(h)Mr Palmer's position, as expressed in the Second Palmer Affidavit, is that until receipt of the statement of Mr Goodwin, which was filed in November 2024 but apparently first shown to Mr Palmer in February 2025, Mr Palmer did not appreciate or know with any precision the very large size and extent of the amount of Low Grade Material (or higher grade material) being used.[58]
[56] First Palmer Affidavit [100] – [101].
[57] Second Palmer Affidavit [25] – [26].
[58] Second Palmer Affidavit [29].

In these circumstances, I cannot find that the matters sought to be ventilated in the Proposed 2FAD are new or fresh matters in any respect. While Mr Palmer may not have known of the extent of the conduct in question, in relation to the use of Low Grade Material, Mineralogy and its previous lawyers were certainly aware of the practice and Mineralogy was also aware that the CITIC Parties did not process all Magnetite Ore and that some rock with greater than 17% MagFe was sent to waste stockpiles.
These matters represent the core of the new allegations which Mineralogy wishes to agitate. Mineralogy was well aware of the underlying conduct and could have commenced proceedings against the CITIC Parties to agitate the breach allegations at any point. Mineralogy also had mechanisms available to it such as pre-action discovery pursuant to O 26A RSC to discover further information as to the extent of the claims, if that was regarded by Mineralogy and Mr Palmer as a necessary anterior step before commencing substantive litigation.
To leave the claims on the sidelines for some years, only to then activate them close to trial, is a matter which this Court must conclude as weighing heavily against the grant of the discretion in the first defendant's favour. Further, it follows from the foregoing, that I do not accept the submission that any delay is the responsibility of the CITIC Parties, on the present material before the Court.

(4) The new claims are contractually weak

Fourth, I do not consider I am in a position to positively conclude, as has been submitted by senior counsel for the plaintiffs, that the new proposed claims are hopeless or unarguable.[59]
[59] ts 1816, 1820, 1823 – 1829 and PS [11], [16].
However, having been taken through the contractual instruments by three senior counsel, and given the opportunity to review the extremely thorough 2013 Royalty Decision, it is apparent that the new claims, particularly the core allegation in [1(eB)(i)] as to Unprocessed Magnetite Ore, are contractually weak and face a number of difficulties when viewed against the express language of the instrument and the commercial purposes which are objectively apparent from the instrument.
In the 2013 Royalty Decision, Edelman J examined the term 'taken' in closely analogous circumstances, and within the same contractual instrument. The application of his Honour's characterisation of the word 'taken' in cl 8.1 of the MRSLAs to the same word in cl 7.1 and cl 7.2 is a likely constructional outcome, which would undermine the essential basis of the plea (in that uneconomically recoverable ore sent to waste even if it contains at least 17% MagFe will not engage the processing obligation in cl 7.2 of the MRSLA).
As to the allegation in [1(eB(ii)] concerning the use of Low Grade Material by the plaintiffs, the first defendant's contention faces substantial turbulence from the express provision in cl 4.2(d) of the MRSLAs that Mineralogy has delegated its rights as holder of the mining leases to the plaintiffs for the purpose of constructing the processing facilities and to take and dispose of material which is mined.
The plaintiffs' senior counsel further emphasised that the allegations are incompatible with the terms of the State Agreement, which permit the plaintiffs to take 'stone, sand, clay and gravel' from the leases for construction of work and maintenance thereof,[60] and which require the plaintiffs to 'implement the approved proposals'.[61] As to this latter point, the plaintiffs observe that the 'approved proposals' provide that the tailings storage facility will be constructed using waste rock. This is expressly mentioned in the Sino Iron Concentrate Proposal dated February 2009, which states that:[62]
Rockfill for the filter wall, decant facility and embankment armouring will be sourced from mine waste. (emphasis added)
[60] State Agreement, cl 10(7). TAB 2 of the Primary Documents for the Trial Judge.
[61] State Agreement, cl 7(6).
[62] Sino Iron Concentrate Proposal dated February 2009 [5.6], under the heading 'Tailings Storage Facility (TSF) Design and Operation'. TAB 15 of the Primary Documents for the Trial Judge.
On my present (and provisional) assessment, the primary contractual claims sought to be agitated in the Proposed 2FAD are contractually weak, in my respectful view. I do not accept the first defendant's contention that the breach pleaded at [1(eB)(i)] of the Proposed 2FAD is strongly arguable.[63] At best, that claim is arguable, as is the breach pleaded at [1(eB)(ii)] of the Proposed 2FAD, and I would be most reluctant to make any stronger, positive assessment of those claims at this stage.

(5) The allegations would require months to prepare for trial

[63] DS1 [37].

Fifth, the allegations are broadly stated, yet seemingly very complex, and would plainly require considerably more work and investigation by the first defendant in order to be ready to responsibly present them at trial.
The process of calculation of the quantity of ore involved is, on its own, likely to be a highly complex task which will require detailed expert evidence in support thereof.
There are numerous interlocutory steps which will be needed in this regard, including discovery, the preparation of expert reports, and the collation of evidence, once of course the plaintiffs have had an opportunity to investigate and plead their responses to the new claims. All of this will likely take months.

(6) The grant of leave would occasion prejudice to the plaintiffs

Sixth, the grant of leave for the amendments to the defence would undoubtedly require the trial of the action to be adjourned. There is considerable prejudice likely to result to the plaintiffs if that were to happen, quite apart from the loss of trial time and the inefficient use of the Court's resources.
The prejudice to the plaintiffs was not disputed in any significant respect by the first defendant. There is also prejudice to the first defendant if it is unable to ventilate the claims in this action, which it says has substantial value. It may thereby be exposed to an Anshun defence in due course. It would also need to bear the costs associated with the commencement of fresh proceedings, should it choose to do so.

Disposition

In weighing up the considerations, I am particularly mindful of the case management considerations identified and endorsed in Aon Risk and UBS AG v Tyne. Those considerations have particular resonance when addressing an application to amend pleadings, and to add a substantial counterclaim, on the eve of a listed commercial trial. Even more so where the grant of leave would almost certainly require the listed trial to be vacated.
I recognise the allegations articulated by Mineralogy embody claims which are said to have substantial value, in the event the claims could be successfully demonstrated. Importantly, though, by refusing leave, the Court would not be denying the first defendant its ability to ventilate these claims. Indeed, the first defendant has had some years to do so already. The first defendant may choose to bring the claims through separate proceedings, subject to any limitations which might preclude that, and any defences available to the plaintiffs.
The possibility of an Anshun estoppel defence being raised has been expressly mentioned by the plaintiffs' senior counsel. Again, it is within the gift of the first defendant to commence such action as it sees fit, by way of separate proceedings. The refusal of leave in this action merely precludes these allegations being raised in this action, to be heard at the same time as the matters agitated on the pleadings filed to date.
The inadequate explanation for the delay is a significant aspect which tells against the application to amend. Any prejudice to Mineralogy arising from a refusal of leave would be a function of Mineralogy's own behaviour, not that of the CITIC Parties, and must of course be weighed against the prejudice which is likely to arise by allowing the amendment.
Ultimately, I consider there is significant force in the following matters, all of which point against a grant of leave in the exercise of the Court's discretion:
(a)the fact this application is a late attempt to introduce these allegations in such close proximity to the listed trial;
(b)the fact the Court has concluded that the explanation for the late attempt to raise these issues is not consistent with the objective course of events, and Mineralogy has long known of the plaintiffs' practice about which it now complains;
(c)the fact a director of the first defendant has frankly now acknowledged the company was aware of the Utilisation Low Grade Material issue many years ago and made a decision not to pursue that matter at the time;
(d)the fact the dispute between the parties as to the provision of information (or lack thereof) on the part of the plaintiffs has also been the subject of numerous communications between these parties, stretching back some years;
(e)the fact the claims for breach of cl 7.1 and cl 27(b) of the MRSLAs appear to be contractually weak, albeit arguable, contrary to the submission advanced by Mineralogy; and
(f)the fact the grant of leave would necessitate an adjournment of the trial to the prejudice of the plaintiffs and result in an inefficient use of the Court's scarce resources.

J. Conclusion and orders

It was for the foregoing reasons that I held at the conclusion of the hearing that leave should be refused to both the amendments to the defence and to add the counterclaims which flow therefrom. On 16 April 2025, I formally ordered that the Second Pleading Application be dismissed.
I reserved the costs of the application but it would naturally follow from these reasons that the costs of the application should be paid by the first defendant. I will hear from the parties on this issue in due course.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
LM
Associate to the Honourable Justice Lundberg
22 APRIL 2025