Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 10] - [2022] WASC 472

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   SINO IRON PTY LTD -v- MINERALOGY PTY LTD [No 10] [2022] WASC 472
CORAM:   KENNETH MARTIN J
HEARD:   3 MARCH 2022
DELIVERED          :   3 MARCH 2022
PUBLISHED           :   7 MARCH 2023
FILE NO/S:   CIV 1915 of 2019
BETWEEN:   SINO IRON PTY LTD
First Plaintiff

KOREAN STEEL PTY LTD
Second Plaintiff

CITIC LIMITED
Third Plaintiff

AND

MINERALOGY PTY LTD
First Defendant

CLIVE FREDERICK PALMER
Second Defendant

STATE OF WESTERN AUSTRALIA
Third Defendant

FILE NO/S: CIV 2326 of 2021
BETWEEN: SINO IRON PTY LTD
First Plaintiff

KOREAN STEEL PTY LTD
Second Plaintiff

CITIC LIMITED
Third Plaintiff

AND

MINERALOGY PTY LTD
First Defendant

CLIVE FREDERICK PALMER
Second Defendant

THE STATE OF WESTERN AUSTRALIA
Third Defendant

Catchwords:

Practice and procedure - Opposed application for the Court to fly to Pilbara mining location in Western Australia to conduct view of mining operations and port facilities at site - Case management considerations including COVID-19 concerns - Application refused

Legislation:

Evidence Act 1995 (Cth)
Evidence Act 1995 (NSW)
Iron Ore Processing (Mineralogy Pty Ltd) Agreement Act 2002 (WA)

Result:

Application refused

Representation:

CIV 1915 of 2019

Counsel:

First Plaintiff	:	J Karkar KC, S Parmenter KC, S Free SC, J Kirkwood, T Maxwell & K Dovey
Second Plaintiff	:	J Karkar KC, S Parmenter KC, S Free SC, J Kirkwood, T Maxwell & K Dovey
Third Plaintiff	:	J Karkar KC, S Parmenter KC, S Free SC, J Kirkwood, T Maxwell & K Dovey
First Defendant	:	P Dunning KC, M Karam, K Byrne, H Cooper & D Fawcett
Second Defendant	:	In person (by video link)
Third Defendant	:	A Sefton SC

Solicitors:

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

CIV 2326 of 2021

Counsel:

First Plaintiff	:	J Karkar KC, S Parmenter KC, S Free SC, J Kirkwood, T Maxwell & K Dovey
Second Plaintiff	:	J Karkar KC, S Parmenter KC, S Free SC, J Kirkwood, T Maxwell & K Dovey
Third Plaintiff	:	J Karkar KC, S Parmenter KC, S Free SC, J Kirkwood, T Maxwell & K Dovey
First Defendant	:	P Dunning KC, M Karam, K Byrne, H Cooper & D Fawcett
Second Defendant	:	In person (by video link)
Third Defendant	:	A Sefton SC

Solicitors:

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

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

Matton Developments Pty Ltd v CGU Insurance Ltd [2014] QSC 256
Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16] [2017] WASC 340
Tito v Waddell [1975] 3 All ER 997

KENNETH MARTIN J:

(This judgment was delivered extemporaneously on 3 March 2022 and has been edited from the transcript.)

These are my reasons for decision in relation to the application made by the three plaintiffs (CITIC plaintiffs) under their chamber summons of 16 February 2022 (folio 387), asking that the Court conduct a physical inspection or a view, as it is sometimes more colloquially called, of the Sino Iron Project at Cape Preston in the Pilbara of Western Australia.
The application was argued at the conclusion of day seven of the trial, as it has now proceeded (Primary Trial). That was at the conclusion of the opening of the Primary Trial by senior counsel for the CITIC plaintiffs. At that time, respective senior counsel for the CITIC plaintiffs and for Mineralogy addressed what is the contested application over whether or not the Court should travel to the site in the Pilbara to conduct a view of the features of the Sino Iron Project.
The ultimate question, which is essentially a question of discretion, towards forensic utility, is whether the Court would be sufficiently assisted in the circumstances of this particular Primary Trial by conducting such an inspection.
Consequently, the evaluations required to this end are unique and sui generis by regard to the issues presenting in a particular case.
It was pointed out in the submissions of the first defendant, Mineralogy Pty Ltd (Mineralogy), that I had declined in the Royalty Component B (RCB) trial - see the reasons post trial which ultimately became Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16] [2017] WASC 340 (delivered 24 November 2017) - to conduct a view of the same project areas. But the considerations arising in a different dispute manifesting over 400 pages of pleadings in the particular case here are different to the issues in the RCB litigation.

Context: a conspectus of the trail issue

To attempt to summarise present issues - and this is a gross oversimplification - here I am concerned with an action brought by the CITIC plaintiffs complaining that certain mine continuation proposals (MCPs) of December 2017 - prepared on behalf of Sino Iron Pty Ltd (Sino Iron) & Korean Steel Pty Ltd (Korean Steel) and submitted by them to Mineralogy (watermarked 'Draft'), for Mineralogy under the terms of the Iron Ore Processing (Mineralogy Pty Ltd) Agreement (State Agreement) found as within sch 1 and sch 2 to the Iron Ore Processing (Mineralogy Pty Ltd) Agreement Act 2002 (WA) to submit, either itself or as a Co-Proponent along with Sino Iron and Korean Steel, to the relevant State Minister (Minister) for advance or approval - have not progressed to the Minister by reason of the breach conduct of Mineralogy.
So far, Mineralogy has declined to advance or submit any MCPs to the Minister as requested. Consequently, the plans seeking to advance the Sino Iron Project underlying the December 2017 MCPs are effectively sterilised. They cannot go anywhere without Mineralogy's involvement and cooperation.
Chiefly underlying the refusal of Mineralogy to submit, or to be their Proponent or Co-Proponent by the submission of the MCPs for the Minister's approval, are a number of underlying tenure issues of serious sub-dispute.
They concern, in particular, the tenure related contention of the CITIC plaintiffs (but with Sino Iron and Korean Steel essentially as the active Sino Iron Project parties) that in order to fully realise their respective contractual entitlements to exploit a billion tonnes of ore, each, as promised to them by Mineralogy under Sino Iron and Korean Steels respective Mine Right and Site Lease Agreements (MRSLAs) that more of Mineralogy's proximately located mining tenements are needed for the Sino Iron Project to continue. The Project has reached a point where, after the initial construction phases have been finished and magnetite concentrate product production begun in earnest (after about 2013), that upon the basis of five year mine pit plans, Sino Iron and Korean Steel now need Ministerial approvals to enable them to expand the mine pit's current dimensions in relation to mining leases, M08/123, M08/124 and M08/125. This is necessary so that Sino Iron and Korean Steel can reach, exploit and obtain, as Mineralogy promised to them, all the magnetite ore that they seek to access and to process as treated ore which is then conveyed by pipes in a fluid solution to other areas for dewatering on land proximate to the Cape Preston Port.
That stockpiled product at Cape Preston Port is then loaded by a process of trans-shipment - eventually to reach and be loaded onto ocean going vessels (OGVs) moored at sea, for the cargo to be transported to ultimate CITIC plaintiffs-related steel manufacturer purchasers in China.
It is contended by the CITIC plaintiffs that an initial five year plan that was first proposed and approved in respect of the commencing mine pit operations now needs to be revised, in order for residual amounts of ore that was promised to Sino Iron and Korean Steel under their respective MRSLAs to be pursued.
There are proposals in the 2017 MCPs which assume a utilisation by the Sino Iron Project of extra areas, said to be urgently required for waste rock dump (WRD) storage, such rock being a by-product of the mining process undertaken in order to reach and obtain the magnetite ore. The work generates large amounts of waste rock. If that rock cannot be usefully deployed then it needs to be stored somewhere. The contention is that there is a lack of space presently for storing waste rock. This rock needs to be accommodated somewhere. So also there is a need to store more tailings waste, likewise generated as a product of the mining and treatment of ore at site.
The tailings waste needs to be stored in what is known as a tailings storage facility (TSF). There is, say the CITIC plaintiffs, now a critical need to access further TSF areas as identified and indeed said to have been earlier promised to the CITIC plaintiffs by Mineralogy - for the very waste storage or deposit purpose. Needs for greater proximate areas of land space for waste storage present in circumstances where existing and initially established and planned TSFs will soon reach their full storage.
The CITIC plaintiffs' contention is that the integrated nature of the Sino Iron Project is such that if a point is reached where there is no more space for the waste rock, or if there is no more space for the tailings, as a by-product of the processing of the magnetite ore being mined, then essentially, further production must ultimately cease. Consequently then, there would be no more concentrate product produced to be exported. The whole Sino Iron Project is in jeopardy then of being halted. That outcome would mean that all related royalty streams payable to many persons, including to Mineralogy, would cease as well.
Allied to the problem of a lack of areas for waste, is a contention that at the Cape Preston Port region, the Sino Iron Project's terminal facility stockyard, used for laying down stockpiles of processed concentrate before its transhipment, is essentially, inadequate. The available area for stockpiling purposes so as to have a ready amount of export concentrate product accessible and close at hand to be barged to ships arriving to take that product, is said to be too small. Essentially, that presents as another issue over presently insufficient stockpile space for the Sino Iron Project in the stockyard area at the Cape Preston Port.
There are some further MCP augmentations for the Sino Iron Project, under further infrastructure corridors and a proposed realignment of the Fortescue River Road. Also proposed is the establishment of a new accommodation village for use by the CITIC plaintiffs' Cape Preston Port workforce at a location more proximate to the Cape Preston Port operations to cut undue worker travel time each day. The newly proposed accommodation village would be more proximate to the local private air strip that has been established and used by the CITIC plaintiffs' fly-in-fly-out workforce.
Those features are a component of the MCPs, first delivered to Mineralogy in 2016, then under revised versions in December 2017 (as the 2017 MCPs), for intended submission to the Minister for executive approval by Mineralogy as a necessary (under the State Agreement) Proponent or Co-Proponent with Sino Iron and Korean Steel.

Mineralogy's opposition to the physical inspection

But Mineralogy has been steadfast to date, in effect, by refusing to advance the MCPs for various reasons.
The Primary Trial therefore, in terms of a proposed advocated inspection or view - presents mining-related issues concerning an existing mine pit operation, TSFs, WRDs - overlaid in relation to the adequacy or otherwise of the currently granted tenure areas as a subject of the MRSLAs in terms of Site Lease Areas held - and the like. Also at issue is the extra tenure areas said to be required and which underly the MCPs for TSF and WRD storage and the need for a greater stockpile area on land for product prior to shipping at the Cape Preston Port facility.
Against all that - and this is in the context where today, being day eight of the Primary Trial - I have now heard senior counsel for the CITIC plaintiffs over perhaps just under seven days of opening submissions, explain the nature of the CITIC plaintiffs' case, and take me, most helpfully, if I may say so, through a number of maps that show the areas and the future plans under the MCPs for the Sino Iron Project prepared in 2016, and then, as subsequently revised in 2017.

Considerations: law and evidence

Into that case needs to be factored multiple legal issues which arise. They are primarily contractual, by reference to either express terms relied upon against Mineralogy from out of the State Agreement, or from a host of other surrounding Sino Iron Project agreements including the MRSLAs and the Fortescue Coordination Deed. Their terms are relevant to see if there is either an express promise, or an implied promise, (either as a matter of law, or by an ad hoc implied term of fact), as a platform to support Mineralogy's suggested obligation to accede to providing its cooperation towards the advancement of the MCPs to the Minister. That inquiry carries with it a vital sub-issue, by reference to the extra tenure areas that are sought from out of Mineralogy's nearby held mining tenements by the CITIC plaintiffs. They seek that allocated tenure from Mineralogy in terms of obtaining greater tenure for larger TSFs, for expanded WRDs and for greater volume stockpile area at the Cape Preston Port.
The resistance position of Mineralogy at the Primary Trial by reference to its amended pleaded defence, is extensive. To that end I keep in mind that I have not yet heard the foreshadowed two day opening under the trial timetable from senior counsel for Mineralogy - but I do have the benefit of Mineralogy's 50 pages of opening written submissions, foreshadowing this strong level of resistance.
I have also, at this point, seen and perused the proposed witness evidence, both lay (called lay technical) and expert, as proposed to be called by the CITIC plaintiffs. I have also seen what is foreshadowed as some trial evidence to be called on the part of Mineralogy - by reference to a witness outline of Mr Clive Palmer and a foreshadowed expert report of a Mr James Cribbes in terms of the expert evidence he is foreshadowed to give for Mineralogy in the Primary Trial.
I have provided an oversimplified summary of the Primary Trial's issues as they present currently, in the context of my consideration of the present application made by the CITIC plaintiffs seeking for the Court to attend at Cape Preston Port and view the Sino Iron Project and its operations, as is proposed.
I point out, lest it be forgotten, that the legal position for Western Australia towards such inspection exercises is currently not on all-fours with the position under the Evidence Act 1995 (Cth) (Commonwealth Evidence Act). That is however the position in the Federal Court of Australia, and indeed, substantially as well, in the State of New South Wales under their uniform Evidence Act 1995 (NSW).
Consequently, s 54 of the Commonwealth Evidence Act, in terms of an inspection constituting evidence, does not reflect the position in Western Australia.
For Western Australia, the nature of the exercise is more from a perspective of orientation and assistance to the Court in terms of achieving a better understanding the issues in a trial.
I accept, however, as Justice Flanagan has said at [26] - [27] in Matton Developments Pty Ltd v CGU Insurance Limited [2014] QSC 256 (delivered 16 October 2014), that the considerations under s 53 of the Evidence Act 1995 (NSW) (and as under s 53 of the uniform Commonwealth Evidence Act) will be relevant in terms of the assembly of considerations to be evaluated by the Court under its discretion whilst coming to a position ultimately over the utility of conducting a view in a particular case or not.
I start, however, with the well-remembered observations of Sir Robert Megarry in Tito v Waddell [1975] 3 All ER 997 where his Honour was asked to conduct a view. That was disputed. The question was whether the judge should conduct an inspection in that phosphate related case concerning Ocean Island. His Honour observed at page 1000:
…where, as in the present case, the parties disagree about whether or not a view should be held, the judge should weigh the advantages of holding a view against the disadvantages. The balance may often be hard to strike, for it will usually be difficult to express the opposing considerations in terms of each other. Considerations of time and money will often point against holding a view, whereas considerations of assistance in reaching a proper decision will often point in favour of holding a view: yet the degree of assistance in reaching a proper decision cannot readily be measured in units of time and money.
On the present application, I hold for the CITIC plaintiffs, two affidavits of Mr David John that have been referred to yesterday by senior counsel for the CITIC plaintiffs, Mr Parmenter KC (folios 388 and 416), as well as the affidavit of Ms Tracey Robinson that was relied upon by the first defendant, Mineralogy, yesterday (folio 407).
I also have respective outlines of written submissions made by each side on the view application of the CITIC plaintiffs - which the parties have exchanged in relation to the opposed application (folios 386 and 408).
The question at the end of the day is one of utility and assistance in the context of trial issues for the proposed orientation exercise.
The submissions made by the first defendant by its written outline of submissions in terms - that is by Mineralogy - strongly oppose the view application. Some matters raised I do not assess as persuasive factors in the overall evaluation. For instance, considerations of delay, and cost, in the overall scheme of this dispute, I view as relatively insignificant in a mega trial for reasons that I really do not need to elaborate upon. It was also said for Mineralogy that the exercise would be prejudicial to the first defendant in terms of it might have - if it had been afforded more time - pointed out against what is advocated.
None of that I find persuasive.
More persuasive however, in every sense, is the submission I believe formed the primary basis of the opposing stance of senior counsel for Mineralogy, Mr Dunning KC, in the verbal submissions made yesterday - to the effect that the nature of the issues in this Primary Trial are such that the Court would not be greatly assisted by it flying to Karratha, then on to Cape Preston and to the Sino Iron Project area. That is because, essentially, the trial issues concerning delineation tenement and issues over proposed expansions into other tenements of Mineralogy are not visible markings physically to be seen - in terms of potentially looking at it to see a physical marking out of tenement areas on the ground.
The tenement boundary delineation exercise and appreciation is conducted more effectively it was submitted for Mineralogy, by reference to photographs and to maps alongside approximately marked areas - on which the overlying boundary areas can be seen.
The position reached so far, is that at day eight of the Primary Trial with the benefit of Mr Karkar KC's comprehensive opening over a number of days, and now holding 50 pages of opening written submissions from each side, I feel I now hold a reasonably comfortable orientation perspective geographically - by reference to the trial issues around the three (3) mining pit area operative mining leases M08/123, M08/124 and M08/125 and to the TSFs at the east of the north-south infrastructure corridor, in relation to what is being proposed by the 2017 MCPs, in terms of northern and southern TSF expansions and the WRD expansions proposed at the south and the east.

The explanations provided so far in terms of mining and processing of the ore into concentrate, which is ultimately piped north to the stockpile area at the Cape Preston Port for the purposes of shipping and export is also something from a geographical perspective at least, I have come to appreciate relatively comfortably, at this stage.
Whilst the Court might obtain some elements of greater utility from elevated view of the stockpile area at the Cape Preston Port (from the perspective of arguments over a need for further stockpile areas and what is proposed in relation to that by the 2017 MCPs), it seems to me that photographic evidence of all that, which I have not seen a lot of to date, could probably be enough for orientation purposes, given the issues presently posed in the Primary Trial.
Arguments in defence as foreshadowed by the fifth further amended defence (folio 332) by Mineralogy, as first defendant (and then incorporated by reference into Mr Palmer's defence personally, see folio 333) essentially look at this point to raise mostly legal questions in terms of the refutations as to any existence of the contended implied terms in the MRSLAs or the proper construction of the agreements as regards contended express terms. There are further legal arguments over whether any such contracted terms, if so found, have indeed been breached by Mineralogy vis-à-vis it taking the negative stance it has to date against submitting the 2017 MCPs to the Minister for approval, or to agree to provide a revised extra tenure as requested of it at 29 November 2021 by Herbert Smith Freehills on behalf of their clients, the CITIC plaintiffs.
Such foreshadowed defences present as raising at this early stage of the Primary Trial what are largely questions of law - primarily questions of contract law in terms of the application of law to trial facts.

Conclusions

Weighing all that up, I am on balance not sufficiently persuaded that there would be sufficient utility in what is proposed in terms of a day trip to the Pilbara and the mooted Sino Iron Project inspection exercise.
That is essentially a case management consideration. But to that end there is a further consideration that presents as well which I will expressly mention, lest there be doubt, that I also weigh in the balance.
First, the trial timetable has now fallen behind somewhat, in terms of the amount of time that has been consumed by senior counsel's opening to date. That is by no means a criticism. It has been extremely helpful to hear the case opened and to be taken carefully to many of the important documents which obviously need to be closely assessed in the Primary Trial.
However, I am concerned under present circumstances about falling behind in terms of the trial timetable.
Second, I am also presently concerned about health unknowns for Western Australia as of today, as Western Australia opens back up to the world after almost two years of closure, in terms of a continuance of this Primary Trial and an Omicron COVID-19 infection factor that is presently now doubling daily in the local community. I read today that it is 2400 COVID-19 cases up from 1100 cases, yesterday.
Anything that has potential to delay a progression of this Primary Trial must be weighed in the balance. All trial time is precious. Delaying getting on with the taking of evidence seems to me to be a luxury that simply cannot be afforded given such unknowns. So I take those further case management considerations into account as well.
At the end, therefore, weighing all this together, I am, on balance, not persuaded in terms of the utility of the exercise by what is envisaged.
Having said that, I want to add two further things which I perhaps do not need to say explicitly, but nevertheless I will.
Number one is this I have not evaluated the exercise on the basis of any lack of personal interest on my part in the Sino Iron Project. Certainly, if it were only a personal decision, in terms of interest, I would be up there tomorrow. That, however, is not the legal test.
Secondly, it is now readily apparent that people on the CITIC plaintiffs' side of the litigation have gone to some lengths to try and accommodate an inspection exercise in terms of travel and flight planning and the considerable resources they are prepared to devote to it, which is very plain to see.
I do not wish anything that I have said in these extempore reasons to be interpreted as in any way indicating that the Court is not appreciative of all those efforts. I record that I very much do appreciate all of what has been put before the Court in terms of that travel and inspection exercise.
My evaluation is purely a legal one. For the reasons I have now indicated, I am not persuaded in the end on an opposed application that the utility in the trip justifies what is required. On that basis, the application is refused.
But this is an interlocutory application. It is a determination made at the commencement of day eight of the Primary Trial. If circumstances should change during the course of the Primary Trial, this interlocutory decision would not pre-empt a further application on any party's part based upon further facts that might emerge underlying such an application at the time.
I decline the application for these reasons.

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