Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 3]

[2021] WASC 384

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   SINO IRON PTY LTD -v- MINERALOGY PTY LTD [No 3] [2021] WASC 384

CORAM:   KENNETH MARTIN J

HEARD:   6 OCTOBER 2021

DELIVERED          :   3 NOVEMBER 2021

FILE NO/S:   CIV 1915 of 2019

BETWEEN:   SINO IRON PTY LTD

First Plaintiff

KOREAN STEEL PTY LTD

Second Plaintiff

CITIC LIMITED

Third Plaintiff

AND

MINERALOGY PTY LTD

First Defendant

CLIVE FREDERICK PALMER

Second Defendant

STATE OF WESTERN AUSTRALIA

Third Defendant

Catchwords:

Practice and procedure - Amended defence - Application to strike out amendments - No reasonable defence - Alleged abuse of process - Trial dates fixed - Large components of new pleas replicated pleas made earlier when seeking a permanent stay of the action which stay application was summarily dismissed as unarguable - No legitimately arguable defensive purposes served by some amendments

Legislation:

Rules of the Supreme Court 1971 (WA)

Result:

Certain amendment paragraphs of first defendant's third further amended defence pleading struck out

Category:    B

Representation:

Counsel:

First Plaintiff	:	Mr J H Karkar QC, Mr J H Kirkwood & Mr T Maxwell
Second Plaintiff	:	Mr J H Karkar QC, Mr J H Kirkwood & Mr T Maxwell
Third Plaintiff	:	Mr J H Karkar QC, Mr J H Kirkwood & Mr T Maxwell
First Defendant	:	Mr P Dunning QC & Mr K S Byrne
Second Defendant	:	Mr P Dunning QC & Mr K S Byrne
Third Defendant	:	No appearance

Solicitors:

First Plaintiff	:	Herbert Smith Freehills
Second Plaintiff	:	Herbert Smith Freehills
Third Plaintiff	:	Herbert Smith Freehills
First Defendant	:	K Jones
Second Defendant	:	Alexander Law
Third Defendant	:	State Solicitor's Office

Cases referred to in decision:

Williams v Spautz [1992] HCA 34

Grundt v Great Boulder Goldmines Pty Ltd [1937] HCA 58; (1937) 59 CLR 641

Mineralogy Pty Ltd v Sino Iron Pty Ltd [2021] WASC 145

Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] 2021 WASC 170

Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507

Table of Contents

Introduction

Background

My 23 June 2021 directions for trial

The present strike out application

Consensual excisions

The impugned 3FAD Fulcrum Purposes pleas

Schedules A, B and C - the alleged reagitation by the 3FAD of the APOC Fulcrum Purposes pleas?

Pleadings context to the present strike out application

Evidence relied upon

Essential issues

Conceded excisions - SRF, GST and Royalty Pleas

Preliminary rulings

Defendants' resistance position concerning Fulcrum Purposes pleas (pars 15A to 15AJ)

Further observations

More 3FAD Fulcrum Purposes plea evaluations

Par 15S - evidentiary platform for the 3FAD Fulcrum Purposes pleas

Pars 15B, 15C, 15D and 15E - factual pleas

Pars 15M and 15N - Contract Normalisation Objective

Remaining 3FAD Fulcrum Purposes pleas - Defendants' attempts at differentiation

Final evaluation of Fulcrum Purposes pleas

Derivative falls

Conclusions

KENNETH MARTIN J:

Introduction

1. I am dealing with the plaintiffs' chamber summons (of 13 September 2021) to strike out or permanently stay parts of the first defendant's third further amended defence dated 17 August 2021 (3FAD), and for further particulars of that pleading (see folio 219).

2. Prior to evaluating that interlocutory application as filed by the plaintiffs, it is necessary to discuss the somewhat lengthy background to the present interlocutory application - including my 23 June 2021 trial directions and Chief Justice Quinlan's prior interlocutory decision in this action.

Background

1. On 23 June 2021, I issued a series of directions in this action listing it for a trial ‑ which I am to hear between 31 January and 29 April 2022 (see order 31 of my orders made on 23 June 2021 (folio 195)). 

2. By order 11 of those 23 June directions, I separated a question from the trial to be deferred - namely the question as to the quantification of any loss or damage suffered by the plaintiffs, being the subject of par 204 of the statement of claim (SOC) and the quantification of any damages or compensation, being the subject of pars E, F, G and H of the prayer for relief in the SOC. Those questions were removed pursuant to O 32 r 4 of the Rules of the Supreme Court 1971 (WA) (RSC) - to be tried separately if necessary, subsequent to a determination by trial of all other issues in a first trial session (the primary trial).

3. I also issued a number of further pre‑trial directions including by order 6(a) of my 23 June directions - that the defendants had until 6 August 2021 (later varied by agreement to 17 August 2021 (see folio 214)) to file and serve any amended defence.  By order 6(b), the plaintiffs were also given leave to make any consequential amendments to their reply pleading by 20 August 2021 (later varied to 27 September 2021).  Thereafter, there were to be no further amendments to any of the parties' pleadings without leave (see order 6(c)). 

4. These 23 June 2021 trial directions issued in the wake of the orders and reasons for decision published by Quinlan CJ in Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] 2021 WASC 170 on 28 May 2021 ‑ clearing away then a potentially interruptive obstacle earlier raised by Mineralogy Pty Ltd and Mr Palmer against this action proceeding to a trial resolution of its merits.

5. Those reasons were published following two days of interlocutory hearings concluded before the Chief Justice across 15 and 21 April 2021.  The end result, explained across 90 pages of reasons as published, was to summarily dismiss at the behest of the CITIC Plaintiffs, Mineralogy's (and Mr Palmer's) application seeking a permanent stay of the action.  In effect, Mineralogy had been contending that the CITIC Plaintiffs were bringing this civil action (and others) for collateral or improper purposes, described in Mineralogy's submissions to the Chief Justice as 'the Fulcrum Purposes' (see [44] of the reasons of Quinlan CJ).

6. That permanent stay application as it was advanced by Mineralogy attempted, in effect, to open up something of an internal mini trial within the present action - contending that the action ought proceed no further - upon the basis it was an abuse of process (see [3] of Quinlan CJ's reasons).  To that end, reliance was placed by Mineralogy on the abuse of process principles as discussed by the High Court of Australia in Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509.

7. To advance its (and Mr Palmer's) permanent stay application of 5 January 2021 (folio 135), Mineralogy filed and relied on a comprehensive internal pleading - assembling at length its abuse of process contentions against the CITIC Plaintiffs.  This was filed as the 'first and second defendants' points of claim' (folio 136) - which document came to be amended later, on 12 April 2021 (folio 167).

8. Components of (but not all of) the amended points of claim ('APOC') document as filed by Mineralogy, were seen to be grounded upon aspects of trial evidence that had emerged during another trial I conducted during November 2020 between the same parties.  That action was referred to as the SRF (Site Remediation Fund) proceedings.

9. After that trial, my reasons for decision came to be published in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2021] WASC 145. I understand there is currently a pending appeal brought by Mineralogy against that decision. Given my reasons in the SRF decision essentially expressed my final views then about some of those evidentiary issues (and because I remain the putative trial judge allocated to hear this action), I considered it inappropriate that I determine Mineralogy's permanent stay application in this action, or indeed what was the subsequent application brought by the CITIC Plaintiffs seeking to dismiss the stay application summarily, as in effect, wholly untenable.

10. As the Chief Justice's reasons explain (see for instance [226], [227], [234], [284], [298] and [302]), parts of the evidence adduced before me at the SRF trial (with some extra evidentiary matters) were subsequently relied upon by Mineralogy to support its basal contention.  Specifically, this contention was that the CITIC Plaintiffs were pursuing this action (and others) for collateral or improper purposes - thereby rendering further pursuit of this action an abuse of the court's process that ought be stayed by the court. 

11. Under the heading 'Fulcrum Purposes', the Chief Justice's reasons (commencing at [214] and particularly from [217] onwards) address all ten (10) discrete evidentiary matters raised and relied upon by Mineralogy under its then APOC - in support of a contended inference as to the existence of wholly illegitimate and improper Fulcrum Purposes, which allegedly underlie this action.  By its APOC, Mineralogy had advanced this most serious adverse contention as to the CITIC Plaintiffs' Fulcrum Purposes at the time by pars 35(a) to (d) as follows:

    The purposes of the Fulcrum Group included to achieve the Contract 'Normalisation' Objective by the:

    (a)use legal proceedings, including as moving party and resisting party, to apply commercial pressure to Mineralogy and Mr Palmer to agree to alter the contractual relationship between the parties under the CITIC Negotiated Agreements, rather than to vindicate any bona fide claim or defence;

    (b)use legal proceedings by complaints to regulatory and law enforcement authorities to apply commercial pressure to Mineralogy and Mr Palmer to agree to alter the contractual relationship between the parties, rather than to have some bona fide wrong sanctioned or loss recovered;

    (c)by the use of legal proceedings as alleged in (a) and (b) above, to enable CITIC to recoup the unexpected costs of developing the Sino Iron Project directly from Mineralogy or indirectly from Mineralogy by denying to it sums to which it was entitled, including royalties, and potentially thereby rendering it insolvent and leaving CITIC able to pursue the Sino Iron Project on terms more favourable to it;

    (d)thereby to engage legal processes in the manner alleged in (a) to (c) above not for the purpose of vindicating any legal right or defence at law or complaint about a loss or injury bona fide held, but rather to achieve a collateral purpose being the Contract 'Normalisation' Objective (the Fulcrum Purposes);

    …

12. By APOC par 35(e), those APOC Fulcrum Purposes were all then said to be inferred from the ten (10) as identified evidentiary sources. 

13. As may also be seen from within Mineralogy's APOC document, the contended efforts of the CITIC Plaintiffs to normalise the Sino Iron and Korean Steel projects towards industry standards - were referred to there as a 'Contract Normalisation Objective' (APOC par 30).  But that stated objective was, by itself, wholly benign and going nowhere for Mineralogy:  see Quinlan CJ's reasons at [119] and [226] to [229].

14. Between [219] and [312] of the Chief Justice's reasons, he proceeded  then to evaluate on a seriatim basis (and also in the aggregate), each of the 10 evidentiary matters (including documents and testimony adduced in the SRF proceedings) as were then relied upon by Mineralogy to support its permanent stay application.  I note that the item by item evaluation of the APOC evidence as undertaken by Quinlan CJ, was conducted in the context of the CITIC Plaintiffs' cross‑application in this action seeking then to have Mineralogy's permanent stay application dismissed in itself on a summary basis (see the CITIC Plaintiffs' chamber summons of 26 February 2021 (folio 153)). 

15. The CITIC Plaintiffs' summary dismissal application was sought on the basis that Mineralogy's permanent stay application was itself said to be untenable and constituted in effect, a wasteful and interruptive obstacle to the legitimate advancement of the CITIC Plaintiffs' present action towards a determination on the merits at a trial. 

16. At [312] of Quinlan CJ's reasons, his Honour ultimately concluded:

    It will be apparent that, in my view, the Points of Claim do not, either individually or collectively, arguably support such illegitimate or unlawful means.  In my view, the matters relied upon by Mineralogy in support of the Fulcrum Purposes do not reveal a reasonably arguable case that the substantive proceedings have been commenced for collateral purposes.  They certainly do not reveal a case efficiently arguable to justify the time, expense and delay that would be occasioned by embarking on what would, in effect, be an interlocutory trial as to the CITIC parties' litigation strategy over the past decade. 

17. Reaching the conclusion that Mineralogy's application for a permanent stay of this action must be summarily dismissed (at [318]), the Chief Justice also observed on several occasions that Mineralogy's allegation as to illegitimate 'Fulcrum Purposes' had undoubtedly been both a significant and serious allegation to have raised.  In particular, see Quinlan CJ's reasons at [191] and [315].  At [316], his Honour concluded:

    Not only do I find that there is no reasonable basis for the allegation of the Fulcrum Purposes generally, for the purposes of the stay application it would be necessary for the Court to be satisfied that these particular proceedings (i.e. the substantive proceedings) have been brought for the Fulcrum Purposes.  There is no basis for that contention whatsoever.  In my view, the substantive proceedings have been brought for the purposes of seeking the relief claimed by the CITIC parties.  Whether the CITIC parties will be successful in obtaining any, or all, of that relief is a different matter.

18. On 28 May 2021, in the wake of the publication of the reasons summarily dismissing the permanent stay application brought by Mineralogy and Mr Palmer, the Chief Justice issued orders in terms that (folio 180):

    (1)The first and second defendants' chamber summons filed 5 January 2021 (Permanent Stay Application) is dismissed. 

19. By order 8 of those orders, this action was then referred back to me as its case manager, essentially for the purpose of re-progressing the by then, somewhat interrupted interlocutory progress of the action to a trial determination. 

My 23 June 2021 directions for trial

1. That history essentially all led to a trial directions hearing of 23 June 2021, at which time at the behest of the CITIC Plaintiffs, I fixed provisional trial dates across the requested three months of trial time in 2022, commencing on 31 January 2022. 

2. Within the 23 June 2021 trial timetable orders programme, provision was made for exchanges of witness statements or witness outlines, which (after the relevant extensions of 26 August 2021 (folio 214) and 22 September 2021 (folio 224)) was fixed for filing by 18 October 2021 and with responsive statements to follow thereafter.  Provision was also made for the exchanges of expert evidence with reports in respect of identified issues, to be filed by 22 November, with responsive expert reports due by 20 December 2021 (again after extensions on a first exchange basis).  Other facilitative directions were also issued at that time. 

3. As mentioned, order 6(a) of those 23 June 2021 trial directions provided a last opportunity to Mineralogy and Mr Palmer to amend further and without leave their respective pleaded defences.

4. There had already been by that time, a considerable number of prior defence pleading iterations lodged in the action on behalf of Mineralogy as first defendant.  Nevertheless, this order provided a further opportunity to amend the last defence pleading iteration filed at 17 September 2020 (folio 121) - which was then Mineralogy's second further amended defence to the statement of claim.  The order was not strongly opposed and so, was permitted by that trial direction.

5. With one extension of time to the originally allowed arrival date of 6 August 2021, there eventually emerged Mineralogy's third further amended defence (the 3FAD) of 17 August 2021, responding to the plaintiffs' statement of claim (SOC) (folio 212). 

6. This is an extensively pleaded document of some 144 pages.  Its length however, is not the issue - given it seeks to engage against the SOC of the CITIC Plaintiffs which of itself was of 172 pages as filed in the Federal Court - from where the action was originally commenced on 23 May 2019. 

7. The SOC was in part, a subject of some preliminary explication in my earlier interlocutory reasons in this action - delivered on an earlier strike out application brought then against aspects of an earlier iteration of Mineralogy's pleaded defence:  see Sino Iron Pty Ltd v Mineralogy Pty Ltd [2020] WASC 311, delivered 1 September 2020.

8. Having provided that relevant background, I turn to discuss the CITIC Plaintiffs' position as regards its present strike out application in greater depth.

The present strike out application

1. As mentioned, the present strike out application by the CITIC Plaintiffs against parts of Mineralogy's 3FAD came to be filed under their chamber summons of 13 September 2021.  The application seeks to strike out various 3FAD paragraphs as they are identified in Schedule 1 to that summons - which pleading amendments came to be introduced under the latest tranche of amendments to Mineralogy's defence pleading. 

2. In particular, the present application seeks to strike out as failing to disclose any reasonably arguable defence, alternatively as an abuse of process, various amendments introduced into the 3FAD at 17 August 2021, being:

   Schedule 1

Defence Plea	Parts of the 3FAD sought to be struck out
Fulcrum Pleas	[8A], [10A], [15A]-[15J], [131(d)(iii)], [142(aB], [147(aB)], [148(a)], [159(a)], [182AA(e)], [183(bC), [192(aA(ii)], [203(d)]
SRF pleas	Particular (b) to [58(c)], particular (a) to [140(b)(ii), [203d)]
GST pleas	Particular (h) to [140(b)(ii)], [203(d)]
Royalty pleas	Particular (a) to [58(c)], particular (i) to [140(b)(ii)], [203(d)]

1. I should also mention that the State as third defendant was not affected by the present interlocutory application.  It sought and was granted leave not to appear or to participate at the hearing of the present application on 6 October 2021. 

Consensual excisions

1. As matters unfolded, an excision of some of the impugned 3FAD amendment pleas became essentially uncontroversial as between the parties by the time of the hearing of the present application.  I will return to identify these excisions later in the reasons.

2. Further, an aspect of the application concerning the CITIC Plaintiffs' request for some aspects of further particulars to the 3FAD (par 2 of the Plaintiffs' chamber summons) also came to be resolved - on a basis that particulars be provided by Mineralogy by 18 October 2021 (see afternoon sitting ts 6).

The impugned 3FAD Fulcrum Purposes pleas

1. The essence of the core remaining interlocutory grievance pursued against aspects of the 3FAD sees the CITIC Plaintiffs complain that, to a large degree, the new 3FAD pleas addressing so-called 'Fulcrum Purposes' merely import over to the 3FAD, in effect on a 'cut, paste and drag' basis, wholesale components of the old APOC document pleas. 

2. These are, as discussed, the former APOC 'Fulcrum Purposes' allegations as had been previously raised by Mineralogy and Mr Palmer within the APOC context of them then seeking a permanent stay of the present action - based on alleged collateral abuse of process principles.  But at 28 May 2021, that stay challenge was summarily dismissed

   
   

   - under the orders of the Chief Justice.  For a time, there had been an appeal filed with the Court of Appeal against that decision, by Mineralogy.  But the appeal notice came to be unilaterally discontinued only a few days later.   

3. Hence, any attempt by Mineralogy at this time to revive, or to reagitate under the 3FAD pleas, what were the summarily dismissed aspects of its former APOC Fulcrum Purposes pleas, or to seek to argue them out yet again on some collateral basis via the 3FAD, must be a clear abuse of process not to be tolerated.  

1. That is, in effect, the challenge raised by the CITIC Plaintiffs on the present application against the as identified Fulcrum Purposes aspects of the 3FAD.  I note the challenge is firmly rejected and resisted by Mineralogy and Mr Palmer.

Schedules A, B and C - the alleged reagitation by the 3FAD of the APOC Fulcrum Purposes pleas?

1. For the purpose of facilitating an orderly disposition of the present strike out application, the parties exchanged written submissions concerning their disputed issues.

2. The CITIC Plaintiffs' outline of written submissions of 27 pages contains what is a helpful comparative table provided as a Schedule 2 in those submissions (see folio 222 at page 26).  The table contrasts the new amendment Fulcrum Purposes pleas of Mineralogy under its new 3FAD - against what Mineralogy and Mr Palmer had previously put forward under their APOC contentions (folio 167).  A close correlation of common text as demonstrated in this table, is clearly established.

3. To avoid unnecessary clutter, I will incorporate that comparative table as a Schedule A to these reasons.  I will also attach to these reasons, as Schedule B, a copy of the first and second defendant's APOC points of claim of 12 April 2021 as they ultimately came to be considered by Quinlan CJ on the earlier summary dismissal application. 

4. A further Schedule C to these reasons will incorporate pars 15A through 15AJ from out of Mineralogy's 3FAD, all of which (and more) are challenged on the present strike out application.

5. It is apparent from the Schedule A comparative table that there presents in the 3FAD a situation - not merely of some level of overlap, but instead a substantial textual identity between the former APOC pleas from out of pars 7 through 52 of that document - once they are measured against the impugned 3FAD Fulcrum Purposes amendment pleas.

6. What is also readily apparent is that the new 3FAD amendment pleas once again address a so-called Fulcrum Group and the so-called Fulcrum Purposes of the CITIC Plaintiffs.  To the as repeated 'Fulcrum Purposes' end, I draw attention to Mineralogy's key pleas under par 15R(a), (b) and (c) and then, at par 15S of the 3FAD (see Schedule C). 

7. Although not specifically defined by the 3FAD, the term 'Fulcrum Purposes' was confirmed by senior counsel for the defendants at the hearing (afternoon sitting ts 35), as informally so defined by reference to the stated purposes of the Fulcrum Group, as they are identified at par 15R.  Subsequent 3FAD pleas use the term 'Fulcrum Purposes' on that basis.

8. It is necessary then to focus upon the crucial 3FAD Fulcrum Purposes plea found under paragraph 15R.  It reads:

   The purposes of the Fulcrum Group included:

   a.to achieve the Contract 'Normalisation' Objective;

   b.to recoup the additional costs of developing the Sino Iron Project in paragraphs 15M(b) and (c) above from Mineralogy;

   c.to seek to sterilise Mineralogy's other valuable mining tenements; confound the evident commercial intent of the sophisticated commercial arrangements the parties agreed to; and  render the plaintiffs the one and only miner that Mineralogy must sell it's other rights to, the other tenements having been rendered unsaleable and unusable by Mineralogy as a miner. 

9. I must record that for the present dispute, the CITIC Plaintiffs expressly eschew that their strike out challenges are grounded at all upon conditions of res judicata or issue estoppel - by reason of the APOC and the reasons and the summary dismissal orders of the Chief Justice, as mentioned.  No such arguments are put.

10. Instead, the strike out controversy over aspects of 3FAD sees the CITIC Plaintiffs raising challenges of no reasonable defence and of abuse of process.  They commence the challenges by highlighting the established significant overlap as between the former APOC Fulcrum Purposes pleas, measured against what has since emerged as the subject matter of the impugned amendments the subject of the 3FAD. 

11. But the close textual similarity of the pleas is not itself the problematic issue.  The similarity is merely the starting position.  The CITIC Plaintiffs' strike out contentions are deeper.  The CITIC Plaintiffs complain, in effect, of the recalcitrance of Mineralogy and Mr Palmer by seeking to reagitate by the 3FAD observed Fulcrum Purposes pleading amendments - what are, in effect, the same old APOC grievances, albeit now re-manifesting in the 3FAD under a different chapeau. 

12. Building from the close textual similarity, there emerged the main strike out contentions of the CITIC Plaintiffs - that the newly arrived at 3FAD Fulcrum Purposes pleas can ultimately go nowhere, even arguably, as providing any level of reasonable defence for Mineralogy at the looming trial, or alternatively, that the pleas raise and constitute an abuse of process.  

13. To understand these contentions, it is necessary to expose the SOC pleaded causes of action which form the basis for Mineralogy's pleaded 3FAD Fulcrum Purposes contentions.

Pleadings context to the present strike out application

1. At the future trial, the CITIC Plaintiffs' pleaded causes of action from out of the SOC (very broadly summarised) are framed on them seeking against Mineralogy and Mr Palmer:

   (a)contract relief;

   (b)statutory relief for contended statutory unconscionable conduct by Mineralogy (in which it is contended Mr Palmer participated personally as an accessory); and

   (c)two estoppel relief pleas somewhat different in character, put against Mineralogy. 

2. The first of the SOC estoppel pleas contends for a series of representations allegedly arising from the conduct of Mineralogy over time - and on which the CITIC Plaintiffs contend they have subsequently relied, to their fiscal detriment.  To that extent, the plea presents as in the nature of an orthodox equitable promissory estoppel claim. 

3. Allied to those contentions is a further but distinct SOC plea raised in the alternative by the CITIC Plaintiffs.  This estoppel plea contends for relief on the basis of what is known as an estoppel by convention.  This different genre of estoppel is grounded on showing mutual conduct over time upon a common assumption.  Hence, this genre of estoppel is more in the character of an estoppel in pais.  That was explained by Dixon J (as his Honour then was) in Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507 at page 547 and later again in Grundt v Great Boulder Goldmines Pty Ltd [1937] HCA 58; (1937) 59 CLR 641, at page 676.

4. For their part, Mineralogy and Mr Palmer emphatically reject any contention that they are seeking by the 3FAD to reagitate again the former, failed (Williams v Spautz) abuse of process challenge which became the subject of summary dismissal orders of 28 May 2021.

5. They contend instead that their new 3FAD Fulcrum Purposes pleas, which undoubtedly do repeat a great deal of the same textual material as the former APOC pleas, carry a distinct and legitimate defensive relevance at the looming trial and so, do provide a legitimate platform to assist their arguable defences at the trial.

6. It is contended by Mineralogy and Mr Palmer that such pleas (bearing in mind the interlocutory strike out standard requires only reasonable arguability upon an application of the present nature), hold a legitimate potential to engage against and thereby to assist the defendants' defences raised in relation to issues around the CITIC Plaintiffs' true corporate purposes or objects.  That defence presents, they say, particularly from a suggested holding by the CITIC Plaintiffs of rival Fulcrum Purposes corporate objectives which are put, defensively against, or be seen to stand as inconsistent with, the CITIC Plaintiffs' contended statutory relief for unconscionable conduct, or by way of undermining some elements of the two estoppels (particularly against reliance and detriment) that the CITIC Plaintiffs ultimately pursue under their SOC. 

7. Mineralogy and Mr Palmer also say that the 3FAD Fulcrum Purposes which they seek to raise at the future trial concerning the par 15R as identified purposes, are relevant to stand and be put against any ultimate grant of what is discretionary equitable relief sought - by way of the contended permanent injunctions as ultimately sought by the CITIC Plaintiffs. 

8. These resistance arguments are expanded upon in the written outline of submissions provided on behalf of Mineralogy and Mr Palmer of 4 October 2021 (folio 226) and by senior counsel for the defendants at the hearing.  I discuss more of the content of those resistance submissions later.  For now, I turn to mention the evidence before me in respect of the present strike out application.

Evidence relied upon

1. First, I note that on a strike out application taken against a pleaded cause of action or a pleaded defence, evidence is generally not admissible.  The pleas must be taken at their highest for the purposes of evaluating the rival arguments.  Nevertheless, the CITIC Plaintiffs' present interlocutory application is supported by two affidavits of a partner from the CITIC Plaintiffs' lawyers of record, Mr David William John.  In particular, I refer to Mr John's affidavits sworn 13 September 2021 (folio 221) and 5 October 2021 (folio 232). 

2. For Mineralogy and Mr Palmer, they rely upon an affidavit of one of Mineralogy's internal legal counsel, Mr Daniel Jacobson, sworn 5 October 2021 (folio 229) and on an earlier affidavit of Mineralogy's lawyer of record, Mr Kane Christopher Jones, sworn 26 November 2020 (folio 127). 

Essential issues

1. There was no disagreement between the parties over the legal principles applicable to interlocutory pleading strike out applications generally.   The central question that eventually distils for the present pleading strike out application - is whether or not there is any arguable long term defensive trial utility ascertainable for the challenged pleas within the 3FAD, especially viewing par 15R and its impugned Fulcrum Purposes pleas - which are the subject of Mineralogy's 3FAD and reiterated by Mr Palmer's own adoptive defence pleading of 17 August 2021 (folio 211).  

2. As mentioned, the textual similarity as between the former APOC contentions and the new Fulcrum Purposes pleas is not itself the issue.  If there is found to be some genuinely arguable defensive utility in the new 3FAD pleas then they must remain intact.  Those matters should proceed to a trial determination. 

3. I should reiterate that a part of the arguments as advanced by the CITIC Plaintiffs and as is elaborated upon in Mr John's affidavits, also seeks to raise suggested allied case management considerations of utility and proportionality supporting the contended striking out and disallowance of the presently impugned 3FAD Fulcrum Purposes pleas.  A likely consumption of even more trial time and resources, particularly as regards an accompanying enhanced scope for wider discovery requests by Mineralogy, is a subject of Mr John's second affidavit, sworn 5 October 2021. 

4. Under par 7 of Mr John's second affidavit, he provides a table that is attachment DWJ-16.  This table compares the categories of discovery as were previously sought by Mineralogy for the purposes of its previous permanent stay application based on the APOC - against categories of requested further discovery as are presently sought by Mineralogy by reference to its current 3FAD Fulcrum Purposes pleas (see Schedule 1 to the defendants' written submissions).  Again, the overlap and similarity is stark. 

5. At par 8, Mr John observes that by reference to his table, there is a significant overlap as between the contrasted sets of proposed discovery categories.  Some 15 of the former 20 permanent stay requested discovery categories are still sought by Mineralogy as a part of a 3FAD Fulcrum Purposes discovery exercise.  No new discovery categories were added as part of the 3FAD pleading amendments.  None of that looks to be disputed.  But is said by Mineralogy to be wholly beside the point.

6. The CITIC Plaintiffs particularly emphasise as insightful, the as requested 3FAD Fulcrum Purposes discovery categories 11, 12 and 13 (which are identical between the two lists of discovery requests).  Those discovery categories seek from the CITIC Plaintiffs documentary materials being (see attachment DWJ-16 to Mr John's second affidavit):

   11.The minutes of all meetings of the Fulcrum Group.

   12.Documents recording or referring to the CITIC parties' consideration of the merits of their defences in the RCA Proceeding.

   13.Documents recording or referring to the CITIC parties' consideration of the merits of the defences in the RCB Proceeding.

7. A few of the impugned 3FAD Fulcrum Purposes pleas the subject of the present strike out application essentially came to be abandoned by senior counsel for Mineralogy and Mr Palmer at the hearing.  I will identify the conceded excisions below.

Conceded excisions - SRF, GST and Royalty Pleas

1. Under Mineralogy's and Mr Palmer's written submissions of 4 October 2021, certain excisions from the 3FAD came to be accepted - by reference to pleas challenged under Schedule 1 of the CITIC Plaintiffs' chamber summons of 13 September 2021. 

2. Essentially, the 3FAD's SRF pleas, GST pleas and Royalty Pleas are no longer defended, leaving the residual debate to focus exclusively upon the merits or demerits of the so-called 3FAD's Fulcrum Purposes pleas (see pars 2 and 3 of the defendants' written submissions of 4 October 2021). 

3. I formally record that for the:

   (a)Royalty pleas, Mineralogy's written submissions say that the royalty pleas (being particular (a) to par 58 c. and particular (i) to par 140 b.(ii) of the 3FAD) are not pressed - upon a basis of interdependence (see par 3 of Mineralogy's written submissions).  However, I note that there is a reformulation of that plea at the end of Mineralogy's written submissions (par 61) which, subject to one point of clarification, senior counsel for the CITIC Plaintiffs said at the hearing they did not wish to persist in striking out.  The qualification concerns the concluding words of the proposed revised plea under (i), reading 'and the second defendant repeats and relies on paragraphs 15(U) to 15(AJ) above'.  Such concluding words still remain potentially controversial - since they are tied to the eventual success or failure of the Fulcrum Purpose 3FAD amendments.  Subject to that point, the CITIC Plaintiffs accept that the revised 3FAD par 140b.(ii) pleas seen at par 61 of Mineralogy's and Mr Palmer's written submissions, can be tolerated for a trial resolution. 

   (b)GST pleas under particular (h) to par 140b.(ii) are no longer defended (see Mineralogy's and Mr Palmer's written submissions at par 2 item 1(b)).  The plea is also seen as struck through at page 19 of those written submissions. 

   (c)SRF pleas seen under the 3FAD at particular (b) to par 58c. can also be excised (see Mineralogy's and Mr Palmer's written submissions at par 2, item 1(a)). 

4. These 3FAD excisions are made without any admission by the first and second defendants.  However, bearing in mind the terms of the SRF reasons at first instance, the SRF excisions in particular would follow as a matter of course, given the trial outcome of the SRF proceedings (noting, of course, that the SRF decision is pending appeal). 

5. I turn back now to render some preliminary rulings concerning the 3FAD Fulcrum Purposes pleas which remain as the major area of challenge under the present strike out application. 

Preliminary rulings

1. Notwithstanding the close textual parallel with the contents of Mineralogy's former APOC pleas, my assessment is that the 3FAD pleas by Mineralogy, as seen under par 8A and thereafter at par 10A, largely present as factual pleas. 

2. Consequently, these pleas are arguably capable of legitimately serving a purpose of providing possibly relevant factual background context or potential extrinsic facts.  They, in turn, are possibly relevant to the exercises in contractual construction required at the trial, around ascertaining the true meaning and interpretation of various express terms, or towards finding the advocated ad hoc implication of implied contractual terms.  These tasks look to be one integral part of the CITIC Plaintiffs' case at the trial.  A similarity to previous pleas raised under pars 7 through to 18 of the APOC, is interesting - but it is not at all determinative.  I do not assess such factual 3FAD pleas to be illegitimate.  Hence the pleas at 3FAD pars 8A and 10A can remain for trial.

3. There were also some late concessions offered by senior counsel for Mineralogy and Mr Palmer during the hearing on 6 October 2021, towards 3FAD Fulcrum Purposes pleas that could be excised (see afternoon sitting ts 17).  Consequently, the following impugned 3FAD Fulcrum Purposes pleas were no longer defended, being:

   (a)the plea under 3FAD par 142aB reading, 'says that the MCP's were proffered by the plaintiffs for the Fulcrum Purposes';

   (b)the plea under 3FAD par 147aB reading, 'says that the alleged Further Necessary Tenure Request was made for the Fulcrum Purposes'; and

   (c)the plea under 3FAD par 148a reading, 'the first defendant says that the Re-Purposing Request was made for the Fulcrum Purposes'.

4. Consequently, those three  (3) 3FAD pleas above, will be removed consensually.

5. Possibly also conceded, albeit not as clearly, was 3FAD par 159a.

   
   

   - reading 'says that the PoW Request was made for the Fulcrum Purposes' (see ts 17).

6. Aside from those excised pleas, it is apparent the 'heart' of the strikeout concerns advanced by the CITIC Plaintiffs was directed against what manifests by the 3FAD pleas as seen under par 15A through to 15AJ.  Because of their significance, as mentioned, I have assembled these impugned 3FAD pleas together at Schedule C of these reasons. 

Defendants' resistance position concerning Fulcrum Purposes pleas (pars 15A to 15AJ)

1. First, I note that on my view, to the extent the 3FAD par 15A to 15AJ pleas only raise background facts, they can remain for the trial - as they hold potential to arguably feature in the interpretive context, or (possibly) to bear upon the grant of final equitable or statutory injunctive relief.  To that extent, I note that par 15A may require some correlative revision, depending on which of these pleas stands or falls by the ensuing determinations. 

2. At page 20 of the afternoon sitting transcript, senior counsel for Mineralogy and Mr Palmer summarised the defendants' resistance position as regards the strike out application as follows:

   MR DUNNING QC:  Now as to 15R(a), well, the Chief Justice has concluded that that's not in dispute, and your Honour can take that from the way the case was argued earlier today by the plaintiffs.  They say that's a good thing.  Well, whether that's a good thing or a bad thing.  We don't put any sinister motive on it here.  We simply say it's inconsistent with the common assumption.  Then - and, your Honour that's dealt with in our written submissions at paragraphs 40 to 42.  In relation to 15R(b), that's dealt with in our written submissions at paragraph 43.  But can I particularly give your Honour reference to 15S(a) and (g) ... and 15N … 

3. Senior counsel continued (at page 20):

   … and then, your Honour, in relation to 15R(c), can I give your Honour the reference to paragraph 44 of our written submissions and also the prayer for relief, annexure 11 to the statement of claim and those pictorial depictions at the beginning of our defence … 

4. Senior counsel then said:

   … because what gives them their context is where they are deployed later on and how that's used in the statement of claim ...

5. To more fully expose the defendants' positions in their proper context in terms of a potential defensive response to causes of action as pleaded in the SOC - it is necessary to provide some greater insights towards the contents of the SOC, particularly in relation to the dual pleas of estoppel (conventional estoppel and promissory estoppel) and also to the statutory unconscionable conduct pleas put against Mineralogy and Mr Palmer. 

1. Naturally, these need to be read and evaluated in their full context (ie, in the context of the 172 page SOC pleading).  However, for present purposes I highlight only certain SOC paragraphs.  First, is the plaintiffs' conventional estoppel plea and its underlying contention about all parties being held to a suggested common position or assumption.  The plea is found under par 182 of the SOC.

2. SOC par 182 reads:

   Further or alternatively, Mineralogy adopted a common position or assumption with Sino Iron, Korean Steel, CITIC and CPMM that Mineralogy would take such steps as were necessary to enable the location of infrastructure, facilities and activities for the efficient and economic carrying out of the Sino Iron Project on the Mineralogy Tenements, and to enable the exercise by Sino Iron and Korean Steel of their rights to mine 1 billion tonnes each of magnetite ore and to produce and export up to 13.8 million tonnes each of magnetite product per annum, including by:

   (a)approving and submitting to the SA Minister under the State Agreement proposals reasonably required to further progress and implement the Sino Iron Project;

   (b)granting access to, and/or use of, further tenure reasonably required by Sino Iron and Korean Steel for the purposes of the Sino Iron Project, for no additional monetary consideration; and

   (c)taking steps reasonably required by Sino Iron and Korean Steel to enable them to exercise rights to access, and/or use, tenure for the purposes of the Sino Iron Project. 

   (Common position or Assumption) 

3. See also subsequent references to a common position or assumption under SOC pars 183, 184, 185, 188 and 189.  The particulars to par 182 rely upon matters as pleaded in earlier pars 62 through 130 - as regards the evidentiary basis for the as contended common position or assumption.

4. Apart from the SOC plea concerning a common position or assumption, there is a further plea of corporate knowledge concerning Mineralogy

   
   

   - raised under SOC par 183(b) and to the effect that Mineralogy, along with the CITIC Plaintiffs and CPMM:

   (b)knew or intended that the other would act on that basis.

5. I call attention to these particular SOC pleas whilst evaluating the defendants' underlying present submission that their 3FAD par 15R Fulcrum Purposes pleas should be allowed to remain for the trial.  The submission is made on the basis that the matters raised by the Fulcrum Purposes pleas are said to be irreconcilable or inconsistent with, or would assist in negating or undermining the SOC contended common assumption or knowledge and intent that is alleged concerning the CITIC Plaintiffs' contended estoppel by convention. 

6. But a question that must be raised against that submission by Mineralogy and Mr Palmer, is whether the suggested level of incongruity is necessarily the case - since hypothetically, there is no reason why multiple corporate objectives or purposes could not all reside together within one corporate organisation - especially a complex overseas based corporate goliath of the Hong Kong stock exchange.  I return to resolve that issue later. 

7. Next, I turn to expose further the SOC promissory estoppel plea at par 191 of the SOC under the heading 'Estoppel By Representation And Conduct'. 

8. This SOC plea presents in the following terms:

   Further or alternatively, Mineralogy induced Sino Iron, Korean Steel, CPMM and CITIC to adopt the Reasonable Expectations. 

9. The SOC pleas as to corporate belief manifest by a plea of reliance under SOC par 192 by reference to the 'Reasonable Expectations' of the CITIC Plaintiffs and then, a following plea of their 'detriment' (SOC par 193) concerning the CITIC Plaintiffs' alleged suffering of harm, in effect, as a result of Mineralogy's alleged failures to fulfil the 'Reasonable Expectations' (as defined).

10. In SOC par 131, the SOC defined 'Reasonable Expectations' are encountered, in the following terms:

    131.By reason of the matters pleaded in paragraphs 62 to 130 above, CITIC, CPMM, Sino Iron and Korean Steel reasonably expected that Mineralogy would take such steps as were necessary to enable the location of infrastructure, facilities and activities for the efficient and economic carrying out of the Sino Iron Project on the Mineralogy tenements, and to enable the exercise by Sino Iron and Korean Steel of their rights to mine 1 billion tonnes each of magnetite ore and to produce and export up to 13.8 million tonnes each of magnetite product per annum, including by:

    (a)approving and submitting to the SA Minister under the State Agreement proposals reasonably required to further progress and implement the Sino Iron Project;

    (b)granting access to, and/or use of, further tenure reasonably required by Sino Iron and Korean Steel for the purposes of the Sino Iron Project, for no additional monetary consideration; and

    (c)taking steps reasonably required by Sino Iron and Korean Steel to enable them to exercise rights to access and/or use, tenure for the purposes of the Sino Iron Project.

    (Reasonable Expectations.)

11. Lastly, I refer to the SOC pars 181, 188, 198 and 200 pleas concerning alleged statutory unconscionable conduct contrary to the Australian Consumer Law (ACL).  In these pleas, something of an intersection arises as between the alternative plea concerning a suggested wrongful departure by Mineralogy from the position of the common assumption (see par 188), by reference to the conventional estoppel plea.  An extra SOC plea raised in the alternative, is that the departure from the common position of assumption was an unconscionable departure by Mineralogy.  There is also an observable intersection of the SOC unconscionable conduct pleas, with the promissory estoppel plea - by reason of an incorporation (at par 200) of matters in SOC par 198. 

12. Unconscionable conduct pleas under the SOC are found specifically at par 181(d) and par 200(d) - made by reference to contended and continuing contraventions against s 21 of the ACL.

13. Upon examination, the SOC pleas seeking statutory relief seem to be grounded upon alleged 'conduct', either by act or omission by Mineralogy.  Therefore, the possible impacts of 3FAD Fulcrum Purposes contended as residing in the corporate minds of the CITIC Plaintiffs, do not look to bear against, even arguably, an existence and ascertainment of the alleged 'conduct', by way of such acts or omissions.  Either the act or omission conduct is proved as a fact at the trial, or it is not.  Intent is not the point for this cause of action.

Further observations

1. With the benefit of these brief insights towards the estoppel causes of action and the statutory unconscionable conduct cause of action as pleaded by the SOC, I can turn back to the defensive argument elaborations found in the defendants' written submissions - as mentioned by senior counsel for the defendants at the hearing on 6 October 2021.  I have already addressed par 40 through to par 43 of Mineralogy's written submissions concerning a so-called Contract Normalisation objective of the CITIC Plaintiffs and the fact that such an objective, of itself, is benign and so can go nowhere defensively for Mineralogy.

2. Towards the pivotal 3FAD par 15Rc. Fulcrum Purpose plea, par 44 of the defendants' written submissions was emphasised by senior counsel for the defendants.  It reads:

   44.The purpose of seeking to sterilise Mineralogy's other valuable mining tenements pleaded in paragraph [15R](c) [sic] of the 3FAD as part of the 3FAD Fulcrum Purposes may be inferred from the relief sought in paragraph A of prayer for relief in the SOC and depicted in annexure 11 to the SOC and the Not Presently Exploited Tenements Mining Areas Depiction, MCP Interference with Common Use Areas in the Mineralogy Tenements Mining Areas Depiction, MCP Interference with Common Use Areas in the Port (Landslide) Areas Depiction and the MCP Interference with Common Use Areas in the Port (Waterside) Areas Depiction in the 3FAD.

3. To unlock that somewhat dense submission (which is difficult by regard to an excessive accumulation of proper noun defined terms), I approach the task by looking at par A of the prayer for relief in the SOC (since it is referred to).  This reads:

   A.Orders for specific performance, alternatively injunctions under s 232 of the ACL, alternatively orders under ss 237 and 243 of the ACL, alternatively injunctions under the general law, requiring Mineralogy to, forthwith:

   a.jointly with Sino Iron, submit the 2017 Sino Iron MCP to the SA Minister for approval under the State Agreement; and

   b.jointly wth Korean Steel, submit the 2017 Korean Steel MCP to the SA Minister for approval under the State Agreement.

4. Even with the benefit of seeing that SOC prayer for relief, the contended 3FAD par 44 inference as to a 'sterilising' purpose, remains unacceptably elliptical.  A resort to annexure 11 of the SOC does not alleviate the need for more help. 

5. At the hearing I put this to senior counsel for the defendants (afternoon sitting ts 22):

   What you're really saying is the tripartite Fulcrum Purposes as they're now formulated, which is normalisation, recoupment of losses and sterilising and confounding, simply can't be compatible with you holding such common assumptions.  But you don't say why that is.

6. Responding to that proposition, senior counsel for Mineralogy and Mr Palmer observed, by reference to the defendants' response to the SOC promissory estoppel plea (at ts 23):

   But ultimately what has to be proved and what is presumably deployed for is to meet those elements of the promissory estoppel that there was reliance, that is, you believed it.  Now, it's hard to both believe we're simply proceeding on this basis and at the same time be trying to renegotiate the contract, because if you feel the need to renegotiate the contract, you're not believing it, and if you feel the need to renegotiate the contract, you're not relying on it.

7. Mr Dunning QC's response continued (at ts 24):

   - you can't in the one breath say, 'I want to renegotiate the contract because its terms are not satisfactory to me', and say in the next, 'But, look, we were operating that contract on a conventional understanding' or 'I was content with that contract because you had represented certain things to me.'  And it's certainly not a matter to be determined summarily.

8. The utility submission for the 3FAD Fulcrum Purposes pleas, as further explained by senior counsel (see ts 31), continued:

   ... in our respectful submission, the allegations in 15A to AJ to the extent they're employed, subject to those four inconsequential references I've given your Honour to, serve an efficient purpose within the defence, they're responsive to the way the plaintiff has framed the plaintiffs' claim, because it's the plaintiff who makes purpose relevant here, and they - even if your Honour entertained the view that their prospects were checked, that's not a basis for striking them out.  It's not a basis for striking them out because experience has long shown us that, in fact, points like this when people are allowed to put their evidence on do illuminate particularly in this sort of case matters relevant to a viable defence ... And the compendious expression of 'reasonably expected' can't be used as a way to get around the fact that they have to plead reliance, they have to plead they acted to their detriment and they have to plead and prove that it was unconscionable to resile from it, and these matters will go to that.

9. After some further discussion concerning a possibly diverting label of 'Fulcrum Purposes' as deployed by the 3FAD and its potentially distracting influence away from the true defensive issues - senior counsel for the defendants concluded (at ts 35):

   Frankly, if it will stop us talking about it, I'm happy to nominate another word for it, but it's not said to have a sinister purpose.  The whole sinister thing is just, with the greatest of respect, frankly, a sign that, you know, the red herring finds, you know, all of the Swan, Yarra and Brisbane rivers agreeable in the spring because we're not alleging it's sinister.  We don't allege it in the pleading.  I've made that clear today.

   The point we raise is that it is said against us that there was this common assumption as to things, as to certain matters, and we say 'No, you didn't.  The parties didn't share that common assumption because you would have had no need to want to - you would have no need to attempt to renegotiate it if the parties were acting on a common assumption and you relied upon them to do so'.  And that's all it goes to.  And it doesn't - there are no words that say anything different to that.

More 3FAD Fulcrum Purposes plea evaluations

Par 15S - evidentiary platform for the 3FAD Fulcrum Purposes pleas

1. Having exposed Mineralogy's and Mr Palmer's responsive submissions and position on the present strike out application, I turn to an evaluation of the more challenging 3FAD Fulcrum Purposes pleas in dispute.

2. 3FAD par 15S (noting the express linkage as between the seven documents and matters as mentioned) aligns almost precisely to the former evidentiary pleas used by Mineralogy to support the old APOC Fulcrum Purposes at the time, under APOC subpars 35(e)(i), (ii), (iii), (iv), (vi), (viiii) and (x). 

3. Those same evidentiary matters now seen in 3FAD par 15S have thus (along with others not used by the 3FAD), been a subject of close evaluation under the reasons of Quinlan CJ in CITIC v Mineralogy [No 2] at [219] - [224].  Quinlan CJ's evaluations resulted in the end conclusion that those same evidentiary matters did not sustain the APOC's then stated Fulcrum Purposes.  And neither do they here

   
   

   - despite a slight terminology 'tweaking' of the new 15Rc. pleaded Fulcrum Purpose plea.

4. 3FAD par 15S reads:

   15SThe Fulcrum Purposes are recorded in, and/or may be inferred from, the following documents and testimony:

   a.The Project Fulcrum Budget (Mineralogy) dated 30 September 2010 budgeted for a contractual obligation to pay:

   (i)$20m to the Site Remediation Fund by June of 2011 (at rows 32 and 500);

   (ii)$14.8225 m for Royalty A by December 2011 (rows 40, 570-575 and 612); and

   (iii)$280.630515 m for Royalty B by December 2011(rows 41, 577-595 and 613);

   b.CITIC Pacific Mining Management, Department Plan and Budget for the calendar year 2013, dated 16 October 2012 recorded:

   (i)the reason for 'Project Fulcrum' was '[d]ue to the poor contracts that were entered into in 2006 and 2008 and on the Sino Iron and Korean Steel Projects, there is a requirement to normalise the contracts as far as possible towards industry standards' (at .0077);

   (ii)'the forecast contractual obligations to pay royalties to Mineralogy under the CITIC Negotiated Agreements of $5.265m for Royalty A, $72.734m for Royalty B and $230.073m for what it described as the Royalty Penalty for the calendar year 2013' (at .0051);

   (iii) '... there is a dispute related to royalties that is currently between the parties.  It is expected that this dispute may affect the timing of payment in relation to the Royalty Penalty and Royalty Component B as such the following has been removed from the 2013 base budget forecast.  A request has been made to ensure that the following [being the $230.073m and $72.734m] can be easily accessed if required to fulfill a short notice requirement.' (at .0051) Thus, the purpose for the defending of the proceedings was to delay a payment known to be payable, rather than attempt to vindicate a defence that was believed to be arguable;

   (iv) in relation to the Site Remediation Fund and the request for payment into the fund by Mineralogy, '[t]he request from Mineralogy was denied on the grounds it was unreasonable, however it should be noted that there is a contractual obligation for Sino Iron and Korean Steel to contribute towards a Site Remediation Fund.  Negotiations are occurring with Mineralogy to explore other options such as a corporate guarantee to fulfil this obligation.  If this negotiation is successful, then it will require changes to the project agreements to solidity [sic] fulfillment of this obligation.  Either way, this is a risk that is currently being managed by the Special Projects team.  Consequently, a request has been made to ensure that ~$75Million can be easily accessed if required to fulfill this requirement.' (at .0050): [CPM.518.004.0047]

   c.On 16 October 2012 Ms Dillon emailed Dr Hua and Mr Walkland:

   (i)recording 'Attached is updated after conversation with Charles.  He has asked me to move $75 Million and the Royalty B + Royalty Penalty to 2014.  The reason being that the Royalties will be in dispute, and we will be negotiating for guarantees instead of payment of the Site Remediation Fund.';

   (ii)such correspondence recorded the belief in an existing contractual obligation to make the payments and the use of the defence of the proceedings to defer such payments:  [CPM.523.003.1670]

   d.Notwithstanding the acceptance of the obligations in relation to Royalty Component A and B under the CITIC Negotiated Agreements as recorded at sub-paragraphs 15S(a)(i), 15S(a)(ii), and 15S(a)(iii) above, Sino and Korean refused to pay any of the royalties until forced by court order and defended proceedings for them to pay those royalties as alleged in paragraphs 15U to 15AJ below;

   e.During a telephone call on 13 February 2013 between Mr Woods of Allens and Mr Prescott of HopgoodGanim, Mr Woods said words to the effect that assuming litigation in respect of Royalty Component B is commenced and that eventually Mineralogy wins everything, bearing in mind the other litigation on foot (which was already 8 months old), when did Mineralogy think it would reach conclusion of the Royalty Component B litigation;

   f.Spreadsheet titled '2017 Risk Assessment Table' stating that a strategy to deal with 'Legal Dispute Risk' included 'Civil or criminal suit to deal with the risk' and that the statement was made in the context of disputes with Mineralogy and Mr Palmer:  [CPM639.173.2597]

   g.The normalisation of the CITIC Negotiated Agreements referred to in sub-paragraph 15S(b) above was a reference to CITIC's desire to alter the contractual arrangements with Mineralogy and Mr Palmer under the CITIC Negotiated Agreements because the commercial terms effected by those agreements were ones Sino and Korean considered unsatisfactory. (evidence of Ms M.L. Rifici in CIV 2840 of 2018, 19/11/20 t pp 320-322).

5. Against the pleas seen above, I refer generally to [225] - [229], [230] and [231] - [234] of the reasons of Quinlan CJ, where the same matters were canvassed and evaluated.  As regards the telephone call between Mr Woods and Mr Prescott (par 15Se.), see [257] - [263] of those reasons.  As to the assessment spreadsheet (par 15Sf.), see [297] - [304] and as to Ms Rifici's evidence (par 15Sg.), see the reasons at [305] - [312]. 

6. The par 15S evidentiary matters have therefore already been evaluated severally and in the aggregate by Quinlan CJ - as not arguably supporting any illegitimate, unlawful or collateral purpose.  The Chief Justice concluded at [312]:

   ... the matters relied upon by Mineralogy in support of the Fulcrum Purposes do not reveal a reasonably arguable case that the substantive proceedings have been commenced for collateral purposes …

Pars 15B, 15C, 15D and 15E - factual pleas

1. On my assessment, the following 3FAD paragraphs are essentially factual in character and can remain for the trial.  They are 3FAD pars 15B, 15C, 15D, 15E (and its subpars a through to g which are essentially documentary references). 

2. However, I disallow 15F, on the basis that it is more in the nature of a distracting assertion rather than a true factual plea (it is also in a legal sense unclear and hence embarrassing). 

3. I allow par 15G and 15H to stand, on the basis they are essentially factual as well.

1. I also allow par 15I, 15J, and 15K, on the basis they are also essentially to be seen as factual pleas. 

2. I also allow par 15L to remain, on the basis it essentially presents as a factual plea.

Pars 15M and 15N - Contract Normalisation Objective

1. Paragraphs 15M and 15N address a so-called Contract Normalisation Objective.  They manifest under a heading in the 3FAD, reading:

   CITIC forms the view it is dissatisfied with the negotiated agreements and resolves to alter them.

2. As I found in the SRF reasons in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2021] WASC 145 at [216], and as the Chief Justice later explained in CITIC v Mineralogy [No 2] at [315] - [316], such a corporate objective, even if held, is essentially benign.  It can go nowhere in terms of providing the defendants with an arguable defence. 

3. Furthermore, contrary to the submissions of Mineralogy and Mr Palmer, I do not assess the holding of an objective purpose towards one day obtaining a better contractual deal - as being of itself inconsistent with elements of the CITIC Plaintiffs' pleaded estoppel cases by the SOC.  A normalisation object, if held, would not necessarily be irreconcilable with CITIC also being wholly willing to perform all of their lawful contractual obligations to Mineralogy until the legitimate opportunity to consensually negotiate a better deal presented itself.  That happens in business.  Corporations, large and small, can also legitimately hold multiple objectives and corporate strategies at any particular time.  How they act on them is another question.  Hence, I do not assess an assumed holding of some benign or non‑sinister Fulcrum Purpose (under par 3FAD par 15R at a. and b.), as being necessarily inconsistent with, or as being irreconcilable to, or as potentially detracting from the elements of the SOC pleaded estoppels, including as to the alleged common assumption, or as to the elements of reliance and detriment in any estoppel.  In short, they could all, in theory, co-exist together legitimately in the corporate mind of an organisation at the same time.

4. Were SOC pars 15M and 15N the only irrelevant distractions in the 3FAD, I would be inclined to just ignore them - to work around them at a trial in the overall scheme of things. 

5. But those pleas also raise and carry along with them what are now to be evaluated as some unnecessary case management discovery burdens, bearing upon the trial's proximity and as pre-trial preparations necessarily intensive.  At this time, proximate to a three-month trial beginning on 31 January 2022, the par 15M and 15N pleas carry along with them too much distracting forensic baggage - which is unnecessarily wasteful, burdensome and essentially, only now of nuisance value. 

6. My end assessment, as I elaborate upon later, is that when read with the ensuing pleaded Fulcrum Purposes references (as revealed in the later 3FAD pleas at pars 15R, 15T, 15Z, 15AB and 15AH) the par 15M and 15N pleas presence only reflects an underlying recalcitrance to accept and live with an earlier defeat and to move on.  The pleas, closely evaluated, are lingering and unnecessarily distracting Williams v Spautz improper purpose or collateral purpose challenges - persisted with de facto in the face of the reasons provided by Quinlan CJ in CITIC v Mineralogy [No 2].  

7. On that basis, I assess that pars 15M and 15N are illegitimate and an abuse of process.  I cannot accept that these pleas render any arguably relevant or legitimately helpful defence contributions in the spheres as contended for by the first and second defendants. 

8. Having reached that determination, I turn to address some further arguments put by Mineralogy and Mr Palmer to defend the remaining 3FAD para 15 pleas.

Remaining 3FAD Fulcrum Purposes pleas - Defendants' attempts at differentiation

1. Paragraph 33 of Mineralogy and Mr Palmer's written submissions of 4 October 2021 submitted:

   The 3FAD Fulcrum Purposes are directed at different subject matters - necessarily provoked by the unique character of the plaintiffs' claims, framed as they are exclusively on putative extra-express terms or extra-contractual bases, in respect of these sophisticated commercial documents.  In terms, the 3FAD Fulcrum Purposes say nothing about the use of legal proceedings.  The 3FAD concerns the plaintiffs' purposes and the conduct of their relationship with Mineralogy.  (footnotes omitted)

2. But as seen, on a close examination, the new 3FAD Fulcrum Purposes pleas can still be seen as unacceptably tied to the old APOC grievance over the CITIC Plaintiffs' then illegitimately contended deployment of legal proceedings - which was summarily dismissed.  The similarity is ascertainable explicitly from the pleas seen under 3FAD pars 15Z, 15AB and 15AH. 

3. Later in the written submissions of Mineralogy and Mr Palmer, it is contended the 3FAD Fulcrum Purposes could go to establish unclean hands on the part of the CITIC Plaintiffs, and are a defence against the proposed orders for permanent injunctions (see the defendants' written submissions at par 34(k)(ii)).  If that is the case to be advanced, then the 'unclean hands' plea should have been made explicitly.  'Unclean hands' is not pleaded as such by the 3FAD.  The defendants' submissions also say that the pleas carry relevant considerations for a court exercising its discretionary powers judicially and sensibly under provisions of the ACL around a grant of statutory injunctions, including under ACL s 232, s 237 and s 243 (see written submissions at par 34(k)(iii)).  However, as I assess it, what are now clarified to be wholly benign and non-sinister pleaded Fulcrum Purposes, cannot be relevant to such an exercise.

4. The new Fulcrum Purposes pleas as they manifest under the 3FAD par 15R were seen set out earlier in [46] of these reasons.  The purposes raised under par 15Ra. and b. align closely to what was said by the old APOC.  A proposed recouping of additional costs from a contractual partner per se is benign.  These pleas are demonstrably benign. 

5. It is only from 3FAD subpar 15Rc. that there could present something possibly new from a purposive perspective - although the plea still aligns very closely to a past paragraph from Mineralogy's written submissions used in resisting the CITIC Plaintiffs' summary dismissal application as determined by the Chief Justice:  see Mineralogy's and Mr Palmer's previous written submissions of 1 April 2001 (folio 161).

Final evaluation of Fulcrum Purposes pleas

1. At the end, 3FAD par 15Rc. as a suggested Fulcrum Purpose, presents as being heavy on rhetoric but vacuous on facts.  In terms of an arguable derivation of that plea as a purpose, the ensuing 3FAD par 15S (through its subpars a. to g.) as now seen, display only the same old evidentiary source antecedents, linking back to the old APOC subpars 35E(i), (ii), (iii), (iv), (vi), (viiii) and (x) pleas forming part of the now dismissed permanent stay application.  The plea is also clarified as not being at all suggestive of anything sinister.

2. Just as the defendants failed before in the APOC setting (along with a further evidentiary matters raised in the APOC) to sustain anything sinister or improper, so here as well, they must also fail towards providing the required evidentiary foundation to even derive this Fulcrum Purpose, as contended for under 3FAD par 15Rc.  As discussed earlier, similar missing evidentiary derivation platform arguments have, in effect, already been extensively traversed under the reasons of the Chief Justice in CITIC v Mineralogy [No 2].

3. Consequently, the like evidentiary platform attempted under 3FAD par 15S, fails to provide any support towards deriving the Fulcrum Purpose 3FAD plea at par 15Rc. 

4. Furthermore, as mentioned, pleas ultimately going nowhere should not at this time (ie, close to a trial beginning) be allowed to inhibit or increase pre-trial burdens, weighed alongside all of the other preparatory pre-trial tasks that now loom to be addressed intensively by the parties between now and the commencement of a trial at 31 January 2022.

5. Derivatively to those adverse evaluations, the later Fulcrum Purposes pleas also need to be excised from the 3FAD.  They are to be assessed as both abuses of process and fail to disclose any arguable defence.

6. First, par 15O must be excised.  It reads:

   15OBy no later than August 2010, CITIC formed a group of senior executives and advisors known as the 'Fulcrum Group' or 'Project Fulcrum'.

7. Secondly, par 15P must be excised.  It reads:

   15POn or around 27 August 2010, Ms Helen Dillon was appointed as 'lead' of the Fulcrum Group.

   Particulars

   (a)Affidavit of Helen Teresa Dillon affirmed 19 November 2012 and filed in Supreme Court of Western Australia Proceeding CIV2338 of 2012 (RCA Proceeding), [15].

8. Notwithstanding an adverse history, Mineralogy and Mr Palmer strive to submit that the 3FAD Fulcrum Purposes as now articulated at par 15R, no longer carry in their new 3FAD context, any suggested abuse of process or sinister or improper purposes put against the CITIC Plaintiffs.  But that submission simply cannot be accepted once rationally measured against the ensuing text of the 3FAD pleas as seen under par 15T, 15Z, 15AB and 15AH.  

9. 3FAD par 15T reads:

   Since 2010, CITIC, Sino Iron and Korean Steel have conducted the relationship with Mineralogy according to the Fulcrum Purposes, including to apply commercial pressure to Mineralogy and alter the terms of the CITIC Negotiated Agreements.  (my emphasis in bold)

10. That plea can only be read as a plea contending for an application of illegitimate commercial pressure.  Otherwise, its presence would be irrelevant.  As such, par 15T must be excised. 

11. Likewise, par 15Z reads:

    Sino Iron, Korean Steel and CITIC did not have any genuine belief in their purported defences in the RCA proceeding, by reason of the matters pleaded in sub-paragraphs 15S above, but rather they were maintained to achieve the Fulcrum Purposes.  (my emphasis in bold)

12. Again, that observed reference to a lack of 'genuine belief' in purported defences, by reference to the achievement of the Fulcrum Purposes, can only suggest an improper or illegitimate motive in such conduct by the plaintiffs. 

13. Likewise, par 15AB reads:

    Sino Iron and Korean Steel made the contentions in the RCA proceeding to effect the Fulcrum Purposes, to apply commercial pressure on Mineralogy, to alter the CITIC Negotiated Agreements and to delay payment of sums to which Mineralogy was entitled.  (my emphasis in bold)

14. Again, a grievance as to illegitimate conduct, is irresistible. 

15. The same adverse conclusion is to be reached for 3FAD par 15AF, reading:

    Sino Iron and Korean Steel made the contentions to effect the Fulcrum Purposes, to apply commercial pressure on Mineralogy, to alter the contractual relationship and to delay payment of sums to which Mineralogy was entitled.  (my emphasis in bold)

16. Likewise for 3FAD par 15AH, reading:

    Sino Iron, Korean Steel and CITIC did not have any genuine belief in their purported defences in the RCB proceeding by reason of the matters pleaded in sub-paragraphs 15S above and paragraph 15AF above, but rather were maintained to achieve the Fulcrum Purposes.  (my emphasis in bold) 

17. Notwithstanding efforts to rationalise and defend all the amended par 15R Fulcrum Purposes pleas in the 3FAD, as now serving some different, legitimate and as was put, 'wholly non-sinister' forensic purposes at a trial (ts 35), the submission simply cannot be reconciled with what is observed in the 3FAD pleas just mentioned above. 

18. Upon close examination, the old Fulcrum Purposes APOC grievances are essentially being repositioned into the 3FAD - trotted out again under a rough coat of new paint.  This is not enough to shield or save these pleas.  

19. To be clear, whilst I do allow legitimately made factual pleas to remain within 3FAD par 15, I strike out, essentially as abuses of process and as defensively pointless in any event, pars 15F, 15M, 15N, 15O, 15P, 15Q, 15R, 15S, 15T, 15Z, 15AB, 15AF and 15AH for the reasons now provided. That will also affect par 15A.

Derivative falls

1. A number of subsequent pleas in the 3FAD must also then fall derivatively. 

2. This includes par 131 a., insofar as it seeks to incorporate paragraphs from 3FAD par 15 which are to be excised. 

3. Further, par 131 d.(iii) must fall (which I would, in any event, strike out on a basis that it is so unintelligible as to be legally embarrassing). 

4. Paragraph 140 particular (i) will require revision by the excision of its concluding words.

5. Paragraph 141a. must be adjusted, insofar as it has referenced some fallen paragraphs from par 15 which will be excised.

6. Paragraphs 142aB, 147aB and 148a. were all conceded by Mr Dunning QC at the hearing on 6 October 2021 (see ts 17).

7. Paragraph 159a., if it was not fully conceded, would not survive in any case (see ts 17). 

8. Likewise, pars 182AAe. and 183bC cannot remain.

9. Paragraph 183d., insofar as it references some aspects of par 15A to 15AJ that are to be removed, must be revised.

10. Paragraph 192aA (ii) also cannot remain.  In any event, it is so vague as to be legally embarrassing.

11. Finally, par 203d. requires some revision.  First, references to paragraphs within 3FAD par 15A to 15AJ which have been excised, are to be removed.  Second, there must be removed its concluding words, 'and pursuing the Fulcrum Purposes'. 

Conclusions

1. Two plenary considerations also bore upon the above assessments. 

2. First, a long trial is looming in early 2022.  Much intense preparatory work looks to be required to be accomplished between now and 31 January 2022. 

3. The 3FAD pleas which have been challenged and fallen, on my assessment, carried with them wholly disproportionate and unnecessary extra pre-trial preparatory workload repercussions - in terms of expanding the scope of an already gargantuan discovery exercise (over 85,000 documents discovered by the plaintiffs - see the affidavit of Mr John sworn 5 October 2021).  They also open up potential excursions down even further documentary 'rabbit holes' - ultimately going nowhere, when assessed even at the mere arguability threshold.  They also carried an unacceptable potential to derail and divert an already long and complex enough trial, by a pursuit of irrelevancies. 

4. Secondly, in terms of the many other and greater 3FAD substantive resistance arguments that Mineralogy and Mr Palmer legitimately do put (arguably) against the grant of discretionary equitable relief as a contractual breach remedy, or against the two estoppel claims, or against the statutory claim for unconscionable conduct - my assessment is that Mineralogy is not at all prejudiced forensically towards a viable resistance stance at trial by an excision of the fallen 3FAD pleas.  Their excision still leaves Mineralogy and Mr Palmer free to deny and to challenge the plaintiffs' establishment of the elements of the causes of action at the trial at many other levels as seen in the 3FAD.

5. The plaintiffs should prepare a minute of orders for circulation in due course giving effect to these reasons.  I will resolve orders thereafter if they cannot be agreed upon.

   SCHEDULE A

SCHEDULE B

SCHEDULE C
(Extract from the first defendants' 3FAD filed 17 August 2021))

15A     The first defendant says further in paragraphs 15B to 15AJ below.

CITIC steps between 2006 - 2010 to give effect to the CITIC Negotiated Agreements

15B     From 2006, CITIC commenced development pursuant to the express rights         obtained in respect of those limited areas of the Mineralogy Tenements under the       CITIC Negotiated Agreements (the Sino Iron Project), relevantly as follows.

15C     On or about 24 January 2007, Sino Iron and MCC entered into a construction      contract titled "General Construction Contract" for the construction of     infrastructure necessary for the Sino Iron Project.

15D     There was a delay:

a.       in the commencement of work by MCC on the Sino Iron Project of between                  10 and 11 months;

b.       in the construction timeline of the Sino Iron Project (from commencement   of construction to first production) of approximately 20 months (the Sino   Iron Project Construction Delay); and

c.       as may be inferred by the allegations made by Sino Iron, Korean Steel and                   CITIC in paragraph 1(e) of Schedule D to the Defence to the Fourth Further                  Amended Statement of Claim filed on 29 April 2016 in the Supreme Court              of Western Australia Proceeding CIV1808 of 2013 (RCB Proceeding).

15E      By 2008, CITIC formed the view that MCC was responsible for the Sino Iron      Project Construction Delay, as recorded in the following documents authored by or         on behalf of CITIC:

a.       Analysis of the reasons for the Sino Iron Construction Project Delay by   MCC, document titled Major MCC/NETC Issues dated 18 August 2008;

b.       Analysis undertaken on or about 23 December 2009 by CPMM determining                  how to address the Sino Iron Project Delay caused by MCC to achieve first                production by 30 September 2010;

c.        Internal report titled 'Relationship with China Metallurgical Group  Corporation ("MCC") moving forward' dated 30 March 2010;

d.       CITIC Hong Kong Stock Exchange announcement titled 'Disclosable   Transaction relating to the Sino Iron Project and Continuing Connected   Transactions' dated 30 December 2011 regarding MCC not meeting   timelines;

e.       CITIC Hong Kong Stock Exchange announcement titled 'Announcement -                   Response to MCC's Announcement' dated 30 January 2013 regarding   CPMM assuming responsibility for production lines 3 to 6;

f.        CITIC Hong Kong Stock Exchange announcement titled 'Announcement   Iron Ore Mine Project Update' dated 19 April 2013 regarding delay to load                commissioning;

g.       CITIC Hong Kong Stock Exchange announcement titled 'Fourth   Supplementary Contract relating to the Sino Iron Project' dated 24   December 2013 regarding handover of responsibility to CITIC.

CITIC incurs foreign exchange losses relating to, and consequently changes its leadership of, the Sino Iron Project

15F      From an early stage, there were cost pressures on the Sino Iron Project.

15G     By the end of 2007 projected capital expenditure had increased from US$2.5 billion        to US$3.5 billion.  In its 2007 annual report, CITIC summarised the causes of the     costs pressures as being due to "industry wide cost pressures and inflation,   especially in Australia; depreciation of the US dollar to the Australian dollar and to        the renminbi; and cost pressures and inflation in China where certain supplies are     sourced."

15H     Capital expenditure for the Sino Iron Project was substantially in Australian dollars.        To minimise the foreign exchange risk associated with fluctuations in the value of        the Australian dollar against the US dollar, CITIC used 'hedging', being foreign       exchange forward contracts and structured forward instruments.  Hedging for the          Sino Iron Project began in 2007.

15I     In late July 2008, there was a sharp depreciation in the value of the Australian     dollar to the US dollar, causing CITIC's outstanding Australian dollar/US dollar     hedging contracts (target redemption forward contracts or TRF contracts) to impose        on CITIC a contractual obligation to purchase increasing multiples of Australian         dollars, beyond what was needed for the construction of the Sino Iron Project, at          prices materially higher than prevailing market rates.

15J     In fact, by 20 October 2008, as CITIC published in a profit warning to the Hong    Kong Stock Exchange on that date (the CITIC FX Losses Announcement):

a.       severe losses had been sustained through its use of TRF contracts; based on                   the most up-to-date valuations received from various counterparty banks,   CITIC estimated that its mark-to-market loss on that date under the   outstanding leveraged foreign exchange contracts (of all currencies) was   HK$14.7 billion;

b.       the maximum amount deliverable to the Group under all of its Australian   dollar leveraged foreign exchange contracts was AUD$9.44 billion, the last                   amounts only falling due in October 2010.  In respect of the anticipated   capital expenditure on the construction of the Sino Iron Project over the   coming two years, that is, until its completion, it was estimated that it would              require AUD$1.6 billion.  In respect of capital expenditure, it therefore   found itself over hedged by almost 6 times;

c.       because of the currency exposure, Mr. Leslie Chang Li Hsien, the Group   Finance Director and Mr. Chau Chi Yin, the Group Financial Controller,   had resigned as Directors with effect from 20 October 2008.  Mr. Vernon   Francis Moore, a Director since 1990, was appointed as the Group Finance               Director on 20 October 2008 responsible for the Group's finance and   internal control.

15K     After the CITIC FX Losses Announcement, CITIC replaced its senior management         personnel, as follows:

a.       On 25 March 2009, CITIC announced to the Hong Kong Stock Exchange   that Mr Zhang Jijing was appointed as a non-executive director.  On   18 November 2009, CITIC announced to the Hong Kong Stock Exchange                  that Mr Zhang was appointed Managing Director of CITIC.

b.       On 8 April 2009, CITIC announced to the Hong Kong Stock Exchange that:

(i)      Mr Larry Yung Chi Kin has resigned as Director and Chairman of  CITIC and Mr Henry Fan Hung Ling has resigned as Managing  Director of CITIC.  Mr Yung and Mr Fan had established the CITIC   Group in 1990.

(ii)     Mr Chang Zhenming had been appointed Chairman and Managing   Director of CITIC.

15L      On 24 December 2008, CITIC announced to the Hong Kong Stock Exchange that CITIC Group, being CITIC's parent company, agreed to assume the liabilities and         benefits from the hedging contracts.  The deemed mark-to-market losses were  HKD$9.155 billion (approximately AUD$1.553 billion at 2008 exchange rates).        

CITIC forms the view it is dissatisfied with the CITIC Negotiated Agreements and resolves to alter them

15M     By no later than May 2010, CITIC had determined that steps were required to be   taken to alter the parameters in which the Sino Iron Project was operating,     including the contractual regime and the area allocated to the Sino Iron Project     under the CITIC Negotiated Agreements, to parameters more favourable to CITIC        and any subsidiary company, and less favourable to Mineralogy and Mr Palmer, by          reason of the matters alleged in paragraph 15B to 15L above (the Contract         'Normalisation' Objective), by reason of each of:

a.       it having negotiated what it considered to be an unfavourable bargain to it   and any subsidiary company, compared to the position of Mineralogy and   Mr Palmer, under the CITIC Negotiated Agreements;

b.       it and its subsidiary companies had suffered significant losses by reason of                    the foreign exchange hedging pleaded in paragraph 15F to 15L above, and               as recorded in the CITIC FX Losses Announcement;

c.       it and its subsidiary companies could not recover from MCC the cost   overruns in developing the Sino Iron Project or as a result of the Sino Iron                    Project Construction Delay, as MCC was also an entity ultimately owned by                  the People's Republic of China;

d.       consequently, the additional costs of developing the Sino Iron Project in     `                 15M(b) and 15M(c) above were to be recouped from Mineralogy.

15N     Consistent with the Contract 'Normalisation' Objective, in May 2010, at a meeting         between representatives of CITIC and Mineralogy, CITIC stated that the Sino Iron Project was running into many costs objectives which made the whole venture       unprofitable and CITIC required Mineralogy's assistance to vary the Mineralogy         Royalty formula, as follows:

a.       the meeting was held at CPMM's offices in Perth, Western Australia.

b.       the attendees for CITIC were Milton Law, Chairman Mr Chang Zhenming,                  Fei Xu, Kelvin Wong and a number of unidentified employees.

c.       the attendees for Mineralogy were Mr Palmer and Mr Geoff Smith.

CITIC forms The Fulcrum Group

15O     By no later than August 2010, CITIC formed a group of senior executives and     advisors known as the 'Fulcrum Group' or 'Project Fulcrum'.

15P      On or around 27 August 2010, Ms Helen Dillon was appointed as 'lead' of the      Fulcrum Group.

Particulars

(a)      Affidavit of Helen Teresa Dillon affirmed 19 November 2012 and   filed in Supreme Court of Western Australia Proceeding CIV2338 of   2012 (RCA Proceeding), [15].

15Q     In or around September 2010, the Fulcrum Group team structure included as the    'Specialised Taskforce':

a.       Ms Dillon as 'Lead';

b.       Mr Walkand as 'Commercial';

c.       Mr Warren Fish as 'Compliance & Approvals'; and

d.       Mr Gavin Maclaren of Allens Arthur Robinson as 'Legal'.

Particulars

(a)      Diagram titled ‘Fulcrum Team’ [CPM.522.007.0239]

15R     The purposes of the Fulcrum Group included:

a.       to achieve the Contract 'Normalisation' Objective;

b.       to recoup the additional costs of developing the Sino Iron Project in   paragraphs 15M(b) and (c) above from Mineralogy;

c.       to seek to sterilise Mineralogy's other valuable mining tenements; confound                   the evident commercial intent of the sophisticated contractual arrangements              the parties agreed to; and render the plaintiffs the one and only miner that  Mineralogy must sell its other rights to, the other tenements having been   rendered unsaleable and unusable by Mineralogy as a miner.

15S      The Fulcrum Purposes are recorded in, and/or may be inferred from, the following         documents and testimony:

a.       The Project Fulcrum Budget (Mineralogy) dated 30 September 2010   budgeted for a contractual obligation to pay:

(i)      $20m to the Site Remediation Fund by June of 2011 (at rows 32 and   500);

(ii)     $14.8225 m for Royalty A by December 2011 (rows 40, 570-575   and 612); and

(iii)      $280.630515 m for Royalty B by December 2011(rows 41, 577-595   and 613);

b.       CITIC Pacific Mining Management, Department Plan and Budget for the   calendar year 2013, dated 16 October 2012 recorded:

(i)      the reason for "Project Fulcrum" was "[d]ue to the poor contracts   that were entered into in 2006 and 2008 and on the Sino Iron and   Korean Steel Projects, there is a requirement to normalise the   contracts as far as possible towards industry standards" (at .0077);

(ii)     the forecast contractual obligations to pay royalties to Mineralogy   under the CITIC Negotiated Agreements of $5.265m for Royalty A,   $72.734m for Royalty B and $230.073m for what it described as the   Royalty Penalty for the calendar year 2013 (at .0051);

(iii)      "… there is a dispute related to royalties that is currently between   the parties.  It is expected that this dispute may affect the timing of   payment in relation to the Royalty Penalty and Royalty Component   B as such the following has been removed from the 2013 base   budget forecast.  A request has been made to ensure that the   following [being the $230.073m and $72.734m] can be easily   accessed if required to fulfill a short notice requirement." (at .0051)   Thus, the purpose for the defending of the proceedings was to delay   a payment known to be payable, rather than attempt to vindicate a   defence that was believed to be arguable;

(iv)      in relation to the Site Remediation Fund and the request for payment   into the fund by Mineralogy, "[t]he request from Mineralogy was   denied on the grounds it was unreasonable, however it should be   noted that there is a contractual obligation for Sino Iron and Korean   Steel to contribute towards a Site Remediation Fund. Negotiations   are occurring with Mineralogy to explore other options such as a   corporate guarantee to fulfil this obligation.  If this negotiation is   successful, then it will require changes to the project agreements to   solidity [sic] fulfillment of this obligation.  Either way, this is a risk  that is currently being managed by the Special Projects team.    Consequently, a request has been made to ensure that ~$75Million   can be easily accessed if required to fulfill this requirement." (at   .0050): [CPM.518.004.0047]

c.       On 16 October 2012 Ms Dillon emailed Dr Hua and Mr Walkland:

(i)      recording "Attached is updated after conversation with Charles.  He   has asked me to move $75 Million and the Royalty B + Royalty   Penalty to 2014.  The reason being that the Royalties will be in   dispute, and we will be negotiating for guarantees instead of   payment of the Site Remediation Fund.";

(ii)     such correspondence recorded the belief in an existing contractual   obligation to make the payments and the use of the defence of the   proceedings to defer such payments:  [CPM.523.003.1670]

d.       Notwithstanding the acceptance of the obligations in relation to Royalty   Component A and B under the CITIC Negotiated Agreements as recorded                    at sub-paragraphs 15S(a)(i), 15S(a)(ii), and 15S(a)(iii) above, Sino and   Korean refused to pay any of the royalties until forced by court order and   defended proceedings for them to pay those royalties as alleged in   paragraphs 15U to 15AJ below;

e.       During a telephone call on 13 February 2013 between Mr Woods of Allens                    and Mr Prescott of HopgoodGanim, Mr Woods said words to the effect that              assuming litigation in respect of Royalty Component B is commenced and                    that eventually Mineralogy wins everything, bearing in mind the other   litigation on foot (which was already 8 months old), when did Mineralogy   think it would reach conclusion of the Royalty Component B litigation;

f.        Spreadsheet titled "2017 Risk Assessment Table" stating that a strategy to   deal with 'Legal Dispute Risk' included ‘Civil or criminal suit to deal with   the risk' and that the statement was made in the context of disputes with   Mineralogy and Mr Palmer: [CPM639.173.2597]
         g.       The normalisation of the CITIC Negotiated Agreements referred to in   subparagraph 15S(b) above was a reference to CITIC's desire to alter the   contractual arrangements with Mineralogy and Mr Palmer under the CITIC              Negotiated Agreements because the commercial terms effected by those   agreements were ones Sino and Korean considered unsatisfactory.   (evidence of Ms M.L. Rifici in CIV 2840 of 2018, 19/11/20 t pp 320-322).

CITIC prosecutes the Fulcrum Purposes

15T      Since 2010, CITIC, Sino Iron and Korean Steel have conducted the relationship    with Mineralogy according to the Fulcrum Purposes, including to apply
         commercial pressure to Mineralogy and alter the terms of the CITIC Negotiated    Agreements.

Royalty Component A

15U     Under the MRSLAs, Royalty Component A is payable on magnetite ore taken by Sino Iron and Korean Steel.

15V     In June 2008, Royalty Component A became payable because Sino Iron and        Korean Steel had commenced taking magnetite ore.

15W    Sino Iron and Korean Steel did not pay Royalty Component A in accordance with          the MRSLAs at that time.

15X     Sino Iron and Korean Steel refused to pay Royalty Component A at all times
         thereafter.

15Y     On 7 August 2012, Mineralogy commenced Supreme Court of Western Australia Proceeding CIV2338 of 2012 (RCA Proceeding).

15Z      Sino Iron, Korean Steel and CITIC did not have any genuine belief in their         purported defences in the RCA Proceeding, by reason of the matters pleaded in          sub-paragraphs 15S above, but rather they were maintained to achieve the Fulcrum      Purposes.

15AA On 21 May 2013, the Supreme Court of Western Australia gave judgment in
         Mineralogy’s favour in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2013] WASC 194.
         15AB Sino Iron and Korean Steel made the contentions in the RCA Proceeding to          effect the Fulcrum Purposes, to apply commercial pressure on Mineralogy, to alter    the CITIC Negotiated Agreements and to delay payment of sums to which       Mineralogy was entitled.

Royalty Component B

15AC   Under the MRSLAs, Royalty Component B is payable on products produced       (magnetite concentrate) according to the formula in clause 8.2 of the MRSLAs.

15AD Royalty Component B became payable in December 2013 when Sino Iron and      Korean Steel commenced shipping magnetite concentrate.

15AE   Sino Iron and Korean Steel:

(a)      did not pay Royalty Component B at that time;

(b)     refused to pay Royalty Component B for the purpose of delaying payment                    of sums to which Mineralogy was entitled.

15AF   Sino Iron and Korean Steel made the contentions to effect the Fulcrum Purposes, to
         apply commercial pressure on Mineralogy, to alter the contractual relationship and         to delay payment of sums to which Mineralogy was entitled.

15AG On 18 March 2013, Mineralogy commenced proceedings which after transfer      became the RCB Proceeding.

15AH Sino Iron, Korean Steel and CITIC did not have any genuine belief in their         purported defences in the RCB Proceeding by reason of the matters pleaded in sub‑paragraphs 15S above and paragraph 15AF above, but rather were maintained     to achieve the Fulcrum Purposes.

15AI    On 24 November 2017, the Supreme Court of Western Australia gave judgment for        Mineralogy in Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 16) [2017] WASC 340.

15AJ    Appeals to the judgment of the Supreme Court of Western Australia were dismissed, as follows:

(a)      on 21 May 2019, the Court of Appeal of Western Australia refused the   appeal in Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80;

(b)     on 14 February 2020, the High Court of Australia refused special leave to

appeal in Sino Iron Pty Ltd v Mineralogy Pty Ltd [2020] HCATrans 10.

I certify that the preceding paragraphs comprise the reasons for decision of the Supreme Court of Western Australia.

RC

Associate to the Honourable Justice Martin

3 NOVEMBER 2021