St Barbara Ltd v Hockley
[2013] WASC 283
•1/08/13
ST BARBARA LTD -v- HOCKLEY [2013] WASC 283
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2013] WASC 283 | |
| Case No: | CIV:1685/2013 | 30 JULY 2013 | |
| Coram: | BEECH J | 1/08/13 | |
| 22 | Judgment Part: | 1 of 1 | |
| Result: | Application for separate trial successful | ||
| B | |||
| PDF Version |
| Parties: | ST BARBARA LTD DESMOND JAMES HOCKLEY |
Catchwords: | Practice and procedure Application for separate trial of issues Application for claim and counterclaim to be separated Turns on own facts |
Legislation: | Rules of the Supreme Court 1971 (WA), O 18 r 5, O 32 r 4 |
Case References: | Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 Carlo Nobili SpA Rubinetterie v Militaire Nominees Pty Ltd [2004] WASC 47 EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23 Ernst & Young (a firm) v Butte Mining plc (No 2) [1997] 2 All ER 471 Home Building Society Ltd v Pourzand [2005] WASCA 242 Landsdale Pty Ltd v Moore [2009] WASCA 176 Mineralogy Pty Ltd v Sino Iron Pty Ltd [2013] WASC 194 Moore v Stockland South Beach Pty Ltd [2011] WASC 337 O'Dea v Scott (1912) 14 WALR 198 Tap (Harriet) Pty Ltd v Burrup Fertilisers Pty Ltd [2010] WASC 137 The Normar [1968] P 362 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
DESMOND JAMES HOCKLEY
Defendant
Catchwords:
Practice and procedure - Application for separate trial of issues - Application for claim and counterclaim to be separated - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 18 r 5, O 32 r 4
Result:
Application for separate trial successful
Category: B
Representation:
Counsel:
Plaintiff : Mr S K Dharmananda SC
Defendant : Mr A F Mizen
Solicitors:
Plaintiff : Gilbert & Tobin Lawyers
Defendant : Mizen & Mizen
Case(s) referred to in judgment(s):
Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66
Carlo Nobili SpA Rubinetterie v Militaire Nominees Pty Ltd [2004] WASC 47
EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23
Ernst & Young (a firm) v Butte Mining plc (No 2) [1997] 2 All ER 471
Home Building Society Ltd v Pourzand [2005] WASCA 242
Landsdale Pty Ltd v Moore [2009] WASCA 176
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2013] WASC 194
Moore v Stockland South Beach Pty Ltd [2011] WASC 337
O'Dea v Scott (1912) 14 WALR 198
Tap (Harriet) Pty Ltd v Burrup Fertilisers Pty Ltd [2010] WASC 137
The Normar [1968] P 362
- BEECH J:
Introduction
1 The plaintiff applies for the separate trial of some issues in the action.
2 The plaintiff's application is founded on O 32 r 4 and O 18 r 5(2) of the Rules of the Supreme Court 1971 (WA).
3 It is convenient to begin with an outline of the principles relevant to applications under these rules. I will then summarise the pleadings and the issues, before turning to the parties' submissions on this application. Finally, I will explain why I would make orders to the effect sought by the plaintiff.
Order 32 rule 4: legal principles
4 The starting point is that, generally speaking, all issues of fact and law in an action should be determined at the one time. In Landsdale Pty Ltd v Moore1 Newnes JA (Buss JA agreeing) made the following observations:
The respondents' application for separate trials of liability and damages was founded on the proposition that such a course would result in a more efficient and cost-effective resolution of the proceedings. There is no doubt that at a time when the time and cost involved in litigation is a matter of legitimate public concern, it behoves the court to approach each case which comes before it with the object of eliminating any unnecessary delay or cost, and ensuring the efficient and timely resolution of the case, consistent with doing justice to both sides. That is reflected in O 1 r 4A and r 4B of the Rules of the Supreme Court 1971 (WA). But while that will often require a more flexible approach than might have been taken in the past, at the same time it is important that the lessons of the past are not forgotten, and that the court and the parties do not succumb to the immediate attraction of apparently more efficient but less conventional procedures without careful regard to past experience with such procedures.
In relation to the present case, experience has shown that the attraction of the separate trial of issues is often illusory; it is a course that often causes the very delay, additional expense and uncertainty of outcome it was intended to avoid. It is self-evident that generally a trial on liability alone will be shorter and less costly than a trial on both liability and damages. But it is equally self-evident that separate trials will not necessarily lead to the overall action being resolved sooner or at a lesser cost. If the plaintiff is successful on liability and it is necessary to have a further trial on the issue of damages, the contrary may well be the case. Separate trials also raise the prospect of separate appeals on the findings on liability and quantum, which, if it occurs, will increase the time and expense involved in the overall action. The vagaries of litigation are such that its course often does not run smoothly, or predictably. An application for the separation of issues is therefore to be approached with some caution. See generally Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1, 55.
The starting point is that ordinarily the trial of an action should include all issues arising in the action. The determination of an application for separate trials requires a careful balancing of the prospective advantages and disadvantages involved in separating the issues, bearing in mind the uncertainties inherent in litigation, and that, once embarked upon, it is a course from which it may be difficult and even impossible to retreat. It should only be embarked upon where its utility, economy and fairness to the parties is clearly made out: Tepko (55).
5 Although some of his Honour's observations relate to the particular context of splitting issues of liability and damage in tort cases, many of the observations are of general application.
6 The specific observations in Landsdale about the need for caution before separating issues of liability and damage in tort cases do not apply with the same force to the present case. In tort, damage is an element of the cause of action. In this case, there is a clear demarcation between the question of whether withholding consent to an assignment was unreasonable, and the question of whether that withholding gave rise to any, and if so what, damage. Indeed, there is a question as to whether the unreasonable withholding of consent is a breach of contract giving rise to any damages.
7 The circumstances in which it is appropriate for there to be a separate trial of some issues defy comprehensive description. Each case will turn upon the whole of its circumstances. It is relevant whether there is a clear line of demarcation between the issues the subject of the application and the other issues, and whether the determination of one in isolation from the other is likely to result in a substantial saving in time, inconvenience and expense.2
8 Whether trying issues separately is likely to assist in leading to a settlement is also a relevant consideration.3
9 A party applying for a trial of separate issues should put before the court evidence or other material to enable an informed assessment to be made about the scope and likely length of the trial of the action as a whole, as against the scope and length of the issues the subject of the application for a trial of preliminary issues.4
10 In Carlo Nobili SpA Rubinetterie v Militaire Nominees Pty Ltd,5 McKechnie J gave the following summary of the principles:
• A separate trial of issues is only appropriate in clear and simple cases.
• Separate trials of issues should only be embarked upon when the utility, economy and fairness are beyond question.
• The fact that the resolution of a separate trial may determine the litigation is relevant.
• Separate trials of issues may be appropriate where it is likely to save expense and inconvenience.
• There is a focus in the Rules of the Supreme Court on the expedition of determination of matters before the Court and separate trials of issues may advance the expedition.
• A possibility that the determination of issues tried separately may lead to settlement should be taken into account even though the issues may not finally dispose of the action.
• In many cases the formulation of specific questions to be tried separately, from and in advance of other issues, will assist in the resolution of the matters in issue if the questions are capable of final answer in accordance with the judicial process.
• Separate trials are inappropriate where the result depends on complex issues of fact or when a preliminary question is one of mixed fact and law.
• The procedure should be confined generally to cases where facts are complicated and the legal issues short, otherwise it can be a treacherous shortcut.
• Separate trials may be productive of delay, extra expense and uncertainty of outcome, which they are intended to avoid. Saving some time is often illusory when the parties have the necessity of making full preparation and factual matters relevant to one issue are relevant to others which overlap.
• There is potential for further appeals.
11 The emphasis is on the possible saving of costs and the speedy resolution of matters. That is most likely to occur where the preliminary issue is relatively simple and is not enmeshed in factual controversy. Ultimately, the question is whether the court is satisfied that it is 'just and convenient' for an order for a separate trial to be made.6
12 See also Tap (Harriet) Pty Ltd v Burrup Fertilisers Pty Ltd.7
13 It is clear, from all of this, that the courts approach an application under O 32 r 4 with considerable caution.
Order 18 rule 5(2): legal principles
14 There is a question whether the same degree of caution applies in an application under O 18 r 5(2). That rule empowers the court to make orders for a separate trial of the counterclaim whenever it appears to the court that 'the subject matter of the counterclaim ought for any reason be disposed of by a separate action'.
15 In The Normar,8 the court said that it may be appropriate to order a separate trial if a counterclaim would be likely to result in substantial delay in bringing the plaintiff's action to trial and would greatly enlarge the area of dispute.
16 In O'Dea v Scott,9 the Full Court treated the question as whether the action and counterclaim would be conveniently tried together. The fact that the witnesses in the claim and the counterclaim would be virtually the same was an important factor in favour of an affirmative conclusion.
17 In Ernst & Young (a firm) v Butte Mining plc (No 2),10 Lightman J said that the question under (the English equivalent of) O 18 r 5(2) whether 'the subject matter ought to be disposed of in a separate action' essentially involves a balancing of the consideration of procedural convenience in favour of and against disposal in a separate action.
18 I would summarise the position under O 18 r 5 as follows. The starting point is that an action and a counterclaim in the action will be progressed and tried together. However, a different approach can be taken whenever the court considers that, for any reason, the counterclaim and the action should be separately disposed of. That involves questions of procedural convenience; the procedural advantages and disadvantages of trying the claims together or separately must be weighed. Relevant factors include the relationship of the claims, the extent of overlap of the evidence relevant to the claim and the counterclaim, the extent to which the counterclaim will delay the trial of the plaintiff's claim, and the time involved at trial if the actions are tried separately or together.
19 It is convenient next to outline the parties' pleaded cases.
Pleadings
Overview
20 The plaintiff's claim arises from the defendant's refusal to consent to an assignment by the plaintiff of its interest in a mining tenement to a third party. The tenement is held by the plaintiff but, by agreement, the defendant is entitled to 25% of the gold recovered, less 25% of the mining costs. Further, the agreement provides that the plaintiff requires the consent of the defendant to the assignment, which cannot be refused on unreasonable grounds.
21 The plaintiff alleges that the defendant's refusal is unreasonable in the circumstances and, consequently, seeks a declaration and damages as a consequence of its inability to assign its interest.
22 The defendant alleges several reasons why the refusal is reasonable in the circumstances. The defendant counterclaims for a failure to keep true and proper accounts and claims any payment omitted as a result of that failure. Further, the defendant seeks a declaration of the boundaries of the mine which, it appears, affects the amount of gold it is entitled to.
Background
23 The matter concerns mining lease 77/525 located at Marvel Loch (Tenement). The plaintiff is the registered holder of the Tenement.11
24 By a sale of mining lease agreement (Agreement), the defendant sold the Tenement to Cambrian Resources NL on 5 June 1992.12 Clause 14 of the Agreement provides that either party can assign its entire interest in the Tenement to a third party provided:
(a) the third party agrees in deed with the non-assigning party to be bound by the terms of the Agreement in all respects; and
(b) the assigning party gets the written consent of the non-assigning party which cannot be unreasonably withheld.13
25 Although pleaded differently by the parties, in broad summary cl 9 of the Agreement provides that after the sale to Cambrian, the defendant will be entitled to 25% of the gold mined from the Clough Lode (as defined in the Agreement), less 25% of the mining costs.14
26 On 19 June 1995, Cambrian sold its interests in the Tenement to Sons of Gwalia Ltd pursuant to a Deed of Covenant between Cambrian, Sons of Gwalia and the defendant.15
27 The defendant lodged caveat 2115H/945 against the Tenement on 26 June 1995 under the Mining Act 1978 (WA).16
28 Sons of Gwalia sold its interest in the Tenement to the plaintiff on 28 March 2005.17 The transfer was subsequently registered.18
29 The plaintiff, defendant and Sons of Gwalia entered into a Deed on 1 December 2006 which provided that:
(a) the plaintiff agreed to be bound by, assume, observe and perform all of the obligations of Sons of Gwalia;
(b) the defendant consented to the assignment;
(c) the defendant would cooperate fully in the transfer of title to the plaintiff;
(d) the plaintiff acknowledged the defendant's right to re-lodge a caveat to protect his interest under the Agreement;
(e) in the event that the plaintiff wished to transfer its interest in the Tenement, the plaintiff would cause the purchaser to be bound by the terms of the Agreement.19
30 On 30 March 2007, the plaintiff and the defendant entered into a supplementary agreement (Supplemental Agreement) which set out procedures for mining, sampling and apportioning gold.20
Statement of claim – the 'Consent Dispute'
31 It is not disputed that the plaintiff gave notice by letter dated 10 January 2013 of its intention to assign its rights under the Agreement to Hanking Gold Mining Pty Ltd (Hanking).21 The plaintiff sought the defendant's consent to the assignment.22
32 By letters dated 20 January 2013 and 5 February 2013, the defendant notified the plaintiff that he would not consent to the assignment.23
33 The plaintiff says the letters provided the following reasons for the defendant's refusal to consent:
(a) the processing of shared ore is not complete;
(b) the issues giving rise to a Notice of Dispute, sent by the defendant on 24 June 2010, have not been resolved; and
(c) the defendant disagrees with a third party agreement the plaintiff made with 3D Resources in which 15% of the profits from the defendant's shared ore were allegedly given away.24
34 The defendant accepts those grounds of refusal were raised in the letters and also relies on the following additional reasons:
(a) The plaintiff's interest in the Tenement and its rights under the Agreement and Supplemental Agreement as varied by the Variation Agreement have fundamental correlative obligations regarding the mining of the Clough Lode and allocation of the costs of mining. The defendant is not required to consent to the assignment of these obligations and, as such, it is reasonable for the defendant to refuse to consent to the assignment.25 The plaintiff denies that those obligations arise.26
(b) The defendant is entitled to a release under cl 8.7 of the Supplemental Agreement, and no offer of release has been made by Hanking.27 The plaintiff says that Hanking has offered to be bound by the terms of the Agreement and the Supplemental Agreement.28
(c) No evidence of the financial capacity or ability of Hanking to mine the Clough Lode has been provided to the defendant in accordance with the Agreement and the Supplemental Agreement.29 The plaintiff denies that the Agreement or Supplemental Agreement imposes such obligations on the plaintiff. Further, the plaintiff pleads that, in any event, the defendant has not requested evidence of Hanking's financial capacity or ability to mine the Clough Lode.30
(d) The Notice of Dispute is such a burden to Hanking that it is a significant commercial disincentive for Hanking to conduct mining operations.31
(e) There is a dispute between the plaintiff and the defendant concerning the boundaries of the Clough Lode, the amount of gold recovered and mining costs, and until that dispute is resolved the plaintiff should not transfer the Tenement or assign its rights under the Agreements.32 As to this dispute, the plaintiff pleaded in reply that the defendant has not progressed the Notice since 2 July 2010 and, in any case, the proposed assignment would not affect the defendant's rights to progress the Notice of Dispute.33
(f) There was no attempt to ascertain Hanking's mining costs and compare them to those of the plaintiff.34
35 The plaintiff pleads that the defendant's refusal to consent to the assignment is unreasonable.35
36 In February 2013, the plaintiff provided the defendant with a draft deed of consent and assumption.36 The draft deed acknowledged the defendant's right to pursue the plaintiff for any liability considered owing to the defendant, including any amounts incurred before the sale to Hanking.37 The defendant refused to sign the draft deed.38
37 On 12 April 2013, the plaintiff and Hanking entered into a deed of assignment and assumption whereby Hanking agreed to be bound by the terms of the Agreement and Supplemental Agreement.39 The defendant says that it received a letter from Hanking stating that the assignment from the plaintiff to Hanking was subject to the defendant's consent or a declaration of the court that the assignment could be made without consent.40 In reply, the plaintiff pleads that the letter notified the defendant of completion of the agreement between the plaintiff and Hanking and enclosed a copy of the deed of assignment and assumption.41
38 The plaintiff says the deed of assignment and assumption was sent to the defendant on 12 April 2013 and 16 April 2013 for signing but the defendant has failed to sign the deed.42
39 The plaintiff claims it has suffered loss or damage by reason of the defendant's alleged breach of cl 14 in unreasonably refusing to consent to the assignment.43
Overpayment dispute
40 The plaintiff also claims that it overpaid the defendant $105,000 as a result of a mistake arising from the exclusion of royalties in the calculation of mining costs deducted from the defendant's share of gold. The plaintiff says it demanded the repayment of the $105,000 from the defendant on 26 February 2009 and 9 April 2009. The defendant has not repaid the amount and so the plaintiff claims it is entitled to that amount.44
41 The defendant denies the allegations of overpayment and says that there is no obligation on the plaintiff to pay any royalty in respect of the defendant's gold and that no royalty has been paid to the Department of Mines and Petroleum. Further, cl 8.7 of the Supplemental Agreement restrains the plaintiff from pursuing such a claim.45
Relief sought
42 The plaintiff claims:
(1) a declaration that the defendant unreasonably withheld consent;
(2) an order that the defendant uplift its caveat to permit the transfer;
(3) an order that the defendant do all things necessary to provide consent and transfer the Tenement;
(4) further or alternatively, damages;
(5) the sum of $105,000;
(6) interest; and
(7) costs.
Defendant's counterclaim – the 'Gold Dispute'
43 The defendant pleads that the plaintiff owed him duties of trust and confidence by virtue of the Agreement and Supplemental Agreement.46 The plaintiff denies the existence of these duties.47
44 The defendant pleads that as a result of those duties, the plaintiff owed him a duty to keep true and proper accounts of all gold recovered and the mining costs.48 Further, the defendant alleges that the plaintiff failed to render true and proper accounts.49
45 In the Defence to the Counterclaim, the plaintiff pleads that it kept true and proper accounts of the mining costs and gold recovered and provided them to the defendant.50 In addition, the plaintiff repeats its allegation that it overpaid the defendant approximately $105,000 as a result of excluding royalties from the mining costs.51
46 The defendant also alleges a dispute between the plaintiff and defendant as to the boundaries of the Clough Lode.52 It alleges that the plaintiff has not allowed the defendant to ascertain the true boundaries and, consequently, seeks a declaration of those boundaries.53
47 In response, the plaintiff claims that an independent review of the site was conducted on 11 May 2010. The results of that survey allegedly detected minor differences which would not materially affect the calculation of the gold attributable to the Clough Lode.54 The plaintiff also says it did not permit the defendant to conduct an underground survey of the Clough Lode on 9 March 2010 due to safety reasons. However, the plaintiff says it offered access to the site for the purpose of conducting a survey on two alternative days.55
Relief sought
48 The defendant seeks:
(1) a declaration of the true and correct boundaries of the Clough Lode;
(2) an account of all the gold recovered from the Clough Lode and the mining costs;
(3) after the account, payment by the plaintiff to the defendant of any outstanding amount; and
(4) interest on any outstanding amount.
The issues
49 The plaintiff submits and the defendant does not deny on this application that the issues are accurately summarised in the Plaintiff's List of Issues,56 as follows:
CONSENT DISPUTE
1 What does clause 14 of the Sale of Mining Lease Agreement (Agreement) require St Barbara and Hockley to do if St Barbara wishes to assign its interest in the Tenement and rights under the Agreement to a third party?
Paragraph 3(b) of the amended statement of claim.
2 Has St Barbara complied with the requirements of clause 14 of the Agreement?
Paragraphs 3(b), 10, 13, 15, 16, 17 of the amended statement of claim, paragraphs 8 and 9 of the amended defence and paragraphs 5 and 6 of the further amended reply.
3 Does the letter dated 10 January 2013 from Kylie Okely of St Barbara to Hockley comply with clause 14 of the Agreement?
Paragraphs 3(b) and 10 of the amended statement of claim.
4 Can Hockley withhold consent under the Agreement as set out below?
(a) Can Hockley withhold consent because of the failure to resolve the dispute set out in Hockley's notice of dispute dated 24 June 2010 to Hockley's satisfaction?
Paragraphs 11 and 12 of the amended statement of claim, paragraph 5(f) of the amended defence and paragraph 4 of the further amended reply.
(b) Does the NPI Agreement between 3D Resources and Hanking 'give away' 15% of Hockley's profit from his shared ore and can Hockley acting reasonably withhold consent for this reason?
Paragraph 11(a) of the amended statement of claim and paragraph 5 of the amended defence.
(c) Does St Barbara's interest in the Tenement and its rights under the Agreement and Supplemental Agreement give rise to 'fundamental correlative obligations' (Obligations) owed by St Barbara to Hockley under the Agreement and Supplemental Agreement?
Paragraph 5(a) of the amended defence and paragraph 1 of the further amended reply.
(d) Do the Obligations enable Hockley not to consent to the assignment of the Obligations and allow Hockley to refuse consent to the transfer of the Tenement and to the Proposed Assignment?
Paragraph 5(b) of the amended defence and paragraph 1 of the further amended reply.
(e) Is it reasonable for Hockley to withhold consent because Hanking has not offered to release Hockley under clause 8.7 of the Supplemental Agreement?
Paragraph 5(c) of the amended defence and paragraph 2 of the further amended reply.
(f) Is it reasonable for Hockley to withhold consent because St Barbara has not provided Hockley with evidence of Hanking's financial capacity or ability to mine the Clough Lode in accordance with the Agreement and Supplemental Agreement?
Paragraph 5(d) of the amended defence and paragraph 3 of the further amended reply.
(g) What is the effect of the agreement with 3D Resources (referred to in paragraph 11(a)(iii) of the statement of claim) on Hanking's ability to mine the Clough Lode?
Paragraph 5(e) of the amended defence and paragraph 3 of the further amended reply.
(h) Is it reasonable to withhold consent because the mining costs referred to in section 5.3 of Attachment 2 to the Supplemental Agreement that would apply if the Proposed Assignment and transfer of the Tenement was made to Hanking were not ascertained and compared to the mining costs that applied to St Barbara?
Paragraph 5(g) of the amended defence.
Paragraph 4 of the amended statement of claim and paragraph 3 of the amended defence.
6 If Hockley is found to have unreasonably withheld his consent, does St Barbara have any right to damages against Hockley under the Agreement? If so, what is St Barbara's loss or damage?
Paragraph 20 of the amended statement of claim and paragraphs 6 and 7 of the amended defence.
GOLD DISPUTE
7 What does clause 9 of the Agreement require St Barbara and Hockley to do?
Paragraph 3(a) of the amended statement of claim and paragraph 2 of the amended defence.
8 Was the Supplemental Agreement varied by the Variation Agreement on 21 December 2007?
Paragraph 4 of the amended defence.
9 In relation to Hockley's amended counterclaim:
(a) Do duties of trust and confidence arise from a proper construction of the Agreement and Supplemental Agreement?
Paragraph 2 of the amended counterclaim and paragraph 8 of the further amended defence to counterclaim.
(b) Does St Barbara have a duty to keep true and proper accounts of gold mined and Mining Costs under the Agreement and Supplemental Agreement?
Paragraph 3 of the amended counterclaim and paragraph 9 of the further amended defence to counterclaim.
(c) Has St Barbara prevented Hockley from ascertaining the boundaries of the Clough Lode?
Paragraph 5(a) of the amended counterclaim and paragraph 11 of the further amended defence to counterclaim.
(d) Has St Barbara not provided true and proper accounts of gold mined and the Mining Costs to Hockley?
Paragraph 5(b) of the amended counterclaim and paragraph 12 of the further amended defence to counterclaim.
Paragraph 4 of the amended counterclaim and paragraph 10 of the further amended defence to counterclaim.
11 What is the proper account of all gold mined from the Clough Lode and Mining Costs?
Paragraph 5(b) of the amended counterclaim, paragraph 13 of the further amended defence to counterclaim.
12 Has there been a mistaken overpayment of $105,000 to Hockley that St Barbara is entitled to claim or set off against any amount which may ultimately be found owing to Hockley?
Paragraphs 21-28 of the amended statement of claim, paragraphs 12 and 13 of the amended defence and paragraph 13(c) of the further amended defence to counterclaim.
50 The plaintiff seeks an order for the determination, by way of preliminary issues, of the plaintiff's claim in the Consent Dispute, but without the claim for damages; in other words, issues 1 – 5 of the List of Issues. The plaintiff applies under O 32 r 4, or alternatively, O 18 r 5(2).
51 The plaintiff also seeks orders programming the steps in the Consent Dispute through to an early hearing. I will deal with programming orders after I publish these reasons.
The parties' submissions
52 The parties' submissions assert fundamentally different positions about the scope, character and material relevant to the issues in the Consent Dispute.
53 The plaintiff submits that:
(a) the consent issues are confined in character and involve little factual dispute. The plaintiff will call only one witness and the defendant is likely to call only one or two. There will be no need for expert evidence or discovery;
(b) by contrast, the Gold Dispute is considerably more complex. It gives rise to wide ranging issues of a factual and expert nature, including whether the plaintiff has prevented the defendant from ascertaining the boundaries of the Clough Lode, whether the plaintiff has provided true and proper accounts of gold mining costs, where the correct boundaries of the Clough Lode are, and what is the proper account of all gold mined from the Clough Lode and mining costs;
(c) the Gold Dispute will involve much wider discovery, likely to be more than 1,000 documents, involving considerable difficulties in locating some of them. There may be 14 possible witnesses and the case may take 10 days;
(d) there is no significant risk of any substantial overlap in the evidence.
54 The defendant submits that a much wider range of evidence will be relevant to the determination of the Consent Dispute than is asserted by the plaintiff. In summary, the defendant submits:
(a) in deciding the Consent Dispute, a considerable amount of background evidence is necessary to understand and construe various elements of the Agreement and Supplemental Agreement;
(b) in the Consent Dispute, the court must understand the background and context of events from December 2006 to March 2007 to understand the relationship between the Agreement and the Supplemental Agreement. The defendant seeks to demonstrate the importance of the identity of the holder of the Tenement and its ability to mine in the manner set out in the Supplemental Agreement;
(c) the defendant will rely on up to six witnesses in relation to the Consent Dispute. The same witnesses will be the witnesses for the Gold Dispute;
(d) there is considerable overlap in the evidence in the two sets of disputes;
(e) the Consent Dispute will, in the defendant's assessment, take four days to try;
(f) determination of the Consent Dispute will not determine the Gold Dispute;
(g) discovery should be given in the ordinary way;
(h) the commercial imperatives of the plaintiff, arising from the terms of an agreement voluntarily entered into, should not determine this application.
55 These competing and conflicting assertions about the scope of the issues in the Consent Dispute and the nature of the evidence that will be relevant to their resolution are founded on the more detailed analysis of those issues in the competing written submissions, all of which I have, of course, carefully considered.
The plaintiff's commercial interests
56 The evidence of Mr Kennedy establishes a substantial commercial interest on the part of the plaintiff in early resolution of the Consent Dispute. On 18 April 2013, the plaintiff renegotiated the sale of assets to Hanking. (The sale included assets other than the Tenement.) The resulting amendment provides that:
(a) the original sale price was reduced by $4.5 million to $18 million;
(b) if by 18 October 2013 the defendant consents to the assignment of the Tenement to Hanking, or if the court declares that the assignment can be made without the defendant's consent, the plaintiff will receive consideration of $2 million from Hanking for the transfer of the Tenement.57
57 Thus, in the absence of successful negotiations with the defendant, the plaintiff needs to obtain judgment in its favour in the Consent Dispute by 18 October 2013 in order to obtain the $2 million under the amended sale agreement.
58 Although this may explain the plaintiff's motive in seeking separation of the Consent Dispute, in the end, it is not a consideration to which I give great weight. It is obvious that the counterclaim will not be determined by 18 October 2013. However, it is by no means clear that, if separated, the Consent Dispute will be judicially determined by 18 October 2013. That will be influenced by many factors, not all of which relate to the steps necessary to bring the claim to trial. For example, there will be questions of what dates are available for trial, and the time necessary for consideration by the court before making a decision. The most that can be said at this stage is that, if the Consent Dispute is separately determined, there is a prospect that it will be determined by 18 October 2013, whereas if the claim and counterclaim are heard together there is no prospect of that.
The disposition of the application
59 In my view, this application is not an appropriate occasion to resolve, in a final and definitive way, the competing contentions about what evidence is, or may be, relevant to resolution of the issues in the Consent Dispute. I think it would be premature to determine, in a summary way, those questions, which include issues of relevance and admissibility of evidence. Rather, I will state the views to which I have come for the purposes of, and only for the purposes of, resolving this application.
60 In essence, I am persuaded by the plaintiff's analysis. In summary:
(a) the resolution of the Consent Dispute requires the relevant agreements to be construed, and the various reasons for withholding consent assessed against the proper construction of the agreements to determine whether the withholding of consent was unreasonable. The assessment is made as at the time consent was refused. See, generally, EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd.58 (I note that, in substance, counsel for the defendant agreed with that proposition at the strategic conference59);
(b) the task outlined in (a) is one for submission and analysis by the court; it is not one on which witnesses can directly give evidence of their view of things;
(c) the defendant's submissions assert that evidence of surrounding circumstances in several respects will be relevant to 'understand' the relationship between (i) the plaintiff and the defendant; and (ii) the Agreement and the Supplemental Agreement, to determine whether the defendant has unreasonably withheld his consent. None of the allegedly relevant surrounding circumstances are pleaded in the defence. In any event, the defendant has not identified a specific provision that is ambiguous and needs to be construed in order to resolve the Consent Dispute. For the purposes of this application, I proceed on the basis that ambiguity is required before evidence of surrounding circumstances can be used in construing an instrument. See, for example, Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd60 and Mineralogy Pty Ltd v Sino Iron Pty Ltd.61 In submitting to the contrary the defendant relied on what was said by McLure JA in Home Building Society Ltd v Pourzand.62 However, that has been overtaken by subsequent cases. Further, the defendant has not otherwise identified how the allegedly relevant matters and questions bear on the question of whether the withholding of consent was unreasonable. Evidence of surrounding circumstances is not received in order to 'understand' how an unambiguous clause (consent not be unreasonably withheld) applies or was 'understood' or 'intended' to apply to a given situation. Nor, contrary to the defendant's submission, is evidence received to explain why the Supplemental Agreement was reached, or why that agreement was reached in the form or terms that it was;
(d) the defendant's affidavit and submissions assert that in the Consent Dispute he is likely to call himself; his wife; Mr Giles Dale, a geologist; his former solicitor who participated in negotiations leading to the Supplemental Agreement; Mr Mark Murphy, a geologist who prepared wire frame models of the Clough Lode at the time of entering the Supplemental Agreement; and a representative of Snowdens, who will give evidence about the boundaries of the Clough Lode. The defendant's only explanation of the relevance of those witnesses' evidence is in the Defendant's Analysis of Consent Dispute Issues document dated 22 July 2013. For the purposes of this application, I am not persuaded that, apart from the defendant, the other witnesses' evidence will be relevant to the resolution of the Consent Dispute;
(e) while both disputes will involve construction of the agreements, on my analysis, determination of the issues in the Consent Dispute is substantially independent of the resolution of the issues in the Gold Dispute. The defendant points to the absence of resolution of the issues raised in the Notice of Dispute of 24 June 2010 as a ground for withholding consent. Those issues substantially mirror and give rise to the Gold Dispute. However, the merits of the dispute do not affect the question of whether the absence of resolution of the issues raised in the Notice of Dispute (alone or in combination with other facts and circumstances) meant that the withholding of consent was reasonable. As the plaintiff conceded (at the strategic conference),63 the Consent Dispute can be determined on the assumption that the Gold Dispute will be determined in favour of the defendant.
61 In my view, considerations of procedural convenience and efficiency favour the separation of the claim and the counterclaim. They have a fundamentally different subject matter and character. The Consent Dispute is confined, and capable of being brought to a trial quickly. The Gold Dispute involves much more complex and wide-ranging questions, and will require substantially more time for interlocutory steps. The progressing and resolution of the Consent Dispute will be substantially delayed by the counterclaim. There are substantially no or insufficient efficiency gains in keeping the claim and counterclaim together to justify the inevitable significant delay in the resolution of the claim that would result from keeping them together. Further, it should be noticed that after 2010, before this action was commenced, the defendant did little or nothing to advance the claims he made in 2010 in the Notice of Dispute.
62 The plaintiff's claim for damages for the unreasonable withholding of consent can be efficiently and crisply segregated from the merits of the Consent Dispute. The suffering of damage by the plaintiff is in no sense an element of the Consent Dispute. By definition, the question of loss and damage will arise only if the plaintiff succeeds on the Consent Dispute. The evidence of the nature and extent of the plaintiff's loss will not overlap with the evidence relevant to the merits of the Consent Dispute.
63 The plaintiff's claim for $105,000 as an overpayment of gold revenue under the Agreement can also be conveniently tried with the Gold Dispute. It is unrelated to the Consent Dispute and, in substance, was raised by the plaintiff only in partial answer to the defendant's counterclaim.
64 For these reasons, I would make orders to the effect that:
(1) the plaintiff's claim be tried separately from the defendant's counterclaim; and
(2) the issues raised by pars 20 – 28 of the statement of claim be tried separately from the other issues raised in the statement of claim and be tried with the counterclaim.
1Landsdale Pty Ltd v Moore [2009] WASCA 176 [19] - [21].
2Landsdale [22].
3Landsdale [28].
4Landsdale [12], [26].
5Carlo Nobili SpA Rubinetterie v Militaire Nominees Pty Ltd [2004] WASC 47 [47].
6Moore v Stockland South Beach Pty Ltd [2011] WASC 337 [32].
7Tap (Harriet) Pty Ltd v Burrup Fertilisers Pty Ltd [2010] WASC 137 [4].
8The Normar [1968] P 362, 371.
9O'Dea v Scott (1912) 14 WALR 198.
10Ernst & Young (a firm) v Butte Mining plc (No 2) [1997] 2 All ER 471, 481.
11 Statement of Claim (SC) [1], Defence (D) [1].
12 SC [2], D [1].
13 SC [3(b)], D [2].
14 SC [3(a)], D [2].
15 SC [4], D [3].
16 SC [5], D [1].
17 SC [6], D [1].
18 SC [7(b)], D [1].
19 SC [8], D [1].
20 SC [9], D [1].
21 SC [10], D [1].
22 SC [10], D [1].
23 SC [11], D [5].
24 SC [11].
25 D [5(a) - (b)].
26 Reply (R) [1].
27 D [5 (c)].
28 R [2].
29 D [5(d)].
30 R [3].
31 D [5(e)].
32 D [5(f)].
33 R [4].
34 D [5(g)].
35 SC [12].
36 SC [13], D [1].
37 SC [13], D [1].
38 SC [14], D [1].
39 SC [15].
40 D [8].
41 R [5].
42 SC [16] - [18].
43 SC [19] - [20].
44 SC [22] - [28].
45 D [12].
46 Counterclaim (CC) [2].
47 R [8].
48 CC [3].
49 CC [5(b)].
50 R [9].
51 R [12].
52 CC [4].
53 CC [5(a)].
54 R [10].
55 R [11].
56 Annexure A to the Plaintiff's Application, dated 12 July 2013.
57 Affidavit of Ross James Kennedy sworn 12 July 2013, [45].
58EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23.
59 ts 25/6/13, 15.
60Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 [107] - [108].
61Mineralogy Pty Ltd v Sino Iron Pty Ltd [2013] WASC 194 [117] - [133].
62Home Building Society Ltd v Pourzand [2005] WASCA 242 [25] - [33].
63 ts 25/6/13, 29.
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