Tribune Resources Ltd v EKJV Management Pty Ltd
[2020] WASC 47
•19 FEBRUARY 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: TRIBUNE RESOURCES LTD -v- EKJV MANAGEMENT PTY LTD [2020] WASC 47
CORAM: KENNETH MARTIN J
HEARD: 24 JANUARY 2020
DELIVERED : 24 JANUARY 2020
PUBLISHED : 19 FEBRUARY 2020
FILE NO/S: CIV 3171 of 2019
BETWEEN: TRIBUNE RESOURCES LTD
First Plaintiff
RAND MINING LTD
Second Plaintiff
RAND EXPLORATION NL
Third Plaintiff
AND
EKJV MANAGEMENT PTY LTD
First Defendant
NORTHERN STAR (KANOWNA) PTY LTD
Second Defendant
GILT-EDGED MINING PTY LTD
Third Defendant
EKJV MANAGEMENT PTY LTD
NORTHERN STAR (KANOWNA) PTY LTD
GILT-EDGED MINING PTY LTD
Plaintiff by counterclaim
TRIBUNE RESOURCES LTD
RAND MINING LTD
RAND EXPLORATION NL
Defendant by counterclaim
Catchwords:
Practice and procedure - Interlocutory application - Mandatory injunction - Parties to Joint Venture Agreement - Whether a strong argument of breach of contract between parties - Consideration of the balance of convenience - Application dismissed
Legislation:
Corporations Act 2001 (Cth)
Result:
Application dismissed
Category: B
Representation:
Counsel:
| First Plaintiff | : | Ms P Cahill SC & Mr C Beetham |
| Second Plaintiff | : | Ms P Cahill SC & Mr C Beetham |
| Third Plaintiff | : | Ms P Cahill SC & Mr C Beetham |
| First Defendant | : | Mr S Penglis SC & Ms C Pedler |
| Second Defendant | : | Mr S Penglis SC & Ms C Pedler |
| Third Defendant | : | Mr S Penglis SC & Ms C Pedler |
| Plaintiff by counterclaim | : | Mr S Penglis SC & Ms C Pedler |
| Defendant by counterclaim | : | Ms P Cahill SC & Mr C Beetham |
Solicitors:
| First Plaintiff | : | Quinn Emanuel Urquhart & Sullivan Llp |
| Second Plaintiff | : | Quinn Emanuel Urquhart & Sullivan Llp |
| Third Plaintiff | : | Quinn Emanuel Urquhart & Sullivan Llp |
| First Defendant | : | Ashurst Australia |
| Second Defendant | : | Ashurst Australia |
| Third Defendant | : | Ashurst Australia |
| Plaintiff by counterclaim | : | Ashurst Australia |
| Defendant by counterclaim | : | Quinn Emanuel Urquhart & Sullivan Llp |
Case(s) referred to in decision(s):
Leisure Co Pty Ltd v City of Bunbury [2006] WASC 209
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105
Ooranya Pty Ltd v ISPT Pty Ltd [2018] WASC 256
Patrick Stevedores Operation No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1
KENNETH MARTIN J:
Introduction
I am dealing with the plaintiffs' application made by amended chamber summons filed 14 January 2020 (plaintiffs' summons) seeking various interlocutory injunctive relief against the defendants. This matter has reached me on an urgent basis given the nature of the relief sought under the plaintiffs' summons.
In the afternoon of Friday, 24 January 2020, I heard the parties on the plaintiffs' application. At the conclusion of that hearing, having heard from senior counsel for both sides, it was necessary for me to deliver brief summary reasons as to my decision on the application to the parties. I indicated that I would not make the contested orders as sought under the plaintiffs' summons. However, as I will come to discuss, it was not necessary for me to make a determination as to par 4 of the plaintiffs' summons.
But given the great amount of work done by the parties' respective lawyers and counsel in order to prepare the matter for hearing and the complicated constructional matters underlying the application, I indicated to the parties that I would provide more fulsome reasons for my conclusions to be published at a later time. These are those reasons.
Background
Broadly, the parties are involved in gold extraction near Kalgoorlie, Western Australia.
The three plaintiffs (who are all related corporations) are involved in the business of exploring for, and mining, minerals. Those plaintiffs and the third defendant are parties (with a 49% and 51% interest respectively) to a joint venture project known as the East Kundana Production Joint Venture (EKJV), under which the parties mine for ore (EKJV Ore). The EKJV is governed by the East Kundana Production Joint Venture Agreement dated 21 February 2002 (but later amended and varied by three supplemental deeds) (EKJVA). The first defendant is the appointed manager of the EKJV. The second defendant is a local mill owner and operator who (generally) mills gold ore including since at least 2013, the EKJV Ore.
The first, second and third defendants are all related body corporates for the purposes of the Corporations Act 2001 (Cth). Since at or around January 2014 they have shared congruent boards and company secretaries.
Between 2005 and 2012, the plaintiffs and the third defendant look to have separately milled their respective joint venture shares of mined ore from the EKJV. However, on 21 January 2013, they entered into an Ore Treatment Agreement (OTA) with the second defendant - for it to mill the EKJV Ore. The ore would be milled at the second defendant's processing plant, namely, the Kanowna Belle Mill (approximately 20 km north of Kalgoorlie). The as milled ore (which results in a product known as doré gold) is then sent to the Perth Mint for further refining and treatment. The resulting bullion gold was then allocated between the plaintiffs and third defendant in accordance with the interests in the EKJV.
A particular clause of the OTA requires that the plaintiffs and the third defendant (ie, the EKJV co-venturers) advise the second defendant of projected amounts of EKJV Ore that will be available to be milled at the Kanowna Belle Mill (see cl 4.1). This advice is to be given on a rolling quarterly basis and in advance by two months. The second defendant is correlatively required by the OTA to provide the plaintiffs with an advance schedule of the estimated amounts of ore that could be processed in the next 12 months (see cl 4.2). This is also to occur on a rolling quarterly basis in advance.
This is the landscape in which the current injunction applications arise.
Materials before the court
Before proceeding any further, it is necessary to record the voluminous amounts of material read and relied upon by the parties for the present application.
The plaintiffs read and relied upon the affidavits of:
i.Danielle Lise Eaton sworn 20 December 2019 (first Eaton affidavit - 367 pages);
ii.Danielle Lise Eaton sworn 6 January 2020 (second Eaton affidavit - 899 pages across six volumes);
iii.Rodney William Johns sworn 6 January 2020 (first Johns affidavit - 145 pages). Subject to some objections as raised by senior counsel for the defendants (see ts 3 - 6) there was no formal objection to the first Johns affidavit being received; and
iv.Rodney William Johns sworn 23 January 2020 (second Johns affidavit - 17 pages). Leave was required for this extra evidence given that this affidavit was filed late and well out of alignment with programming orders made in late 2019. Given the late filing of this affidavit, senior counsel for the defendants foreshadowed that there may be an objection to the receipt of the second Johns affidavit. Nevertheless, I granted the plaintiffs leave to file the second Johns affidavit but noted the defendants' reservations as regards responding further, if required. That, as we shall see, proved unnecessary in the end.
The defendants read and relied upon the affidavits of:
i.Catherine Louise Pedler sworn 22 January 2020 (Pedler affidavit - 8 pages). As the Pedler affidavit was filed out of time leave was sought, and subsequently granted on an unopposed basis;
ii.Darren John Stralow affirmed 17 January 2020 (Stralow affidavit - 558 pages);
iii.Peter George Onley sworn 17 January 2020 (Onley affidavit -76 pages); and
iv.Simon Alexander Heath Tyrrell sworn 17 January 2020 (Tyrrell affidavit - 17 pages).
Interlocutory applications - legal principles
Towards resolving the present application I naturally apply the well established general interlocutory injunction principles, which I discussed at some length in my reasons for decision in Ooranya Pty Ltd v ISPT Pty Ltd [2018] WASC 256 at [51] - [55] and at [83] - [88]. I specifically refer to those observations as regards interlocutory injunctions seeking affirmative interlocutory relief, in the character of what is sometimes referred to as a mandatory injunction. In short, the legal test is the same, albeit that positive mandatory injunctions in practice are seen to issue less frequently than negative interlocutory restraints as regards alleged contract breach scenarios. There is no need to repeat the well settled principles in present circumstances.
From my observations in Ooranya I only draw out Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105. That decision requires me to not only evaluate the prima facie case but also assess the strength of that argument and in that process, the strength of any defence put against the applicants' case (see McLure P at [23]). I also refer to the observations of Newnes JA (with Corboy J agreeing) in Mineralogy v Sino Iron at [76] and [85] as regards balance of convenience considerations towards a mandatory interlocutory injunction.
Further, I note observations of the High Court of Australia in Patrick Stevedores Operation No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1 in holding an entity to a course of business conduct. To that same end, I mention the decision of Le Miere J in Leisure Co Pty Ltd v City of Bunbury [2006] WASC 209 at [32] where the observations in Patrick Stevedores were applied.
Applying all those principles to the present application, there are, on my assessment, insuperable difficulties against the plaintiffs' application to which I now turn.
Background to the plaintiffs' application
The current dispute concerns the anticipated volumes of ore advance notices as required to be provided under cl 4.1 and cl 4.2 of the OTA. It is necessary to turn to these clauses in greater detail.
OTA cl 4.1 and cl 4.2
For convenience, I will set out all of cl 4.1 and cl 4.2 of the OTA in full:
4.EKJV MILL SCHEDULE
4.1During the term of this Agreement, the EKJV Parties will advice Kanowna [ie, the second defendant] on a rolling quarterly basis of the projected EKJV Ore that is expected to be available to be sent to the Mill for processing (tonnage and source of ore). The report will provide these details for the upcoming quarter, as well as an estimate for the succeeding three quarters.
4.2During the term of this Agreement, Kanowna must provide to the R&T Group at least two months in advance of the start of each quarter a calendar quarterly milling schedule which is consistent with the requirements of clause 5.7 and which details the estimated EKJV Ore tonnes and ore source that can be processed in the upcoming calendar quarter and the timing of that processing, and the estimated EKJV Ore tonnes and ore source that can be processed in the following three calendar months (the 'EKJV Mill Schedule').
For the purposes of better insights to the OTA parties' agreed regime of notification under cl 4.1 and 4.2 of the OTA in practice and the dispute between the parties, I will attach schedules 1 and 2 to these reasons.
First as schedule 1, is DLE‑9 from the first Eaton affidavit. So seen, these are the quarterly, two months in advance notifications as given, commencing at 29 January 2019, with the last at 29 October 2019 - in terms of notifying an amount of EKJV Ore that the plaintiffs and third defendant had then advised the second defendant they sought, in effect, to have milled at the Kanowna Belle Mill.
Second, correspondingly, I attach schedule 2 for the purpose of seeing the workings of cl 4.2 of the OTA, from DLE‑10 of the first Eaton affidavit. Schedule 2 includes a penultimate quarterly notice as given by the second defendant at 31 July 2019 (see DLE-10 page 305) (31 July 2019 notice). So seen, that notice nominated an amount of dry milled tonnes (DMTs) of ore that could be received for processing at the second defendant's mill over the October to December 2019 calendar quarter (292,773 DMTs). Thereafter, a following estimate is seen given for the ensuing three quarters of the 12-month period.
It will be noted that by the second defendant's 31 July 2019 notice an amount of DMTs then estimated in advance for the January to March 2020 quarter, being then 260,360 DMTs.
However, things changed three months later. By the second defendant's most contemporary OTA notice given under cl 4.2 (as at 29 October 2019 - see DLE-10 page 306) (29 October 2019 notice), the quantity of ore to be treated at the mill for the January to March 2020 calendar quarter was now nominated by the second defendant as only 35,000 DMTs (with that same volume of ore also nominated for the three ensuing quarters thereafter).
The second defendant's cl 4.2 OTA notifications between 31 July 2019 and 29 October 2019, thus showed a diminished milling of proposed quarterly EKJV Ore over the January to March 2020 calendar quarter, by some 225,360 DMTs of ore.
In fact, it would seem, as related by the second Johns affidavit (at pars 26 and 27), that 35,016 DMTs of EKJV Ore were already processed in the period through 3 January 2020 to 9 January 2020.
Paragraph 1 relief
With that background, I can now turn to par 1 of the plaintiffs' summons.
First, with regard to the relief sought by par 1 of that chamber summons, I record that it reads in the following dual terms:
1.Until further order of the Court, the Second Defendant:
(a)whether by itself or by its officers, servants, agents or otherwise, be restrained and an injunction is hereby granted restraining it from:
(i)taking any steps to rely upon the notice dated 29 October 2019 issued by the Second Defendant pursuant to clause 4.2 of the Ore Treatment Agreement dated 21 January 2013 (OTA);
(ii)limiting the processing of Minerals (as defined in the East Kundana Production Joint Venture Agreement dated 21 February 2002 as amended (EKJV Agreement)) obtained by the Joint Venture Operations (as defined in the EKJV Agreement) to the amounts in each calendar quarter referred to in the notice dated 29 October 2019; and
(b)do process in accordance with the OTA, all Minerals obtained by the Joint Venture Operations (as defined in the EKJV Agreement) up to the amounts in each calendar quarter referred to in the notice dated 31 July 2019 issued by the Second Defendant pursuant to clause 4.2 of the OTA.
By par 1, the plaintiffs, in effect, seek to compel the second defendant on an interlocutory basis, effectively, to ignore its most contemporary 29 October 2019 notice as given for the January to March 2020 quarter - and instead for the second defendant to be required to process EKJV Ore at a much higher level of not less than 260,360 DTMs of ore. Contrast, in fact, the plaintiffs' and third defendant's issued notice of 29 October 2019 (DLE-10 to the first Eaton affidavit at page 302) which had nominated for the January to March 2020 calendar quarter the expressed objective to have milled by the second defendant some 314,820 DMTs of EKJVA ore from out of its mine.
One early and fundamental problem for the plaintiffs encountered in seeking the par 1 relief is that the plaintiffs do not pursue under their current pleading (see the statement of claim of 20 December 2019) to set aside, invalidate or avoid the second defendant's most contemporary 29 October 2019 notice as had been given under cl 4.2 of the OTA.
For as long as the OTA and, in particular, cl 4.2 thereof remain afoot and operational, the 29 October 2019 notice must also stand as undiminished in terms of its legal force and applicability. There can be no legitimate basis under the OTA to contractually require the second defendant to be forced to conduct its Kanowna Bell Mill commercial operations otherwise than as it had so recently notified under its 29 October 2019 notice. The relief as sought by the plaintiffs by par 1 effectively seeks to quarantine, or to disregard the effectiveness of the 29 October 2019 notice advice - but without any legal basis to deliver an element of ineffectiveness to that cl 4.2 notice as so given.
A second problem for the plaintiffs arises from out of their advocated contractual construction of the OTA. It seems to me that the plaintiffs' present construction is not convincing. That is particularly so towards the OTA being read so to bind the second defendant to process (mill) the EKJV Ore, in effect, in priority to the ore obtainable and processable by the second defendant from all other third party sources (apart from processing its own ore). The OTA priority meaning for which the plaintiffs contend needs to be winkled very carefully out of the definitions within the OTA and particularly, out of the ensuing clauses 1 through 5 thereof.
There is no OTA express covenant conferring such an EKJV Ore priority as the plaintiffs would contend for at the Kanowna Belle Mill of the second defendant.
There is, however, as seen within the contractual promise under OTA cl 4.2 a directed emphasis on advance notifications towards a calendar quarterly milling schedule that is to be consistent with the requirements of OTA cl 5.7 and which details the estimate EKJV Ore tonnes and source that 'can be processed in the upcoming calendar quarter'. It may then be seen that OTA cl 5.7 commits the second defendant only in terms to:
There shall be a minimum of one Batch Campaign in each calendar quarter. The minimum batch size shall be 35,000 tonnes of EKJV Ore for a Batch Campaign ('Batch Size'). The parties may, acting reasonably, agree to change this amount.
See also ensuing OTA cl 5.11 which reads:
Subject to the terms of this [OTA], Kanowna will have no liability to the EKJV Parties in relation to the cessation of the treatment of EKJV Ore or the reduction in the amounts of the EKJV Ore treated.
I am, of course, not now delivering any concluded interpretation towards the true meaning of the OTA from a final perspective. I also bear in mind that any interpretive exercise must take account of not only of the relevant text at issue but, as well, of the surrounding commercial context and of the (objectively assessed) purpose and objects of an agreement.
Nevertheless, for the purposes of the present urgent interlocutory exercise, I have needed to form provisional views towards the meaning of these OTA clauses, particularly for cl 4 and cl 5. This is necessary in order to evaluate the contended constructional prima facie breach of contract interpretive arguments contended for by the plaintiffs regards, in effect, an ore priority position for which they contend under the OTA for EKJV Ore.
The position I reach on a wholly provisional basis is that the OTA construction as is now contended for by the plaintiffs towards such suggested priority is unconvincing.
To that end, I observe upon two further matters. First, it would have been relatively easy for the purpose of an elaborate and professionally drawn OTA‑like instrument of importance between commercial parties, for the draftsperson to deal with any ore treatment priority position by explicit text. That did not happen.
Secondly, the overall 'flavour' of the OTA bargain seen assembled under all the pages of the OTA, particularly by many express exceptions (as to the second defendant processing the EKJV Ore, seen laid out under cl 5.2 of the OTA) reflects, and as I only would expect, a commercial bargain that looks to be weighted heavily towards the interests of the mill owner. In other words, the OTA provisions look to me at this time to be deliberately framed to be skewed towards the interests of the second defendant, rather than favouring the interests of the EKJV entities (the plaintiffs and third defendant) who seek to have their EKJV Ore processed under that milling regime. I emphasise, of course, that these are only my provisional observations.
A third problem presents for the plaintiffs as regards par 1. By my assessment, the balance of convenience, assessed within the context of weighing potential end relief by common law damages for an OTA breach if ultimately proved at a trial, is against the plaintiffs. That is in a situation where the assumption is that the plaintiffs can ultimately make good their presently weakish looking breach case.
On my assessment, any delays encountered by the plaintiffs - in terms of having their 49% share of the EKJV Ore milled somewhere else, in order to convert it to doré gold, before it in turn can be refined elsewhere to gold bullion and thereby to realise money for the plaintiffs - is a profit delay scenario that ought be capable of being quantified and calculated for the purposes of an end award of common law damages in due course if the plaintiffs do ever succeed on these breach arguments.
Consequently, my overall assessment of the balance of convenience is against the plaintiffs in terms of a par 1 intervention of the court granting, effectively, affirmative relief against the second defendant. Damages would be an adequate remedy.
Fourth, as to the timing of this dispute, as is now apparent at the time the plaintiffs' application was heard, that the month of January 2020 was almost over as the Australia Day public holiday long weekend loomed.
For the court to now issue relief in the nature of par 1 - which would extend to engage as a matter of force, substantively as to the vastly extra volumes of ore over the remaining two-thirds of the current production quarter (that is, across February and March 2020) - would be, on my assessment, a risky intrusion by a court into the second defendant's business of providing milling services generally for reward.
Moreover, the OTA regime, as is evident from cl 4.1 and cl 4.2 now seen, displays what is a carefully assembled regime of advanced planning processing notice towards milling services provided by the second defendant. In other words, by cl 4 of the OTA there must be at least two months minimum advanced notice to be provided of the amount of EKJV Ore to be processed in the ensuing calendar quarter. That advanced notification regime is now incapable of being achieved for the January‑March 2020 calendar quarter.
Fifth, in resisting the present application, the affidavits read on behalf of the defendants for this application, particularly the Tyrrell and Stralow affidavits, have now fully explained the second defendant's business rationale underlying its as communicated, in effect, milling volume reduction assessment given at 29 October 2019 for the January to March 2020 calendar quarter to the EKJV parties, down to 35,000 DMTs in that period.
Senior counsel for the plaintiffs directed a number of criticisms at those explanations now provided for the second defendant's business decisions, taken for the processing of a further 72,000 DMTs of the second defendant's own ore (about which, as I understood the plaintiffs' position as the meaning of the OTA, they do not complain), and for further milling amounts of third party ore. However, those explanations as now proffered are, on their face, plausible. They are commercial explanations for what has occurred.
It is not at all feasible on an interlocutory application of the present kind for the court to render credibility assessments towards diminishing the commercial explanations as are now proffered for the second defendant.
All in all then, applying orthodox interlocutory injunction principles towards the present pursuit of mandatory interlocutory relief at this time on an urgent basis, I am not left sufficiently persuaded that the plaintiffs' pure common law action for breach of (the OTA) contract is a prima facie sufficiently strong OTA breach case. Nor am I persuaded that the balance of convenience, particularly taking into account the adequacy of damages, can sustain the relief as is sought under par 1 of the plaintiffs' summons. Those factors are interdependent, of course. But here both weigh against the par 1 relief sought.
I now turn towards assessing the relief as sought under par 2 of the plaintiffs' summons.
Paragraph 2 relief
Paragraph 2 of the plaintiffs' summons reads:
2.Alternatively to order 1, the First Defendant, whether by itself or by its officers, servants, agents or otherwise, be restrained and an injunction is hereby granted restraining the First Defendant from using or permitting to be used any process or method to stockpile Minerals produced by the Joint Venture Operations (in excess of any Minerals produced by the Joint Venture Operations (in excess of any Minerals that are directly transported to the Kanowna Bell Mill to be processed by the Second Defendant under the terms of the OTA) other than in accordance with the procedures set out in:
(a)the Ore Division Agreement dated 2 December 2005 (as amended 8 March 2006) between the Plaintiffs, First Defendant, Second Defendant and Placer Dome Australia Ltd (Raleigh ODA) with respect to Raleigh Ore (as defined in the Raleigh ODA); and
(b)the Ore Division Agreement dated 12 November 2010 between the Plaintiffs, First Defendant, Second Defendant and Barrick (PD) Australia Limited (Rubicon ODA) with respect to Rubicon Ore (as defined in the Rubicon ODA),
without the prior written consent of the Plaintiffs, or until further order of the Court.
On my assessment, by par 2, which is seen to be directed towards only the first defendant (that is, to the manager of the EKJV), the plaintiffs seek to compel the first defendant to implement elaborate stockpiling procedures for all EKJV Ore (other than mined ore transported to the Kanowna Belle Mine to be processed by the second defendant). This is now sought to be done on the basis of implementing two earlier Ore Division Agreements (the Raleigh ODA of 2 December 2005 and the Rubicon ODA of 12 November 2010).
However, as had emerged during the course of oral argument, the base difficulty with relief in par 2 terms is that it would be relief that is directly contrary to the terms of cl 3 of the OTA. Clause 3 provides:
3.Suspension of Ore Division Agreements
The Ore Division Agreements [a defined term under OTA definition cl 1.1] will be suspended from 31 December 2012 and remain in suspense until they recommence as provided for in the [OTA].
No contention is put before me on the part of the plaintiffs at this time that the OTA itself is not still alive, fully enforceable and on foot as between the OTA parties.
Rather, the plaintiffs' par 1 contention towards the second defendant now seen is only as to an alleged breach of the OTA, by reference to a priority argument directed towards the consequences of OTA definitions read with cl 2, cl 4 and cl 5 of the OTA.
However, as seen, cl 3 of the OTA, is explicit. On that basis, the compulsive par 2 relief of stockpiling as is sought under what are still suspended ODAs would, effectively, mandate a breach of cl 3 of the OTA. That is an untenable situation for interlocutory relief.
A further practical obstacle to the stockpiling relief as sought by par 2 is that, as I understood the plaintiffs' argument, is the contended threat argued for in order to support the urgent obtaining of par 2 relief on an interlocutory basis is best characterised as in the nature of a 'what if' concern. This apparently relates to the plaintiffs' fears of losing out vis‑à-vis the third defendant in terms of their 49% interest, over undivided and stockpiled ore produced as a result of the EKJV mining operations, under the EKJVA regime.
To that end, I was directed to concerns expressed by Mr Johns in the first Johns affidavit (see pars 94 - 98).
However, senior counsel for the defendants has directed my attention to what is now said by Mr Stralow for the respondent defendants, as the chief development officer of Northern Star Resources (the ultimate parent corporation of the first, second and third defendants). I refer to the Stralow affidavit at pars 112 - 113 and then, to the undertakings as are offered by Mr Stralow at between par 114 - 116(e):
112.I am informed by Mr Simpson, and believe, that:
(a)between 4 September 2019 and 23 September 2019, an ore stockpile at the RHP ROM Pad was split by MLG personnel in accordance with the procedures in the ODP; and
(b)the total volumes of ore split as part of this campaign were measured by the Loadrite systems on MLG's loaders undertaking the splitting as follows:
(i)GEM - 29,709/55 tonnes (50.8%); and
(ii)R&T - 28,769.95 tonnes (49.2%)/
113.I am informed by Mr Simpson and believe that he prepared a spread sheet summarising the haulage details provided to him by MLG in relation to the ore splitting. Annexed to my affidavit and marked DJS-35 is a true copy of a spread sheet prepared by Mr Simpson.
Undertakings to this Honourable Court
114.I refer to paragraphs 95(a) and 103 of the Johns Affidavit.
115.I am informed by Mr Simpson, and believe, that as at the time of this affidavit since 1 January 2020:
(a)EKJVM has applied, and required MLG to apply, the ODP for ore mined at the EKJV Mine that is not to be processed under the OTA; and
(b)GEM's share of ore mined at the EKJV Mine (GEM Ore) has not been blended or co-mingled with ore from any other mine.
116.I confirm on behalf of EKJVM and GEM, and EKJVM and GEM hereby undertake to this Honourable Court, that:
(a)until final orders are made following the final hearing of this matter at trial, EKJVM will apply, and will require that any other person involved in stockpiling or dividing of ore mined at the EKJV Mine applies, the ODP for ore mined at the EKJV Mine that is not to be processed under the OTA;
(b)until final orders are made following the final hearing of this matter at trial, GEM will not blend or co-mingle GEM Ore with ore containing gold mined from any other mine;
(c)until final orders are made following the final hearing of this matter at trial, GEM will have any GEM ore processed, milled or treated only as part of a batch campaign with GEM Ore only (GEM Batch Campaign);
(d)until final orders are made following the final hearing of this matter at trial, for each GEM Batch Campaign, GEM will:
(i)prepare, cause to be prepared or obtain, and keep, all necessary and appropriate records of:
(A)the tonnes and grade of GEM Ore processed, milled or treated as part of each GEM Batch Campaign, including the recovery rate at the relevant processing facilities; and
(B)an outturn statement recording the grade and quantity of gold bullion produced and sold from each Batch Campaign (the Reconciliation Records),
to the same level of detail as the information that is currently provided to R&T for processing conducted at the KB Mill.
(e)If this Honourable Court holds following trial that R&T have established a cause of action against GEM and/or EKJVM for a breach of clause 2.4 of the EKJVA, GEM will provide R&T with copies of all of the Reconciliation Records on 5 business days' notice of a request for the Reconciliation Records from R&T.
As I indicated to counsel at the hearing, the court will accept those undertakings.
The essential par 2 relief grievance as presently articulated about ore division appears to be that the plaintiffs believe they are to put at a risk of somehow not later receiving their 49% JV share of mined ore vis‑à‑vis the 51% share of the third defendant, under the current stockpiling regime applied by the first defendant. But the defendants say this regime is a more technologically modern and sophisticated weighing and loading regime as now deployed. This regime concerns the stockpiling and trucking of gold ore, mined and produced from the EKJVA operations (referred to as an ODP procedure).
Given what has now been put by Mr Stralow as regards answering Mr Johns' expressed concerns, it seems that proper and sufficient records will be kept by the first defendant in terms of what is occurring with all future divisions of the EKJV Ore - in terms of the stockpiling and processing by the first defendant manager vis-à-vis the joint venture ore interests of the third defendant.
If per chance it does later mature to be the case at a trial that the plaintiffs can establish a grievance in terms of their diminished level share of EKJV Ore and that they say properly reflects their (49%) joint venture interest, then the undertakings and commitments in terms of weighing and record keeping as now proffered from the first defendant, as explained, are sufficient to address the 'what if' concern. This was, as expressed by senior counsel (see ts 119 - 120), more on the basis of a future risk, rather than an empirically based present factual sustaining of loss or damage that could be immediately pointed to.
The contractual basis for the plaintiffs' breach arguments on this key issue of stockpiling are directed essentially to a proper interpretation of the EKJVA as regards taking in kind provisions towards an entitlement to 'Minerals', seen under cl 2.4 and to the definition of 'Minerals' within the EKJVA at cl 1.1.
The purport of the submission essentially is that although ore produced as a result of this mining venture between the parties is joint venture property, it is only 'Minerals' that may be taken in kind by the venturers. That effectively means, say the plaintiffs, that it is not permissible to take in kind the product of the EKJV mining operation as ore - until that ore has at least been processed further and so milled to be converted into doré gold or, possibly, further refined to gold bullion.
Nevertheless, and against this 'too early to take in kind' argument, senior counsel for the defendants drew my attention to cl 17 of the EKJVA, particularly cl 17.2, which provides:
Any Participant having a beneficial interest in Joint Venture Property may at any time and at their expense call for a transfer from the other Participants, of the legal title to that beneficial interest (provided such transfer would not produce any application for a mining tenement which has been made or which is about to be made).
By reference to that clause, senior counsel for the defendants submitted that the third defendant might, at any time, require the first defendant (as regards the joint venture beneficial interest it holds in 51% of the produced ore from the mine) to immediately transfer to it the legal title to its beneficial interest in that ore. Whilst that step does not directly deal with the 49% other interest holding of the plaintiffs in the EKJV Ore it, nevertheless by necessary subtraction in a process of transferring the third defendant's majority 51% interest, must result in the same essential outcome as regards the residue of 49% of the mined ore for the defendants were the cl 17.2 path to be taken by the third defendant. That argument is persuasive presently.
Hence, my provisional interlocutory assessment of the plaintiffs' argument to the effect that the 'taking in kind' provisions of the EKJVA do not extend to the as mined EKJV Ore, whilst arguable, does not present as being all that strong. It also presents to me as a situation easily remedied by the invocation of cl 17.2 by the third defendant.
In terms of the balance of convenience towards par 2 relief then, the same consideration in terms of damages being a potential common law adequate end remedy here again seems to me to be at the forefront of considerations, particularly by reference to the comprehensive record keeping and weighing undertakings that are offered and which the court will receive from the first defendant. I am not persuaded to grant the relief under par 2.
Paragraph 3 relief
By reference to par 3 of the plaintiffs' summons, the further interlocutory relief as sought there is seen in the following terms:
3,Further or alternatively to order 1, the First and Third Defendants, whether by themselves or by their officers, servants, agents or otherwise, be restrained and an injunction is hereby granted restraining each of them from removing any Minerals from the Joint Venture Area (as defined in the EKJV Agreement), or dividing any stockpile of Minerals, other than for the purpose of causing those Minerals to [be] processed by the Second Defendant under the terms of the OTA:
(a)without the prior written consent of the Plaintiffs; or
(b)until further order of the Court.
However, I am once again not persuaded that such relief as regards any such restraint against dealings with stockpiled ore (other than in accord with processing by the second defendant under the OTA) is appropriate.
On my assessment, a suspense scenario inhibiting any of the parties presently dealing with the EKJV Ore produced as a result of the EKJV mining operations, other than in accord with a submission of that ore for milling to the second defendant is not in the commercial interests of either camp. A 'Stalingrad' outcome of mutual commercial devastation is in no-one's interests.
Rather, it seems to me that a more economically sensible outcome is for a continued conversion of the mined ore by processing and milling ultimately into gold bullion and thereby to wealth for the parties, rather than sterilising all their EKJV Ore at site.
If there is to be at a later time arguments over breach of contract vis‑à‑vis the OTA or the EKJVA, then these issues are well capable of being sorted out by an award of common law damages, particularly by reference to the utility of record keeping undertakings as provided by the Stralow affidavit and which are accepted.
Paragraph 4 relief
Paragraph 4 of the relief as sought under the plaintiffs' chamber summons was addressed by reference to terms of a letter as recently received from the lawyers on behalf of the defendants of 22 January 2020. The letter indicated that the defendants effectively would consent to the continued stockpiling of the plaintiffs' ore upon the joint venture tenements and so the concern this would not be allowed further by the first defendant and the third defendant is resolved.
Accordingly, the court will order in the terms of the essentially unopposed par 4 relief as is sought by the plaintiffs in this respect. Of course, this is done on the basis that such interlocutory relief is granted on the basis of the usual undertaking as to damages given in the usual terms as provided by the plaintiffs to obtain the interlocutory relief of this character.
Conclusion - final orders
Consequently, orders issued essentially by way of the court's receipt of the undertakings as are proffered by the defendants being received and, as well, as regards unopposed orders as per par 4 of the plaintiffs' summons. Otherwise, the relief sought by the plaintiffs under par 1, par 2 and par 3 by way of interlocutory injunction was refused.
The costs of the hearing, which extended until past 5.00 pm on Friday, 24 January 2020, will be reserved.
SCHEDULE 1
SCHEDULE 2
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DW
Associate to the Honourable Justice Martin
19 FEBRUARY 2020
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