Wright Prospecting Pty Ltd v Hamersley Iron Pty Ltd (No 3)

[2013] NSWSC 1069

Supreme Court

New South Wales

Medium Neutral Citation:	Wright Prospecting Pty Ltd -v- Hamersley Iron Pty Limited [No 3] [2013] NSWSC 1069
Hearing dates:	22 July 2013
Decision date:	09 August 2013
Jurisdiction:	Equity Division - Commercial List
Before:	Hammerschlag J
Decision:	See paragraphs 66 to 69
Catchwords:	EVIDENCE - Court Suppression and Non-publication Orders Act 2010 ss 7, 8(1)(a), 8(1)(e) - application for suppression orders with respect to documents where during the trial of a commercial cause contractual documents concerning a joint venture and partnership between one of the parties to the cause and third parties were admitted into evidence without qualification but asserted by that party to the cause to be commercially confidential to it - whether making of a suppression order is necessary to prevent prejudice to the proper administration of justice - whether suppression orders is otherwise necessary in the public interest and whether this public interest signifficantly outweighs the public interest in open justice - Held making of a suppression order not necessary in the circumstances.
Legislation Cited:	Court Suppression and Non-publication Orders Act 2010 (NSW) Federal Court of Australia Act 1976 (Cth)
Cases Cited:	John Fairfax & Sons Pty Ltd v Police Tribunal (NSW) (1986) 5 NSWLR 465 Rinehart v Welker [2011] NSWCA 403 Wright Prospecting Pty Ltd v Hamersley Iron Pty Ltd [2013] NSWSC 536 Wright Prospecting Pty Ltd v Hamersley Iron Pty Ltd [No 2] [2013] NSWSC 709 Hogan v Australian Crime Commission and Ors (2010) 240 CLR 651
Category:	Procedural and other rulings
Parties:	Wright Prospecting Pty Ltd - Plaintiff Hamersley Iron Pty Limited - First Defendant/First Cross-Defendant Mount Bruce Mining Pty Limited - Second Defendant/Second Cross-Defendant Channar Mining Pty Ltd - Third Cross-Defendant Rio Tinto Exploration Pty Ltd - Fourth Cross-Defendant Hamersley Exploration Pty Ltd - Fifth Cross-Defendant
Representation:	Counsel: K.A. Stern SC and R. Hardcastle - Plaintiff M.J. Darke - First and Second Defendants and all Cross-Defendants Solicitors: Clayton Utz - Plaintiff Allens Linklaters - First and Second Defendants and all Cross-Defendants
File Number(s):	2009/323345

Judgment

introduction

1. HIS HONOUR: Under the common law, and under the statutory law of this State, the administration of justice is to take place in open court. A court can only depart from this rule where its observance would frustrate the administration of justice or some other public interest for whose protection Parliament has modified it: see John Fairfax & Sons Pty Ltd v Police Tribunal (NSW) (1986) 5 NSWLR 465 at 476-477 per McHugh JA, cited with approval in Rinehart v Welker [2011] NSWCA 403 ("Rinehart").

1. On 10 May 2013 the principal judgment in these proceedings was handed down, determining that the plaintiff and cross-claimant were entitled to a monetary verdict against the second defendant: Wright Prospecting Pty Ltd v Hamersley Iron Pty Ltd [2013] NSWSC 536 ("the principal judgment"). Final orders were made on 30 May 2013: Wright Prospecting Pty Ltd v Hamersley Iron Pty Ltd [No 2] [2013] NSWSC 709.

1. Defined terms in the principal judgment have the same meaning here.

1. The Rio defendants, together with Channar Mining Pty Ltd, Rio Tinto Exploration Pty Ltd and Hamersley Exploration, seek an order under s 7(b) of the Court Suppression and Non-publication Orders Act 2010 (NSW) ("the Act") suppressing disclosure of information comprising evidence given in the principal proceedings, being some of the contents of the:

(a)   Channar Mining Joint Venture Agreement ("the Joint Venture Agreement");

(b)   Partnership Agreement dated 24 May 1988 ("the Partnership Agreement"); and

(c)   Master Restructure Deed for the Channar Project ("the Master Restructure Deed");

(collectively "the documents").

1. References below to sections are references to sections of the Act. The expression the Rio defendants includes, unless indicated otherwise by the context, the other applicants.

1. Except with respect to very limited parts of the documents, the application is opposed by WPPL. HPPL took no active part in the present contest.

Background

1. The documents were part of the Court Book tendered by Hanwright during the trial of the principal proceedings. They had been discovered by the Rio defendants pursuant to orders of this Court. They were admitted into evidence without objection and without any order limiting disclosure of their contents. Under a consensual inter partes regime, however, their disclosure was limited to Hanwright's external legal advisers, and, pending decision on the present application, publication has been so restricted by order of the Court.

1. In the principal proceedings, Hanwright contended that ore won by the Channar Joint Venturers from the MBM area attracted payment of royalties because the Channar Joint Venturers derived their title to Channar through or under MBM, or because ore won by the Channar Joint Venturers is won in association with MBM via Channar Investment Nominee, in which MBM and Hamersley Iron have a shareholding interest.

1. The Rio defendants put both these propositions in issue. They put that ore won by the Channar Joint Venturers in the MBM area is not being won by MBM itself, or by any person or corporation deriving title through or under MBM, and that ore won by the Channar Joint Venturers is not being won by MBM in association with the Channar Joint Venturers. They argued that, if anything, the ore is being won by the Channar Joint Venturers in association with MBM.

1. The Joint Venture Agreement established, and contains the terms and conditions of, the Channar Mining Joint Venture ("the Channar Joint Venture"), which was formed with a view to extracting iron ore within a designated area and supplying it to the participants. The parties to it are Channar Mining Pty Ltd (a Rio Tinto entity) and China Metallurgical Import and Export Corporation ("Sinosteel"). It is a comprehensive commercial document running, with schedules, to over 200 pages. It legislates comprehensively for the affairs of the Channar Joint Venture. It contains provisions, amongst others, for management and governance, supply (including delivery schedules and product specifications), change of control, termination and default.

1. As the principal judgment recounts, the Channar Joint Venturers granted Channar Investment Nominee Pty Ltd a sublease of ML 265SA for a term ending on 31 December 2012. Channar Investment Nominee Pty Ltd, of which MBM holds 12.5%, was the nominee and agent of the partnership which had been formed to mine the area.

1. The Partnership Agreement established the partnership between the Channar Joint Venturers and a number of financing partners including banks who committed to invest in the enterprise by way of equity and debt.

1. By the Master Restructure Deed the partnership was dissolved and the partners agreed to transfer their interests in its assets to the Channar Joint Venturers, who took over all operations and activities previously undertaken by the partnership. The Master Restructure Deed contains provisions for transfer of interests in the partnership assets, balancing and adjustments of amounts due between the partners, and payments to be made to departing partners.

1. In support of this application the Rio defendants read an affidavit by Mr Robert Paul Shannon, the Chief Financial Officer of Rio Tinto's Iron Ore division.

1. Mr Shannon explains that Rio Tinto entities own eight operating iron ore mines in the Pilbara, some of which, including the Channar mine, have been developed in joint venture with other parties. All of these mines are operated by Rio Tinto companies using an integrated mining, infrastructure, transport and services system, and the iron ore mined from most of them is blended together to create uniform iron ore products for sale to customers. The joint venture mines are governed by suites of commercially negotiated agreements, including, in respect of each joint venture, a joint venture agreement and a management agreement. There are commercial agreements in place between the joint venture participants and Rio Tinto entities governing the manner and terms through which joint venture product is included in Rio Tinto's integrated mining, infrastructure, transport and services system.

1. Mr Shannon explains further that the agreements governing the joint ventures have been separately commercially negotiated and contain different terms, but deal with many similar matters. He says that the terms governing various joint ventures have a substantial commercial and operational impact on the underlying projects for the parties to them. Various Rio Tinto entities also hold, or have interests in, mining tenure covering other iron ore resources in the Pilbara which are yet to be developed. Some of these interests are held in joint venture with third parties. From time to time, Rio Tinto entities enter into joint ventures to develop and mine resources over which they hold tenure and also enter into joint ventures to develop and mine resources which are located on tenure held, up until entry into a joint venture, by third parties.

1. Hamersley Resources Ltd, a Rio Tinto entity is, by dint of a series of assignments, party to a joint venture (Rhodes Ridge) with Hanwright under written agreements entered into in 1972. Rhodes Ridge has iron ore mining opportunities in the Eastern Pilbara which have not yet been exploited. At present, WPPL holds 25% and HPPL 25%, but it may be that as a consequence of legal proceedings in Western Australia (presently the subject of an application for special leave to the High Court of Australia) WPPL may come to hold HPPL's share.

1. WPPL has apparently expressed an intention to negotiate amendments to the Rhodes Ridge joint venture arrangements. Negotiations have not commenced but, according to Mr Shannon, it would be typical for such contractual arrangements to be updated by negotiation before Rhodes Ridge can be developed, given that Rio Tinto was not involved in Rhodes Ridge at its inception and that the present arrangements do not include the terms through which Rhodes Ridge would come within Rio Tinto's integrated mining, infrastructure, transport and services system.

1. HPPL, or related companies, is in a joint venture relationship with a Rio Tinto company in the Hope Downs iron ore project in the Pilbara and is a joint venturer with a third party in the Roy Hill iron ore project, also in the Pilbara. HPPL also has interests in coal projects in Queensland.

1. Mr Shannon says that HPPL is a commercial competitor of Rio Tinto and that it has other competitors including BHP Billiton, Vale and Fortescue Metals Group. He does not assert that WPPL is a competitor of Rio Tinto.

1. Mr Shannon says that the contents of the Joint Venture Agreement, the Partnership Agreement and the Master Restructure Deed are not in the public domain and that within Rio Tinto, access to them is restricted to a limited group of personnel.

Relevant provisions of The Act

1. Section 7(b) provides, relevantly:

A court may, by making a suppression order... on grounds permitted by this Act, prohibit or restrict the publication or other disclosure of:

(a)   ...

(b)   information that comprises evidence, or information about evidence, given in proceedings before the court.

1. Section 3 defines suppression order to mean an order that prohibits or restricts the disclosure of information (by publication or otherwise).

1. Section 6 provides, relevantly, that in deciding whether to make a suppression order a court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice.

1. Sections 8(1)(a) and (e) provide, relevantly, that:

(1) A court may make a suppression order... on one or more of the following grounds:

(a)   the order is necessary to prevent prejudice to the proper administration of justice,

(e)   it is otherwise necessary in the public interest for the order to be made and that public interest significantly outweighs the public interest in open justice.

1. Section 8(2) provides that a suppression order must specify the ground or grounds on which the order is made.

1. Section 11(2) provides that a suppression order is not limited to applying in NSW and can be made to apply anywhere in the Commonwealth. Section 11(3) provides that an order is not to be made to apply outside NSW unless the court is satisfied that it is necessary for achieving the purpose for which it is made. Section 12(1) provides that a suppression order operates for the period decided by the court and specified by the order.

The parties' positions

The Rio Defendants

1. By far the largest field of contest concerns the Joint Venture Agreement. The Rio defendants seek a suppression order covering the vast bulk of its provisions.

1. The Rio defendants say that by its nature the Joint Venture Agreement is commercially sensitive.

1. First, they say it contains a Rio Tinto entity's agreed position on key commercial matters in joint venture negotiations and ongoing joint venture management which may, if known by third parties seeking to negotiate a joint venture with a Rio Tinto entity, provide leverage to that party in negotiations concerning similar or equivalent provisions and correspondingly weaken Rio Tinto's position. They say that in the context of Rhodes Ridge this might give WPPL information as to the scope and range of matters that have been addressed in a joint venture to which a Rio Tinto entity is a party and which WPPL might seek to address in its negotiations.

1. Next, they say it contains information such as delivery schedules and product specifications which, if disclosed to competitors and customers, could be used to Rio Tinto's competitive disadvantage.

1. Finally, they say it records the positions agreed between a Rio Tinto entity and a customer for iron ore (the counterparty is an Australian subsidiary of Sinosteel who processes and trades metallurgical raw materials including iron ore). If these positions are disclosed to other customers with similar standing, this may prejudice Rio Tinto in its future dealings with those customers.

1. The Rio defendants submit that the proceedings were conducted without reference to the contents of the documents and that there is no public interest in their disclosure. They submit further that there is a public interest in parties being able to litigate their disputes through the courts without fear of the public disclosure of their confidential and commercially sensitive information in circumstances where (as they submit is the case here) that information is irrelevant to the issues being litigated.

1. Parts only of two provisions of the Partnership Agreement are germane and WPPL does not oppose the making of an order with respect to them. They refer to the dollar amounts of equity commitment and contribution by the various partners.

1. The only provisions of the Master Restructure Deed in contest are a clause entitled Repayment obligations which provides for repayment of money made available to the Channar Joint Venture, a clause entitled Balancing and Adjustment Payments which provides for payments to be made between the participants and a schedule of the partnership assets which are to be dealt with on dissolution.

WPPL

1. WPPL does not oppose the making of the order sought with respect to a limited number of provisions (or more accurately, parts of provisions) in each of the documents.

1. They need not be dealt with in detail. They largely concern financial figures or the bases for their calculation in the supply and other arrangements of the Channar Joint Venturers. WPPL does not seek access to them.

1. It may be inferred that WPPL accepts that the Rio defendants have a substantial and legitimate commercial interest in keeping them confidential, sufficient to make a suppression order necessary. Although it is by the slimmest of margins, I am satisfied that an order under s 8(1)(a) is necessary with respect to them.

Consideration

1. Section 8(1)(a) requires the court to be satisfied that a suppression order is necessary to prevent prejudice to the proper administration of justice. Section 8(1)(e) requires the court to be satisfied that a suppression order is otherwise necessary in the public interest for the order to be made and that public interest significantly outweighs the public interest in open justice.

1. Section 6 requires the court to take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice.

1. In Hogan v Australian Crime Commission and Ors (2010) 240 CLR 651 ("Hogan"), the High Court considered s 50 of the Federal Court of Australia Act 1976 (Cth) which is in terms not materially different from s 8(1) of the Act. More recently the Act itself was considered by the Court of Appeal in Rinehart.

1. In Hogan at [30], the High Court pointed out that "necessary" is a strong word and that the making or not of a suppression order is not a matter of discretion but rather requires the Court to reach the requisite stage of satisfaction that the order is necessary to achieve the objects of the specific provision under which it is to be made. In Rinehart at [27] the Court of Appeal pointed out that orders should only be made in exceptional circumstances.

1. One recognised exception to the principle of open justice is where publicity would destroy the subject matter of the proceedings because it will be in the interests of justice that the process for determination of the proceedings not destroy or seriously depreciate the value of the subject matter: see Hogan at [42].

1. Another exception (based on the same notion - that is, that if an order is not made, unacceptable consequences in the context of the proper administration of justice will flow), is that the law may protect from disclosure trade secrets and personal or commercial information, the value of which, as an asset, would be seriously compromised by disclosure: see Hogan at [38] and [42]; Rinehart at [34] - [37] and the authorities cited there.

1. The last mentioned exception is covered by s 8(1)(a) and the Rio defendants submit that the present case falls into it.

1. Section 8(1)(e) requires the court to be satisfied that it is necessary in the public interest generally that the order be made and that this outweighs the public interest in open justice.

1. The Rio defendants' submissions rest on two premises. The first is that the contents of the documents were irrelevant to the proceedings. The second is that the information sought to be shielded is of such a confidential nature that, as an asset, its value would be seriously compromised by disclosure.

1. Save with respect to the information in respect of which there is no opposition to the making of an order, I have fallen well short of reaching the requisite stage of satisfaction that the order sought is necessary as the Act requires because, in my view, neither premise has been made good by the Rio defendants.

Relevance

1. The terms and effect of the Joint Venture Agreement were relevant (even central) to the issues of whether ore was being won by MBM itself, by any person or corporation deriving title through or under MBM, within the meaning of cl 24(iii) of the 1962 Agreement as incorporated in the 1970 Agreement, or by MBM in association with the Channar Joint Venturers. The assertions were pleaded by WPPL in paragraph 70 and following of its Second Further Amended Commercial List Statement and denied by the Rio defendants in paragraph 70 and following of their Commercial List Response.

1. The central structure and import of the documents was discussed in open court. By way of example, the following was said by senior counsel on behalf of the Rio defendants:

YOUNG: Our learned friends for the plaintiff have argued that there is a relevant connection deriving title through or under by virtue of the fact that there is a minor shareholding in Channar Investment Nominee that was held by MBM. I don't want to trawl through the documents but I do want to give your Honour the picture of the Channar Joint Venture documents.

There is, as your Honour has seen, a Channar Joint Venture Agreement. There is in addition something called the Channar Partnership. The Channar Partnership is effectively a financing structure. Channar Investment Nominee is an agent and nominee for the Channar Partnership.

The structure of the financing is that when it operated, was that Channar Investment Nominee as agent for the financing partnership would hold a sublease. Under the sublease the partners would contribute all of the money necessary to develop the mine and the infrastructure. The nominee company would hold rights as sublessee and would extract the ore but would sell it back to the Channar Joint Venturers. That financing structure operated for a period from 1988 until May 2012 when the sublease expired.

YOUNG: The position in relation to the shareholding of the nominee company, and we say that doesn't matter but that is what the plaintiff relies upon, is that Channar Investment Nominee was owned by Channar Finance Limited 100 per cent. Channar Finance Limited had a number of shareholders which included MBM which had a non-beneficial shareholding of 12.5 per cent. That shareholding was held only between June 2006 and 31 December 2010 and at all times it was non-beneficial.

It is irrelevant because it was a shareholding in a company which held a hundred per cent of the shares in Channar Investment Nominee. Channar Investment Nominee at all times acted as agent for the partnership. There is no sense in which the shareholders of the parent company and in particular a non-beneficial one, were winning ore. They simply held shares in a company which acted as agent for the financing partnership. The Channar Partnership was the entity extracting the ore and entitled to the ore. It resold it under the financing structure to the Channar Joint Venturers.

HIS HONOUR: But you accept that MBM is doing it.

YOUNG: No. In respect of the Channar Joint Venture we accept that Channar, the joint venturers, are doing the extraction and for a period an agent for the Channar Partnership was doing the extraction. And to the extent of the blue areas on our map, that is to the extent of section 19 and section 18, you can trace title back to MBM.

1. Very little, if any, debate took place about any particular provision in the documents, but this was not because they were irrelevant. On the contrary, it may be inferred that both sides, with knowledge of the provisions (in the case of Hanwright, that knowledge being restricted to the lawyers), took the forensic position that there was no dispute about the elements of the relationship between the various participants in the Channar Joint Venture enterprise. The field of contest became whether the relationship so established fell within the ambit of the applicable provisions of the 1970 Agreement (including the incorporated provisions of the 1962 Agreement).

1. I add to this that the documents went into evidence in their entirety without qualification.

Confidentiality

1. Leaving aside the provisions which are not in contest, the Rio defendants have not established that the information has sufficient (or in some cases any) confidential quality so as to warrant the making of an order.

1. Mr Shannon identifies a number of provisions in the Joint Venture Agreement which he says are confidential for the reasons he gives. However his evidence does not deal with, let alone identify, any basis for clothing in confidentiality numerous other provisions, which on no view would qualify.

1. Many of these are what commercial lawyers might refer to as "boilerplate". Examples include provisions entitled Interpretation, Voting Arrangements, Force Majeure, Resolution of Disputes, Confidentiality, Assignments, and even a provision according to which references to currency are references to Australian dollars.

1. With respect to the Repayment obligations clause in the Master Restructure Deed, Mr Shannon's testimony rises no higher than an assertion that it is commercially sensitive to Rio Tinto and the Rio defendants because it records private financial information about the financial standing of the partnership at the date of dissolution. This is insufficient to establish any necessity for suppression.

1. With respect to the Balancing and Adjustment Payments provisions, Mr Shannon's testimony rises no higher than an assertion that it is commercially sensitive to Rio Tinto and the Rio defendants because it records private financial arrangements between parties to the agreement. This is insufficient to establish any necessity for suppression.

1. With respect to the schedule of partnership assets, Mr Shannon's testimony rises no higher than an assertion that it is commercially sensitive to Rio Tinto and the Rio defendants because it records the property, plant and equipment belonging to the partnership. This is insufficient to establish any necessity for suppression.

1. Moreover, significant aspects of the Channar Joint Venture arrangements are matters of public record.

1. As early as 1 July 1987 the existence and basic structure of the Channar Joint Venture became matters of public record, when they were the subject of a press release entitled "Australia-China Iron Ore Joint Venture to go Ahead at Channar". In May 1989 they were the subject of a paper given at the Annual Conference of the Australasian Institute of Mining and Metallurgy, entitled "Financing the Channar Project".

1. One of the Rio defendants' primary contentions is that knowledge of the Channar Joint Venture terms may advantage WPPL by providing it with leverage in potential negotiations with Rio Tinto on Rhodes Ridge, presumably by enabling WPPL to assert as a negotiating position that Rio Tinto should give it terms no less favourable than those which it gave Sinosteel.

1. This submission is unsustainable. The terms, if any, upon which both Rio Tinto and WPPL may later contract in relation to Rhodes Ridge are matters entirely for them.

1. Counsel for the Rio defendants submitted that Rio Tinto would want to be seen as acting reasonably in negotiations and disclosure of the documents would enable WPPL to use the Channar Joint Venture arrangements as a yard stick. The thrust of this submission is that information should be withheld from WPPL so as to enable Rio Tinto to negotiate unreasonably but not be seen to be doing so, a proposition which need only be stated to be revealed as unsustainable.

1. There is no evidence that the terms of the Channar Joint Venture represent some benchmark or that the circumstances which may have brought about the terms of the Channar Joint Venture (now more than 25 years ago) are materially relevant today in the context of Rhodes Ridge. If they did represent some benchmark, this would presumably be a known fact.

1. As to levels of production, the press release described above referred, amongst others, to anticipated levels of production. The schedule of production in the Joint Venture Agreement is now largely of historical importance only as it runs out in 2013.

Conclusion

1. Any extant order suppressing the contents of the documents or any other part of the Court Book is dissolved.

1. I am satisfied that a suppression order under s 8(1)(a) should be made with respect to the contents of the documents in respect of which there is no opposition to the making of the order. The documents in the Court Book may be redacted accordingly.

1. Beyond this I am not satisfied that it is necessary to make any suppression order. Such an order is neither necessary to prevent prejudice to the proper administration of justice nor is it otherwise necessary in the public interest.

1. Save to the limited extent so described, the application is dismissed.

1. The parties are to bring in Short Minutes reflecting this outcome.

1. The Exhibits are to be returned.

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Decision last updated: 09 August 2013