Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd
[2013] WASC 248
•2 JULY 2013
WRIGHT PROSPECTING PTY LIMITED -v- HANCOCK PROSPECTING PTY LIMITED [2013] WASC 248
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2013] WASC 248 | |
| Case No: | CIV:2617/2012 | 27 FEBRUARY 2013 | |
| Coram: | LE MIERE J | 2/07/13 | |
| 29 | Judgment Part: | 1 of 1 | |
| Result: | Application for leave to apply for summary judgment out of time granted Application for summary judgment dismissed Application to strike out the statement of claim granted | ||
| B | |||
| PDF Version |
| Parties: | WRIGHT PROSPECTING PTY LIMITED HANCOCK PROSPECTING PTY LIMITED HOPE DOWNS IRON ORE PTY LTD |
Catchwords: | Practice and procedure Application for leave to apply for summary judgment out of time Application for summary judgment Rules of the Supreme Court 1971 (WA) O 16 Turns on own facts Practice and procedure Application to strike out statement of claim Turns on own facts |
Legislation: | Mining Act 1904 (WA) Mining Act 1978 (WA) Rules of the Supreme Court 1971 (WA), O 16 |
Case References: | Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 Aon Risk Services Pty Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 Australian Anglo American Prospecting Ltd v CRA Exploration Pty Ltd [1981] WAR 97 Australian Broadcasting Commission v Australasian Performing Right Association Limited [1973] HCA 36; (1973) 129 CLR 99 Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 Clegg v Edmondson (1857) 44 ER 593 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 Duke v Royalstar Pty Ltd [2001] WASCA 273 Ernest v Vivian (1863) 33 LJ Ch 513 General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2012] WASCA 216 Nicholas v Western Australia [1972] WAR 168 Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118 Streeter v Western Areas Exploration Pty Ltd [No 2] [2011] WASCA 17; (2011) 278 ALR 291 The Commonwealth of Australia v The State of Western Australia [1999] HCA 5; (1999) 196 CLR 392 Western Export Services Inc v Jireh International Pty Ltd (2011) 86 ALJR 1 Wright Prospecting Pty Limited v Hancock Prospecting Pty Limited [No 2] [2010] WASC 16 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
HANCOCK PROSPECTING PTY LIMITED
First Defendant
HOPE DOWNS IRON ORE PTY LTD
Second Defendant
Catchwords:
Practice and procedure - Application for leave to apply for summary judgment out of time - Application for summary judgment - Rules of the Supreme Court 1971 (WA) O 16 - Turns on own facts
Practice and procedure - Application to strike out statement of claim - Turns on own facts
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Legislation:
Mining Act 1904 (WA)
Mining Act 1978 (WA)
Rules of the Supreme Court 1971 (WA), O 16
Result:
Application for leave to apply for summary judgment out of time granted
Application for summary judgment dismissed
Application to strike out the statement of claim granted
Category: B
Representation:
Counsel:
Plaintiff : Mr A J Myers QC, Mr J Rowland & Mr T J Palmer
First Defendant : Mr P J Brereton SC & Mr C Bova
Second Defendant : Mr P J Brereton SC & Mr C Bova
Solicitors:
Plaintiff : Clayton Utz
First Defendant : Jackson McDonald
Second Defendant : Jackson McDonald
Case(s) referred to in judgment(s):
Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552
Aon Risk Services Pty Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Australian Anglo American Prospecting Ltd v CRA Exploration Pty Ltd [1981] WAR 97
Australian Broadcasting Commission v Australasian Performing Right Association Limited [1973] HCA 36; (1973) 129 CLR 99
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Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256
Clegg v Edmondson (1857) 44 ER 593
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337
Duke v Royalstar Pty Ltd [2001] WASCA 273
Ernest v Vivian (1863) 33 LJ Ch 513
General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125
Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2012] WASCA 216
Nicholas v Western Australia [1972] WAR 168
Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118
Streeter v Western Areas Exploration Pty Ltd [No 2] [2011] WASCA 17; (2011) 278 ALR 291
The Commonwealth of Australia v The State of Western Australia [1999] HCA 5; (1999) 196 CLR 392
Western Export Services Inc v Jireh International Pty Ltd (2011) 86 ALJR 1
Wright Prospecting Pty Limited v Hancock Prospecting Pty Limited [No 2] [2010] WASC 16
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1 LE MIERE J: The plaintiff, Wright Prospecting Pty Limited (WPPL) and the first defendant, Hancock Prospecting Pty Limited (HPPL) (together the Partners) carried on business in partnership under the firm name 'Hancock and Wright' (Partnership). This action is concerned with WPPL's claimed entitlements in relation to mining tenements acquired by HPPL or its subsidiaries and now known as Hope Downs 4, Hope Downs 5 and Hope Downs 6, which are collectively referred to as the East Angelas.
2 In 1969 WPPL and HPPL entered into an agreement with James and William Nicholas and DFD Rhodes Pty Ltd (Rhodes) who held rights of occupancy pursuant to s 276 of the Mining Act 1904 (WA) in respect of areas of land which included the East Angelas Reserves. The agreement granted, or purported to grant, the Partnership the right to mine ore from the temporary reserves. In 1971 the Minister for Mines decided that the rights of occupancy to the temporary reserves would not be renewed and granted rights of occupancy to another company. Lang Hancock, the life governing director of HPPL, pressed the State Government to restore HPPL's access to the reserves. In a letter dated 3 April 1985 to HPPL, the Minister for Minerals and Energy agreed to give HPPL access to the reserves.
3 Peter Wright was the life governing director of WPPL. In September 1985 Peter Wright died. HPPL became Managing Partner of the Partnership. In 1989 Hancock Mining Ltd (HML), a subsidiary or associated company of HPPL, was granted exploration licences (East Angelas ELs) pursuant to s 57(1) and s 59(4) of the Mining Act 1978 (WA) covering the areas of land formerly comprising the East Angelas Reserves. The East Angelas ELs were subsequently transferred to other companies which were subsidiaries of or associated with HPPL and then transferred to HPPL. In 1997 HPPL transferred the East Angelas ELs to the second defendant, Hope Downs Iron Ore Pty Ltd (HDIO) which is a subsidiary of HPPL.
4 In 2005 HPPL and HDIO entered into a joint venture with Rio Tinto to develop the East Angelas ELs. In 2006 the State, in exchange for the surrender by HDIO of three exploration licences, granted to HDIO Mining Lease 282SA. Later in 2006 Hamersley WA Pty Ltd (Hamersley), a subsidiary of Rio Tinto, became a registered shareholder of Mining Lease 282SA and the East Angelas ELs in respect of 50/100th shares. In 2011 the Minister for Mines and Petroleum authorised the inclusion of the East Angelas ELs into Mining Lease 282SA. WPPL claims that HDIO holds an interest in the land formerly subject to the East Angelas ELs and East
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- Angelas Reserves contained within Mining Lease 282SA in respect of 50/100th shares on trust for the Partnership.
5 It is convenient, before outlining the statement of claim and WPPL's case, to summarise relevant parts of the various partnership agreements and the dealings in relation to the East Angelas Reserves, East Angelas ELs and Mining Lease 282SA.
Partnership Agreements
6 WPPL and HPPL entered into a number of partnership agreements. The first partnership agreement was dated 2 March 1978. It was superseded by a new partnership agreement dated 24 May 1983 (the 1983 Agreement). The 1983 Agreement provides, amongst other things, that all losses, profits and liabilities of the Partnership were to be shared equally and that all authorities, claims, permits or licences held by HPPL or WPPL under any Mining Act 'are held in trust for and comprise assets of the Partnership'. Clause 12 of the agreement addressed what was to happen in the event of the death of either Mr Hancock or Peter Wright. It provides that the company of which the survivor is the governing director shall become the managing partner of the Partnership and have the right solely to conduct, manage, maintain, control and make all decisions in connection with the Partnership including, amongst other things, all dealings with the assets of the Partnership in such manner as it may think fit, other than the sale or transfer of any or all of the rights subsisting in certain royalty agreements (being a reference to royalties then payable by Hamersley to the Partnership).
7 In 1984 the Partners entered into an agreement to vary or supplement the 1983 Agreement (1984 Agreement). The Partners agreed that each Partner shall assume individual control over certain assets and interests of the Partnership to exclusion of the other Partner, and shall have the option to require the division of such assets between the Partners. The 1984 Agreement also provided, amongst other things, that each of the Partners shall be free to undertake any activity on its own account, excluding any activity previously undertaken by the Partners and for any reason (including the loss of any mining or prospecting right or tenement) not proceeded with or abandoned, but shall offer such interests it may determine in any venture resulting from such activity to the other Partner on a 'Best Friends' basis.
8 In 1987 the Partners entered into a further contract to vary or supplement the 1983 Agreement and the 1984 Agreement (the 1987
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- Agreement). Clause 1 of the 1987 Agreement provided, amongst other things:
(a) neither HPPL in respect of the HPPL interests nor WPPL in respect of the WPPL interests shall be entitled to conclude any negotiations or make any agreement having the effect of reducing or disposing completely of any royalties to which the Partnership shall otherwise be entitled for the purpose of proceeding with any relevant mining venture;
(b) subject to sub-clause (d) hereof, WPPL relinquishes in favour of HPPL its interest in Hope Downs;
…
(e) royalties received from third parties by the Partnership in respect of iron ore produced and sold by them from the following tenements or projects shall be divided equally between the Partners, namely:
(i) Rhodes Ridge;
(ii) Hope Downs;
…
(i) to the extent not otherwise covered elsewhere in this Agreement, the Partners shall share equally all royalties payable to the partnership, namely at the rate of 1 1/4% each of the fob revenue received on the iron ore or other minerals produced and sold; and
The defendant says that cl 5 of the 1987 Agreement is a complete answer to the WPPL's claim in relation to the East Angelas. Clause 5 is:
5. Future Exploration
Each Partner shall be entitled to prospect for minerals of any type and take up any type of mining or other tenement (whether or not previously owned by the Partnership) without being obliged to offer to the other Partner any opportunity to participate in such activity or tenement and in no circumstances shall one Partner be liable to pay any royalty to the other in respect of iron ore or any other mineral produced from such activity or tenement.
9 Between 1969 and 1971 James and William Nicholas and Rhodes held rights of occupancy pursuant to s 276 of the Mining Act 1904 in respect of areas of land which included the East Angelas Reserves and which enabled them to prospect for iron ore. The Partnership made an
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- agreement dated 19 May 1969 with James and William Nicholas and Rhodes (Exclusive Rights Agreement). The Exclusive Rights Agreement granted, or purported to grant, to the Partnership an exclusive right to mine ore from the temporary reserves, which included the East Angelas Reserves. The defendants say that James and William Nicholas and Rhodes never had the right to mine ore from the East Angelas Reserves and the Exclusive Rights Agreement did not give HPPL and WPPL any rights to mine ore from the East Angelas Reserves.
10 By letter dated 2 August 1971 the Minister for Mines informed HPPL and WPPL that it had been decided that the rights of occupancy to a number of temporary reserves, including the East Angelas Reserves, would not be renewed to the previous registered holders nor would any new rights of occupancy over those areas be granted to HPPL and WPPL and that it had been decided to grant rights of occupancy to Armco Resources Pty Ltd over a number of temporary reserves, including the East Angelas Reserves.
11 On 13 August 1971 James and William Nicholas, Rhodes, HPPL and WPPL commenced proceedings against the State, the Minister for Mines and others claiming relief in relation to a number of temporary reserves including the East Angelas Reserves. The plaintiffs claimed that they had been permitted by the Minister for Mines to remain in occupation of the reserves in the expectation that further extensions of their rights of occupancy would be granted and had continued to spend substantial sums of money in exploratory work on the reserves. The plaintiffs contended that they had acquired a right in equity to remain in occupation of the reserves, with the further right to be offered mining tenements on them for the purpose of mining iron ore. After the action was commenced, the Parliament of Western Australia passed an Act to amend the Mining Act by adding a new section, s 277A, which purported to extinguish rights such as those claimed by the plaintiffs. The court ordered that points of law raised by the defence be heard before the trial. Hale J held that the plaintiffs' claims were untenable for reasons other than s 277A of the Mining Act and dismissed the action on 23 September 1971. A subsequent appeal to the Full Court was dismissed: Nicholas v Western Australia [1972] WAR 168.
12 Sometime before 23 September 1971 Australian Steel and Mining Corporation Pty Ltd (ASMC) lodged with the State an application for rights of occupancy over the East Angelas Reserves. ASMC held rights of occupancy pursuant to s 276 of the Mining Act 1904 over the East Angelas Reserves from September 1971 to 30 September 1974.
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13 Between 1971 and 1985 there was correspondence between Peter Wright, Mr Hancock and representatives of the State government concerning rights of occupancy over the East Angelas Reserves. Mr Hancock, at least, claimed that the reserves had been wrongly taken from, and should be restored to, HPPL.
14 In a letter dated 3 April 1985 to HPPL, the Minister for Minerals and Energy referred to a letter of 20 February 1984 in which the Premier advised of the Minister's decision to allow HPPL access to ministerial reserves TR5072 and TR6446. The Minister stated:
On this basis, should such reserves become necessary for any firm development proposal, I would be prepared to grant [HPPL] access to the following Temporary Reserves:
4189, 4190, 4191, 4886, 4268, 4503.
Such access will enable you to indicate continuity of supply to potential customers.
15 WPPL pleads that that letter conferred on HPPL, for and on behalf of the Partnership, a future right to exploit the area of land formerly comprising the East Angelas Reserves which included the right to apply for and obtain exploration licenses over the land. The defendants say that the letter conferred no rights known to law, or alternatively that it was no more than a permission to access the East Angelas Reserves for the limited purpose of exploration, taking samples and undertaking related activities and that such permission was revokable at will. HPPL further says that any rights that were conferred by the letter were conferred upon HPPL and not upon HPPL for and on behalf of the Partnership.
16 In September 1985 Peter Wright died. HPPL became managing partner of the Partnership pursuant to cl 12 of the 1983 Agreement. WPPL pleads that as a result of its role as managing partner with power solely to exercise the rights of the Partners, as expressed in cl 12 of the 1983 Agreement, HPPL acted as a trustee of the Partnership with powers reserved solely to it as managing partner. WPPL claims that between April 1985 and 2 February 1989 HPPL held the rights conferred on it by the letter of 3 April 1985 from the Minister for Minerals and Energy, which WPPL refers to as the Exploration Right, on trust for the Partnership.
17 On 2 December 1998 HML applied for the grant of exploration licences EL47/427, EL47/428, EL47/429 and EL47/430 covering the areas of land formerly comprising the East Angelas Reserves. On
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- 2 February 1989 HML was granted exploration licences EL47/427, EL47/428, EL47/429 and EL47/430 (East Angelas ELs) pursuant to s 57(1) and s 59(4) of the Mining Act 1978. WPPL pleads, and the defendants deny, that from 2 February 1989 until on or about 3 August 1990 HML held the East Angelas ELs on trust for the Partnership.
18 On 3 August 1990 HML transferred the East Angelas ELs to Pilbara Port and Railroad Co Pty Ltd (PPR), a subsidiary of, or company associated with, HPPL. WPPL claims that HML transferred the East Angelas ELs to PPR at the direction of HPPL, as HPPL's agent, as the alter ego of HPPL or with the consent, approval or acquiescence of HPPL. WPPL claims, and the defendants deny, that from 3 August 1990 until 9 March 1993 PPR held the East Angelas ELs on trust for the Partnership.
19 On 31 January 1991, 50% of the East Angelas ELs were surrendered to the State pursuant to s 65(1) of the Mining Act 1978. PPR changed its name to Pilbara Port Railroad & Resource Co Pty Ltd (PPRR) and subsequently to Hancock Resources Ltd (HRL). On 30 November 1992, HRL entered into a transfer deed with Hope Downs Ltd (HDL), a subsidiary of HPPL, and HPPL, pursuant to which HRL covenanted to transfer legal title to the East Angelas ELs to HDL. Also on 30 November 1992 HDL and the State entered into an agreement (the Iron Ore (Hope Downs) Agreement) for the development and mining of iron ore deposits, the processing of iron ore and for incidental and other purposes.
20 On 9 March 1993 HRL transferred the East Angelas ELs to HDL at the direction of HPPL, or with the consent, approval or acquiescence of HPPL. WPPL claims, and the defendants deny, that from 9 March 1993 until 26 July 1996, HDL held the East Angelas ELs on trust for the Partnership.
21 On 26 July 1996 HDL transferred the East Angelas ELs to HPPL. WPPL claims, and HPPL denies, that from 26 July 1996 until 11 September 1997, HPPL held the East Angelas ELs on trust for the Partnership.
22 On 11 September 1997 HPPL transferred the East Angelas ELs to the second defendant, HDIO. WPPL claims, and the defendants deny, that from 11 September 1997 until 13 June 2006, HDIO held the East Angelas ELs on trust for the Partnership.
23 On 1 July 2005, HPPL and HDIO entered into a 50/50 unincorporated joint venture with Rio Tinto and/or certain of its subsidiaries to develop, amongst other things, the East Angelas ELs.
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24 On 31 March 2006 the State, in exchange for the surrender by HDIO of exploration licences EL47/308, EL47/431 and EL47/309, granted to HDIO Mining Lease 282SA.
25 On 13 June 2006 Hamersley WA Pty Ltd (Hamersley), a subsidiary of Rio Tinto, became a registered shareholder of the Mining Lease 282SA and East Angelas ELs in respect of 50/100th shares. WPPL claims that from 13 June 2006 until 30 June 2011 HDIO held an interest in the East Angelas ELs in respect of 50/100th shares on trust for the Partnership.
26 In 2010 or 2011 HDIO and Hamersley lodged with the State applications for the East Angelas ELs to be included in Mining Lease 282SA. On 30 June 2011, the Minister for Mines and Petroleum authorised the inclusion of the East Angelas ELs into Mining Lease 282SA. WPPL claims that from 30 June 2011 HDIO has held an interest in the land formerly subject to the East Angelas ELs and East Angelas Reserves contained within Mining Lease 282SA in respect of 50/100th shares on trust for the Partnership.
WPPL's pleaded case
27 In its amended statement of claim (ASOC) WPPL pleads the various partnership agreements to which I have referred. WPPL also pleads the history of the various mining tenements to which I have referred, starting with the rights of occupancy acquired by James and William Nicholas and Rhodes pursuant to s 276 of the Mining Act 1904. In [30] WPPL pleads that the Minister for Minerals and Energy provided the letter of 3 April 1985 to HPPL for and on behalf of the Partnership as a consequence of the Partnership, or alternatively HPPL on behalf of the Partnership, between 1 November 1971 and 3 April 1985 seeking from the State the return of rights of occupancy over the East Angelas Reserves to the Partnership, or alternatively to HPPL on behalf of the Partnership, pursuant to s 276 of the Mining Act 1904 and s 58 of the Mining Act 1978. Also in [30] WPPL pleads that by the letter the Minister conferred on HPPL, for and on behalf of the Partnership, 'a future right to exploit the area of land formerly comprising the East Angelas Reserves which included the right to apply for and obtain exploration licences over the said area of land (Exploration Right)'.
28 In [39] WPPL pleads that from 2 February 1989, the date on which the State granted the East Angelas ELs to HML, until on or about 3 August 1990, the date on which HML transferred the East Angelas ELs to PPR, HML held the East Angelas ELs on trust for the Partnership. After pleading the various transfers of the East Angelas ELs and the
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- inclusion of the East Angelas ELs in Mining Lease 282SA to which I have referred, WPPL pleads at [66] that since 30 June 2011, the date on which the East Angelas ELs were included in Mining Lease 282SA, HDIO 'has held an interest in the land formerly subject to the East Angelas ELs and East Angelas Reserves contained within [Mining Lease 282SA] in respect of 50/100th shares, on trust for the Partnership'. And in [76] that 'HDIO continues to hold a 50% interest in the land formerly subject to the East Angelas ELs and East Angelas Reserves'.
29 WPPL then pleads at ASOC [78] that as a consequence of the pleaded transfers, the transferee of the East Angelas ELs had, at the time of transfer, common directors with the transferor and
as a consequence, each recipient of the East Angelas ELs at the time of receipt of the East Angelas ELs:
(1) had knowledge that the East Angelas ELs were property held on trust for the Partnership; and
(2) took the East Angelas ELs subject to the trust in favour of the Partnership.
30 WPPL pleads in ASOC [79] that HDIO holds all its right, title and interest in and to the land formerly subject to the East Angelas ELs and East Angelas Reserves, and the proceeds of any transfer of East Angelas ELs on trust for the Partnership.
31 WPPL then pleads its case of breach of fiduciary obligation. WPPL pleads that HPPL owed fiduciary obligations to WPPL as WPPL's partner and managing partner of the Partnership. At [81] WPPL pleads that the Exploration Right was a beneficial interest which formed an asset of the Partnership, that the opportunity to acquire a mining lease over land formerly subject to the East Angelas ELs and East Angelas Reserves was a benefit obtained by reason of HPPL's position as a partner of WPPL, and knowledge in relation to the history and feasibility of the land formerly subject to the East Angelas ELs and the East Angelas Reserves were benefits obtained by reason of HPPL's position as partner of WPPL. WPPL pleads that HPPL breached the fiduciary obligations it owed to WPPL by:
1. directing, consenting, approving or acquiescing in the transfer of the land formerly subject to the East Angelas ELs and the East Angelas Reserves to HDL;
2. failing to enliven the Exploration Right for the Partnership; and
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- 3. failing to account to WPPL for any profits or benefits HPPL obtained by exploiting the Exploration Right, or failing to procure from HDIO an account of profits or benefits for WPPL which have been obtained by exploiting the Exploration Right.
32 WPPL then pleads a breach of trust. It pleads that the Exploration Right was a beneficial interest which formed an asset of the Partnership. WPPL says that HPPL, as WPPL's partner and managing partner of the Partnership, held the Exploration Right on trust for the Partnership. WPPL says that HPPL breached that trust by directing, consenting, approving or acquiescing in the transfer of the East Angelas ELs to HDL, failing to enliven the Exploration Right on behalf of the Partnership, and relinquishing the Exploration Right to a third party.
33 WPPL then pleads a Barnes v Addy case. WPPL pleads that HPPL disposed of the East Angelas ELs in breach of trust or in breach of fiduciary obligations. WPPL pleads that HDIO knew or ought reasonably to have known that the land formerly subject to the East Angelas ELs and the East Angelas Reserves was trust property and was disposed of by HPPL, or HRL on behalf of HPPL, in breach of trust or in breach of fiduciary obligations. Further, it is pleaded that HDIO knowingly assisted in the disposal of the land formerly subject to the East Angelas ELs and the East Angelas Reserves by HPPL, or HRL on behalf of HPPL, in breach of trust or in breach of fiduciary obligations. WPPL says that HDIO is liable to WPPL as trustee in respect of HDIO's interest in the land formerly subject to the East Angelas ELs and East Angelas Reserves, and that HDIO has profited from HPPL's breaches of trust or fiduciary obligations and is liable to account to WPPL for that profit.
34 WPPL claims relief against HPPL for breaches of its fiduciary obligations and/or trust obligations.
The defendants' application
35 The defendants seek leave to apply for summary judgment out of time and that judgment be entered for the defendants summarily. Alternatively, the defendants seek an order that the whole of the ASOC, or such parts as the court thinks fit, be struck out on the grounds that it discloses no reasonable cause of action, is vexatious, or is otherwise an abuse of the process of the court.
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Leave to apply for summary judgment
36 The defendants require leave to bring an application for summary judgment pursuant to O 16 r 1 of the Rules of the Supreme Court 1971 (WA) because the application was not brought within 21 days of an appearance being entered. The defendants brought their application 58 days after they filed their appearance. WPPL opposes the defendants' application for leave on the basis that the delay is unexplained and has prejudiced WPPL as it has delayed these proceedings and the related proceedings in CIV 3041 of 2010 that also concern the application of cl 5 of the 1987 Agreement to other assets of the Partnership.
37 Where there has been delay and a discretion is sought to be exercised in favour of the party who has delayed, an explanation is called for: Aon Risk Services Pty Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175. However, I do not accept that the failure to explain delay is necessarily fatal to an application for leave to apply for summary judgment out of time. In this case, the principal consideration is whether the defendants' application has sufficient merit to warrant the grant of leave. This action concerns a commercial dispute between large and well resourced litigants. It concerns events, some of which took place a long time ago. The plaintiff says that there are substantial factual controversies to be resolved at trial. If the matter proceeds to trial, the trial will be a substantial piece of litigation. If the defendants' application has merit, then it is in the interests of the parties and efficient case management that the court should exercise its discretion to give leave to apply for summary judgment out of time. At the conclusion of the hearing of the application, I formed the view that the defendants' case for summary judgment has sufficient merit that leave to bring the application for summary judgment out of time should be granted.
Summary dismissal - legal principles
38 Order 16 r 1(1) provides that the court, if satisfied that the action is frivolous or vexatious, that the defendant has a good defence on the merits, or that the action should be disposed of summarily, may order that judgment be entered for the defendant.
39 The exercise of the power to summarily terminate a proceeding must be exercised with great care. A court will only dismiss a claim if the defendant can establish that the case of the plaintiff is so clearly untenable that it cannot possibly succeed: General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, 129 (Barwick CJ) and see Spencer v Commonwealth [2010] HCA
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- 28; (2010) 241 CLR 118 [24] (French CJ & Gummow J) [54] - [57] (Hayne, Crennan, Kiefel & Bell JJ).
40 In Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 Gleeson CJ, Gummow, Hayne and Crennan JJ approved the following passage from the judgment of Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57]:
It is, of course, well accepted that a court whose jurisdiction is regularly invoked in respect of a local defendant (most often by service of process on that defendant within the geographic limitations of the court's jurisdiction) should not decide the issues raised in those proceedings in a summary way except in the clearest of cases. Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way [46].
Basis of defendants' application
41 The defendants advance a number of defences to the WPPL's claims. They rely on two of them in support of their application for summary judgment. They are:
(1) clause 5 of the 1987 Agreement is a complete answer to WPPL's claim; and
(2) WPPL should be barred from claiming the relief that it seeks by reason of its inordinate and inexcusable delay in commencing the proceeding.
I will consider each argument in turn.
The cl 5 argument
42 In their defence the defendants plead that cl 5 of the 1987 Agreement, which I have set out earlier in these reasons, is a complete defence to WPPL's claims. In response to that contention, WPPL in its reply repeats and relies upon the matters pleaded in [30] of the ASOC and says further:
[A]s the Exploration Right had been conferred on the Partnership prior to the time of entry into the [1987 Agreement], on its proper construction, clause 5 of the [1987 Agreement] did not entitle HPPL to take up the East
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- Angelas ELs without being obliged to offer to WPPL any opportunity to participate in such activity or tenement and without any liability to pay any royalty to WPPL in respect of iron ore produced from such activity or tenement.
43 The defendants maintain that cl 5 of the 1987 Agreement operates as a complete defence and advance two principal reasons why WPPL's rebuttal of that defence must fail:
1. the alleged Exploration Right never arose and the allegations at [30] of the ASOC are misconceived as a matter of law; and
2. even if the Exploration Right did arise, as a matter of construction cl 5 of the 1987 Agreement entitled HPPL to take up the East Angelas ELs without being obliged to offer to WPPL any opportunity to participate in such activity or tenement and without any liability to pay any royalty to WPPL in respect of iron ore produced from such activity or tenement.
Exploration Right
44 The defendants contend that the Exploration Right never arose for two reasons. First, the letter of 3 April 1985 did not grant, or purport to grant, the pleaded Exploration Right. In the letter the Minister stated:
… should such reserves become necessary for any firm development proposal, I would be prepared to grant [HPPL] access to the following Temporary Reserves:
4189, 4190, 4191, 4886, 4268, 4503.
Such access will enable you to indicate continuity of supply to potential customers.
45 The defendants submit that at its highest the letter stated that the Minister would be prepared to grant rights of access to the temporary reserves in the event certain conditions were satisfied, but that was a long way short of creating the alleged right to exploit the land. That contention is strongly arguable.
46 The defendants say that there is a more fundamental problem with the Exploration Right. The defendants say that the Minister had no power to confer such a right. I agree. The pleaded Exploration Right is the conferral by the Minister of a future right to exploit the area, including the right to apply for and obtain exploration licences over the land. WPPL does not claim that the Minister had any statutory power to confer such a
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- right. The grant of such a right could only be the exercised by the Minister of an executive power. However, the Minister has no such executive power. In The Commonwealth of Australia v The State of Western Australia [1999] HCA 5; (1999) 196 CLR 392 Gummow J said:
The functions of government identified by these references to grants respecting land in the State are, in the absence of express terms or necessary intendment to the contrary, to be taken as activities of the Executive Government of the State. The entire management of the waste lands in Western Australia had been vested by the Imperial Parliament in the Western Australian legislature by s 3 of the Western Australia Constitution Act 1890 (Imp). Thereafter, subject to the operation of the Constitution and laws of the Commonwealth, dealings in Crown land, including mines and minerals thereon and therein, could only be authorised and supported by the statute law of Western Australia [114]. (references to authorities omitted)
See also Nicholas v Western Australia [1972] WAR 168, 172 Jackson CJ, 174 Burt J; Australian Anglo American Prospecting Ltd v CRA Exploration Pty Ltd [1981] WAR 97, 102 Brinsden J.
Diversion of commercial opportunity
47 WPPL submitted that it is no answer to its claim that there was no property or binding legal right conferred on it by the Minister's letter of 3 April 1985. WPPL submitted that its case is that HPPL must account to it for the benefit that it has received in relation to the East Angelas tenements because that benefit was obtained either when HPPL was in a position of conflict or possible conflict between its fiduciary duty and personal interest or by reason of HPPL taking advantage of an opportunity or knowledge derived from its fiduciary position.
48 An errant fiduciary is liable to account for a benefit obtained by his breach of duty notwithstanding that the principal could not himself have obtained the benefit or that no loss was caused to the principal. WPPL says that its case is that facts that will be proven at trial will demonstrate that the Minister's letter of 3 April 1985 gave HPPL a sufficient opportunity and furnished HPPL with sufficient knowledge to later place it in a position of conflict of interest when it exploited that opportunity and knowledge through the acquisition of exploration licences in respect of the East Angelas tenements through its related entity, HML. WPPL submits that that opportunity came from knowledge gained and money spent by the Partnership in the early 1970s, when it had previously had an interest in the East Angelas tenements under rights of occupancy held in the name of Nicholas and Rhodes, but which were confiscated by the
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- State Government in 1971. WPPL says that HPPL was subject to fiduciary obligations to those entitled to the Partnership property. These obligations included obligations not to enter into engagements which gave rise to a conflict between its own interest and its duty to WPPL as its partner and to account to WPPL for any benefit or gain obtained or received by reason of or by use of its position as WPPL's partner or of some opportunity or knowledge resulting from this position. WPPL submits that the Minister's letter of 3 April 1985 was the result of a campaign by Mr Hancock on behalf of the Partnership to obtain the return of various temporary reserves, including the East Angelas, which the Partnership had formerly held and expended monies upon in prospecting for minerals. WPPL submits that the Minister's letter conferred a valuable opportunity on the Partnership. WPPL submits that whether the Minister's letter presented an opportunity to the Partnership that HPPL subsequently exploited for its own benefit to obtain the East Angelas tenements can only be decided at trial when the relevant facts are determined.
Construction of cl 5
49 The defendants submit that the errant fiduciary case put by WPPL is hopeless. HPPL relies upon cl 5 of the 1987 Agreement. HPPL submits that cl 5 contemplates that a partner can take up a mining tenement notwithstanding the fact that it was previously owned by the Partnership. HPPL says that it does not matter that HPPL, or HML, may have had some benefit by reason of things done by or on behalf of the Partnership before the exploration licences were obtained by HML in February 1989 because cl 5 of the 1987 Agreement provides that that is permissible.
50 In its reply WPPL pleads that as the Exploration Right had been conferred on the Partnership prior to the time of entry into the 1987 Agreement, on its proper construction cl 5 of the 1987 Agreement did not entitle HPPL to take up the East Angelas ELs without being obliged to offer to WPPL any opportunity to participate in such activity or tenement and without any liability to pay any royalty to WPPL in respect of iron ore produced from such activity or tenement.
51 Counsel for WPPL submitted that if the Minister's letter of 3 April 1985 does not give rise to the rights described as the Exploration Right, nevertheless HPPL was in a position of conflict and breached its fiduciary duty in exploiting the opportunity or knowledge derived from its fiduciary position. WPPL contends that on its proper construction, cl 5 of the 1987
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- Agreement has no application to either Hope Downs or East Angelas. WPPL relies upon the factual matrix for that argument.
52 In the special leave application in Western Export Services Inc v Jireh International Pty Ltd (2011) 86 ALJR 1, in relation to the admission of evidence of surrounding circumstances for the purpose of construing a contract, the High Court said that primary judges are bound to follow what was said in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 per Mason J, with the concurrence of Stephen and Wilson JJ to be the 'true rule'. In Codelfa Mason J said:
The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning (352).
53 In Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2012] WASCA 216 McLure P, with whom Newnes JA and Le Miere J agreed, said:
The practical limitation flowing from the Codelfa true rule is that surrounding circumstances cannot be relied on to give rise to an ambiguity that does not otherwise emerge from a consideration of the text of the document as a whole, including whatever can be gleaned from that source as to the purpose or object of the contract.
The word 'ambiguous', when juxtaposed by Mason J with the expression 'or susceptible of more than one meaning', means any situation in which the scope or applicability of a contract is doubtful: Bowtell v Goldsbrough, Mort & Co Ltd (1905) 3 CLR 444, 456 - 457. Ambiguity is not confined to lexical, grammatical or syntactical ambiguity.
Moreover, the extent to which admissible evidence of surrounding circumstances can influence the interpretation of a contract depends, in the final analysis, on how far the language of the contract is legitimately capable of stretching. Generally, the language can never be construed as having a meaning it cannot reasonably bear. There are exceptions (absurdity or a special meaning as the result of trade, custom or usage) that are of no relevance in this context [76] - [78].
54 WPPL submits that cl 5 is ambiguous or susceptible of more than one meaning. WPPL's submission is based upon the text of the 1987 Agreement taken as a whole. In determining the true interpretation of a contract, a clause must not be considered in isolation, but must be considered in the context of the whole document. In an often repeated passage in Australian Broadcasting Commission v Australasian
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- Performing Right Association Limited [1973] HCA 36; (1973) 129 CLR 99 Gibbs J said:
It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, 'even though the construction adopted is not the most obvious, or the most grammatically accurate', to use the words from earlier authority cited in Locke v Dunlop, which, although spoken in relation to a will, are applicable to the construction of written instruments generally; see also Bottomley's Case. Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument (109).
56 WPPL submits that the construction of cl 5 advanced by HPPL, that the clause applies to the East Angelas, is inconsistent with the manner in which the Partners' interests in Hope Downs are dealt with in the 1987 Agreement. WPPL's argument is as follows. Subclause 1(b) provides that 'subject to subclause (d) hereof, WPPL relinquishes in favour of HPPL its interest in Hope Downs'. It is common ground and was found in Wright Prospecting Pty Limited v Hancock Prospecting Pty Limited [No 2] [2010] WASC 16 [59] that subcl (d) is intended to refer to subcl (e). Notwithstanding that WPPL relinquished its interest in Hope Downs, subcl (e) provides that all royalties 'received from third parties by the Partnership in respect of iron ore produced and sold by them from [Hope
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- Downs] shall be divided equally between the Partners'. Clause 5 therefore cannot have been intended to confer on either partner an entitlement to 'take up' any tenement in Hope Downs without a liability to pay any royalty to the other in respect of those tenements. At the time the 1987 Agreement was concluded, only one of the four exploration licences in relation to the Hope Downs tenements had been granted. Of the remaining three exploration licences, two had been applied for but not yet granted and one had not yet been applied for. The only 'right' the Partnership had to the Hope Downs areas not covered by the granted EL was exactly analogous to the Partnership's right in respect of the areas covered by East Angelas. That right was contained in the letter of 20 February 1984 stating that the Minister for Minerals and Energy was 'prepared to hold these reserves for you' on the understanding that once a firm proposal was received for the development of a mining operation 'these reserves will be granted to you for inclusion in any development agreement area' and in the 3 April 1985 letter. There is no obvious logical basis for treating the rights in respect of the Hope Downs tenements not covered by the granted EL differently from the East Angelas tenements. The treatment of Hope Downs in the 1987 Agreement indicates that the partners considered that it was a Partnership asset. WPPL submits that cl 5 is therefore susceptible of more than one meaning. One possible meaning is that cl 5 does not apply to the East Angelas. WPPL submits that that construction is supported by extrinsic material.
Action should not be summarily dismissed
57 The defendants have a strong argument. On the face of it cl 5 applies to the East Angelas ELs. However, before I order the action to be summarily dismissed I must be satisfied that WPPL's case is so clearly untenable that it cannot possibly succeed. I have not arrived at a sufficiently high degree of certainty that HPPL's construction of cl 5 of the 1987 Agreement will ultimately succeed so as to justify summarily dismissing WPPL's action.
Laches
58 The second basis of the defendants' application is that WPPL's claim is bound to fail because of its delay in commencing the proceedings. The equitable defence of laches may apply where a plaintiff has delayed in bringing a claim for equitable relief.
59 The defence of laches may take two forms. The first is where the plaintiff, by delaying the institution or prosecution of his case, has acquiesced in the defendant's conduct (delay with acquiescence). The
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- second is where the plaintiff's delay in instituting or prosecuting his case has caused the defendant to alter his position in reasonable reliance on the plaintiff's acceptance of the status quo, or otherwise permitted a situation to arise which it would be unjust to disturb (delay with prejudice): Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (4th ed) [36-005].
60 The equitable defence of laches was considered by Murphy JA, with whom McLure P and Buss JA agreed, in Streeter v Western Areas Exploration Pty Ltd [No 2] [2011] WASCA 17; (2011) 278 ALR 291. Murphy JA held that in the case of a defence of laches involving only alleged acquiescence or assent, proof of knowledge or belief of rights is a necessary element of the defence [638] although the plaintiff's knowledge of its rights will generally be inferred from knowledge of the relevant facts [639]. Murphy JA referred with approval to the statement in Meagher, Gummow & Lehane at [36-030] that there are cases which traditionally call for special promptitude. One of those classes of case is 'claims in mining cases'. Murphy JA referred to Clegg v Edmondson (1857) 44 ER 593 where at 604 Knight Bruce LJ said:
Robert Clegg's apologies for delay are, - that he continually claimed and did so to the knowledge continually of James Collinge; that there is no bar from any Statute of Limitations; that if the subject in dispute had been an ordinary farm of which James Collinge had been receiving the rent, instead of mines which he worked, there would have been no answer to the suit; and that the mines having been (as they have in fact been) uniformly prosperous, nor having required (as in fact they have not required) any outlay which the produce did not more than meet and cover, and James Collinge having, from his long acquaintance practically with the property, known (as he must be taken in fact to have known) all along its probable safety and probable advantages, there is no reason for treating and dealing with the claim, otherwise than as a similar claim in respect of an ordinary farm of which James Collinge had been receiving the rents might properly be.
This argument is plausible, but has not convinced me. A mine which a man works is in the nature of a trade carried on by him. It requires his time, care, attention and skill to be bestowed on it, besides the possible expenditure and risk of capital, nor can any degree of science, foresight and examination afford a sure guarantee against sudden losses, disappointments and reverses. In such cases a man having an adverse claim in equity on the ground of constructive trust should pursue it promptly, and not by empty words merely. He should shew himself in good time willing to participate in possible loss as well as profit, not play a game in which he alone risks nothing.
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- There was here, in my opinion, no sufficient apology, no excuse for the delay from 1846 to 1855.
61 The characteristic of mining operations which is particularly relevant to the defence of laches is that such operations require time, care, attention and skill and the risk of capital; they are an uncertain and speculative and hazardous adventure: Ernest v Vivian (1863) 33 LJ Ch 513, 517.
62 WPPL submits that it is generally appropriate for questions of laches to be decided at trial rather than on a summary basis. WPPL referred to Duke v Royalstar Pty Ltd [2001] WASCA 273 where the Full Court said:
However, as the Master did note, the evidence before him, which appeared to be undisputed, was that as at May 1994 $240,000 was a fair value for the land, but that its value declined in 1996 to approximately $165,000. It is now agreed to be worth in the region of $375,000. The defendant asserts that in those circumstances, the reference in Boomalli Ltd v Hake (1985) WAR 7 to the unfairness of holding the possibility of a decree for specific performance for too long over the head of a party, particularly where the agreement concerns property of a fluctuating value, is applicable. The Master took the view that matters of this kind were not appropriate to be taken into consideration in the context of an application to strike out for want of prosecution, but were rather properly to be raised in the context of the hearing of the action in determining whether relief should be granted. In our view, this overstates the position. Where questions of laches and the like arise, it is generally appropriate to consider them in the context of an action when all material facts have been found. However, there are cases, of which this appears to be an example, where the material facts are before the Court. The fluctuation in the value of the property is apparent in the evidence, and the plaintiff has put before the Court an affidavit purporting to explain his delay in pursuing the action, which singularly fails to present any credible explanation. It is difficult in those circumstances to see what further material would be likely to emerge from an action, and both the delay and the prejudice in our view are appropriate to be taken into account [19].
63 WPPL submits that not all of the relevant material facts are before the court and further material is likely to emerge before the trial of the action. Further, WPPL submits that those facts that are before the court are controversial such that they ought not to be determined on a summary basis. WPPL further submits that, in any event, it will be necessary for the court to consider not just whether there was delay and the period of any such delay, but also where, on a consideration of all the material facts, the balance of justice lies. WPPL submits that it is not appropriate to determine that matter summarily.
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Delay with acquiescence
64 The defendants do not assert that WPPL had knowledge of the legal rights that it seeks to pursue in this action. To the contrary, the defendants contend that WPPL has no cause of action against them. However, the defendants contend that WPPL has had knowledge for many years of the underlying material facts on which its case is based.
65 The defendants submit that the foundation of WPPL's case is the Exploration Right alleged to have arisen from the Minister's letter of 3 April 1985. WPPL pleads that a copy of the letter was provided to WPPL under cover of a letter dated 1 November 1985. WPPL admits that Michael Wright and Kevin Dalby and Doug Salt had knowledge of the letter from 5 November 1985, 3 January 1986 and 3 January 1986 respectively. Mr Michael Wright, Mr Dalby and Mr Salt were directors of WPPL from 22 December 1962 to 26 April 2012, 28 May 1985 to 25 October 1991 and 4 January 1985 to 23 December 1994 respectively. Obviously, WPPL had knowledge of the Partnership and of the 1983 Agreement, the 1984 Agreement and the 1987 Agreement.
66 Mr Dalby and Mr Salt had knowledge of the applications for the East Angelas ELs from at least 2 December 1988 and 21 December 1988 respectively. Mr Dalby had knowledge of the grant to HML of the East Angelas ELs at least from 27 February 1990. Mr Dalby and Mr Salt had knowledge of the transfer to PPR from 3 August 1990.
67 The ASOC pleads a series of dealings with the land formerly comprising the East Angelas Reserves, commencing in 1989 and concluding in June 2011. The defendants submit that those dealings were reflected in the mining register, which is open to the public for inspection. Accordingly, WPPL should be taken to have knowledge of all those dealings and the expenditure by the defendants from time to time as recorded in the mining register.
68 WPPL submits that the presently known facts giving rise to its claim arose at the earliest on 1 July 2005, when the joint venture in relation to Hope Downs and East Angelas was announced, or alternatively in or about June 2006, when the East Angelas exploration licences were transferred to Hamersley. WPPL submits that the events between 1985 and 2005 relied upon by the defendants as material facts in support of the laches defence either did not involve conduct which would give rise to the equity since, at least on the basis of what was or ought to have been known by WPPL, HPPL's actions in this period were not inconsistent with HPPL's duties to WPPL as its partner, and were consistent with HPPL
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- continuing to act as the managing partner of the Partnership with sole management powers, or alternatively are facts that were not known to WPPL until after 2005. It was not until either the public announcement of 1 July 2005 about the Hope Downs joint venture or the transfer of an interest in the East Angelas exploration licences to Hamersley on 13 June 2006 that events occurred capable of giving rise to the equity since it was only at that time that WPPL might have had the means to know that HPPL was diverting the opportunity to participate in the East Angelas tenements away from the Partnership and to itself or its subsidiaries.
69 WPPL says that its representatives did not have actual knowledge of the transfers of the ELs in 1990, 1993, 1996 and 1997. The defendants assert that WPPL should be taken to have knowledge of all of the dealings in the mining register. WPPL submits that it may be that matters recorded in the mining register are matters of public record, but consideration of whether WPPL's delay was unjust requires consideration of whether in all of the relevant circumstances it would reasonably be expected that one partner would actively monitor the relevant tenement register in circumstances where the other partner had all of the relevant tenement information and could be expected to act lawfully and, at least for a time, was responsible for managing the Partnership business. Furthermore, WPPL submits that the transfers were not, in any event, obviously inconsistent with the East Angelas tenements remaining as Partnership assets. WPPL submits that the court will have to determine whether WPPL should have been alerted to some breach by HPPL of its obligations to WPPL as a mere result of these transfers having occurred. The Partnership records show that frequently HPPL held tenements in its own name, or in the name of a subsidiary, for and on behalf of the Partnership. Accordingly, had WPPL searched the relevant tenements registers, the transfer of those tenements between HPPL subsidiaries would not have indicated to WPPL that HPPL was thereby dealing with the tenements in a manner inconsistent with WPPL's interests in the tenements. HPPL, or a related entity such as HML, held assets in its name that were Partnership assets without it being intended thereby to deprive WPPL of its interest in Partnership assets.
70 Whether or not WPPL had actual knowledge of the relevant dealings with the ELs before 1 July 2005, or is taken to have such knowledge, involves a close investigation of the facts and evaluation of the reasonableness of WPPL's conduct in not doing things that would have given it actual knowledge of the transfers, such as searching the mining register. Those matters should not be determined summarily.
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71 The defendants submit that even if the facts giving rise to the equity claimed in this case arose at the earliest on 1 July 2005 when the joint venture in relation to Hope Downs and East Angelas was announced, WPPL had knowledge of those matters. WPPL admits that Michael Wright and Robert Brandli each had actual knowledge of the existence of the Hope Downs Joint Venture from about 1 July 2005. That knowledge included that the Hope Downs Joint Venture included the East Angelas tenements. Mr Brandli was a director of WPPL from 1998 to 2011. The defendants submit that WPPL knew everything it needed to know to propound its claim. The defendants submit that even if the delay is to be measured from July 2005 or July 2008, when WPPL obtained searches from the mining register, the delay is inordinate and inexcusable and justifies the inference that WPPL was content not to claim any equitable rights to the East Angelas tenements.
72 WPPL says that after the announcement of the Hope Downs Joint Venture it took steps to request from HPPL information relating to the nature of its interest in the tenement the subject of the joint venture. Additionally, WPPL says that at all material times it was a small company intensely involved in two substantial pieces of litigation during the relevant alleged period of delay.
73 Whether WPPL's delay in commencing proceedings between 2005 and 2012 amounts to laches by acquiescence should not be determined summarily. Mere delay does not constitute laches. Something more than mere delay is required. All of the circumstances must lead to an inference that WPPL was content not to make a claim. That determination should take place after all of the evidence is presented at trial.
Delay with prejudice
74 The defendants' alternative case of laches is laches in the sense of delay with prejudice. The defendants identify two areas of prejudice. The first is that the defendants will suffer the forensic disadvantage of not being able to fairly defend the claim because of the delay in commencing the proceedings. This inability primarily flows from the unavailability of witnesses by reason of death or incapacity. Mr Hancock died in 1992, Mr Dalby in 1991 and Mr Michael Wright in April 2012. Mrs Angela Bennett suffers from mental impairment, including memory loss, a reduced ability to retain information, a reduced ability to concentrate and a reduced ability to comprehend and express herself clearly. The defendants say that these persons had actual knowledge of the 3 April 1985 letter as well as the grant of ELs. There may have been events that
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- were never documented or that are no longer documented, upon which the defendants may have relied. The defendants say that the evidence of Mr Hancock, Mr Dalby and Mr Michael Wright may have been particularly relevant to the estoppel defence pleaded in [100] - [103] of their defence. In response WPPL pleads that since about 3 April 1985 until on or about 1 July 2005 HPPL and WPPL have conducted relations with each other on the assumed basis that the East Angelas Reserves and/or East Angelas ELs were assets of the Partnership and were held for and/or on trust for the Partnership. The defendants say that the persons who could best have addressed this part of the case are Mr Hancock, Mr Dalby and Mr Michael Wright.
75 WPPL acknowledges that some of those potential witnesses now deceased might have been able to give evidence if proceedings had been commenced earlier. However, WPPL submits that it would be premature to reach any concluded view about the significance of the death of any particular witness. I accept that submission. The prejudice to the defendants arising from the death or incapacity of witnesses as result of the delay in the commencement of the proceedings should be evaluated in light of all of the evidence presented at trial.
76 The second area of prejudice relied upon by the defendants is that the grant of equitable relief to WPPL would cause injustice to the defendants because of the change of the economic circumstances since the facts giving rise to the claim occurred. Meagher, Gummow and Lehane state that delay with prejudice may arise in many different situations including:
A third situation arises where the transaction which the plaintiff seeks to impugn is at all hazardous or speculative: if equity permits a plaintiff to rescind or to affirm a transaction, he will not be allowed to let time run by so that actual knowledge of the profitability or otherwise of the transaction determines his choice. There are many decisions illustrating this where plaintiffs seeking to set aside mining transactions have been denied relief for this reason [36-020].
- In Streeter, Murphy JA found that prejudice by delay in commencing proceedings against Mr Streeter arose from the fact that the value in the shares there in question was itself in part a product of substantial risk undertaken by Mr Streeter in relation to his contribution of seed capital and in his subsequent investments. His Honour said:
The risks inherent in the appellants acquiring and holding the subject property required that any claim to beneficial ownership of the property be made reasonably promptly once the material facts were known. Also, the exercise of the options entailed risk, albeit different in degree from the risk
- associated with the provision of seed capital. Further, his Honour was required, in my respectful view, to take into account, and not just dismiss as in effect irrelevant, all the changed circumstances that had occurred since July 2000, by which the value of the property was transformed in the six years after the float. In substance, over that period, the character of the investment changed from being shares in an infant, speculative, exploration company, to shares in a company poised to embark upon substantial and lucrative mining activities. The imposition of a constructive trust in all these circumstances would 'give the party claiming relief an unjust advantage' and impose on the appellants 'an unfair prejudice' [682]. (reference omitted)
77 There is evidence that the defendants and their predecessors in title have expended large amounts of time and money on developing the mining ventures on the East Angelas. The defendants submit that enormous risks have been borne by the defendants and that the character of the investment has changed significantly from an infant, speculative investment to a substantial mining development. The defendants have entered into two significant agreements concerning the East Angelas tenements which imposed obligations on them. The first was the agreement entered into on 30 November 1992 between the State and Hope Downs Limited. The second agreement is the joint venture with Rio Tinto to develop the Hope Downs areas including the East Angelas ELs.
78 WPPL disputes the extent of the defendants' expenditure and the extent of the alleged prejudice. WPPL submits that the only evidence of the extent of the defendants' expenditure is hearsay evidence from Mr Walsh which does not condescend to particulars. WPPL submits that the extent of the risk to the defendants is relevant to whether this is a case analogous to the mining cases referred to by the defendants. WPPL relies upon a report prepared by Lonergan Edwards dated 4 October 2011 for Ebsworth Lawyers acting for HPPL (Lonergan Report). The Lonergan Report suggests that the risk to HPPL may have been significantly less than in many mining ventures on a number of grounds. First, Hope Downs 4 is being developed in conjunction with Hope Downs 1, 2 and 3, an established and operating mine, and in joint venture with Rio Tinto, a large mining company, which in effect controls the project. Secondly, to the extent that HPPL has raised debt capital, that debt is limited to recourse debt, with the recourse of the lender being limited to its security to HPPL's share of the Hope Downs 'Venture Assets'. Thirdly, to the extent that HPPL's share of the Hope Downs 'Venture Assets' comprises its share in the East Angelas tenements, that risk is one shared, albeit unknowingly, by WPPL.
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79 Those contentions are in turn disputed by the defendants. The extent of the risk to the defendants in developing the East Angelas is a significant factor in evaluating the unfairness to the defendants in granting equitable relief after the delay in commencing the proceedings. Evaluating that risk involves determining the factual issues to which I have referred. That is not appropriately undertaken summarily.
80 For the reasons stated, it is not appropriate to determine summarily whether the defendants' defence of laches is bound to succeed. I am unable to reach the required level of certainty that the defence will succeed.
Action should not be summarily dismissed
81 For the reasons stated, the action should not be summarily dismissed.
Strike out application
82 The defendants submit that their case that the statement of claim be struck out is overwhelming. They submit that the case as pleaded hinges critically on the proposition that the Exploration Right is a right at law. The defendants submit that the 'breach of corporate opportunity type case' that is now argued by WPPL is not pleaded.
83 I accept the defendants' contention that the ASOC should be struck out on the grounds that it may prejudice, embarrass or delay the fair trial of the action. The ASOC does not reflect the case put forward by WPPL in opposition to the defendants' application for summary judgment.
84 Paragraph 30 of the ASOC is critical to the pleading. It pleads that the Minister conferred on HPPL, for and on behalf of the Partnership, 'a future right to exploit the area of land formerly comprising the East Angelas Reserves which included the right to apply for and obtain exploration licences over the said area of land (Exploration Right)'. For the reasons I have stated earlier, the Minister's letter did not, and could not, give rise to such a right.
85 ASOC [31] pleads that '[f]ollowing the grant of the Exploration Right, HPPL represented to WPPL, that any and all rights of occupancy and interests in the land formerly comprising the East Angelas Reserves were assets of the Partnership and were held for and/or on trust for the Partnership'. ASOC [34] pleads that between April 1985 and February 1989 HPPL held the Exploration Right on trust for the Partnership. The Exploration Right is not property that could form the subject matter of a trust.
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86 ASOC [39] pleads that from February 1989 until August 1990, HML held the East Angelas ELs on trust for the Partnership. The pleading does not disclose any ground on which HML held the ELs on trust for the Partnership other than the assertion in [34] that HPPL held the Exploration Right on trust for the Partnership.
87 ASOC [80] - [82] plead a case of breach of fiduciary obligations by HPPL. Part of that case is the plea in [81] that the Exploration Right was a beneficial interest which formed an asset of the Partnership.
88 ASOC [83] - [85] plead a case of breach of trust. Part of the case is the plea in [83] that the Exploration Right was a beneficial interest which formed an asset of the Partnership.
89 Paragraph 85 pleads that HPPL breached the trust pleaded in [84] (the document says [3] but that appears to be an erroneous reference to [84]). Paragraph 84 pleads that HPPL acquired the Exploration Right on trust for the Partnership.
90 Paragraphs 86 to 88 plead a Barnes v Addy case. The pleading refers to HPPL's breaches of trust or fiduciary obligations. As I have said, those alleged breaches are based upon the alleged Exploration Right.
91 The structure of the ASOC is built upon the foundation of the Exploration Right pleaded in [30]. Paragraph 30 should be struck out because it pleads that the Minister's letter of 3 April 1985 gave rise to rights which are not capable of arising from that letter. The statement of claim should be struck out. WPPL should have leave to re-plead.
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