BHP Iron Ore Pty Ltd v Westraint Resources Pty Ltd [2002] WASCA 18

BHP Iron Ore Pty Ltd v Westraint Resources Pty Ltd [2002] WASCA 18 - WASCA 2002 case summary — Zoe

[132]

36 Paragraphs 2A.4 and 2A.5 of the statement of claim are those which plead that the appellant had substantial commercial advantages over HML as to the subject matters of the MOA and that, in May 1987 and until April 1992, to the appellant's knowledge, HML was in a position of commercial vulnerability. Paragraphs 2A.6(a) and (b) are those which plead that HML disclosed to the appellant, and entrusted it with knowledge of, various matters, introduced it to HML's Romanian (and other) contacts and disclosed to it the terms of its Romanian contracts. Paragraph 2A.11(f) is that which alleges that the appellant stood in a fiduciary relation to HML and owed duties to it not to use its position to acquire benefits for itself or a third party such as BHP Minerals at the expense of HML. Paragraphs 3AB(d) to (g) plead express terms of the 6 June 1988 Agreement relating to the preparation, by the parties, of a feasibility study in respect of mining at McCamey's Monster, the conducting, by HML and the appellant, of negotiations in good faith to reach agreement for the development of McCamey's Monster, the fact that HML could not make other arrangements in respect of mining at McCamey's Monster for as long as it and the appellant had rights and duties vis-à-vis one another with respect thereto under the 6 June 1988 Agreement and the fact that the appellant was to procure the chairman of the joint management company to act in good faith and not do anything to unduly prejudice the Romanian Ore Sales Contract or compliance by HML with its obligations thereunder or the proposed development of McCamey's Monster. Paragraph 3AD(b) is that which pleads that, by the 6 June 1988 Agreement, HML and the appellant were contemplating the formation of an unincorporated joint venture for the development of bedrock mining at McCamey's Monster. Paragraph 3AE(f) is that which pleads that the appellant stood in a fiduciary relation to HML and owed duties to it not to use its position to acquire benefits for itself or a third party, such as BHP Minerals, at the expense of HML. In par 9B(f), the respondent pleads that, in breach of the fiduciary duties owed by the appellant to HML, the appellant took unconscientious advantage of its own wrongdoing by:

[140]

"16. The ... [appellant] has been unjustly enriched at the expense of HML because it has obtained the full benefit of the Romanian market opportunities including the ship unloading facilities at Constanza, which cost HML a substantial amount of money to set up, and other market opportunities provided by HML without compensating HML for the establishment costs or paying for the remaining 275 Ore Wagons as alleged in paragraph (iv) of the particulars to paragraph 15 hereof, and it acquired ownership of McCamey's Monster at a substantial undervalue (as alleged in paragraph (iii) of the particulars to paragraph 15 hereof).

PARTICULARS

(a) The ... [appellant] through its breach of the 6 June 1988 Agreement, its obligations of disclosure and, its obligations of good faith put HML in a position where it had no economic option but to sell its equity in McCamey's Monster to BHP Minerals under the Share Purchase Deed;

(b) Because of these breaches by the ... [appellant], BHP Minerals acquired McCamey's Monster on terms that were disadvantageous to HML because it had no economic option but to sell on those terms;

(c) If HFMF or HML was selling under an arms length sale as a willing but not overly anxious seller of its equity in McCamey's Monster, BHP or BHP Minerals would have paid a further $60,000,000 for the purchase of HML's equity;

(d) On the other hand HML has not been paid for the remaining 275 Ore Wagons which were constructed under the ... [appellant's] supervision and to its specifications and were customer built for its use only;

(e) HML complied by using its best endeavours with all of its obligations under the agreements; and,

(f) The ... [appellant] was aware of HML's financial predicament and of the opportunity which that financial predicament gave it for the acquisition of HML's equity in McCamey's Monster and its acts and defaults as alleged in this Statement of Claim were conducted with that knowledge and for that purpose.

17. As a result of the ... [appellant's] conduct as alleged herein the ... [appellant] is a constructive trustee of the sum of $60,000,000 which was underpaid for McCamey's Monster, which trust is secured over McCamey's Monster."

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (218 paragraphs)

BHP Iron Ore Pty Ltd v Westraint Resources Pty Ltd [2002] WASCA 18 (11 February 2002)

Parties

Legislation Cited (1)

Cases Cited (28)