BETWEEN : BHP IRON ORE PTY LTD (ACN 008 700 981)

Appeal and cross­appeal - Practice and procedure - Pleadings - Application for leave to appeal against decision permitting respondent to amend its statement of claim to introduce new causes of action - Where new claims obviously untenable - Prejudice - Turns on own facts

Appeal and cross­appeal - Practice and procedure - Pleadings - Limitation of actions - Whether amendments statute­barred - "Relation back" rule - Turns on own facts

Appellant (Defendant) : Mr C M G Scerri QC & Mr B Dharmananda

Respondent (Plaintiff) : Mr E N Magee QC & Mr I D Martindale

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1 ANDERSON J: I have had the advantage of reading in draft the judgment of Steytler J and I agree with it. I, too, would grant leave to appeal and allow the appeal and I would not grant leave to cross-appeal.

2 STEYTLER J: This is an application for leave to appeal against an interlocutory decision made in an action between the respondent as plaintiff and the appellant as defendant.

3 The respondent applied for leave to amend its statement of claim so as to introduce new causes of action. The appellant opposed the amendments. It contended that some of them introduced claims which were barred by the operation of the Limitation Act 1938 and that others failed to disclose a triable issue. The appellant was largely unsuccessful in its opposition. The respondent was given leave to amend in all respects save one. The sole exception relates to amendments which have been described as the "Lygren amendments". These introduce a claim for damages arising out of a contract (described as "the Lygren Agreement") made on about 11 December 1987 between the respondent and a shipping company, IMR Transport Corporation ("IMR"). The appellant appeals against the decision of the primary Judge, contending that none of the amendments should have been allowed. The respondent has cross-appealed against the decision of the primary Judge as regards the Lygren amendments.

The causes of action as they emerge from the pleading

4 Before turning to the grounds of appeal and cross-appeal, I will summarise, briefly, the principal components of the various causes of action pleaded by the respondent against the appellant in the amended statement of claim.

5 The respondent, formerly known as Hancock Resources Ltd, was one of a stable of companies controlled by the late Mr Lang Hancock. Mr Hancock had established excellent relations with the Socialist Republic of Romania enabling him, on behalf of BHP Iron Ore (Jimblebar) Pty Ltd, then known as Hancock Mining Ltd ("HML"), to enter into contracts to supply iron ore to Romania using major new unloading facilities which were to be built at the Romanian Black Sea port of Constanza. A long-term contract ("the Romanian Ore Sales Contract") dated 3 November 1986 was entered into between HML and the

Romanian purchasing authority, Mineralimportexport ("Mimex"), by which HML agreed to supply 53,000,000 tonnes of iron ore to Romania in return for barter goods.

6 HML did not then have an operating iron ore mine. However, it was the holder of Mining Lease S266A which contained substantial quantities of iron ore and which was known as "McCamey's Monster". Economic analysis carried out by the appellant in consultation with HML indicated that a full mining development of McCamey's Monster was not then viable, but an initial mining operation of its scree ore deposits could be viable with assistance from the appellant.

7 On 25 May 1987 HML and the appellant executed a memorandum of agreement ("MOA"). By the terms of that agreement the appellant agreed to supply ore ("Mt Newman ore") from one of its mines to Romania so as to enable HML to meet its obligations under the Romanian Ore Sales Contract. The appellant also agreed to acquire from HML ore wagons that HML was to receive from Romania in part payment for the "ship unloaders" supplied by it at the port of Constanza. HML and the appellant agreed to undertake joint studies as to the viability of long-term mining operations at McCamey's Monster, with a view to the appellant's possible participation in a joint venture with HML for that purpose.

8 The respondent pleads that, in May 1987 and until April 1992, the appellant had substantial commercial advantages over HML as to the subject matters of the MOA (these are set out in par 2A.4) and that HML, to the appellant's knowledge, was in a position of commercial vulnerability (par 2A.5). It alleges that, from about December 1986, HML disclosed confidential information to the appellant, introduced it to its Romanian contacts and sought its assistance to develop McCamey's Monster and to purchase the ore wagons on a joint-venture basis. Consequently, it pleads (par 2A.7), HML relied upon the appellant to act in good faith. The respondent also pleads that there were express and implied terms of the MOA that the appellant would act in good faith and do what it could to give HML the full benefit of the MOA. The respondent alleges that, in these circumstances, and having regard for the fact that HML and the appellant were contemplating the formation of an unincorporated joint venture, the appellant stood in a fiduciary relation to HML and owed fiduciary duties to it.

9 Next, the respondent alleges that, from 25 May 1987 until January 1988, HML and the appellant negotiated the terms of various agreements contemplated by the MOA. It pleads (par 3) that, as a result of these negotiations and further negotiations which commenced in March 1988, on 6 June 1988 HML, the appellant, and a company known as Pennant Pty Ltd entered into an agreement in writing (referred to as the "6 June 1988 Agreement") whereby the parties agreed that:

(a) they would procure the sale and delivery of 14,000,000 tonnes of Mt Newman ore pursuant to the Mimex contract;

(b) they would establish a joint management company for marketing purposes; and

(c) the appellant would purchase from HML 350 "complete sets of Ore Wagons" for a price of $26,000,000, to be paid by way of progress payments.

10 In par 3AA the respondent pleads that, in these circumstances, the appellant knew that HML was relying upon it to act in good faith, with due regard to HML's interests in its dealings with HML as to the subject matter of the 6 June 1988 Agreement. It also pleads express and implied terms of the 6 June 1988 Agreement which are to similar effect.

11 The respondent alleges that, in all of these circumstances, the appellant "stood in a fiduciary relation" to it and owed duties to it to act in the joint interests of HML and the appellant under the 6 June 1988 Agreement and, indeed, to act in the interests of HML thereunder.

12 The respondent also alleges (par 3D) that prior to, and at the time of entering into, the 6 June 1988 Agreement the appellant was of the opinion or belief that:

(a) without increasing production of iron ore from Mt Newman or acquiring other comparable ore it could only supply up to 10,000,000 tonnes during the contract period and not the 14,000,000 tonnes required to be sold;

(b) it had no intention of increasing Mt Newman iron ore production accordingly;

(c) the Romanian iron ore market was not capable of taking 14,000,000 tonnes of Mt Newman ore by 31 March 1992;

(d) the appellant did not intend to purchase 350 ore wagons over the relevant period;

(e) the appellant was only prepared to supply Mt Newman ore if a letter of credit for the full sale price was opened in its favour prior to loading a vessel for shipment; and

(f) the appellant was not prepared to assist HML or the joint marketing company to effect sales of iron ore to Romania and suitable barter trades.

13 Next, the respondent pleads that, on about 15 June 1988, HML and the appellant caused a company known as Eastern Pilbara Iron Ore Co Pty Ltd ("EPIOC") to be incorporated in order to perform the role of the joint management company under the terms of the 6 June 1988 Agreement. However, it alleges (par 4F) that the appellant controlled EPIOC and controlled the extent to which it performed its responsibilities.

14 The respondent also alleges (par 5A) that, between 6 June 1988 and mid-May 1989, HML and the appellant negotiated the terms of various agreements contemplated by the 6 June 1988 Agreement.

15 On 17 May 1989 HML and the appellant executed what is described as the "Ore Wagons Sale and Purchase Agreement" by which, the respondent says, HML and the appellant "more fully and formally recorded the terms of their agreement with respect to the sale and purchase of the Ore Wagons".

16 The respondent alleges that, in breach of the 6 June 1988 Agreement, the appellant refused, on 16 August 1990 and at all times thereafter, to supply any Mt Newman ore on behalf of HML to Mimex in satisfaction of HML's obligations under the Romanian Ore Sales Contract. It also alleges (par 9A) that, in further breach of various terms of the 6 June 1988 Agreement, the appellant:

(a) did not use its best endeavours to implement and give full effect to the arrangements contemplated by that agreement;

(b) did not sell 14,000,000 tonnes of Mt Newman ore under the Romanian Ore Sales Contract;

(c) did not seek to maximise its sale of ore under that contract;

(d) having agreed on price, did not thereafter hold meetings with HML and, from August 1989, refused to supply iron ore to Mimex;

(e) did not procure the chairman of EPIOC to act in good faith and not do anything to unduly prejudice or interfere with compliance by HML with its obligations under the Romanian Ore Sales Contract;

(f) did not act in good faith with due regard to HML's interests; and

(g) did not do all things reasonably within its power to give HML the full benefit of each of the 6 June 1988 Agreement and the arrangements contemplated thereby, including the Ore Wagons Sale and Purchase Agreement.

17 The respondent also alleges, in par 9B of the statement of claim, that there were various breaches of fiduciary duty on the part of the appellant. These encompass such things as the non-disclosure by the appellant to HML of material information, the appellant preferring its own interests to those of HML, or to the joint interests of the appellant and HML, and the appellant using its knowledge of the probable value of McCamey's Monster for the benefit of a company known as BHP Minerals Ltd in negotiating with HML the sale of all of the shares in HML held by the Hancock Memorial Foundation Ltd ("HFMF") to BHP Minerals for a price some $60,000,000 less than the value of McCamey's Monster. This sale is said to have occurred at a time when HFMF was desperate to sell because of the appellant's failure to pay for the 275 ore wagons, notwithstanding that the appellant had by then received "the full benefit of the Romanian market opportunities".

18 In par 12 of the statement of claim the respondent alleges that, by a deed dated 1 April 1992, executed by the respondent, the appellant and HML:

"HML assigned to the ... [respondent] all of its rights title and interest in the Ore Wagons Sale and Purchase Agreement together with any and all accrued rights, claims, damages or interest of HML against the ... [appellant] arising from or in respect of any non-performance or breach of:

(a) the Ore Wagons Sale and Purchase Agreement; or

(b) any agreement or obligation of the ... [appellant] arising pursuant to or in respect of the 6 June 1988 Agreement to supply Mt Newman ore under the Romanian Ore Sales Contract to the extent that such non-performance or breach affected the ... [appellant's] obligations under the Ore Wagons Sale and Purchase Agreement;

with the express consent and acknowledgment of the ... [appellant] ("Deed of Novation")."

19 The respondent pleads (par 13) that there was an express term of the Deed of Novation by which the appellant covenanted and agreed with the respondent that, to the extent that the rights assigned to the respondent by HML pursuant to the Deed of Novation constituted a right of recovery of loss or damage suffered by HML, the respondent would be deemed to have suffered the same loss or damage.

20 In par 14 of the statement of claim the respondent alleges that, in order to enable the respondent to perform the obligations which it had assumed pursuant to the Deed of Novation, HML assigned to the respondent its rights, title and interest in the 275 ore wagons which remained to be purchased by the appellant pursuant to the Ore Wagons Sale and Purchase Agreement.

21 In par 15 the respondent alleges that it has suffered loss and damage as a consequence of the appellant's breaches of the 6 June 1988 Agreement and of its fiduciary duties owed to HML. It also pleads (par 16) that the appellant has been unjustly enriched at the expense of HML because it has obtained "the full benefit of the Romanian market opportunities ... and other market opportunities provided by HML without compensating HML for ... [its] establishment costs or paying for the remaining 275 Ore Wagons ... and it acquired ownership of McCamey's Monster at a substantial undervalue". It contends (par 17) that the appellant is consequently 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".

22 Much of what I have summarised (very broadly and without attempting to be exhaustive) appeared for the first time in the amended pleading.

23 The Lygren amendments, too, were new. These commence by adding additional particulars to par 3AA of the statement of claim, being that which introduces, in the amended pleading, an allegation that, during the negotiations between 25 May 1987 and April 1992, the appellant knew that HML was relying upon it to act in good faith and with due regard to HML's interests in its dealings with HML as to the subject matter of the 6 June 1988 Agreement. The additional particulars are to the effect that the appellant knew of the terms of the Lygren Agreement, one of which was to the effect that HML would become liable to pay to IMR a sum of US$0.50 per tonne in respect of iron ore proposed to be shipped to Romania in accordance with the Romanian Ore Sales Contract, whether that ore was shipped or not. The respondent also pleads (amongst other pleas relating to the Lygren Agreement which do not seem to me to require repeating) that, by a Deed dated 1 April 1992 executed by HML and the respondent, HML, to the appellant's knowledge, assigned to the respondent the benefit of the Lygren Agreement and the respondent agreed to indemnify HML in respect of the burden thereof. Finally, there is a plea, in the form of an additional particular to par 15 (which sets out loss and damage allegedly suffered by the respondent as a result of the appellant's breaches of the 6 June 1988 Agreement and of its fiduciary duties owed to HML), as follows:

"(vi) HML became liable to IMR for the consequences of the ... [appellant's] failure to procure the supply of iron ore to Romania under the Romanian Ore Sales Contract, in that, in settlement of arbitration proceedings brought by IMR in London, the ... [respondent] paid IMR the sum of US$19,500,000 plus costs in September 1994."

The statement of claim prior to the amendment

24 The statement of claim, as it stood prior to the amendment, took a far simpler form than that which it now takes. There was no reference to the MOA. While the 6 June 1988 Agreement was referred to in that document, only a few of its terms were then said to have been breached. Many other of its terms have since been said to have been breached. The claim that the appellant "stood in a fiduciary relation to" and owed fiduciary duties to HML emerged for the first time in the amended pleading. All of the claims arising from what are said to be breaches of fiduciary duties, or of the appellant's contractual obligations to use its best endeavours to implement and to give full effect to the 6 June 1988 Agreement and to act in good faith and to procure EPIOC to act in good faith, are new. So, too, are the claims for breach of fiduciary duty arising out of the alleged non-disclosures, the acquisition of McCamey's Monster at an undervalue and the preference, by the appellant, of its own interests over those of HML or the joint interests of HML and the respondent. The unjust enrichment claim and the Lygren claims were also added by the amendment.

25 The primary Judge's reasons for allowing all of the amendments other than the Lygren amendments were concisely expressed.

26 After a thorough and careful analysis of the principles concerning applications to amend, he said that, putting aside Limitation Act questions, the amendments should be allowed. He went on to say (at 15):

"This will enable the differences between the parties to be fully litigated. In that respect, the proposed amendments do not substantially alter the framework of the action as originally pleaded, except that the period of time relevant to these causes of action is now significantly extended. In that respect, the original statement of claim in this action, dated 2 May 1996, pleaded the agreement of 6 June 1988, together with the ore wagon sale and purchase agreement of 17 May 1989, as the two documents fundamental to its causes of action. By the proposed amendments, the timeframe will be greatly widened and the issue substantially extended. On the other hand, however, the statement of claim, even with the amendments, pleads causes of action arising out of the relationship between the plaintiff and the defendant involving the Hancock companies' arrangements with Romania. In my view, the proposed amendments do not substantially alter the original framework of the allegations, but rather seek to characterise different legal obligations arising therefrom. In saying that, I accept that discovery questions will need to be substantially revisited because new agreements are sought to be pleaded. Other witnesses no doubt will have to be located and their evidence obtained. In that respect, it is a matter of balancing the respective injustice to the parties and evaluating whether a fair and just result can be achieved with the amendments being allowed."

27 His Honour then turned his attention to arguments which had been advanced on behalf of the appellant in respect of the operation of the Limitation Act. After a review of the case law in that respect, he said (par 69), as regards the claims for breach of fiduciary duty, that, while it was "arguable ... that the statute of limitations would apply, by analogy[,] that is a matter for trial". He reached a similar conclusion as regards the respondent's claim as to the existence of a constructive trust in respect of the sum of $60,000,000 alleged to have been underpaid for McCamey's Monster.

28 He said (par 72) that the other amendments, including those which related to the 6 June 1988 Agreement, "should be allowed because they reparticularise matters which were previously alleged in the pleadings". He said that the amendments in relation to the Romanian Ore Sales Contract were already pleaded in the statement of claim and that, in his view, the amendments concerning that agreement should be allowed together with the claims arising therefrom.

29 The primary Judge did not refer, in his reasons, to an argument which, we were told, had been put to the effect that claims had been raised by the respondent in reliance upon the Deed of Novation which were not the subject of that deed and which were accordingly not maintainable by the respondent against the appellant, including that in respect of the alleged underpayment of $60,000,000 for McCamey's Monster. Nor did he refer to other alleged deficiencies in the pleading which, it was said, had been pointed out to him.

30 There are 11 grounds of appeal (although the last of them is numbered 12, ground 11 having been deleted by amendment), encompassing numerous sub-grounds. However, these, insofar as they were pursued at the hearing of the appeal, might conveniently be broken down (as they were by senior counsel for the appellant during the course of argument on the appeal) into five broad contentions, as follows:

(1) the primary Judge erred in allowing, without any qualification, the amendments with respect to the claims for breach of fiduciary duty and as regards the existence of a constructive trust when these were barred by the Limitation Act and raised, for the first time, a course of conduct over an extended period involving different facts and an expanded range of issues to those previously pleaded (grounds 1, 2 and 10);

(2) the primary Judge erred in law in failing to find that the alleged existence of fiduciary relations could not be sustained (grounds 8 and 9);

(3) the primary Judge erred in allowing the amendments to the contract claims because these depended upon facts different to those originally pleaded and raised claims which are now statute barred (grounds 1 and 2);

(4) the primary Judge erred in allowing claims to be raised which were utterly hopeless, including claims which had no foundation in fact on the pleadings and claims which could only belong to the respondent by means of assignment in circumstances in which there had been no valid assignment of those claims (grounds 3, 5, 6 and 7); and

(5) the primary Judge gave inadequate weight to the prejudice which the making of the amendments would cause to the appellant (ground 12).

31 Other, more minor, issues were raised by grounds 2 and 3 but these were not pursued in argument on the hearing of the appeal.

32 So far as the cross-appeal is concerned, the respondent contends that the primary Judge was wrong in concluding that the Lygren amendments should be disallowed because they are statute barred.

33 I will deal, first, with those grounds by which counsel for the appellant contend that the primary Judge erred in allowing claims to be raised which are "utterly hopeless". They are grounds 3, 5, 6 and 7.

34 Ground 3 contends only that the pleading should have been found to be defective as set out in a document titled "Basis of Defendant's Objections to the Proposed Reamendments" dated 15 January 2001. This document was not placed before us or referred to on the hearing of the appeal.

35 Ground 5 contends that the primary Judge erred in fact and in law in granting the respondent leave to reamend. It reads as follows:

"5 The learned Judge erred in fact and in law in granting ... [the respondent] leave to re-amend in terms of paragraphs 2A.4, 2A.5, 2A.6(a) and (b), 2A.11(f), 3AB(d) to (g), 3AD(b), 3AE(f), 9B(f), 12A, 15(b), 15(iii), 16 and 17 of the proposed re-amended statement of claim despite those paragraphs being bad in law in that allegations of unjust enrichment, taking unconscientious advantage in breach of fiduciary duties and constructive trust cannot be sustained because:

(a) it was BHP Minerals Ltd that bought the shares in HML, not ... [the appellant];

(b) the shares were sold by ... [HFMF], not HML or ... [the respondent];

(c) HML still owns McCamey's Monster;

(d) neither BHP Minerals Ltd, HML nor ... [HFMF] is a party to this action;

(e) further, as to the allegation of unjust enrichment, if the claim for unjust enrichment is a claim for restitution arising from a breach of contract, such a claim is either exceptional or not recognised and unless the agreement is set aside, the claims for unjust enrichment cannot be made out."

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:

"(i) exploiting the financial weakness of HML which their wrongdoing caused and/or exacerbated; and

(ii) using its knowledge of the probable value of McCamey's Monster for the benefit of BHP Minerals."

37 This last allegation is particularised as follows:

"BHP Minerals purchased all of the shares in HML from ... [HFMF] on 1 April 1992. The sale was negotiated by the ... [appellant] with HML. The ... [appellant] then knew that the net present value of McCamey's Monster was up to $150,000,000 and that HFMF was desperate to sell because of the ... [appellant's] failure to pay for the 275 Ore Wagons and the ... [appellant] had received the full benefit of the Romanian market opportunities, including the benefit of the ship unloaders, without paying for the 275 Ore Wagons."

38 Paragraph 12A deals with the Deed of Novation. It pleads that this was executed in contemplation of the sale or completion of the sale of all of the issued shares in HML by HFMF to BHP Minerals, for the purpose and with the intent of preserving accrued rights of HML against the appellant, in addition to novating the Ore Wagons Sale and Purchase Agreement.

39 Paragraph 15(b) is that which alleges that the respondent has suffered loss and damage by reason of the appellant's breaches of its fiduciary duties owed to HML. Particular (iii) to that paragraph reads as follows:

"(A) As a result of the breach by the ... [appellant] of the 6 June 1988 Agreement and of its fiduciary obligations, HFMF had no option but to sell its equity in McCamey's Monster to BHP Minerals on terms and conditions far less favourable to HML than would have been the case but for the ... [appellant's] breaches.

(B) If HFMF was not forced to sell its equity in McCamey's Monster to BHP Minerals as aforesaid and the McCamey's Monster deposit was developed by Mr L G Hancock and HML as Mr L G Hancock had contemplated prior to entering into the MOA with the ... [appellant] in May 1987, HML would have had the opportunity to sell its equity in McCamey's Monster when it was developed and on terms not dictated by a necessity to sell or HML would have demanded a premium from the ... [appellant] or BHP Minerals for the sale of its equity in McCamey's Monster in entering into the 17 February 1992 Share Purchase Deed ("Share Purchase Deed"). As a result HML lost the opportunity to be paid an additional $60,000,000 by the ... [appellant] for McCamey's Monster. $60,000,000 is calculated on the basis that in 1981 Hamersley Iron Pty Ltd paid $17,400,000 for 50% of the Marandoo tenement. In 1990 it paid $60,000,000 for the remaining 50%. In 1990 Marandoo was in a national park and had no infrastructure. The Marandoo ore deposit is 345,000,000 tonnes. The McCamey's Monster deposit is 328,000,000 tonnes. On the basis that Hamersley Iron Pty Ltd paid $60,000,000 for 50% of the Marandoo deposit, this puts a value of $120,000,000 for 100% of the McCamey's Monster deposit."

40 Paragraphs 16 and 17 of the amended statement of claim read as follows:

"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."

41 In my respectful opinion, the amendment, insofar as it introduced a claim for damages arising out of the sale of McCamey's Monster, should not have been allowed.

42 The test, in an application of the kind made to the primary Judge, is similar to that adopted in deciding whether or not to grant summary judgment or to strike out a pleading. A party should be allowed to put forward its case unless it is so obviously untenable that it cannot possibly succeed and great care must be exercised to ensure that the plaintiff is not improperly deprived of its opportunity for the trial of its case by the appointed tribunal (General Steel Industries Inc v Commissioner for Railways NSW [1964] HCA 69; (1964) 112 CLR 125 at 130). A court at first instance should also be careful not to risk stifling the development of the law by summarily rejecting a claim where there is a reasonable possibility that, as the law develops, it will be found that a cause of action will lie (Hospitals Contribution Fund of Australia Ltd v Hunt (1982) 44 ALR 365 at 373).

43 The pleading, so far as it seeks to support the respondent's entitlement to damages arising out of the appellant's acquisition of McCamey's Monster, should, in my respectful opinion, have been found to be so obviously untenable that it cannot possibly succeed.

44 HML could not have suffered a loss arising out of the sale of McCamey's Monster. On the pleadings, McCamey's Monster has not been sold. Rather, only the shares in HML were sold. Moreover, the pleading alleges that those shares were sold by HFMF. The respondent seemingly did not own any shares in HML. Consequently, even assuming that a sale of the shares in HML to BHP Minerals (and not to the appellant) at an undervalue could give rise to a cause of action against the appellant in the circumstances alleged, the cause of action could not even arguably be that of the respondent, whether as HML's assignee or otherwise.

45 The problems inherent in the pleaded cause of action are highlighted by the manner in which the loss and damage is alleged to have been suffered. In particular (iii)(B) to par 15(b), HML is said to have been deprived, as a consequence of the allegedly forced sale of the shares by HFMF to BHP Minerals, of "the opportunity to sell its equity in McCamey's Monster when it was developed and on terms not dictated by a necessity to sell" or of the opportunity to "have demanded a premium from the ... [appellant] or BHP Minerals for the sale of its equity in McCamey's Monster in entering into the 17 February 1992 Share Purchase Deed". As to the first of those alternatives, HML never lost the opportunity of selling its equity in McCamey's Monster when it was developed and on terms not dictated by a necessity to sell. It has, on the pleadings, never sold its equity in McCamey's Monster. As to the second alternative, HML could not have demanded a premium from anyone for the sale of its equity in McCamey's Monster when it did not sell that equity, even if it was a party to the Share Purchase Deed (and it is not clear from the pleading that it was, or should have been, a party to that deed).

46 For similar reasons, the amendment, so far as it introduces a claim against the appellant for unjust enrichment at the expense of HML arising out of the appellant's acquisition of ownership of McCamey's Monster at an alleged substantial undervalue, should not have been allowed.

47 It is consequently unnecessary to consider other points sought to be made in ground 5.

48 It is convenient to deal with grounds 6 and 7 together. Ground 6 contends that, insofar as the respondent seeks to enforce equitable claims in reliance upon the Deed of Novation, it cannot do so as those claims belong to HML and cannot be assigned. Ground 7 contends that the new claims which have been sought to be pleaded do not, in any event, fall within the terms of the assignment clause of the Deed of Novation and cannot otherwise be brought by the respondent.

49 Both parties referred to, and relied upon, the terms of the Deed of Novation, a copy of which was made available to the primary Judge and, on the appeal, also to us.

50 Clause 2 of that document is that which effects the assignment. It reads as follows:

"In consideration of the covenants and agreements in clause 3 of this Deed HML hereby assigns to ... [the respondent] all of its right, title and interest in and under the Principal Agreement and the Rights, with effect from the date of this Deed ('Effective Date') and ... [the respondent] accepts such assignment and the parties agree that it shall take effect by way of novation."

51 The "Principal Agreement" is defined to mean the Ore Wagons Sale and Purchase Agreement executed on 17 May 1989.

"... Any accrued rights, claims, damages or interest of HML against ... [the appellant] arising from or in respect of any non-performance or breach of:

(a) the Principal Agreement; or

(b) any agreement or obligation of ... [the appellant] arising pursuant to or in respect of the 6 June Agreement [defined to mean the agreement of 6 June 1988 between HML, the appellant and Portman Mining Ltd (as successor to Pennant Pty Ltd) and all additions and variations thereto] to supply Mt Newman iron ore under the Romanian [Ore] Sales Contract to the extent that non-performance or breach of such agreement or obligation affected ... [the appellant's] obligations under the Principal Agreement."

53 It is consequently plain that HML assigned to the respondent only:

(a) all of its right, title and interest in and under the Ore Wagons Sale and Purchase Agreement; and

(b) any accrued rights, claims, damages or interest of HML against the appellant arising from or in respect of any non-performance or breach of:

(ii) any agreement or obligation of the appellant arising pursuant to or in respect of the 6 June 1988 Agreement, but only to the extent that non-performance or breach of such agreement or obligation affected the appellant's obligations under the Ore Wagons Sale and Purchase Agreement.

54 The new equitable claims which are made by the respondent against the appellant are the claim for loss and damage arising out of the appellant's alleged breach of fiduciary duties owed to HML, the claim that the appellant has been unjustly enriched at the expense of HML and the claim as regards the existence of a constructive trust secured over McCamey's Monster.

55 The fiduciary duties said to have been breached are those which are alleged in pars 2A.11, 3AE and 9B of the statement of claim.

"By virtue of the matters alleged in paragraphs 2A.2 to 2A.7 and 2A.10 the ... [appellant] stood in a fiduciary relation to HML and owed duties to HML:

(a) to act in the joint interests of HML and the ... [appellant] under the MOA;

(b) to act in the interests of HML thereunder;

(c) to avoid any conflict between the ... [appellant's] own interests, and

(i) the joint interests of HML and the ... [appellant] under the MOA; or

(ii) the interests of HML thereunder;

(d) to prefer the interests of HML or the joint interests of them both when and if such a conflict should arise;

(e) to act in the utmost good faith toward HML and make full disclosure of all matters within or coming to the knowledge of the ... [appellant] that might affect the interests of HML or the joint interests of them both under the MOA; and,

(f) not to use its position to acquire benefits for itself or a third party such as BHP Minerals Ltd ("BHP Minerals") at the expense of HML."

57 As appears from the opening line of that paragraph, the duties are said to have arisen by virtue of the matters alleged in pars 2A.2 to 2A.7 and 2A.10. Paragraph 2A.2 recites the circumstances in which the MOA was executed on 25 May 1987 and par 2A.3 recites material terms of the MOA. I have earlier mentioned that par 2A.4 alleges that, in May 1987 and until April 1992, the appellant had substantial commercial advantages over HML as to the subject matters of the MOA and that par 2A.5 alleges that, over the same period, HML was, to the appellant's knowledge, in a position of commercial vulnerability. I have also mentioned that par 2A.6 alleges that, from about December 1986, HML disclosed to the appellant and entrusted it with knowledge of matters pertaining to its position of commercial vulnerability, introduced the appellant to its Romanian and other contacts, disclosed to the appellant the terms of its Romanian contacts and sought the appellant's assistance to develop McCamey's Monster and purchase the ore wagons on a joint-venture basis. Paragraph 2A.7 alleges that as a consequence of the matters alleged in pars 2A.4 to 2A.6, HML was, in May 1987 and until April 1992, to the appellant's knowledge, relying upon the appellant to act in good faith and with due regard to HML's interests in its dealings with HML as to the subject matter of the MOA. Paragraph 2A.10 is that which alleges that, by the MOA, HML and the appellant were contemplating the formation of an unincorporated joint venture for the development of McCamey's Monster and the exploitation of the Romanian Ore Sales Contract.

58 It seems to me to be quite impossible to categorise a claim for breach of the fiduciary obligations alleged in par 2A.11 as falling within the terms of cl 2 of the Deed of Novation, even if obligations of that kind are capable of assignment.

59 The claim does not arise under the Ore Wagons Sales and Purchase Agreement. It is a claim for damages for breach of fiduciary duties which are said to have arisen out of various matters, each of which is external to that agreement. The claim can consequently not be said to form any part of HML's "right, title and interest in and under" that agreement. Nor can it be said to arise "from or in respect of any non-performance or breach of" that agreement. It arises from or in respect of breach of the alleged fiduciary duties. Moreover, none of the alleged breaches of those duties (the breaches are pleaded in par 9B of the statement of claim) is said to arise as a result of any non-performance or breach by the appellant of the Ore Wagons Sale and Purchase Agreement.

60 Nor can the claim be said to arise from or in respect of any non-performance or breach by the appellant of "any agreement or obligation of ... [the appellant] arising pursuant to or in respect of the 6 June 1988 Agreement ... to the extent that non-performance or breach of such agreement or obligation affected the ... [appellant's] obligations under the Ore Wagons Sales and Purchase Agreement." The claim arises out of matters which are largely extraneous to any agreement or obligation arising pursuant to or in respect of the 6 June 1988 Agreement and there is, in any event, nothing in the pleading to the effect that non-performance of any such agreement or obligation affected the appellant's obligations under the Ore Wagons Sale and Purchase Agreement.

"By virtue of the matters alleged in paragraphs 2A.2 to 2A.7, 2A.10, 2B and 3AA to 3AD, the ... [appellant] stood in a fiduciary relation to HML and owed duties to HML:

(a) to act in the joint interests of HML and the ... [appellant] under the 6 June 1988 Agreement;

(b) to act in the interests of HML thereunder;

(c) to avoid any conflict between the ... [appellant's] own interests, and

(i) the joint interests of HML and the ... [appellant] under the 6 June 1988 Agreement; or

(ii) the interests of HML thereunder;

(d) to prefer the interests of HML or the joint interests of them both when and if such a conflict should arise;

(e) to act in the utmost good faith toward HML and make full disclosure of all matters within or coming to the knowledge of HML that might affect the interests of HML or the joint interests of them both under the 6 June 1988 Agreement; and,

(f) not to use its position to acquire benefits for itself or a third party, such as BHP Minerals, at the expense of HML."

62 I have already set out what is pleaded in pars 2A.2 to 2A.7 and 2A.10. Paragraph 2B alleges that, in the period from execution of the MOA until about April 1988, HML and the appellant negotiated the terms of various agreements contemplated by the MOA. Paragraph 3AA alleges that, by reason of the matters alleged in pars 2A.4 to 2A.6, during the negotiations alleged in par 2B and until April 1992, to the appellant's knowledge, HML was relying upon the appellant to act in good faith and with due regard to HML's interests in its dealings with HML as to the subject matter of the 6 June 1988 Agreement. Paragraph 3AB recites express terms of the 6 June 1988 Agreement and par 3AC recites implied terms thereof. Paragraph 3AD alleges that, by the 6 June 1988 Agreement, HML and the appellant were contemplating:

(a) the formation of an incorporated joint venture, in the form of the joint management company, to be responsible on their behalf for exploiting the Romanian Ore Sales Contract during the term of the 6 June 1988 Agreement; and

(b) the formation of an unincorporated joint venture for the development of bedrock mining at McCamey's Monster.

63 For reasons which are similar to those earlier expressed, the claim for breach of the fiduciary obligations alleged in par 3AE, too, does not arise under the Ore Wagons Sale and Purchase Agreement and nor is it one which arises out of the non-performance or breach of any agreement or obligation of the appellant arising pursuant to or in respect to the 6 June 1988 Agreement "to the extent that non-performance or breach of such agreement or obligation affected ... [the appellant's] obligations under the ... [Ore Wagons Sale and Purchase Agreement]".

64 It follows, in my opinion, that the respondent has no arguable claim for damages against the appellant as alleged in par 15(b) of the amended pleading. No such claim was assigned to it by HML and it is not suggested that it has any other standing to bring that claim. Consequently, the amendment, insofar as it introduces that claim, should not, in my respectful opinion, have been allowed.

65 The same is true of par 16 which, as I have said, alleges that the appellant has been unjustly enriched at the expense of HML because it has obtained the full benefit of the Romanian market opportunities in the circumstances there pleaded. That is not a claim which arises in and under the Ore Wagons Sale and Purchase Agreement and nor is it a claim against the appellant arising from or in respect of any non-performance or breach of any other agreement or obligation arising pursuant to or in respect of the 6 June 1988 Agreement "to the extent that non-performance or breach of such agreement or obligation affected ... [the appellant's] obligations under the ... [Ore Wagons Sale and Purchase Agreement]".

66 These conclusions make it unnecessary for me to consider the further question whether the claims the subject of these grounds of appeal were, in any event, capable of assignment.

67 Grounds 8 and 9 contend that the alleged existence of fiduciary relations could not be sustained and that the alleged positive fiduciary duties are not imposed by Australian law with the consequence that the primary Judge should not have allowed amendments to that effect.

68 Because I have, under the previous heading, arrived at the conclusion that the respondent is unable to bring these claims as they fall outside the terms of the Deed of Novation, it is unnecessary for me to deal with these grounds.

69 That brings me, next, to ground 1, which raises the limitation issues. Before dealing with that ground I propose to say something about the context in which it arises and in respect of the principles as they appear from the case law.

70 Order 21 r 5(1) of the Rules of the Supreme Court (WA) gives to the Court power, at any stage of the proceedings, to allow a party to amend its writ or pleading, subject, inter alia, to the other provisions of the rule.

71 Order 21 r 5(2) and r 5(5) read, relevantly, as follows:

"(2) Where an application to the Court for leave to make the amendment mentioned in paragraph ... (5) is made after any relevant period of limitation current at the date of issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that paragraph if it thinks it just to do so.

...

(5) An amendment may be allowed under paragraph (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment."

72 The interrelationship between O 21 r 5 and the so-called "relation back" rule (to the effect that an amendment to a writ or pleading is generally taken to have dated from the date of issue of the writ) has been considered by the Full Court of this Court in Morgan v Banning (1999) 20 WAR 474.

73 In that case Wheeler J (with whom Ipp J was in agreement) said (at 483) that, if an endorsement on the writ, when issued, is not capable of encompassing amendments sought to be made after the expiry of the limitation period, "so that the amendments truly 'add' an additional and time barred cause of action (rather than particularising, clarifying, or expanding one already instituted) then, whether leave to amend is granted or not, the new action remains time barred." Her Honour went on to say (ibid) that, whatever the Rules of Court may provide, an action which is in fact instituted out of time is able to be defeated by reliance upon the Limitation Act, which the Court has no power to override, whether by a procedural rule of "relation back" or otherwise.

74 Her Honour, after discussing aspects of the rule in Weldon v Neal (1887) 19 QBD 394 (that the Court will not permit a "new cause of action" to be added once the limitation period has expired), said (at 486):

"If I am correct in the view that the court's inability to permit the raising of a new cause of action (rather than a new description or new form of action) is as a result of a lack of power to do that which the statute of limitations prohibits, then O 21, r 5(5) and its equivalents can only be directed to curing the unduly rigid and narrow interpretation of Weldon v Neal which may be discerned in a line of authority. It is for that reason, I think, that r 5(5) permits amendment only 'if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action ...'. If the amendment is in that sense within the terms of the indorsement, no question of power arises.

The position now as I understand it is that the rule in Weldon v Neal applies to a cause of action which is truly new, and may not be abrogated without statutory authority. At least in a clear case, the court should refuse to allow the addition of a new cause of action in that sense. There may of course be circumstances where it is not clear how the amendments relate to the original cause of action and in such a case, it may be preferable that the issue be left for trial, just as the issue may be left for trial where it is not clear from the pleadings whether an action is time barred. If there is no new cause of action in that sense, but is rather a re-labelling, addition, modification or clarification of an existing cause of action raised in the indorsement, O 21, r 5(5) is applicable. When the discretion is exercised in that case, it is of course to be remembered that the effect of a refusal to permit amendment may be that a plaintiff will be unable to bring an issue before the court at all, and questions of justice to the plaintiff, delay, reasons for delay, prejudice to the defendant or other persons, possible abuse of process, among others, will be relevant."

75 Owen J, in that case, considered the phrase "cause of action". He said (at 476):

"Problems arise when an amendment does, or may, introduce a new cause of action not encompassed within the writ as originally issued. I reiterate that this problem falls to be determined in the statutory context. Neither through the inherent jurisdiction or by rules of court could the court alter the operation of the Limitation Act. Order 21, r 5(2)-(5) is a case in point. These rules empower the court to permit an amendment, if it is just to do so, to correct the name of a party or to alter the capacity in which a party sues or to add or substitute a new cause of action even though the limitation period may have expired. It is not difficult to see how a correction of a name or the alteration of a capacity could be done without interfering with any rights that the defendant may have to raise a limitation defence. Adding or substituting a new cause of action is more problematic.

This issue falls away if the phrase "cause of action" in O 21, r 5(5) is understood in a narrow sense as meaning the basket of facts which give rise to the right to approach the court for relief rather than as the description of the right to sue by reference to the old forms of action. This must be so or the rule would be in conflict with the statute and, thus, ultra vires."

76 Before leaving Morgan v Banning I should, perhaps, mention that, in Renowden v McMullin [1970] HCA 24; (1970) 123 CLR 584, a majority of the High Court held that the causes of action on which a plaintiff relies are to be ascertained exclusively by reference to the statement of claim without regard to the endorsement on the writ. There, the plaintiff brought an action for damages against a firm of accountants for loss arising from alleged breaches of duty by them in auditing his books of account. The writ bore a general endorsement alleging breach of contract and breach of a duty of care imposed on the defendants by statute. A statement of claim was subsequently delivered which made no claim based on breach of contract. More than six years after the events giving rise to the claims in question had occurred, the plaintiff sought leave to amend the statement of claim by introducing a claim based on alleged breaches of contract. Because the amendments proposed by the plaintiff sought to raise a cause of action which had not been mentioned in the statement of claim (albeit the endorsement on the writ alleged breach of contract), the Court held that the amendment, being statute barred, should not be allowed.

77 That brings me to the situation as regards equitable claims. A Statute of Limitations may be raised in respect of an equitable claim by analogy, furnishing an illustration of the maxim that equity follows the law. (See Meagher, Gummow and Lehane: Equity Doctrines and Remedies, 3rd ed, par 3415). In Knox v Gye (1872) LR 5 HL 656 at 674. Lord Westbury said:

"... [w]here the remedy in equity is correspondent to the remedy at law, and the latter is subject to a limit in point of time by the Statute of Limitations, a Court of Equity acts by analogy to the statute, and imposes on the remedy it affords the same limitation.

Where a Court of Equity frames its remedy upon the basis of the Common Law, and supplements the Common Law by extending the remedy to parties who cannot have an action at Common Law, there the Court of Equity acts in analogy to the statute; that is, it adopts the statute as the rule of procedure regulating the remedy it affords. "

78 Consequently, a court is obliged first to inquire whether there is a statutory provision that affects the equitable right in question and then, if there is no such provision, it must decide whether the right is so similar to a legal right or rights to which a limitation period is applicable that that limitation period should be applied to it also. Spry: The Principles of Equitable Remedies, 6th ed, at 419-420 suggests that:

"[T]he principles that govern cases of this kind are that if there is a sufficiently close similarity between the exclusive equitable right in question and legal rights to which the statutory provision applies a court of equity will ordinarily act upon it by analogy but that it will so act only if there is nothing in the particular circumstances of the case that renders it unjust to do so. What is regarded by courts of equity as a sufficiently close similarity for this purpose involves a question of degree, and reference must be made to the relevant authorities. The basis of these principles is that, in the absence of special circumstances rendering this position unjust, the relevant equitable rules should accord with comparable legal rules."

79 Of course, where there is no analogous legal right, the principle has no application.

Limitation and the claims for breach of contract

80 In considering the limitation issues I will deal, first, with the amended contract claims.

81 By virtue of s 38(1)(c)(v) of the Limitation Act, actions founded on "any simple contract" cannot be commenced more than six years after the accrual of the claim.

82 The statement of claim, prior to its amendment, sought damages arising out of the breach, by the appellant, of the 6 June 1988 Agreement. It still does so. Notwithstanding that there are many references to other contracts, and in particular to the Ore Wagons Sale and Purchase Agreement, the respondent still seeks contractual damages only in respect of breaches of the 6 June 1988 Agreement. However, the breaches now relied upon are significantly more than was the case previously.

83 Prior to the amendment the respondent pleaded, in par 9 of the statement of claim, that, in breach of the 6 June 1988 Agreement, the appellant refused and at all material times thereafter continued to refuse to supply any Mt Newman ore on behalf of HML to Mimex in satisfaction of HML's obligations to supply iron ore to Mimex pursuant to the Romanian Ore Sales Contract. The amendment, by par 9A, pleads an additional seven breaches of the 6 June 1988 Agreement. It alleges that the appellant:

"(a) did not use its best endeavours to implement and give full effect to the arrangements contemplated by the 6 June 1988 Agreement;

(b) did not sell 14,000,000 tonnes of Mt Newman iron ore under the Romanian Ore Sales Contract;

(c) did not seek to maximise its sale of Mt Newman iron ore under the Romanian Ore Sales Contract;

(d) having agreed on price as alleged in paragraphs 3AB to 3BC above, did not thereafter hold the meetings with HML referred to in paragraph 3(ac) above and from August 1989 refused to supply iron ore to Mimex;

(e) did not procure the chairman of EPIOC to act in good faith and not do anything to unduly prejudice or interfere with compliance by HML with obligations under the Romanian Ore Sales Contract;

(f) did not act in good faith and with due regard to HML's interests; and,

(g) did not do all things reasonably within its power to give HML the full benefit of the 6 June 1988 Agreement and the arrangements contemplated thereby, including the Ore Wagons Sale and Purchase Agreement."

84 These allegations are supported by some seven pages of particulars.

85 It is obvious that the breaches alleged in par 9A rely upon facts additional to those relied upon in respect of the breach pleaded in par 9 of the statement of claim. In the latter case, all that need be proved is that the appellant refused on 16 August 1990, and thereafter, to supply any Mt Newman ore on behalf of HML to Mimex. The allegations of breach pleaded in par 9A requires proof of additional facts, in some cases (as, for example, pars (a), (f) and (g)) requiring proof of many additional facts over a substantial period of time.

86 It seems to me, with due respect, to be quite plain that none of those amendments should have been allowed if, as appeared to be common cause, more than six years has elapsed since each new cause of action accrued. The mere fact that they are breaches of the same contract as was previously pleaded cannot assist the respondent. None of the new causes of action even arguably arise out of the same facts or substantially the same facts as any cause of action in respect of which relief had already been claimed.

88 In par 14A of the amended pleading the respondent alleges that, by a deed dated 1 April 1992 and executed by HML and the respondent, HML, to the appellant's knowledge, assigned to the respondent the benefit of the Lygren Agreement and the respondent agreed to indemnify HML in respect of the burden thereof.

89 The Lygren Agreement is pleaded (in a new particular to par 3AA) to have been made on about 11 December 1987 between HML and IMR and, as I have earlier mentioned, the respondent alleges that HML undertook significant liabilities under the terms of that contract. Further pleas in that regard are made in par 3AB(h) and (i) of the amended pleading. Then, by way of additional particulars to par 15, the appellant alleges that HML became liable to IMR for the consequences of the appellant's failure to procure the supply of iron ore to Romania under the Romanian Ore Sales Contract, in that, in settlement of arbitration proceedings brought by IMR in London, the respondent paid IMR the sum of $US19,500,000, plus costs, in September 1994. Consequently, the respondent seeks to recover that sum from the appellant.

90 It is, in my opinion, quite plain that this is a new cause of action depending upon entirely new facts. There had, in the earlier pleading, been no reference to the Lygren Agreement, to HML's liability to IMR as a consequence of its failure to procure the supply of iron ore to Romania under the Romanian Ore Sales Contract or to the deed of assignment dated 1 April 1992.

91 That being so, and there being no contest as regards the proposition that more than six years had elapsed since the cause of action arose, the learned primary Judge made no error in refusing to allow these amendments and there is no basis for the cross-appeal in that respect.

92 I will deal, next, with the appellant's proposition that the primary Judge erred in allowing the amendments with respect to the claims for breach of fiduciary duty and that as regards the existence of a constructive trust in circumstances in which he should have found that they were barred by limitation provisions.

94 The first was whether the amendments should have been allowed at all. Counsel for the appellant contended that they should not, upon the basis that the Limitation Act operated upon them by analogy and that more than six years had elapsed since the accrual of the causes of action. Counsel for the respondent disputed there was any limitation period applicable to these claims.

95 The second was whether, if the amendments were to be allowed, they should have been allowed without any qualification. While the primary Judge had said that the question whether the Limitation Act should be applied was one for trial, the order which he made was one giving leave to amend without any qualification. Counsel for the appellant contended that his Honour should have ordered that the amendments took effect only from the date upon which they were made. If the Court's order allowing the amendment was left unqualified, then the so-called "relation back" rule would, they submitted, effectively put an end to any limitation argument which might otherwise be raised. Counsel for the respondent, on the other hand, submitted (in a supplementary submission filed without leave) that the pleadings should have effect from a date to be determined by the trial Judge.

96 It is, because of the conclusion at which I have arrived in respect of grounds 5, 6 and 7, unnecessary for me to consider these issues. However, I will comment on the second of them.

97 If it was arguable, as the primary Judge found it to be, that the claims for breach of fiduciary duty and as regards the existence of the constructive trust are barred by the operation of the Limitation Act, and if it was appropriate that this question should be aired at trial, then that result was not facilitated by the order which his Honour made.

98 It seems to me to be plain, beyond argument, that his Honour intended the point to be left open. That being so, he should, in my respectful opinion, have ordered either that the amendments were to take effect only from the date upon which they were made, and that the relation back rule should not apply, or that the date upon which the amendments should have effect should be determined by the trial Judge. There is no real contest as to the fact that, if the Limitation Act applies to these claims, they are statute barred. It also seems to me to be plain that O 21 r 5 does not empower a court to give leave to make an amendment in such a way as to override the Limitation Act. If the claims are statute barred, then an unconditional order giving leave to amend (bringing to bear the relation back rule) would purport to override the Act.

99 I should add that, in my opinion, the better of the two options to which I have referred would, in these circumstances, have been the first of them, being an order that leave to amend was conditional upon the amendments taking effect only from the date upon which they were made.

The issues of prejudice and case management

100 The appellant contends, by ground 12, that the primary Judge erred in fact and in law in giving inadequate weight to the prejudice to the appellant of allowing the respondent to reamend its statement of claim. It also contends, by ground 2, that his Honour erred in allowing amendments which raise an extended course of conduct raising different facts and expanded issues and, by ground 10, that he erred in allowing the respondent to reamend its statement of claim to include allegations of the existence of fiduciary relations when those allegations relied on new facts and new issues being raised for the first time. It is not entirely clear to me what, if any, work is intended to be done by grounds 2 and 10 in addition to that performed by grounds 1 and 12. However, I shall assume that they were intended to raise case management issues, as well as to support grounds 1 and 12.

101 It is enough to say, under this heading, that it is plain, even from the amendments taken on their own, that both parties will be required to expend a substantially greater amount of time and money in preparing the case if the amendments to which I have referred were to be allowed than if they were not to be allowed. The amendments canvass many new issues, some of them spanning many years and a great deal of evidence. If I am right in the conclusions at which I have arrived as regards those claims which I have found to be unsustainable, that time and money will be wasted and court time will be unnecessarily taken up in respect of them.

102 The errors which, in my respectful opinion, were present in the reasoning and orders of the primary Judge are such, when coupled with the substantial injustice which would be done if the decision is left unreversed, as should result in the grant of leave to appeal (see Wilson v Metaxas [1989] WAR 285 and Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40). I would consequently grant leave to appeal and allow the appeal. I would leave it to the parties to bring in a minute of orders designed to give effect to the conclusions at which I have arrived.

103 As to the cross-appeal, for the reasons which I have given I am not persuaded that there is sufficient doubt as regards the correctness of the decision of the primary Judge. I would consequently decline to grant leave to appeal.