CITIC LTD -v- MINERALOGY PTY LTD [No 3] [2020] WASC 398 (4 November 2020) - WASC 2020 case summary — Zoe

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CITIC LTD -v- MINERALOGY PTY LTD [No 3] [2020] WASC 398 (4 November 2020)

[2020] WASC 398

Supreme Court of WA|2020-11-04|Before: Martin J

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At a glance

Source facts

Court

Supreme Court of WA

Decision date

2020-11-04

Before

Martin J

Source

Original judgment source is linked above.

Judgment (104 paragraphs)

[1]

This action is currently listed for a two week trial before me commencing on 7 December 2020. Under directions issued some time ago there were to be no further amendments to the pleadings without leave. The action has been formally entered for the trial by the four plaintiffs (the CITIC Plaintiffs).
The subject matter of the presently opposed interlocutory application is the CITIC Plaintiffs' chamber summons of 22 September 2020 seeking leave for them to significantly amend both their statement of claim (the current iteration of which is the amended statement of claim (ASOC) of 19 March 2018) and as well, to alter their amended reply and defence to counterclaim of 20 December 2018.
Iterations of the proposed amendments to both pleadings of the CITIC Plaintiffs have been circulated as minutes of amended pleadings that were attached to an affidavit of the lawyers of record acting for the CITIC Plaintiffs, namely by Mr Jeremy Peter Rich affirmed 22 September 2020. Attachment JPR‑1 is the minute of proposed further amended statement of claim (Proposed FASOC). It displays the marked up amendments proposed in relation to the pleading.
Likewise, attachment JPR‑2 shows the CITIC Plaintiffs' proposed amended reply to the further amended defence and defence to further amended counterclaim (Proposed Amended Reply) in respect of which leave is also sought to amend.
At par 8 and par 9 of his affidavit, Mr Rich merely deposes that the as observed proposed amendments to the Proposed FASOC and Proposed Amended Reply have been determined by the CITIC Plaintiffs to be 'necessary and desirable'.
The CITIC Plaintiffs' chamber summons of 22 September 2020, seeking leave to make the amendments, was initially returnable before me for directions on 24 September 2020. The leave application was supported by a first tranche of written submissions as filed by the CITIC Plaintiffs on 22 September 2020.
Given current COVID‑19 adverse issues still affecting the nation, with the CITIC Plaintiffs' counsel largely located in Victoria and the defendants' legal representatives and counsel in Queensland, the leave application has been dealt with and heard remotely using Microsoft Teams capabilities between the respective parties' representatives and the court.

[2]

The subject matter of the imminent December 2020 trial concerns the CITIC Plaintiffs' ongoing efforts to compel a performance by the defendants of contractual obligations arising by reason of the admitted exercise in 2012 by CITIC Pacific Limited, as it was then known (now known as CITIC Ltd), of the first of a number of options afforded to it under a written agreement of 22 October 2008 (as subsequently varied on 30 March 2012). This agreement is commonly referred to as the China Project Operation Agreement (the CPOA).
The CPOA was perfected between the first defendant, Mineralogy, the second defendant, Mr Palmer and CITIC Ltd, the first plaintiff in the present litigation.
Earlier this year I delivered reasons in CITIC Ltd v Mineralogy Pty Ltd [2020] WASC 223 (CITIC v Mineralogy) (ex tempore on 27 May 2020, then revised and published on 18 June 2020) and concerning largely then Mineralogy's proposed pleading amendment issues. Later, my further reasons delivered as CITIC Ltd v Mineralogy Pty Ltd [No 2] [2020] WASC 252 (CITIC v Mineralogy [No 2]) (on 3 July 2020) dealt with further and better discovery issues still unresolved as between the parties in the lead up to trial. Those two sets of earlier reasons delivered this year will provide a sufficient background to the issues underlying the litigation. For present purposes I proceed on the basis of a reader's familiarity with those earlier 2020 reasons.
Bearing in mind an imminence of a looming complicated civil trial, I listed the present leave applications by the CITIC Plaintiffs in respect of both their Proposed FASOC and Proposed Amended Reply for urgent directions on 24 September 2020, only two days after the application was brought and filed at court.
At that time the defendants' responses to the proposed amendments as signified on behalf of Mineralogy and Mr Palmer by their lawyers of record was to the effect that the complexity of the proposed amendments was such that more time would be required for them to be properly considered. That was not really in contest. Consequently, on 24 September 2020, I issued directions essentially programming the substantive application to a special appointment hearing on Friday, 9 October 2020. This programming was done on the basis the parties were to exchange further written submissions and any further affidavit materials, if any of the proposed amendments by the CITIC Plaintiffs remained controversial.
But also at the time of the 24 September 2020 hearing there had just emerged what presented as a significant communication despatched by Mineralogy to the lawyers for the CITIC Plaintiffs (Allens) late on 22 September 2020 (Mineralogy's September communication). A further Annexure A to that letter communication was initially omitted by error and so was only despatched by Mineralogy the following day. That communication concerned Mineralogy and Mr Palmer's defence positions. As a result, I also issued a direction on 24 September 2020 requiring that Mineralogy should file a minute of amended defence and further amended counterclaim. The reason for that direction to Mineralogy should become evident as I turn to the content of Mineralogy's September communication.
By overview, through its communication, Mineralogy had advised of a very significant alteration to the basis of its (up to then) resistance stance opposing the performance relief sought by the CITIC Plaintiffs as regards implementing the obligations arising from the exercise of the First Option by CITIC Ltd (in 2012) and for all ensuing relief which was sought by the CITIC Plaintiffs, including for the fourth plaintiff, Cape Preston Resource Holdings (Cape Preston). Evidently the level of opposition which had, up to then, otherwise manifested by Mineralogy and Mr Palmer was seen to change.
Before turning to expose further Mineralogy's September communication, I need to provide a brief overview of relevant legal amendment principles and a brief recap in respect of some key matters in and around the present action which go back a number of years.

[16]

Under my orders of 26 February 2018 I gave leave to add a fourth plaintiff, Cape Preston to this action: see again CITIC v Mineralogy at [28] ‑ [32].
As mentioned, those reasons were issued in a context of then proposed amendments to Mineralogy's pleadings, and extensively so, as to its counterclaim for damages against the CITIC Plaintiffs ‑ and seeking significant economic damages. The defences and counterclaims of Mineralogy and Mr Palmer at that time are summarised at [20] of CITIC v Mineralogy.
Those pleadings had to then, included defences by Mineralogy and Mr Palmer raised to the effect that the CITIC Plaintiffs had again breached essential terms of the CPOA, or had repudiated or renounced their obligations under the CPOA ‑ with the end consequence that Mineralogy and Mr Palmer, as the 'innocent' CPOA counter‑parties presented with such alleged breaches, had (in the face of a contended wrongful CPOA breach conduct by the CITIC Plaintiffs) then effectively chosen to terminate all obligations of further performance on that contract.
There were further defence pleas by Mineralogy and Mr Palmer raised and grounded on an alleged contractual frustration of the CPOA; breaches by CITIC Ltd of essential obligations concerning drilling exploration expenditure; and an asserted inadequacy of the available magnetite ore within Area A ‑ effectively rendering it impracticable or impossible to viably grant any further CPOA options to CITIC Ltd. Likewise, there was a plea of a suggested lack of readiness, willingness or ability of CITIC Ltd to perform its obligations under the CPOA at 30 or 31 March 2016 when this action was commenced. Also raised were suggested breach implications of a failure of Sino Iron and Korean Steel to meet their Royalty Component B obligation payments to Mineralogy under other agreements (the MRSLAs) and, thereby bearing against, it was put, any grant of equitable relief in the nature of specific performance of the First Option exercise generated rights under the CPOA.
Also contended were alleged delays by CITIC Ltd in terms of the CITIC Plaintiffs not taking timely steps to enable a completion on the First Option. Finally contended was an alleged engagement of CPOA cl 3.7, as regards a contractual termination of the CPOA. To that end see [21] of my reasons in CITIC v Mineralogy.
Also looming then, for a December 2020 trial horizon, were Mineralogy's complex now counterclaim damage arguments, as discussed in those reasons, but essentially predicated upon an alleged breach or breaches of the CPOA leading to as justifiable termination for breach by Mineralogy as the innocent counter‑party, and from there, to Mineralogy's contended entitlement to significant loss of bargain breach damages.
That background summary as to key dates and events will provide a sufficient context around the present amendment applications advanced by the CITIC Plaintiffs, by reference to the disputed category 1 proposed amendments.
Before turning to those specifically proposed and opposed amendments, it is first necessary to see and digest the content of Mineralogy's September communication. As will be seen, there looks to be significant forensic ramifications for the trial carried under that recent as communicated change of defence position as articulated for Mineralogy and Mr Palmer. Such communications were only provided to the court the evening before the urgently convened directions hearing under attachments KCJ‑1 and KCJ‑3 to an affidavit of Mr Kane Christopher Jones, a lawyer of record for Mineralogy sworn on 23 September 2020.

[33]

[16] We also enclose audited financial statements for Balmoral Iron for the year ending 30 June 2020.

Purchase Consideration

[17] The Purchase Consideration under the CPOA will be USD$135,207,177.77. We have accepted your calculation regarding drilling costs to remove any conflict between the parties.

[18] The calculation of the Purchase consideration is included in Annexure A to this communication.

Clear exit

[19] We advise that Balmoral Iron has been a member of the Mineralogy Pty Ltd tax consolidated group from 1 July 2003 until 16 December 2018 and of the Mineralogy International Limited tax consolidated group from 16 December 2018 until the present time. Mineralogy became a wholly‑owned subsidiary of Mineralogy International Limited on 16 December 2018 and pursuant to a choice made under subsection 615‑30(2) of the ITAA 1997 Mineralogy International Limited became the head company of the consolidated group from [t]his time.

[20] Mineralogy had a valid Tax Sharing Agreement in place for income tax purposes which was entered into on 21 March 2006 which included Balmoral Iron as a contributing member. On 26 March 2019 a new Tax Sharing Agreement with Mineralogy International Limited as the head company was entered into to reflect the 16 December 2018 restructure. Balmoral Iron is also a contributing member under this Tax Sharing Agreement.

[21] The Tax Sharing Agreements provide for a clear exit from group tax‑related liabilities where a contributing member will cease to be a member of the consolidated group. It is proposed that Balmoral Iron, as a contributing member, will on sale exit from the Mineralogy International Limited tax consolidated group under the clear exit provisions such that it will leave the consolidated group clear of all group tax‑related liabilities (refer section 721‑35 of the ITAA 1997) . Mineralogy International Limited will act to comply with these requirements.

Proceeding CIV1514

[22] The content of this letter will affect Proceeding CIV1514.

[23] We note Proceeding CIV1514 is listed for review before the Court on 24 September 2020.

[24] We consider it is appropriate for the parties to raise with the Court this communication.

Next steps

[25] We await your response to this communication.

[26] We trust the parties can work collaboratively towards completion of the First Option consistently with the content of this communication.

Yours faithfully

Geoff Smith Kane Jones

Legal Counsel Legal Counsel

Mineralogy Pty Ltd Mineralogy Pty Ltd

[50]

Evaluating whether or not to allow the proposed amendments as regards drilling costs for trial purposes, I first must reject Mineralogy's contention that the plea by par 67A of the Proposed FASOC is not coherent, by the reference in that paragraph to Mineralogy's 'Verification and Challenge Right' as defined and as particularised. By my assessment, those matters are plain and also plainly arguable. They also do not on their face carry with them a high level of new factual controversy that might bear against the ability or capacity to conclude all issues at the looming trial across 10 (ten) days in December 2020.
Likewise, I must reject Mineralogy's contentions put against proposed subparagraphs 67A to 67N ‑ invoking what appear to be Eshelby principle contentions against raising events that occurred subsequent to the commencement of the present litigation (see Eshelby v Federated European Bank Ltd [1932] 1 KB 254). In this case, the relevant date of commencement is 31 March 2016.
On my assessment, those Eshelby objections are misplaced. As I assess the proposed drilling costs amendments, the CITIC Plaintiffs only seek to make reference to conduct. They do not appear to do so for a purpose of advancing a new cause of action against Mineralogy, but merely to contend that Mineralogy and Mr Palmer, by their conduct, must be assessed to have waived or abandoned their verification and challenge rights as to CITIC Ltd's drilling costs by that inaction. Alternatively, as I understand it, the CITIC Plaintiffs seek to put that Mineralogy and Mr Palmer have not exercised those rights within a reasonable time of being notified of a drilling costs amount as claimed by CITIC Ltd as spent by it in complying with CPOA drilling obligations (see proposed par 67K).
It is true par 67M contends for a breach of a term of the CPOA ‑ namely the term as pleaded by one of these recent amendments in par 17(ja). But that earlier amendment to add par 17(ja), is not opposed.
The proposed 67M amendment itself only contends for the implication of a term within the CPOA that requires the CPOA parties to co‑operate to do all that is necessary on their part to enable the other parties to receive the benefits and to perform the obligations conferred and imposed by the CPOA. That implied term described is found in commercial contracts as a matter of law: see the observations of Mason J (as his Honour then was) in Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 597. The breach as contended for under proposed par 67M, in reference to that co‑operation implied term, by the plea under par 67N, is seen to be raised in a context not of a new or independent cause of action for damages for a breach of that term. Rather, it is raised only by reference to the contention of waiver seen under par 67N(b) and a following contention that all Verification and Challenge Rights of Mineralogy and Mr Palmer relating to drilling costs may no longer be exercised. This is said to be on the basis of them not being allowed to take advantage of their own breaches of (CPOA) contract: see proposed par 67N(a). That is an understandable and plainly arguable plea that does not seek to introduce a new cause of action.
I would also accept the reply submission by the CITIC Plaintiffs, that any need for an eventual quantification exercise and evidence arising in relation to the ascertainment of the precise CITIC Ltd drilling costs amount, in a process of ascertaining the CPOA Purchase Consideration relevant to the exercise of the First Option, can be separated away from the December 2020 trial, to be dealt with, if necessary, and later. Indeed, it has been decided that there will be a separation process decided upon in relation to dealing with any quantification issues arising, if that were ever necessary, in and around Mineralogy's amended counterclaim pursuing loss of bargain breach damages upon the as alleged wrongful termination of the CPOA by CITIC Ltd, if found.
At all events, I am satisfied from a forensic perspective that CITIC Ltd's quantification implications arising around the drilling costs issue are fully capable of being managed without jeopardising the December 2020 trial dates. To that end, I am persuaded there is no forensic prejudice bearing upon a completion of the December 2020 trial arising out of the proposed CITIC Plaintiffs' amendments, in so far as they concern the CITIC Ltd's drilling costs issue, if it is still necessary to resolve that issue at the trial.

[51]

The allied leave question that arises in the context of a relatively late and close to trial application for leave to amend by the proposed amendments as regards drilling costs and whether that application meets the criteria for leave. Approaching that threshold, I bear in mind a need for some legitimate explanation to support the grant of, in effect, indulgence to the CITIC Plaintiffs in this respect. In that quarter, I note this second action over the CPOA has been on foot since March 2016, seeking to compel a performance of obligations relating to an admitted exercise of the First Option as long ago as 13 April 2012.
Admittedly, the explanation for all the amendments as provided by Mr Rich's first affidavit is less than fulsome. I return to that aspect of the application later, in the context of the changes proposed to be introduced under the CPI Increase amendments. However, I do find a sufficient explicated basis for the proposed amendments as to drilling costs of CITIC Ltd, bearing in mind the case management history of this litigation, as was explained by senior counsel for the CITIC Plaintiffs at the 9 October 2020 hearing. Senior counsel did so reference to what emerged at previous interlocutory hearings this year, concerning a need for clarification as regards the precise compulsive orders sought to be made by the court, as the relief for the CITIC Plaintiffs in respect of the First Option and towards the Further Company. That is persuasive enough for this particular amendment issue in terms of showing that there emerged a genuine forensic need to support the present amendment as regards the Purchase Consideration derived amount if the drilling costs issue does remain as live.
Consequently, I will grant leave to allow the drilling cost amendments under category 1, as sought. Nevertheless, I reiterate that Mineralogy and Mr Palmer as a matter of good sense should consider their communicated positions towards seeking to confine what was said about this issue only to Balmoral Iron Pty Ltd as the Further Company.

[52]

Alongside the drilling costs issue, however, are the as proposed potential increase in the CPOA 'Purchase Consideration' amendments of the CITIC Plaintiffs, by an upward adjustment factor attributable to CPI Increases. From Annexure A that figure is now seen to be numerically significant.
But these late augmentations to the pleadings are controversial. Opposed further amendments sought by the CITIC Plaintiffs, in respect of their Proposed FASOC under proposed pars 67P ‑ 67V. They are now directed towards a CPI Increase issue, which would be newly introduced into the litigation by those amendments as proposed.
The CPI Increase proposed amendments carry with them, effectively, what would be entirely new arguments to be advanced from the CITIC Plaintiffs and directed either as a matter of law, or as a matter of the suggested true interpretation of the CPOA, or further, by an application of an ad hoc implied term, or even further, by a contention of breach and application of an equitable set‑off of damages, to limit the full impact of a CPI Increase to the Purchase Consideration, when calculated to now. There presents essentially a $US28 million gulf likely to be raised as between the parties, over the correct CPI Increase figure ‑ applied to a computation of the Purchase Consideration and potentially arising from the amendments to the Proposed FASOC.
The CITIC Plaintiffs by their materials would seem to accept a CPI Increase of $US42,959,427.21. But by Annexure A, Mineralogy's CPI Increase figure is almost $US28 million higher.
Numerically, in any event, the proposed amendments in respect of the CPI Increase carry a new and extra dimension for the trial. Nevertheless, as seen, the December 2020 trial that now looms has otherwise shrunk somewhat, in terms of the magnitude of once disputed issues needed to be raised and resolved. All this is to be weighed applying the principles around amendments earlier discussed.
A remaining leave question then bearing in mind the December 2020 trial is whether the category 1 further subset proposal amendments, as sought in respect of limiting the range of the CPI Increase adjustment to the Purchase Consideration issues, may be allowed at this time. For the purposes of evaluating CPI Increase limitation issues and their possible trial ramifications, I first need to collect and set them out in full below.
They commence at proposed par 67P, under a heading 'CPI Increase' and read:

[100]

Mr Rich's second affidavit of 8 October 2020 canvassed issues back to March 2006 in relation to the implementation then of the Sino Iron Takeover and then subsequently, to the Korean Steel Takeover at 1 November 2007.
This was all from the perspective of identifying the time taken at around 2006 and 2007 for completing all the various steps to be undertaken leading up to the eventual completion of those earlier two Takeover Agreements in respect of the corporation that enjoyed MRSLA derived contractual rights obtained from Mineralogy. This was pursued for a purpose of comparing, contrasting and evaluating what reasonable period should have been reasonably allowable, after 13 April 2012, to complete for a Takeover Agreement in respect of the Further Company after CITIC Ltd's exercise of the First Option under the CPOA in those 2012 underlying circumstances. Reference was made back to Schedule 3 of the CPOA and the unique form of a proposed Takeover Agreement for the Further Company. There is to be noticed an excision of an issue that appears to have taken some time to resolve in relation to getting an approval in the past at 2007, in order to finalise the Korean Steel Takeover Agreement.
Paragraphs 16 to 26 of Mr Rich's second affidavit deal with even more history, concerning the time taken in the past for former negotiations regarding variations to the State Agreement going back to November 2007 to July 2008. Again this is all raised in a context of ascertaining at the December 2020 trial what is the a reasonable period, by taking some regard to the time taken in the past to negotiate and complete proposed amendments to the State Agreement. The exercise is, again, used effectively as a suggested comparator for a trial exercise in forming an assessment that is said to be manageable and, in effect, overblown as to its difficulties as suggested by Mr Iskander for Mineralogy, over how long it should reasonably have taken to obtain an amendment to the State Agreement. Those amendments should then allow the perfection of aspects of the CPOA as regards completing on the First Option and so, the Further Company could be assimilated under coverage by the State Agreement once varied to effect that.
Likewise, under pars 32 ‑ 34 of Mr Rich's second affidavit is his review of correspondence going back to 2006 and 2007, in relation to the time taken previously to obtain the approval under the Foreign Acquisitions and Takeovers Act 1975 (Cth), in respect of the Korean Steel and Sino Iron Takeover transactions of 2006 and 2007. Again, that exercise was undertaken for the purpose of assisting in drawing some comparisons and then, a conclusion about what would be an allowable reasonable period to complete on the First Option in present circumstances. All this is suggested as manageable, in effect, for the December 2020 trial, contrary to Mineralogy's concerns to the contrary.

[101]

On my assessment, if the CPI Increase amendments, as proposed by the CITIC Plaintiffs, under their current Proposed FASOC were to be allowed at this time, they necessarily carry with them a need to resolve a newly introduced factual issue ‑ over the court's required ascertainment of what is or would have been a reasonable period to allow for a completion after CITIC Ltd's exercise of the First Option, back at 13 April 2012.
As the recently exchanged affidavits show, grappling with the introduction of that new factual issue will likely carry with it a need to turn back to canvass prior Takeover Agreement events of 2006 and 2007 in relation to the Korean Steel and the Sino Iron Takeover Agreements, for comparative purposes. These are events I previously confronted in an earlier context of the Royalty Component B MRSLA disputation, the subject of my reasons in Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16] [2017] WASC 340, in particular therein at my reasons at [150] ‑ [153], [199] ‑ [204], [223] and [232]. I assess that there would be old 2006 ‑ 2007 Takeover Agreement documentation to be unearthed to be considered all over again in a quest to show what would have been a reasonable period to allow for completion after 13 April 2012.
Whilst some aspects of Mr Iskander's suggested forensic preparations assessment in terms of time needed to interview witnesses such as Mr Palmer and a former head of legal Mr Geoff Smith are not entirely convincing, and I would also assess Mineralogy's potential legal resources for it to urgently prepare as unconstrained, in the end, I do accept that a foreshadowed comparator exercise to past events of 2006, 2007 and 2012 will necessarily be unavoidable in terms of a newly introduced required factual exercise, towards what is to be assessed as a reasonable period for the First Option's completion after 13 April 2012 under the CPOA. The factual reasonable time issue is new and will require preparatory resources to be urgently devoted to that task. The task will carry with it a need to scrutinise a reasonable amount of anterior factual material going back to at least 2006 and will introduce that new and controversial issue for determination and which is not yet otherwise 'on the table'. I also accept it would be unjust not to allow Mineralogy and Mr Palmer, through their legal representatives, some further time to prepare before the trial, in a documentary and investigative sense, to fairly get ready to deal with that new issue at a contested December 2020 trial.
During the course of verbal addresses by counsel on 9 October 2020, it was made very clear to me by senior counsel for the CITIC Plaintiffs that it was imperative that the December 2020 trial dates as currently allocated, be retained and not be jeopardised. I accept that given past history. One of the potentialities I had then canvassed with counsel was a plenary allowing of all proposed amendments, but vacating the December 2020 trial dates and re‑listing a trial some time later, during 2021. But a trial deferral option was understandably said to be unattractive to the CITIC Plaintiffs. Likewise to the court at this time. The defendants were more amenable, if a trial could be re‑listed in the earlier part of the 2021 calendar year. But civil trial dates are scarce and precious in this court. There are other parties waiting for their civil cases to be listed for trial.
My assessment, weighing up the respective contentions, is that whilst a component of what is now sought to be introduced by the CITIC Plaintiffs in relation to proposed CPI Increase amendments, seen as framed under proposed pars 67P ‑ 67V delivers new issues by multiple alternatives, raising legal arguments capable of being accommodated, that nevertheless, these CPI Increase limit amendments go well beyond raising only new matters of law for determination. They necessarily carry with them, on my assessment, a factual dispute and a required investigation exercise over the required ascertainment upon what is the reasonable period to allow for completion, after the exercise of the First Option at 13 April 2012 and an ensuing completion of a Takeover Agreement in respect of the Further Company. This would all need to be weighed up in 2020, looking back at the required approvals and other matters to be achieved and associated with a 2012 completion process, as identified in the CPOA.
My assessment is that allowing some fair period for Mineralogy to prepare and respond to these new issues, as a matter of fairness, would very much be irreconcilable with keeping the December 2020 trial dates. The time between now and the trial is simply insufficient to fairly accommodate this aspect of what are impactful forensic changes proposed to the CITIC Plaintiffs' case. It would therefore overall be unfair and so, prejudicial to Mineralogy and Mr Palmer, to force them to be ready in time to address new and controversial issues of fact surrounding the reasonable period issues, if allowed to be introduced. The potential monetary impact of these arguments is also significant, as seen. These are new CPI Increase arguments that are not occasioned by or responsive to Mineralogy's alteration to their defence stances as outlined in Mineralogy's September communication.

[102]

At the end, as regard the proposed amendments concerning CPI Increase, I have concluded leave should not be granted for them. To that end, I observe upon some further matters.
First, the fundamental CPOA position as expressed by the CITIC Plaintiffs is that they presently stand as ready, willing and able to perform all their obligations arising after the exercise by CITIC Ltd of the First Option at 13 April 2012 and, hence, to do everything that must follow in consequence on their parts to complete on the acquisition transaction. One vital component of such expressed amenability to complete is to pay over, when required, the Purchase Consideration as calculated under the CPOA.
Yet, in the next breath, needing to resolve the as proposed CPI Increase limit amendments will essentially open up in this court a new front, in a battle beginning, in this court, back at commencement of CIV 3012 of 2012, resulting in a need to resolve extra issues not previously live, within in a complex, multifaceted and ongoing dispute between the CPOA parties. Allowing the CPI Increase arguments will require this new battle to be resolved before the First Option Purchase Consideration could be quantified, so as to facilitate a completion.
As mentioned, prior to this action commenced in 2016 the CITIC Plaintiffs' previous action, CIV 3012 of 2012, over the CPOA, was on foot for several years before being consensually resolved under orders of Chaney J at 1 September 2015 just before a trial was to begin.
My assessment of the newly proposed CPI Increase arguments as proposed by the CITIC Plaintiffs to the effect that, a reasonable time for completion on the exercise of the First Option was no later than 13 October 2012, is that such arguments could have emerged to be ventilated years ago. I see no real reason why such temporal limit to CPI Increase arguments could not have been articulated to be put as a brake against an ongoing CPI Increase in this 2016 action under the first iteration of the CITIC Plaintiffs' statement of claim at the commencement of the present proceedings back in 2016. At that time in 2016, of course, it was still then some 3 1/2 years post October 2012, when the now suggested six‑month temporal period would have lapsed, post 13 April 2012.
Second, I cannot accept, with respect, that the CPI Increase amendment arguments now proposed for leave emerge as a result of anything substantively discussed earlier during the prior interlocutory hearings conducted for this action before me during 2020. I did, in contrast, accept that to be the case for the CITIC drilling cost amendments. But the position as regards limiting the duration of the CPI Increase, towards calculating the Purchase Consideration payable for the First Option under the CPOA, looks to emerge, only now, as something of an unexplained 'bolt out of the blue' ‑ within the Proposed FASOC arriving under Mr Rich's first affidavit.
Third, and correlatively in terms of a need to provide some level of proper explanation towards obtaining leave for such CPI Increase limit amendments, I will not accept that merely because (as Mr Rich says at par 8), the CITIC Plaintiffs say that they have determined it is 'necessary and desirable' that they seek to make these amendments) that this state of mind can carry any sort of meaningful explanation that properly delivers a persuasive factor bearing upon the court and upon which there might ground an affirmative exercise of discretion to grant leave to amend as regards the CPI Increase amendments. That as submitted explanation, on my assessment, is insufficient, applying case management principles, as canvassed by AON. The CPI Increase limit amendment issues present as only recently unearthed during the intensive preparations for the trial. That is just not a sufficient explanation to support the indulgence sought from the court in the short time before trial.
Fourth, and fundamentally, it looms as a potential injection of new controversial issues of fact, as regards an ascertainment of a reasonable period, which at the end I assess as being the overwhelmingly determinative factor against leave, on the basis that a pursuit of that new issue would, as I see it, add an extra battle field of fresh factual disputation needing to be resolved. Given the imminence of a trial it is not fair to expect Mineralogy and Mr Palmer to deal with that new factual issue in the limited preparation time available as between now and the commencement of the December 2020 trial.
Fifth, I do not, prima facie, assess these proposed CPI Increase amendment arguments as being as so overwhelmingly of merit as more likely than not as proving successful. Whilst arguable, a respectable counter position is that if the CITIC Plaintiffs would no longer tolerate from 2012 ‑ 2020 the suggested inordinate delays and CPOA breach of conduct of Mineralogy and Mr Palmer by not completing on the First Option, then they themselves, as 'innocent parties' to such CPOA breaches, could have terminated the proposed CPOA and the First Option as exercised, and then claimed loss of bargain breach damages. They have chosen not to do that over eight years. By deliberately not taking a termination stance after 13 April 2012 until now and by litigating instead so as to compel the performance and completion of the First Option by Mineralogy and Mr Palmer, so then must they themselves also perform and thereby accept the terms of the CPOA as being fully afoot as to 'Purchase Consideration'. In effect, they must take the rough with the smooth. If the rough delivers a CPI Increase up to the time of completion on the First Option, then so be it.
I only mention the last factor since an amendment proposed that is assessable on its face as being of overwhelming and demonstrable merit is one thing ‑ as opposed to an amendment for something merely respectably arguable.
Furthermore, given all the past, it is in the interests of justice that the December 2020 trial proceed at the dates allocated for and that this fundamental dispute resolution objective and imperative not be prejudiced. Consequently, I refuse the CPI Increase amendment application in respects as identified.