CITIC LTD -v- MINERALOGY PTY LTD [No 4] [2020] WASC 439 (1 December 2020)

1. This plea is challenged by the CITIC plaintiffs and was sought to be struck out by them on the basis that it is said to be a plea by Mineralogy which is not properly consequential in responding by way of a defence to the amendments made to the CITIC plaintiffs' further amended statement of claim of 10 November 2020 (folio document 129). I accept that the par 140(cc) defence plea, if allowed, will carry with it knock-on forensic consequences as regards: a) recent requests by Mineralogy already made for further discovery and justified by reference to that plea; b) documents sought on late subpoenas attempted to be issued by Mr Palmer; and c) (possibly) to the subpoenas issued by Mr Palmer to persons to give evidence at the forthcoming trial commencing on Monday, 7 December 2020.
2. I refer to the subject matter of the par 140(cc) plea as the 'Fulcrum', 'Fulcrum issues' or 'Fulcrum team issues'.
3. If the par 140(cc) defence plea by Mineralogy is not properly consequential in character, then leave is required for such an amendment to be allowed at this time.
4. The par 140(cc) defence plea by Mineralogy is said to go, relevantly, to the court's ultimate discretion to grant the declaratory and compulsive relief orders sought at the trial by the CITIC plaintiffs and relating to CITIC Ltd's admitted exercise of a First Option right under the CPOA, as explained in earlier reasons (see, CITIC Ltd v Mineralogy Pty Ltd [2020] WASC 223 published 18 June 2020, CITIC Ltd v Mineralogy Pty Ltd [No 2] [2020] WASC 252 delivered 3 July 2020, and CITIC Ltd v Mineralogy Pty Ltd [No 3] [2020] WASC 398 delivered 4 November 2020).
5. Under the CPOA a 'Further Company', if approved, will receive option rights from Mineralogy or Mr Palmer and thereafter become the subject of a takeover agreement in relation to its shares. This is akin to what occurred with the two earlier takeovers, ultimately by CITIC Ltd, towards the former Mineralogy subsidiaries Sino Iron Pty Ltd and Korean Steel Pty Ltd - after those corporations, whilst wholly owned subsidiaries of Mineralogy Pty Ltd, had perfected mining right and site lease agreements (MRSLA) with their parent corporation, Mineralogy, during March 2006.
6. By my assessment, the par 140(cc) amended defence plea by Mineralogy is not properly consequential to the recent amendments as introduced by the CITIC plaintiffs under their further amended statement of claim of 10 November 2020 (folio document 129). The Fulcrum or Fulcrum team issues appear to have fallen into focus under this defence plea after the recent Site Remediation Fund trial (SRF) (over which I presided as trial judge). But, in my assessment, the Fulcrum issues are insufficiently proximate to, or connected with, any issues concerning the upcoming CPOA trial and the completion of the exercised First Option thereunder, so as to be allowed as even arguably being consequential amendments under the Mineralogy defence.
7. Nor would I grant leave for Mineralogy nunc pro tunc to amend in accord with par 140(cc) at this time, so soon before the commencement of the trial next week.
8. On my assessment, this par 140(cc) plea is a 'Trojan Horse' that would, if allowed, serve only as a diversionary opening to permit the introduction of unproductive and tangential arguments over the CITIC plaintiffs' Fulcrum team which, on my assessment, would be wholly disproportionate in scale and utility to the CPOA residual issues presenting in the forthcoming trial which date back to the options exercise by CITIC Ltd on 13 August 2012. The residual trial issues which currently remain are few. They were were discussed in CITIC Ltd v Mineralogy Pty Ltd [No 3], commencing at [75] of those reasons. Things have moved on and narrowed even further since then concerning Balmoral Iron Pty Ltd, as I explain later, and the acceptance of that entity as the 'Further Company'.
9. If the CITIC plaintiffs were successful at the looming trial, essentially now limited to them first proving their readiness, willingness and ability to perform their obligations arising upon the exercise of the First Option and then, second, in relation to proving the correct amount of the First Option Purchase Consideration (which still sees unresolved the problematic issue of quantifying the CITIC drilling costs for the purposes of their subtraction from the ultimate Purchase Consideration). If those issues are met by the CITIC plaintiffs, only then will some further but wholly subsidiary issues present at the trial concerning the terms of any mandatory performance relief orders that would issue from this court, made by reference to CPOA terms.
10. Those issues would arise around the terms of the orders that the court would be asked to make concerning the content of various further company completion documents, including Project Documents, associated with completing that First Option transaction and the mandatory relief orders from the court - if the parties are unable to consensually resolve those terms. However, it is not, in my view, either necessary or helpful towards any such looming subsidiary exercise to venture at this stage too far down an open-ended path of introducing late issues sought to be introduced under par 140(cc) of Mineralogy's amended defence pleading of 20 November 2020.
11. Bearing in mind the proximity of the trial, I will strike out par 140(cc).
12. Order 1 then of my orders of 1 December 2020 which will issue will be in terms that par 140(cc) of the first defendant's (Mineralogy's) third further amended defence to the amended statement of claim filed 20 November 2020 is struck out.

Requests by Mineralogy for six further categories of further and better discovery in relation to documents pursuing the Fulcrum issue or Fulcrum team issue and related documents

1. By my assessment, it is too late in the day, given the proximity of the trial, even if some degree of relevance could be established, to be seeking such a wide array of further documents. Furthermore, many of these further documents are sought upon the basis of contended relevance by reference to par 140(cc) of Mineralogy's defence of 20 November 2020. Having now struck out that paragraph, any argued relevance in such documents is fatally undermined.
2. I also accept what is said in Mr Jeremy Peter Rich's affidavit affirmed 30 November 2020 (first Rich affidavit) (folio document 150) for the CITIC plaintiffs, particularly at his par 12, concerning the overwhelming volume of late work associated with embarking at this very late stage before trial by a search for documents of the character as requested by Mineralogy. Bearing in mind the proximity to the trial, the request is unduly oppressive and will not be allowed.
3. Consequently, my second order will be that the requests of Mineralogy for further and better discovery by the minute of 30 November 2020 in relation to the six further categories of documents is refused.

Multiple subpoenas issued or attempted to be issued by Mr Palmer

1. On Friday, 27 November 2020, Mr Palmer as second defendant filed a notice indicating that as from that date his former lawyers of record, Alexander Law, no longer act for him and that he was from then, for this litigation, self-represented (see folio document 134).
2. Likewise on Friday last, 27 November 2020, Mr Palmer looks to have successfully issued three subpoenas (folio documents 135, 138 and 140) to require the giving of oral evidence at the trial by those persons. Two of those persons subpoenaed are currently acting as legal representatives for the CITIC plaintiffs (Allens) ‑ Ms Melanie Rifici and Mr Gerard Woods. A further subpoena to give evidence in person was issued to the Director of Special Projects of CITIC Pacific Mining Management Pty Ltd, Ms Helen Dillon.
3. Also on 27 November 2020, Mr Palmer looks to have attempted to issue five further subpoenas to various entities seeking that they produce documents at or prior to trial. These were document subpoenas attempted to be issued to the first, second and third plaintiffs, to CITIC Pacific Management Pty Ltd and, as well, to Allens (see the documents initially filed as folio documents 143 ‑ 147). These proposed document subpoenas do not appear to have been accepted for filing at the court's registry. All the proposed document subpoenas look to be defective as lodged. Their subject matter in a considerable part looks to relate again to the Fulcrum or Fulcrum team issues that I have already said in the context of par 140(cc) of Mineralogy's defence pleading (now struck out) go nowhere relevantly. That is likewise the case for the second defendant, Mr Palmer, as regards the irrelevance of such Fulcrum material in the forthcoming trial.
4. By my assessment, the five document subpoenas seeking production as proposed to be issued by Mr Palmer should not be allowed or, if issued, should be set aside as not serving any legitimate forensic purpose. They would, if allowed, also, in my view, lead to a likely circumvention of the discovery process in this action to date and which was completed some time ago. Discovery in this action was, at the time, a thorough, elaborate and time consuming interlocutory step. The five subpoenas as proposed to be issued by Mr Palmer to the three CITIC plaintiffs or to their lawyers or to related entities, on my assessment, would illegitimately and at a very late stage circumvent the discovery process and this is impermissible. Moreover, the Fulcrum or Fulcrum team issues as are sought to be ventilated at this late time are so remote in terms of any relevance to looming trial issues that the subpoena exercise, like the attempted requests for further and better discovery made by Mineralogy in very similar terms, cannot be permitted. To allow them would be oppressive. They would also constitute a vexatious abuse of the process of the court.
5. Consequently, there will be no leave granted in respect of the five document subpoenas for production as sought to be issued by Mr Palmer.
6. It appears that during the course of these reasons being prepared, Mr Palmer has refiled the five subpoenas seeking that documents be produced. A brief examination reveals that these new subpoenas (folio documents 162 ‑ 166) are substantially the same in content and form, if not identical, (albeit with an amended return date of 10 December 2020) to those rejected on 27 November 2020. However, my determination not to grant leave to Mr Palmer to file the subpoenas stands and the subpoenas which are newly folio documents 162 ‑ 166 will be set aside.
7. As regards the three subpoenas to give oral evidence as now issued by Mr Palmer to Ms Rifici, Mr Woods and Ms Dillon, I will not, for the moment, set those aside. The subject parties will still be required to attend to give evidence at the forthcoming trial. Unlike for the document production subpoenas, it is difficult for me to render a reliable pre‑trial assessment as to the utility of those persons' evidence until the trial. I note that no witness statements or outlines have been exchanged from either of the defendants concerning these persons. I do indicate, however, for the purposes of the looming trial, that if the intent of the subpoena exercise as regards these three persons by Mr Palmer is to put questions to them concerning or associated with Fulcrum or the Fulcrum team issues, then the position is that if such questions are objected to, as is likely, I will likely disallow such questions as being wholly irrelevant to the trial.
8. I will, therefore, make no order concerning the three subpoenas to attend to give oral evidence at this time, pre-trial.
9. However, in relation to the five attempted document production subpoenas to the extent that leave is required for them to be served, such leave is refused. Furthermore, if leave were sought to correct their current deficiencies which prevent them from being accepted for filing, then such leave is also refused. The five subpoenas refiled on 1 December 2020 will also be set aside. That will constitute my third order.

Mr Palmer's proposed amended defence and minute of counterclaim as submitted on Monday, 30 November 2020 (folio document 152)

1. This proposed pleading also requires leave in order to be accepted at this very late stage.
2. What is before me is Mr Palmer's 53‑page proposed pleading filed by him on 30 November 2020 (folio document 152), whilst acting as a self‑represented litigant.
3. Plainly, the amendments sought to be carried under this further pleading from Mr Palmer are not consequential amendments.
4. As seen, they would seek to ventilate Fulcrum or Fulcrum team issue type arguments. These, of course, are simply irrelevant distractions. To the extent that Mr Palmer's proposed fresh pleading would seek to pursue other defences or, indeed, raise a fresh counterclaim, then the scale of these proposed amendments as sought needs to be balanced by the timing - being only one week out from the commencement of the trial. Bearing in mind the extensive case management history of this action, found explained across my earlier three tranches of reasons and already delivered this year, this dictates a conclusion that a late pleading of this nature simply cannot be accepted. Consequently, I will order that leave for Mr Palmer to file his proposed amended defence, which is currently folio document 152, be refused. They would, if allowed, see the trial derailed from proceeding next week.
5. It will be remembered that this litigation was commenced back in 2016 and that Mr Palmer has been a party to it from inception as second defendant. Across the interlocutory history of this action Mr Palmer over time has filed, through legal representatives then acting for him some three prior defence pleadings. The first was filed on 13 January 2017 (folio document 13). There followed his subsequent pleading, (folio document 36) by Mr Palmer by way of amended defence on 31 May 2018. Currently, Mr Palmer's defence pleading is to be found as folio document 49, filed on 26 November 2018.
6. Under all of Mr Palmer's prior defence pleadings he has only filed very brief personal defence pleading documents, in effect, adopting just the same defence stance of Mineralogy. For instance, the amended defence for Mr Palmer, as second defendant, filed by his then lawyers, Alexander Law, of 26 November 2018, simply provides:
   1. The second defendant repeats and relies on the matters pleaded by the first defendant [ie, Mineralogy] in its amended defence to the amended statement of claim dated 19 March 2018 and amended counterclaim as if they were set out in this pleading.
   2. For the reasons pleaded by the first defendant [ie, Mineralogy] in its amended defence to the amended statement of claim dated 19 March 2018 and amended counterclaim, the second defendant denies that the plaintiffs are entitled to the relief claimed.
7. Mr Palmer's change of legal representation position as from Friday last, 27 November 2020, seeking to act in person cannot be used to create a forensic loophole in order to allow him to introduce, unduly late, a raft of new and diverting trial contentions which ought to have been the subject of an introduction as defence issues much earlier. To allow Mr Palmer's late proposed pleading would effectively be to seriously impede and likely derail the feasibility of completing the forthcoming trial as programmed.
8. Consequently, I am only prepared to allow Mr Palmer to amend his defence so that it can again incorporate by reference for him, as he has done on three prior occasions whilst he was then legally represented, the same matters as are raised under the defence of Mineralogy - which corporation is, in effect, his alter ego. Consequently, my fourth order will be:

4. (i) Leave is refused for the second defendant to file the further amended defence of 30 November 2020 (folio document 152).

(ii) Leave is granted for the second defendant to amend his current defence pleading of 26 November 2018 so that it may refer to and adopt by reference the matters raised by the first defendant under its pleading of 20 November 2020 as it stands (folio document 132).

The CITIC plaintiffs' application to amend their current statement of claim

1. The CITIC plaintiffs' minute of proposed second further amended statement of claim of 30 November 2020 is found appended to Mr Jeremy Peter Rich's second affidavit affirmed 30 November 2020 (folio document 158) (second Rich affidavit) as attachment JPR-12.
2. As explained by senior counsel for the CITIC plaintiffs, Mr Karkar QC, during oral argument at the directions hearing on 30 November 2020, these further amendments (highlighted in green) essentially relate to end relief orders (see prayer for relief AX) at the trial, should the CITIC plaintiffs be successful. These amendments are said to be necessary in light of the CITIC plaintiffs' 29 November 2020 as communicated conditional acceptance of Balmoral Iron Pty Ltd as the further company for the purposes of completing the First Option, under the CPOA. The communication of that conditional acceptance of Balmoral Iron Pty Ltd only occurred on Sunday, 29 November 2020 by the CITIC plaintiffs as they completed a due diligence exercise in respect of that corporation. Balmoral Iron Pty Ltd had been proposed, as seen, to be the Further Company under the CPOA under the terms of the 22 September 2020 communication of Mineralogy and Mr Palmer ‑ which may be found set out at [54] of CITIC Ltd v Mineralogy [No 3].
3. Proposed new pleas as pars 66B, 66C, 66D, 66E and 66F, along with further proposed changes under pars 67A(iii), 67(b) and 67(e) are, in the scheme of things, essentially in the nature of clarification towards the issue of end relief and are of a small forensic magnitude overall.
4. I assess all these proposed further pleas, as proposed, to be essentially directed at the terms of the mandatory relief sought from the court should the CITIC plaintiffs be successful in relation to affirmative orders concerning Balmoral Iron Pty Ltd as the Further Company for the purposes of a completion upon the exercise of the First Option ‑ which occurred as long ago as 13 April 2012.
5. I assess these further changes as essentially of utility to the court's consideration, if that point is reached, of the terms of relief and essentially, as machinery amendments required in order to facilitate the trial exercise as regards relief concerning Balmoral Iron Pty Ltd, should that be required.
6. Essentially then, the fifth order that I will make will be that there is leave for the CITIC plaintiffs to amend their statement of claim in accordance with the minute of proposed second further amended statement of claim dated 30 November 2020, which is JPR-12.

The CITIC plaintiffs' proposed reply amendments under their minute of 30 November 2020, which is JPR-9 attached to the second Rich affidavit

1. The position in respect of these proposed amendments to the reply of the CITIC plaintiffs is that, again, they are essentially responsive to Mineralogy's current iteration of its defence (of 20 November 2020) ‑ save that the reply pleading ought, according to my orders of 10 November 2020, have been filed and served by 25 November 2020. Consequently, further leave is now required for this reply pleading as proposed.
2. By my assessment, there should be an extension of time and leave allowed to enable this proposed reply pleading of 30 November 2020 attached to the second Rich affidavit as JPR‑9 to be filed. To the extent that there are small aspects of this reply pleading which are not directly responsive to Mineralogy's defence, they only deal again with the emerging Balmoral Iron Pty Ltd issue - concerning it being accepted as the Further Company to complete upon the First Option. That issue has developed only lately, by reason of events occurring as late as Sunday, 29 November 2020, in terms of the conditional acceptance then of Balmoral Iron Pty Ltd as a performing party to that end in the wake of a due diligence exercise by the CITIC plaintiffs.
3. My sixth order then will be that there should be leave for the CITIC plaintiffs to file and serve an amended reply in terms of the minute of reply to the third further amended defence appended to the second Rich affidavit as JPR-9.

The subpoena to produce documents of 26 November 2020 issued by Mineralogy to the Department of Jobs, Tourism, Science and Innovation care of its acting Director General (folio document 133)

1. At the directions hearing of 30 November 2020, Mr Sefton SC, instructed by the State Solicitor's Office, attended on behalf of this document subpoena recipient.
2. Apparently, there has already been some dialogue between the legal representatives for Mineralogy and the State Solicitor's Office concerning issues around this subpoena and the response to be provided. As seen, it seeks a range of documents across a period between 26 September 2012 and 25 November 2020 recording certain communications or meetings.
3. The parties should continue their discussion by way of conferral in relation to this subpoea being addressed. As regards the documents sought under subpars (d) and the 'inquiries or requests regarding the addition of a further company to the Mineralogy State Agreement and the manner in which that would be affected', the conditional acceptance of Balmoral Iron Pty Ltd, which corporation is already a party to the Mineralogy State Agreement (as defined in subpar (c) of the subpoena) gives rise to a potentiality that such inquiries or requests may prove redundant for the purposes of trial. That is also the case in respect of of subpar (c) as regards the 'addition of a further company'.
4. If the parties are unable to consensually resolve any residual issues between them concerning the subpoena, then I am content to deal with the matter upon the basis that any residual issues of contention should be held over and dealt with proximate to the commencement of the trial on 7 December 2020. Consequently, I will make no orders in respect of this subpoena at the present time.

1. Orders will issue giving effect to my above determinations.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.