CITIC LTD -v- MINERALOGY PTY LTD [No 5] [2021] WASC 89 (30 March 2021)

CITIC LTD -v- MINERALOGY PTY LTD [No 5] [2021] WASC 89 (30 March 2021) - WASC 2021 case summary — Zoe

[9]

After 1 December 2020, following publication of CITIC v Mineralogy [No 4], the disputed trial issues between the parties (with a few hiccups along the way) continued to narrow. By commencement of the trial, all former issues around what had been the initially qualified acceptance by CITIC towards Balmoral Iron Pty Ltd (Balmoral Iron) as the defendants' nominated corporation, were resolved. Balmoral Iron is the company proposed by the defendants to be the CPOA's First Option subject Further Company. By a purchase of all its shares (by the fourth plaintiff, Cape Preston Resource Holdings Pty Ltd (CPRH), a nominated corporate vehicle and wholly owned subsidiary of CITIC), Balmoral Iron would become another corporation (ultimately) wholly controlled by CITIC.
At the time of the trial's commencement, there had been communicated an unequivocal acceptance by CITIC of Balmoral Iron for the purpose of the exercise of the First Option under the CPOA, essentially to acquire the shares in Balmoral Iron from Mineralogy. Effectively, that transaction would see an acquisition of extensive and valuable contractual rights as held by Balmoral Iron (granted to it by Mineralogy) - to a further billion tonnes of magnetite ore in Area A and to other contractual rights. All these valuable contractual rights had earlier been obtained by Balmoral Iron from Mineralogy, at the time when the corporation was a wholly owned subsidiary of Mineralogy.
By the commencement of the trial, the parties had also resolved a former dispute over a required formal proof of the readiness, willingness and ability of the four plaintiffs (who I refer to jointly as 'the CITIC plaintiffs') to perform their obligations on the takeover side of the CPOA's First Option envisaged transaction. A major aspect of that performance obligation was to render the payment of the Purchase Consideration. Satisfaction of the 'readiness' requirement follows necessarily upon the defendants at the commencement of the trial both supporting and advocating that specific performance orders should issue against them from the court. Prior to that, the defendants' formal position under their pleaded defences had been that such relief was unnecessary - since it was put that post 22 September 2020, Mineralogy had stated that it was willing to perform.
Nevertheless, that stance changed by the trial. Mineralogy and Mr Palmer both said through senior counsel at the trial, that orders for specific performance should be made by the court, as a result of the CPOA's First Option rights being implemented through Balmoral Iron (as the Further Company) and which was to be 'taken over' by, in effect, its shares being purchased by CPRH from Mineralogy. Consequently, completion of the First Option would deliver to CITIC control of Balmoral Iron via another intermediary holding corporation subsidiary of CITIC (ie, CPRH).
So then, by the end of the trial, the residual issues of disputation really only concerned arguments over the precise terms of specific performance orders to be issued by the court.
Nevertheless, in this respect, some key issues over details still divided the parties.
Consequently, there emerged at the trial, a series of mini drafting and terminology disputes. Such disputes were over various express terms proposed to be included in the CPOA defined Project Agreements - being agreements to which, under the CPOA, Balmoral Iron must be party, or if not, must become a party, before my completion on the First Option takeover transaction for Balmoral Iron.
There also presented a number of drafting disagreements to be resolved over express terms in the proposed Takeover Agreement, being the contractual mechanism under which CPRH is to acquire all the shares in Balmoral Iron from Mineralogy.

[38]

CITIC's ultimately unconditional acceptance of Balmoral Iron as the CPOA's Further Company, carried with it some further positive trial repercussions. There had once been a fierce dispute over ascertaining the precise quantum of CITIC's drilling costs by reference to its CPOA Drilling Obligation. As seen, the precise amount of those drilling costs, once ascertained, is to be subtracted as an input factor used in deriving the ultimate Purchase Consideration amount to be paid to the Seller (Mineralogy being the agreed Seller for the purpose of the First Option) as the acquisition price under the (exercised) First Option for the shares in the Further Company.
However, what had long loomed as a wasteful, messy and complex drilling costs quantification exercise, ultimately was no longer required at trial. That result followed upon the position ultimately reached as to CITIC's unconditional acceptance of Balmoral Iron as the agreed Further Company. A settled upon figure is now agreed for CITIC's drilling costs.
It is important at this stage to highlight a change in Mineralogy and Mr Palmer's defensive positions, as to the performance of the First Option, as reflected in a communication of 22 September 2020 (Trial Bundle, vol 4, tab 197). This pivotal communication is set out and explained in CITIC v Mineralogy [No 3] at [16] - [17] and [50] - [55]. It will also be remembered that this communication was later attempted to be qualified by the defendants - so as to be said to have been conditional upon the CITIC plaintiffs' acceptance of only Balmoral Iron as the Further Company. More disputation erupted over that suggested qualification by Mineralogy to its 22 September 2020 communicated stance.
For a time after 22 September 2020, there had been a major looming pre‑trial issue over the existence of that suggested limitation of the Further Company, to being only Balmoral Iron. This gave rise in turn to late pleading amendments and then, to further disputed issues around rebuttal arguments as advanced by the CITIC plaintiffs, challenging Mineralogy's attempted qualification to its position. This introduced more issues as to alleged waiver, acquiescence and estoppel - all put against Mineralogy and Mr Palmer - around the issue of the CITIC plaintiffs needing to laboriously prove at a trial the precise level of the CITIC drilling costs as the negative input component in ascertaining the Purchase Consideration - if Balmoral Iron was not accepted by CITIC as the Further Company under the CPOA.
However, the eventual unconditional acceptance by CITIC of Balmoral Iron as the Further Company just before the trial began, removed all need for that otherwise wasteful drilling costs quantification exercise to be undertaken.
An agreed level of CITIC's drilling costs under its Drilling Obligation came to be accepted by Mineralogy and Mr Palmer at the trial. The sum as agreed between the parties is $US135,562,053 (see the CITIC plaintiffs' second further amended statement of claim filed 1 December 2020 (2FASOC), par 67B).

[44]

The extensive prior litigious history underlying the First Option CPOA transaction in the present action, and indeed, in an even earlier action begun and then settled within this court (CIV 3012 of 2012 - see CITIC Pacific Ltd v Mineralogy Pty Ltd [2014] WASC 358), sees the CITIC plaintiffs pursue orders against Mineralogy, to obtain specific performance relief concerning the ordered enforcement of the rights and transactions arising out of CITIC's exercise of its CPOA First Option on 12 April 2012.
As now seen, much has emerged and changed across 2020 to bring the disputing parties a lot closer. Both sides in the end advocate at the trial for the court to issue specific performance orders. As I explained, Mineralogy's former counterclaim seeking significant loss of CPOA bargain breach damages was taken 'off the table', as a further result of the Mineralogy 22 September 2020 communication.
So also to depart the disputation horizon was Mineralogy's former contention that there should be no orders for specific performance by reason of a termination of the CPOA, or as to its contended frustration, or the allied defensive contentions to justify non-performance of the First Option transaction.
As now seen, the previously mentioned discord concerning Mineralogy and Mr Palmer putting CITIC and the other plaintiffs to formal proof of their readiness, willingness and ability to perform, is also no longer controversial. No active submission was put for Mineralogy and Mr Palmer during the trial seeking to advance that contention.
The present action and the earlier 2012 CITIC action as brought in this court over First Option CPOA rights both, in effect, were brought by CITIC, so as to compel Mineralogy and Mr Palmer's adherence to the performance of the sale and transfer obligations arising under the CPOA, as a result of CITIC's exercise of its First Option on 12 April 2012. Given CITIC's persistent and ongoing litigation to that end, the readiness and willingness of the CITIC plaintiffs to complete and perform all their own CPOA First Option obligations could hardly be challenged. That leaves only the ability to perform, which, in effect, distils down to the financial ability of the purchaser on that side of the transaction to complete.
So, I briefly turn to examine the financial wherewithal of CITIC and its subsidiary, CPRH, to complete on the takeover transaction by purchasing from Mineralogy the shares in Balmoral Iron as the Further Company for the Purchase Consideration. Upon all the trial evidence, I am well satisfied that the CITIC plaintiffs' financial capability extends to funding as required the completion on the First Option transaction.
Senior counsel for the CITIC plaintiffs, Mr Karkar QC, submitted at trial that the envisaged exercise price payable on a completion (in the realm of $US141,746,916) was, essentially, a mere 'bagatelle' for CITIC (which obviously stands fully behind the purchase obligations of its subsidiary, CPRH) (see ts 427). The description is not inapt.
As will be seen later, some minor issues have emerged over a challenged requirement for there to be dual deposit tranches payable, prior to completion (arising out of the CPOA applying the template of the Korean [Steel] Takeover Agreement, which in that earlier transaction had required dual tranches of deposit).
But such deposit sums, dual or otherwise, only present as a mere financial 'picayune' of a bagatelle - viewed in the overall context of CITIC, an international corporate behemoth of the Hong Kong Stock Exchange.
Consequently, the former major issues which divided the parties, spanning from April 2012 and across the course of this matter's extensive 2020 interlocutory history, now find themselves resolved by the time of the trial.

[50]

The CPOA's explicitly defined Project Agreements next need to be assimilated with the requirements of cl 3.6(c) of the CPOA.
The text of cl 3.6(c)(i) and (iii) address Mineralogy's obligation to ensure, no later than 20 Business Days after the 'Exercise Date' (relevantly here, 13 April 2012), that the Further Company (now relevantly, Balmoral Iron) becomes a party to the 'necessary Project Agreements'.
No issue is raised by either side at trial against the issuance of specific performance relief by reason of what is now an expiry of almost nine years beyond that observed '20 Business Days' timeline, as is specified in cl 3.6(c)(i) (beyond 13 April 2012) for the 'necessary' Project Agreements to be perfected. See also CPOA cl 3.6(c)(iii) and then cl 3.6(f) as to the seven (7) further Business Days period, as is there specified.
By cl 3.6(c)(iii), Mineralogy is obliged to give CITIC written notice it 'has satisfied' its obligations (relevantly under CPOA subclause 3.6(c)(i)) 'as soon as possible after those obligations are satisfied'. However at the trial in December 2020, there were still multiple unresolved issues between the parties over some disputed terms in what remained as still unfinalised proposed Project Agreements concerning Balmoral Iron as the CPOA's Further Company.
A CPOA provision of some surrounding interpretive significance in the residual disputes is CPOA Recital 3 vis‑à-vis the content of the as envisaged Project Agreements for the Further Company. CPOA Recital 3 states:
1. Seller [relevantly for this case accepted to be Mineralogy, not Mr Palmer] has agreed to grant CITIC options to acquire further allocations of resources or companies who have such allocations of resources subject to the Project Agreements in each case in substantially the same terms as the Project Agreements varied to comply with the Project Qualifications in accordance with the terms and conditions set out in this Agreement. (my emphasis in bold)
There remains a divide between the parties over the contents (ie, express terms) in three of the four Project Agreements for Balmoral Iron and over some terms in the Takeover Agreement, concerning Balmoral Iron. The divide is reflected in the parties' pleadings.

[60]

Disagreements between the parties over the contended proper CPOA construction, or over an alternately contended ad hoc CPOA implied term, present as somewhat conceptually sterile, unless they are traced back to their potential pragmatic rival drafting outcome ramifications.
What emerges is a drafting dispute of degree. In December 2020 the dispute unfolded in an environment of very considerable mutual suspicion and distrust - raised over almost every different word as proposed by the other side.
Ultimately, the rival end points of the parties' contested drafting positions need to be found and then measured against the parties' rival positions vis‑à‑vis differing aspects of rival proposed terms in three (of the four) CPOA required Project Agreements that are 'necessary' for the purpose of any completion by Balmoral Iron upon the First Option transaction. The same goes for the disagreements over proposed rival terms of the Takeover Agreement.
The CITIC plaintiffs accept that the terms of the Project Agreements for Balmoral Iron must be in 'substantially' the same terms as the (Sino Iron) Project Agreements. But beyond that, they further submit as a matter of either the contended true meaning of the CPOA (alternatively, reaching the same end point by way of an ad hoc implied term they submit can be found in the CPOA), that a modification and adaption of the template Project Agreements (being those of Sino Iron) is necessary in December 2020 in two important, but disputed, respects.
First, the CITIC plaintiffs seek to modify and adapt the Project Agreements, so as to essentially bring them in line with the 'state of Project development' at the time of entry into the Takeover Agreement (see the 2FASOC).
Second, the CITIC plaintiffs seek to modify and adapt the template Project Agreements to what is a joint operation of the Project by Sino Iron and Korean Steel (as is currently the position) and with the to be introduced CPOA Further Company (ie, Balmoral Iron) (see 2FASOC).
However, the defendants disagree with the breadth of any such contended modification and adaption of the template Project Agreements (see par 43 of the first defendant's opening submissions). Their rival constructional approach to the CPOA as regards necessary Project Agreements and their content is narrower. They would limit the scope of any non‑consensual departures away from the Sino Iron Project Agreement templates to a bare minimum. They submit the word 'substantially' is more referrable to the content of the new Takeover Agreement (not the Project Agreements) and even then, only allows for departures from the chosen takeover template (this time to Korean Steel Takeover Agreement), essentially as found catalogued in the CPOA at Schedule 3 (see cl 3.6(f)).
An exercise in contrasting different textual language used under CPOA Recital 3 with cl 3.6(c)(i) and (iii) is extended to further terminology found used in cl 3.6(f) as regards the Takeover Agreement being:

[66]

The CITIC plaintiffs submit as a matter of proper construction, the only sensible commercial conclusion is that the 'necessary' CPOA Project Agreements, to be entered into by the Further Company (Balmoral Iron), cannot be in exactly the same terms as the existing template Project Agreements consummated with Sino Iron of many years ago. Rather, they submit, the agreements' content may be varied in necessary respects such that overall, they are left in substantially the same terms as those nominated Project Agreements (CITIC plaintiffs' closing submissions at pars 73 and 76). The CITIC plaintiffs primarily invoke and rely on Recital 3 and then, cl 3.6(f) of the CPOA to support their submission. Such provisions as seen, use the terminology 'substantially the same terms' and 'substantially the same form' respectively.
The CITIC plaintiffs contend Recital 3, whilst not overriding the operative provisions of the CPOA, provides a 'strong context' that helps explain the CPOA parties' underlying objective intent, which contextually gives meaning and insight to the phrase 'same terms' - as being flexible enough to accommodate various drafting changes as advocated by the CITIC plaintiffs to the relevant template agreements (CITIC plaintiffs' closing submissions, par 71).
The CITIC plaintiffs submit the defendants' narrower invocation and reliance on the phrase 'in the same terms' found in CPOA cl 3.6(c)(i) and in the definitions of 'Further Company' and 'Project Agreements', is misdirected. This is, they submit, for several reasons.
First, such terminology does not mean the Further Company will enter (project) agreements in exactly the same terms. Rather, some changes are both necessary and required. It would not be possible for the Further Company to even become a party to the relevant Project Agreements unless some changes were made (CITIC plaintiffs' closing submissions, par 68).
Secondly, the CITIC plaintiffs argue by their closing submissions (at par 69) that undue emphasis of reliance on those 'same terms' terminology is inappropriate. This is because the definitions are subject to and must vary, depending on context (see CPOA cl 1.1 which states that the definitions apply 'unless the context otherwise requires').
On the other hand, Mineralogy and Mr Palmer counter contend that once the very precise variation guidance unlocked from CPOA Schedule 3, as to the departures from the Takeover Agreement template, then the drafting exercise for the (Balmoral Iron) Takeover Agreement is just as tightly controlled and confined as it is for the terms of the necessary Project Agreements to be entered.
For the envisaged Takeover Agreement, CPOA Schedule 3 relevantly states:

[68]

The defendants argue that, viewed objectively, there is a deliberate CPOA drafting distinction as between the language used in respect of the Project Agreements and the language as deployed in respect of the Takeover Agreement.
It is pointed out that CPOA Schedule 3 prescribes use of the language 'same ... form', not 'same terms'. Furthermore, it denotes changes as being 'exceptions', rather than 'amendments'. This, it is argued, simply displays the parties' objective CPOA intent that the (Balmoral Iron) Takeover Agreement would ultimately adopt the same form and structure as the Korean Steel Takeover Agreement, with only the exceptions as found in Schedule 3 being the limited variations permitted from the template (defendants' closing submissions, par 76).
Moreover, it is argued for the defendants that the use of words 'in the same terms' in the definition of 'Project Agreements' communicates a deliberate choice made by the parties seeking to promote consistency and certainty for the contractual relationships sought to be preserved (defendants' closing submissions, par 50). The defendants submit it would not have been the parties' objective intent to renegotiate (existing) Project Agreements in the future by having regard to uncertain and ambiguous notions such as the 'state of Project development', or the 'joint operation of the Project', as is now contended by the CITIC plaintiffs (defendants' closing submissions, par 50).
Specifically towards CPOA Recital 3, the defendants submit that the words 'substantially the same terms', must be read in conjunction with the further language 'varied to comply', which renders it clear that the deployed word 'substantially' is not some free-standing contextual indicator to enable variations that would go beyond those required to comply with the Project Qualifications in CPOA Schedule 2 (see defendants' closing submissions at par 57).
Having outlined the parties' rival arguments over an interpretive CPOA divide, I must turn to discuss some of the unique features of this divide.

[69]

At the outset, I point to a late nomination and the eventual acceptance of Balmoral Iron as the proposed Further Company, to be the subject of the CPOA's First Option. This is a nomination of a corporation that is, ultimately, fortuitous. I also note that an earlier nomination of the very same corporation as the Further Company was previously attempted by Mineralogy on 11 July 2012. But that nomination was not accepted immediately and was then withdrawn on 12 September 2012 by Mineralogy - see the 2FASOC pars 29(b) and 36(a). Those pleas are admitted under the 3FAD par 37.
The corporation, Balmoral Iron, looks to have long been held as a Mineralogy subsidiary in prior years, including at the time the CPOA was perfected, on 22 October 2008.
The corporation Balmoral Iron is seen as explicitly identified under the definition found in the CPOA at cl 1.1, by reference to the name 'Balmoral', as meaning 'Balmoral Iron Pty Limited'. There is then found (at CPOA cl 2.12 and cl 2.13) some express covenants addressing the corporation Balmoral Iron.
Historically, it had looked for some time that Balmoral Iron might become a subject of the CPOA parties' second Takeover Agreement. That prospect turned out not to be the case. In the end, the corporation Korean Steel became that nominated takeover subject in 2007. But in October 2008, the CPOA, by cl 2.12 and cl 2.13, still afforded to Balmoral Iron (as a Mineralogy subsidiary corporation) some special treatment in respect of its as promised preservation, and its isolation against other dealings. So this particular corporation was already known to the parties at the time the CPOA was perfected in 2008.
Second, Balmoral Iron is expressly referenced under the definition of State Agreement at CPOA cl 1.1. At 2008, Balmoral Iron was already a subsisting party to the State Agreement the subject of the Iron Ore Processing (Mineralogy Pty Ltd) Agreement Act 2002 (WA). That remains the position.
Accordingly, many diverting CPOA pre‑requisite issues for the Further Company that may otherwise have arisen are, as matters transpire for Balmoral Iron, not obstacles to a completion on the First Option. This includes Mineralogy meeting its promise to have the Further Company become a party to the State Agreement (see cl 3.6(d), cl 3.6(e)(i) and cl 3.6(g)), if it is not. Balmoral Iron meets that requirement already.
Third, it is a historic fact that Balmoral Iron, at the time of the CPOA in October 2008, was already privy to its own separate MRSLA instrument of 21 March 2006, made with Mineralogy (Trial Bundle, vol 4, tab 201) and, as well, party to a Facilities Deed of 26 October 2001 with Mineralogy (Trial Bundle, vol 4, tab 199) and, as well, party to a Fortescue Projects Consolidation Agreement (Trial Bundle, vol 1, tab 3). These are, of course, equivalent to the genre for three of the four required Project Agreements.
These prior perfected agreements (akin to Mineralogy's Project Agreements entered with Sino Iron) have long been in place as between Mineralogy and Balmoral Iron and certainly were all in place at the time of the perfection of the CPOA in October 2008.
This is a pragmatic consideration to bear in mind when considering the chosen CPOA terminology of cl 3.6(c)(i) for 'necessary Project Agreements'. The word 'necessary' is of some significance, viewed vis-à-vis Balmoral Iron. That is by contrast, say, to another corporate entity nominated as the CPOA's Further Company, but which was not (at October 2008) already privy to such types of genres of agreement with Mineralogy. [Remembering always, of course, that the CPOA's Project Agreement template is to the Sino Iron Project Agreements.]
Where Project Agreements of the CPOA definition genre already exist, as they clearly did, for Balmoral Iron vis-à-vis Mineralogy at the time of the CPOA, is there any need to 'reinvent the wheel'? There may, of course, be some need for some required alignment of terms in those existing Balmoral Iron agreements - to better perfect the analogue template required by the CPOA to Sino Iron's Project Agreements, if there proves to be any difference of real substance with the Balmoral Iron genre of existing Project Agreement.
But otherwise, what is a fortuitous position by an accepted nomination of Balmoral Iron as the Further Company exists in that a CPOA required Project Agreement landscape is already well advanced for Balmoral Iron as a matter of history.
Finally, I must identify a specific aspect of the CPOA's required Takeover Agreement. As seen, CITIC, as the ultimate parent corporation incorporated in Hong Kong, will be indirectly acquiring control of the shares in Balmoral Iron under a Takeover Agreement. Upon this proposed acquisition, there is, correlatively envisaged and stipulated by the CPOA, a need for the approval of the Foreign Investment Review Board (FIRB) by reason of requirements under the Foreign Acquisitions and Takeover Act 1975 (Cth) (as amended).
As an historical fact for the Cape Preston Project, a consent of the Treasurer of the Commonwealth had to be given for the first takeover transaction - being CITIC's takeover of Sino Iron (see the Sino Iron Takeover Agreement cl 2.1 - Trial Bundle, vol 1, tab 13). That first takeover was perfected at 6 July 2006.
There ensued, of course, what was the second and related takeover of Korean Steel by CITIC in 2008, in relation to the same Cape Preston magnetite ore Project. Treasury approval took longer for this takeover transaction, but was eventually forthcoming for the Korean Steel Takeover Agreement, executed 1 November 2007 (Trial Bundle, vol 2, tab 17). The Korean Steel takeover transaction came to be completed the same day as the CPOA was perfected, on 22 October 2008.
The 2007 Korean Steel Takeover Agreement itself displays what is a draft version of the CPOA as Schedule 3. That Takeover Agreement was perfected almost a year prior to the CPOA's eventual perfection. That was the same day the Fortescue Coordination Deed was perfected as between Mineralogy, Sino Iron, Korean Steel and CITIC (Trial Bundle, vol 2, tab 24).
Thus, what now looms in December 2020 as a third Cape Preston Project takeover transaction, as envisaged under the 2008 terms of the CPOA, was in truth always in prospect by reason of the Korean Steel Takeover Agreement and the envisaged CPOA.
With those observations made, I proceed to the contractual dispute in question.

[71]

On the proper construction of the CPOA, assessed by having regard to its relevant text, context and its objectively ascertained commercial purpose at 22 October 2008, I cannot accept the constructional outcomes as they are propounded by the CITIC plaintiffs under 2FASOC pars 17B and 17C.
In particular, I have great difficulty with what I respectfully assess as an unduly loose and open-ended notions of a potential future adaption by a modification of terms in the (Sino Iron) template Project Agreements to align them, as CITIC would say, 'to the state of Project development at the time of entry of those agreements' (contended under 2FASOC, par 17B).
I also hold a like conceptual difficulty with the conjoint further element to this suggested interpretation of the CPOA (which is an entire agreement) with a contended adaption and modification to meet the 'joint operation of the Project by Sino Iron, Korean Steel and the Further Company' (2FASOC, par 17C).
All in all, I assess there to be an unacceptably high measure of ambulatory fluidity around the notions of adapting Project Agreements to a 'state of Project development', where such terms are not agreed and where the CPOA and the chosen templates thereunder lay down their content (terms) in very considerable express detail. There is an inconsistency between the two approaches. The proposed CITIC plaintiffs' looser formula looks ripe for a generation of subjective disputation. This is especially so when the as contended CITIC plaintiffs construction must be measured against an observable and very tightly controlled adaptation framework laid down under the text of the CPOA - which explicitly specifies what changes will be permissible or impermissible - even deploying CPOA Schedules 2 and 3 to minutely address such matters.
Viewed objectively at October 2008, questions over appropriate Project Agreement modifications, needing to be measured against the state of future Project development at a particular time into the future post 22 October 2008, are porous. Again, this notion is out of philosophical alignment with an otherwise tightly circumscribed amendment potential to be seen textually addressed by the CPOA.
Assessing the envisaged Takeover Agreement for the Further Company (Balmoral Iron), I would reach the same position, as regards the similarly structured 2FASOC par 17C CPOA interpretative outcome concerning modification and adaption of that agreement. A like negative conclusion must also be reached for the suggested 'joint operation of the Project' outcome adaption and modification.

[76]

Having regard to the defendants' previously mentioned constructional arguments, the end position I have reached is that their tighter CPOA 'same terms' construction for the content of the necessary Project Agreements, is a closer fit to the approach required than the looser approach proposed by the CITIC plaintiffs. Ultimately however, what the defendants contend is still, in my view, a shade too rigid to apply to the CPOA, given its text.
In the end, my overall preferred construction as to the suggested adaption and modification of express terms found in necessary template Project Agreements for the Further Company (under CPOA cl 3.6(c)(i)) is that the approach must align with the modification approach used for variations to the Takeover Agreement for the Further Company, when required to be entered by the relevant parties, under CPOA cl 3.6(f).
Evaluated in the overall CPOA commercial instrument context, I would reject the contended constructional differentiation as between the Project Agreements and the Takeover Agreement sought to be advanced by Mineralogy. The argument is built around a CPOA differentiation in allowable scope for variations away from the Project Agreement designated (Sino Iron) template by reason of the phrase 'the same terms as the Project Agreements' being used within the CPOA. The differentiation argument was by way of juxtaposition to other CPOA text where say, by cl 3.6(f), a wider phrase 'substantially the same form as', or 'substantially the same form', is used.
I recognise, of course, that the defendants' contended distinction is erected around differing CPOA terminology seen deployed across various provisions of the CPOA, as now canvassed.
However, on my preferred interpretive assessment, the contended logically deployed dichotomy of differentiating scope for adaption is undermined, at other places in the CPOA. First seen is by the terms of CPOA Recital 3. Here, the chosen phrase 'substantially the same terms' is seen used vis-à-vis Project Agreements. That terminology provides an objective insight and overall direction as to what will be adaptively permissible for the terms of Project Agreements for a Further Company by the CPOA.
I do acknowledge, of course, Mineralogy's opposing argument that as one advances on to Schedule 2 of the CPOA, by reference to the defined term 'Project Qualification(s)', the chapeau at Part A uses a phrase 'will be in the same terms as the Project Agreements' and then identifies the four specific amendment principles.
Nevertheless, and against that, there is later found used within the operative CPOA cl 3.6(f), a following reference to modification in the manner described in Schedule 3, and some key further words vis-à-vis the relevant parties to the Takeover Agreement for the Further Company which '... must complete the transactions contemplated by it [ie, by the Takeover Agreement] in accordance with its terms including entering into or varying the Project Agreements'. For me, these highlighted operative words are of key significance in the CPOA, as regards finding some permissible scope for adapting terms in the envisaged Project Agreements to which the Further Company will be privy.
A general notion of permissibly 'varying' the Project Agreements as deployed is, I would assess, out of logical alignment with Mineralogy's more rigid 'same terms' versus 'substantially same terms' differentiation - being deliberately chosen as between a narrow range of (same terms) potential adjustment for the Project Agreements. In contrast to this characterisation is a (slightly) wider permissible adjustment in 'substantially the same form' as the Takeover Agreement - by reference to the template of the Korean Steel Takeover Agreement.
Instead, I would prefer an interpretation that will align with what is still the relatively narrow scope for a substantively similar adoption of the terms of each CPOA template - be it a Sino Iron Project Agreement template, or in the Korean Steel Takeover Agreement template. A relatively narrow scope for adaptation away from the template will be the same, irrespective of the template chosen by the CPOA.

[77]

My preferred construction towards the CPOA is that, objectively assessed as a whole at October 2008, the CPOA envisaged that there may be permitted some level of permissible adjustments away from the template Project Agreements, as defined. But any such variations ought be modest (absent, of course, mutual agreement upon them between all parties) and they must always respect the basal objective of being in 'substantially the same terms' as articulated by CPOA Recital 3. A like variation permissibility approach is applicable as well for the Takeover Agreement for a Further Company. Ultimately, this future agreement to be entered by the Further Company must present as being in 'substantially the same terms' as the Korean Steel Takeover Agreement template and as well, as specified by cl 3.6(f) and as altered by CPOA Schedule 3.
Of course, the end question as to whether an express term is, or is not, in substantially the same terms as the designated template ‑ remains a question of degree. The implementation exercise of this chosen standard will not always produce bright line designation boundaries. Instead, grey areas present. But that is a product of the chosen CPOA criteria.
In the end, my constructional view upon this issue is that any variation away from a CPOA template, not mutually accepted, needs to be justified and must remain structurally respectful to the template (ie, kept substantially the same as the template agreements). Permissible variations or changes need to be in the character of benign, necessary and minimal changes, rather than wider variations - even though they may be said to be reasonable, desirable, or even sensible advocated towards express terms different to the identified template Project Agreements or the Takeover Agreement.
It will no doubt be said, as the CITIC plaintiffs have indeed strongly contended at the trial, that the CPOA as a commercial agreement demands a commercial and sensible meaning. Indeed, they contend that all their suggested modifications adapting the template Project Agreements so as it is put, to align them with a 'joint operation of the Project' (as between Sino Iron, Korean Steel and the Further Company), are a sensible manifestation of required commerciality.
Whilst it is crystal clear a court will strive to afford sensible commercial meanings to the parties' commercial bargain in conducting an exercise in interpretation toward a written instrument, founding textual respect must still be paid to the character of the CPOA as a manifestation of the hard won bargain reached in October 2008 as between well‑resourced and sophisticated parties well versed in complex international business and resources dealings. The CPOA is, as already mentioned, an entire agreement - perfected at October 2008, as a part of a linked network of surrounding contractual bargains of a commercially complex and interrelated character between the same interests. See, for instance, the Korean Steel MRSLA, which came then to be varied, to align it with the Sino Iron MRSLA on 22 October 2008 and, as well, the Fortescue Co-ordination Deed also of 22 October 2008.
Therefore, any variations at 2021 away from the chosen CPOA template Project Agreement terms, or away from the template Korean Steel Takeover Agreement terms, must present as being necessary, almost self‑evident and obviously benign as possibly impinging against the parties' perfected underlying bargain (objectively assessed).
Any permissible variations must display that the as adjusted instrument remains as still faithfully presenting in substantially the same terms as the chosen template's terms.
The caution towards permissible term adjustments require, I would suggest, comparison to the ruinous situation of someone casually pulling too hard against the loose thread of a carefully hand woven garment, with an ensuing consequence of wholesale ruination of the sweater.
That being so, the scope for adjustments to the underlying chosen templates, is necessarily limited.
Consequently, the drafting content evaluation approach I have sought to oversee hereafter is cautious, albeit it is not quite as narrow as contended for by Mineralogy vis‑à-vis its submission against allowing any alterations at all to the template Project Agreements, even if they left the as modified agreement in substantially similar form to the CPOA template.
I turn to the Project Agreements and Takeover Agreement in dispute.

[78]

As seen, the four analogue 'Project Agreements' identified by the CPOA's definition of Project Agreements, are described in (a) - (d) by reference to the four (Project) agreements entered between Mineralogy and Sino Iron (not Korean Steel).
At trial, there was no dispute over the CPOA subpar (c) Project Agreement, namely the 'Fortescue Projects Consolidation Agreement'. That Project Agreement for Balmoral Iron is wholly uncontroversial.
But aspects of or around express terms in the other three Project Agreements as described at subpars (a), (b) and (d) for the Further Company (Balmoral Iron) are controversial, as to some of their term contents. The major controversy essentially concerns the terms of Project Agreement (a), which is the as referred 'Sublease of 25 October 2001'.
There was also some lesser disputation over proposed terms exchanged in drafts circulated between the parties for a (Balmoral Iron) Takeover Agreement that meet the requirement of CPOA cl 3.6(f).
I approach the task of resolving the residual drafting disputes by first addressing the proposed terms of Project Agreement (c), (b) and (d), then moving to the terms of the as proposed Balmoral Iron Takeover Agreement, and last returning to Project Agreement (a), over which there arose the major controversy at the trial.
I have assembled and worked through a number of underlying materials for this purpose. To this end, I mention exhibit 6, being the initial table as submitted by senior counsel for the CITIC plaintiffs at the commencement of the trial. In turn, Mineralogy submitted its response by way of a table under its exhibit 7 through senior counsel, Mr Dunning QC, identifying areas of agreement and disagreement, particularly in areas identified as 'Category C' where Mineralogy and Mr Palmer's consent was expressly refused. This occurred on day two of the trial.
Not unexpectedly, there was some drafting issue movement during the trial bringing the parties closer over those initially flagged and disputed issues at the time of the trial's closing submissions. Hence, an exhibit 12 emerged as Annexure C to the CITIC plaintiffs' closing written trial submissions (constituted by pages 59 through 101). As described at page 2 of exhibit 12, this table is an updated version of exhibit 6. Rows shaded in orange indicate where the parties were still not agreed at the end of the trial.

[85]

For the purposes of the trial, Mineralogy submitted by its exhibit 8.3, a proposed further variation to the subsisting Balmoral Iron Facilities Deed - to accord with the CPOA requirement for such a Project Agreement.
Recitals under this as submitted draft by Mineralogy read:
1. The parties entered into the Facilities Deed on 26 October 2001 (Facilities Deed) and entered into a Variation to the Facilities Deed on 21 March 2006.
2. The parties agree to amend the terms of the Facilities Deed (as amended) in accordance with the terms of this Deed.
Nevertheless, some of Mineralogy's suggested clauses under its submitted draft only replicate changes that were already implemented for Balmoral Iron under the variation of 21 March 2006. This unnecessary duplication was pointed out at the trial by the CITIC plaintiffs. Nevertheless, Mineralogy seemed to be impervious to all such criticism and pressed its exhibit 8.3 version of a further amendment to the Facilities Deed.
By contrast, the CITIC plaintiffs, by their proposed annotated draft for a Balmoral Iron Facilities Deed (exhibit 9.4), seek to correct Mineralogy's duplication errors - by not repeating the amendments as already made under the variation of 21 March 2006. That approach is plainly correct.
That all being so, there still remain a few other areas of conceptual disagreement. Conveniently, these were highlighted by orange shaded clauses to be found in the CITIC plaintiffs' exhibit 9.4.
First, there present what I assess as some trivial drafting disagreements, such as over whether the word 'deed' ought to be capitalised, or not. I will not engage over such trivia. Sort it out or flip a coin.
Substantively, there was disagreement over a proposed introduction by the CITIC plaintiffs of a new definition for 'Effective Date'.
The as proposed Effective Date by the CITIC plaintiffs would read as meaning 'the date of Completion, as defined in the Takeover Agreement between CITIC Limited, Cape Preston Resource Holdings Pty Ltd, Balmoral and Mineralogy.' The amendment is opposed by the defendants.
In my view, the as proposed and opposed new definition is unnecessary. It merely states something which is obvious as a matter of implication. It will not be allowed.
Next substantively, is the CITIC plaintiffs' proposed amendment introducing a new cl 3.6 under a heading 'Acknowledgment in relation to Facilities'. Again, the proposed clause is not agreed to by the defendants.
Instead, Mineralogy, in turn, proposed a new paragraph to replace the paragraph at the end of cl 3.2 of the original Facilities Deed, under a heading 'Approval of Development Proposal'. That clause is opposed by the CITIC plaintiffs.
On my assessment, neither suggested Facilities Deed augmentation is essential, or compatible, as being substantially akin to the terms of the Project Agreement template (b) - the Sino Iron Facilities Deed. Thus, neither version will be allowed. Both will stay out of the final iteration.
The CITIC plaintiffs next suggest a fresh cl 3, under a heading 'Affirmation'. This new clause is proposed in terms:

[87]

The defendants oppose the new clause. They propose a different cl 3, under a heading 'Contributions', which effectively deletes and replaces existing cl 8.7(b).
By my assessment, once again neither proposal submits a clause which is necessary, or which is in terms substantially equivalent to a clause that is found in the template Sino Iron Facilities Deed. Consequently, absent any mutual agreement as between the parties, neither clause will be allowed.
Next proposed is a cl 4 by the CITIC plaintiffs, which reads in terms 'Except as specifically amended by this deed, all terms and conditions of the Facilities Deed remain in full force and effect.' The defendants oppose the clause.
I do not assess the proposed clause as being necessary to augment what already subsists as a Facilities Deed between Mineralogy and Balmoral Iron. In short, the proposed clause merely restates the obvious. It will be disallowed.
What is next seen as cl 5 as proposed by the CITIC plaintiffs does not look to be opposed by Mineralogy. The proposed clause, under the heading 'General Provisions' reads 'Clause 31 (Notices) and 32 (Miscellaneous) of the Facilities Deed apply to this deed as if they were set out in full in this deed.'
On its face, this clause also looks wholly innocuous. It can remain. However, this extra 'General Provisions' clause should be renumbered as cl 2 of the variation instrument.
The CITIC plaintiffs' as proposed cl 6 seen in exhibit 9.4, provides for execution by counterparts. It is opposed by the defendants. Given Balmoral Iron remains a subsidiary of Mineralogy until takeover completion in respect of the acquisition of its shares, there appears to be no convincing reason why Mineralogy or its relevant officers and directors could not attend to the proper execution of this instrument once finalised, both by itself and by Balmoral Iron as required.
The opposition to the counterpart execution clause as proposed under cl 6 should not be allowed.
By reference to proposed changes under Mineralogy's exhibit 8.3, the obvious duplication error in terms of replicating what was already introduced at 21 March 2006 - impacts against the utility of using this draft document to advance to a final iteration.
What is newly proposed by Mineralogy by cl 7 under the 'General Provisions' heading, aligns with the General Provisions clause as suggested by the CITIC plaintiffs. That augmentation looks not to be opposed and can be allowed.
All those minimal changes as now evaluated will be the full extent of permitted variations in the instrument amending the currently existing Facilities Deed as between Mineralogy and Balmoral Iron of 26 October 2001, as varied on 21 March 2006. It may only be further varied as I have now indicated above, or by the mutual agreement of the parties if any matter now resolved causes them to agree upon further adjustments.

[106]

Next, I note a proposed augmentation to cl 12.4(a) suggested by the defendants under exhibit 8.2 - which would have Balmoral Iron join the existing references to 'CITIC, Sino Iron, Korean and any Affiliate of them'.
That proposed augmentation does not look to be formally agreed to by the CITIC plaintiffs. Again, however, no substantive basis of objection is provided.
On my assessment, what is proposed by the defendants, effectively adding Balmoral to the already existing parties identified (and Affiliates), is necessary, sensible, appropriate and will be allowed.
Next, there looks to be minor nomenclature or grammar issues around a proposed cl 21 in relation to the as identified 'Compensation Payment'. However, on my view, none of the shaded augmentations or deletions shown in orange for exhibit 9.6, raise a material grievance of substance. Hence, what is proposed by the CITIC plaintiffs for cl 21 should be accepted.
That result extends as well to a minor disagreement over the words seen in cl 21.7(a) and 22.1(a), namely, '(as applicable)'. On my assessment, the CITIC plaintiffs' terminology is preferable to the alternate wording as proposed by Mineralogy and Mr Palmer. Nothing material turns upon a mere terminology distinction.
There is also minor disagreement over terminology in the second sentence of cl 22.2(a). The defendants propose alternative wording, which is not agreed. Again, this only appears to raise a drafting distinction without material differences. The language of the CITIC plaintiffs proposed under exhibit 9.6 will be accepted.
There is another minor terminology difference over a use of the word 'any' in cl 23.2, by reference to the appointment of an expert under those nominated circumstances. Again, nothing material turns on this. I prefer what is proposed by the CITIC plaintiffs under exhibit 9.6.
The same point should be made in respect of cl 23.8 by a similar use of the word 'any', once again being seen as appropriate.
Other orange shaded areas of differentiation as seen under cl 24.1, cl 26.1 and cl 26.2 of exhibit 9.6, are not material. The proposed terminology of exhibit 9.6 is again, appropriate.
A concluding FCD disagreement presents over cl 28.1(b) of exhibit 9.6 as regards that term of the FCD. The defendants' Schedule to exhibit 8.2 proposes the use of the word 'each' to replace the word 'both' in cl 28.1(b). But the rival drafting proposal of the CITIC plaintiffs uses the word 'all', in reference to Sino Iron, Korean Steel and Balmoral.
By my assessment, the proposed terminology by the CITIC plaintiffs under their exhibit 9.6 is the more accurate and appropriate. It will be preferred.
By reference to annexure 1 to exhibit 9.6, all the as seen minor changes as proposed by the CITIC plaintiffs, on my assessment are necessary, appropriate and fully benign. By example, the definition of 'Mine Participant' to now incorporate a direct reference to 'Balmoral' is surely appropriate. So too is the proposed reference in exhibit 9.6, annexure 1 cl 9 to the word 'Deed' as capitalised, rather than 'deed'.
There were no other FCD drafting disagreements on my assessment. Consequently, all drafting issues over the FCD as a Project Agreement between the parties are now determined and resolved on the basis explained.

[110]

Various tables and drafts need to be assembled and assimilated for the purpose of working out the differences between the parties over the final terms of a Balmoral Iron Takeover Agreement.
At root, however, differences of principle arising between the parties in this realm look to distil to what I would assess as two significant areas. I will elaborate upon them shortly below.
It will be remembered, of course, the Takeover Agreement for the shares in the Further Company as envisaged and regulated by CPOA cl 3.6(f), identified the chosen template to be the 2007 Korean Steel Takeover Agreement (see the definition in CPOA cl 11). The chosen template by the CPOA was not the earlier Sino Iron Takeover Agreement of 31 March 2006. Clause 3.6(f) in turn refers to modifications in the manner as described in CPOA Schedule 3.
Approaching the drafting exercise, it is necessary to bear in mind that after the events of 22 September 2020, the nominated CPOA 'Seller' under the First Option was then identified as Mineralogy, not Mr Palmer. The original Korean Steel Takeover Agreement of 1 November 2007 had seen Mr Palmer as the nominated Seller on that occasion. So that is one obvious and required necessary change that is needed for the Balmoral Iron Takeover Agreement - with Mineralogy to be the nominated Seller of the shares by contrast to the nominated seller in the Korean Steel Takeover Agreement template (ie, Mr Palmer).
For the purposes of resolving further drafting disagreements, I have assembled and worked first through the original Korean Steel Takeover Agreement of 1 November 2007 (as in evidence at Trial Bundle, vol 2, tab 17). I have then worked through the parties' exchanged tables (exhibit 12) under which they assemble their areas of agreement and disagreement from a drafting perspective concerning a proposed draft Balmoral Iron Takeover Agreement.
Within the rival drafting comparison exercise concerning the Takeover Agreement, I had use beyond exhibit 12 of the following extra documents, namely:

[118]

Disagreement between the parties presently distils to whether there ought still to be a second tranche deposit of $AUD69,600,000 as the defendants contend, but which the CITIC plaintiffs submit is unwarranted, in the different circumstances of the CPOA and in 2021.
It will be remembered that the total amount of the Purchase Consideration payable under the First Option under the CPOA is $US141,746,916 but subject to a CPI Increase adjustment for the eventual completion date.
As mentioned, the readiness, willingness and ability of the CITIC plaintiffs to complete the CPOA First Option transaction, notwithstanding issue was taken over that upon the pleadings, is an issue that was ultimately never seriously raised or put at issue by the defendants at the trial.
In that context, senior counsel for the CITIC plaintiffs had, as I mentioned earlier by reference to the obvious financial wherewithal of CITIC, described the whole Purchase Consideration payable for the First Option transaction as a mere 'bagatelle'.
The description was, on my own assessment, fully apposite. So then, in the overall context, a two tranche deposit of $US20,000,000 followed by a second instalment of $AUD69,600,000 is a smaller outlay than the mere 'bagatelle'. Viewed by the scale of these parties, the entirety of two deposit sums taken as a template from cl 1.3(a) of the Korean Steel Takeover Agreement is essentially just 'a drop in the bucket'.
The CITIC plaintiffs made an endeavour to distinguish the different circumstances of November 2007 underlying or around the specification then for the dual deposits under the Korean Steel Takeover Agreement. But that agreement became the chosen template under the CPOA (by reference to subclause 3.6(f) and Schedule 3 to the CPOA). Its Schedule 3 itself did not move away from the dual deposit template when it could easily have said so. That dual deposit position for Korean Steel was plain. Yet no change was mandated when the provision was in full view. So be it.
There is thus, I assess, an insufficient basis to depart from the substantive template dictated choice for two tranches of deposit in the founding template used for the Balmoral Iron Takeover Agreement. Objectively assessed at 22 October 2008, a decision at then to not adjust cl 1.3(a) by Schedule 3, must be respected.
Consequently, I accept Mineralogy's counter drafting proposal that there must be a two tranche deposit clause in the Balmoral Iron Takeover Agreement arrangements.
By reference to the CPOA and its Schedule 3, the CITIC plaintiffs identify there are to be deviations away from the Korean Steel Takeover Agreement template when regard is had to the express omissions of cl 4A and Schedule 8 from that agreement.
Subclause 4A.1(a) of the Korean Steel Takeover Agreement reads in terms:

[132]

Reference is also made to the scenario of actions taken under pre‑existing agreements and pre-existing options entered into prior to 10.30 pm AEDT on 29 March 2020, on the basis 'it is likely that this would not of itself give rise to any new significant and/or notifiable actions'.
On my assessment, is it indeed a significant and powerful differentiating factor that the process for obtaining FIRB approval via the Commonwealth Treasury in 2020-21 has been impacted, along with so many other spheres of life in Australian society, by the COVID-19 pandemic (as Guidance Note 53 explains).
Consequently, the allowed period of three months settled upon by the parties no doubt by reference to the former FIRB approval regime at the time of the Korean Steel Takeover Agreement of November 2007, reflects what was a different era. The turnaround time needed for securing an assessment in 2007 was very different at the time, when the parties to the Korean Steel takeover had then settled upon a three‑month period under cl 2.3(a).
Commercial parties acting reasonably in 2020 and 2021 towards settling the terms of a Balmoral Iron Takeover Agreement under CPOA cl 3.6(f) (such terms that must be in substantially the same form as the Korean Steel Takeover Agreement) would, on my assessment, likely take full cognisance of the new COVID-19 pandemic driven reality confronting commercial parties in Australia in terms of obtaining a FIRB approval - which has seen a necessary extension to the time frames for reviewing applications being nominated then at up to six months.
Given the prevailing underlying commercial reality emerging unexpectedly in light of the worldwide COVID-19 pandemic, I am of the view that some necessary and sensible commercial adjustment to cl 2.3(a), so as to extend the former three‑month period to a six-month period (the outer time nominated in Guidance Note 53 for an assessment) is required. This accommodation would still respect and remain faithful to the substantive form of the template bargain as it is identified by reference to the Korean Steel Takeover Agreement. Allowing six months (ie, double the original time of three months) for the approval would sensibly accommodate what are necessary and uniquely emerging worldwide pandemic induced circumstances.
I am not, however, persuaded to allow any greater time beyond six months, as the CITIC plaintiffs proposed (out of abundant caution). That is a tripling of the original allowed time period of three months to nine months which would present as being so long a period commercially that it could do violence to the underlying Korean Steel template bargain.
Guidance Note 53 has, as seen, nominated a period of up to six months. It also noted the Commonwealth government would continue to prioritise urgent applications for investments that protect and support Australian businesses and Australian jobs.
There also looks to be every good commercial reason why an application for such approval here ought to be reviewed both expeditiously and, prima facie, favourably for the already subsisting Cape Preston Project.
An eventual takeover of the Further Company, in the wake of the CPOA envisaged First Option being completed, will effectively only support the existing and now successfully established Cape Preston Project, Western Australia.
The Further Option, in its effect, serves only to increase by an extra billion tonnes the amount of available magnetite ore that is to be made available to be processed (with some added adjustments). There looks to be every good economic reason why an expansion proposal of this character for an established resource project would contribute greater economic benefits to the CITIC plaintiffs and indeed to the West Australian and Australian economies - by fostering even greater magnetite iron ore production and processing. That should, in the end, lead to increased prosperity and stability of the employment for the existing workforce and, of course, to enhanced royalty payments to the West Australian and Commonwealth governments.
It will also be remembered that the Korean Steel Takeover Agreement of 1 November 2007 has explicitly canvassed the CPOA derived potential for Further Companies to be acquired, to increase by a billion tonnes, on each of four separate potential occasions, the amount of magnetite ore capable of being accessed and processed. A draft of the CPOA was attached as Schedule 3 to that Korean Steel Takeover Agreement at the time, even before the CPOA was perfected at 22 October 2008. Essentially then, what is now being proposed for a further Treasurer's approval, has long been foreshadowed to the Treasury as being in prospect.
Given the earlier Treasurers' approvals of both the Sino Iron Takeover Agreement (completed on 31 March 2006), and the Korean Steel Takeover Agreement (completed on 22 October 2008), and with a subsequent successful establishment of a massive magnetite iron ore resource project at Cape Preston (the magnitude of the cost as explained in Mineralogy v Sino Iron [No 16]), the Project itself is now successfully established. Potential for it to be entrenched and expanded was always well notified. The whole Cape Preston Project, of course, is governed under an umbrella of the State Agreement.
Given such circumstances, there is every reason to expect the presently envisaged application for the Treasurer's consent under the Foreign Acquisitions and Takeovers Act would at least be recognised as needing to be processed expeditiously as a proposal of positive economic significance to both the State and to the Commonwealth, at a crucial time as the Australian national economy seeks to continue to recover from the COVID‑19 induced recession of 2020.
Consequently, my assessment is that a period of six months ought to be sufficient, albeit it will remain in alignment with the substantive form of the Korean Steel Takeover Agreement cl 2.3 template bargain.

[143]

Historically, it will be remembered that a Sino Iron Takeover Agreement was entered between Mineralogy and CITIC on 31 March 2006. That takeover transaction came to be completed on 6 July 2006.
Next, however, it must be remembered that CPOA cl 3.6(c)(i) makes reference to the 'Further Company' (relevantly now, to be Balmoral Iron) becoming 'a party to the necessary Project Agreements'.
The CPOA came to be perfected on 22 October 2008. That meant that a last tranche of amendments to the Sino Iron MRSLA (of 8 January 2008) were already in place for approximately nine and a half months at 22 October 2008. Of course, the agreement template reference used under the CPOA's definition of 'Project Agreement' is the MRSLA that was perfected as between Sino Iron and Mineralogy, not, as may have been alternately chosen, the other MRSLA between Mineralogy and Korean Steel of 21 March 2006 (which MRSLA then came to be varied on 22 October 2008).
Within that historic framework of anterior Sino Iron and Korean Steel MRSLA agreements both perfected as between the parties in the period before the CPOA of 22 October 2008, it is important to remember that at that time, there had already been perfected the earlier Balmoral Iron MRSLA between Mineralogy and Balmoral Iron. That agreement was also of 21 March 2006 (see Trial Bundle, vol 5, tab 240).
The Balmoral Iron MRSLA, by its cl 2.1, also referred to an earlier Sublease of 25 October 2001 as between Mineralogy and Balmoral Iron, then to a variation and restatement under a first MRSLA between Mineralogy and Balmoral Iron of 11 May 2005. The Balmoral Iron MRSLA of 21 March 2006 is there referred to as a 'second' MRSLA.
There had followed, akin to what has earlier been seen occurred with the Sino Iron MRSLA, the entry of a Deed of Variation as between Mineralogy and Balmoral Iron of 30 March 2006 (see Trial Bundle, vol 4, tab 202). That was one day before the Sino Iron MRSLA (of 21 March 2006) came to be first varied on 31 March 2006.
Historically as well, it must be remembered Mineralogy and CITIC looked to have been working earlier towards a takeover of Balmoral Iron. But at November 2007, the second Mineralogy entity proposed to be acquired by CITIC changed and instead became Korean Steel. The acquiring entity of the shares in Korean Steel remained yet another CITIC controlled entity - named Balmoral Iron Holdings Pty Ltd (not to be confused with the different Further Company, Balmoral Iron).
So in 2006 it looked to be the case that Balmoral Iron, a corporation and wholly owned subsidiary of Mineralogy, was then being groomed, like Sino Iron, for eventual acquisition by CITIC. To that end, Balmoral Iron held equivalent contractual mining right and site lease rights from Mineralogy, fully akin to those held by Sino Iron and Korean Steel during March 2006.
Balmoral Iron, as events transpired, did not in 2008 or thereafter, ever enter into a further deed of amendment akin to that seen under the Deed of Amendment to the Sino Iron MRSLA of 8 January 2008 (or even to the Korean Steel MRSLA variation of 22 October 2008).
Consequently in 2021, to meet the CPOA's required definition of 'Project Agreement' under subpar (a), the pre-existing Balmoral Iron MRSLA with Mineralogy (of 21 March 2006, then varied at 30 March 2006), will require some further variation amendments to render it fully in alignment to the Project Agreement (a) template.
A similar amendment process has historically occurred in respect of the Korean Steel MRSLA at 22 October 2008, to advance that MRSLA to almost a complete alignment with the terms of the Sino Iron MRSLA amendments at 8 January 2008.
There appears to be no in principle disagreement between the trial parties about any of this history. From a drafting perspective then, the parties' drafting exercise for the necessary MRSLA Project Agreement proceeds on a basis of working from and using the existing 2006 Balmoral Iron MRSLA.
Nevertheless, there still presents some considerable level of drafting disagreements between the parties over the Balmoral Iron MRSLA.

[146]

Much of the conceptual drafting disagreement articulated between the parties, and particularly as it manifests in their disputes over proposed MRSLA terms for Balmoral Iron, can be explained by their present states of strong mutual distrust as against each other, under circumstances which have emerged out of their commercial relationship discord after the CPOA was perfected on 22 October 2008.
Presently, 'daggers' look to be anticipated around almost every corner on each side. Nevertheless, the CPOA cannot be legitimately interpreted from that highly distrustful mutual perspective of 2020. Instead, it must be interpreted in the surrounding context in which it came to be perfected at October 2008. Subsequent events generating high levels of distrust and grievances in the Mineralogy/CITIC business relationship must be put aside as regards the interpretation of the CPOA. The process is, of course, to be undertaken objectively as well.
From the CITIC plaintiffs' perspective, a deal of the philosophical concern underlining their proposed MRSLA amendments for the Balmoral Iron MRSLA looks to be driven by their concerns that the to be acquired Further Company (Balmoral Iron), following completion of the Balmoral Iron takeover, will likely become exposed to specious future demands issued by Mineralogy.
Such future demands are said to be feared as possibly seeking to compel Balmoral Iron to establish, or, more correctly to re-establish, much of already existing Cape Preston infrastructure and project facilities - on the illogical basis as if Balmoral Iron at 2021 were entering for the first time upon a greenfields site at the Cape Preston Project site rather than it joining into an existing project that has now been jointly and successfully managed and run for Sino Iron and Korean Steel for over a decade and after billions of dollars of start-up capital investment to achieve production of processed Product at site.
A high level of expressed concern by the CITIC plaintiffs about the future appears to carry with it an allied concern that Balmoral Iron, once acquired, will then become exposed to claims by Mineralogy that Balmoral Iron must duplicate or replicate an establishment of production or processing facilities that are already long established by Sino Iron or Korean Steel at site.
The expressed concern is that Balmoral Iron ought not be even potentially exposed to such illogical or extravagant future demands from Mineralogy for it (ie, Balmoral Iron) to freshly create a project from out of nothing at Cape Preston and to develop, in effect, wholly virgin mining leases effectively at a greenfields site to full scale magnetite iron ore production and processing operation by freshly established processing and port facilities - when such facilities at 2021 are already built, established and fully operative after very significant capital expenditures to establish them by Sino Iron and Korean Steel.
I may better sympathise with such future exposure concern as expressed by the CITIC plaintiffs, if it were the case that a fresh MRSLA was being entered into by, say, a new shelf company for the first time in 2021. However, as has been exposed, that is plainly not the case for the corporation and the Further Company that is accepted to be Balmoral Iron.
Balmoral Iron has been privy to a binding MRSLA arrangement with Mineralogy, tracking back as far as a Sublease of 25 October 2001, then by subsequent MRSLAs as varied up to 30 March 2006 (see again cl 2.1 of the Balmoral Iron MRSLA for that recorded history). In my view, that established history is significant towards negating the expressed concerns about extravagant fresh infrastructure outlay demands issuing in future to Balmoral Iron by Mineralogy.
The Balmoral Iron MRSLA antecedents under the prior contractual agreements would require them to be sensibly and commercially interpreted at the time of their earlier creation, if that were required. They are sought to be varied now in 2021 to align Balmoral Iron to Sino Iron, as regards the CPOA's required (necessary) Project Agreements. That history underlying the Balmoral Iron MRSLA renders the potential for specious future Mineralogy demands or arguments of a 'start again from scratch' nature, if they ever were to emerge in the future (and which prospect was totally eschewed by senior counsel for the defendants at the trial as fanciful), in effect, to be cast aside as unmeritorious.
Quite clearly in 2021, Balmoral Iron as the accepted CPOA Further Company will be joining to what is a subsisting and already well established magnetite iron ore producing and processing Project at Cape Preston. In any event, drafting and varying the existing Balmoral Iron MRSLA from a perspective of seeking to shield against further 'lurking daggers around every corner' is invariably problematic. The exercise must be approached from a stance of rationality, commerciality and objective common sense - not paranoia.
For their parts, Mineralogy and Mr Palmer express themselves as equally suspicious and distrustful of almost all of the CITIC plaintiffs' amendments proposed to the Balmoral Iron MRSLA - particularly under the adaption and modification constructional approach advocated for towards Balmoral Iron's Project Agreements (as pleaded under 2FASOC).
But as now resolved by these reasons, I have rejected that wide constructional variation approach under the CPOA. I have also rejected the CITIC plaintiffs' contended derivation of wider adaption and modification outcomes to a 'state of the Project' approach, under an ad hoc implied term on a basis that it is, I have found, equally problematic conceptually.
In short then, I have concluded the MRSLA amendments as proposed by the CITIC plaintiffs, and which are not otherwise agreed by Mineralogy, need to pass a threshold of preserving the Balmoral Iron MRSLA in substantially the same form as the Sino Iron MRSLA template - namely, as a Project Agreement (a) delivered under the CPOA.
Given these founding conclusions, it will be seen that the proposed drafting for the amended Balmoral Iron MRSLA under exhibit 8.1 (as proposed by the defendants) is mostly, on my view, the preferable drafting approach. It is, I assess, closer and in a greater conceptual alignment to the chosen Sino Iron MRSLA template textual commands of the CPOA, in such respects.
There are a few limited exceptions, however, to that general conclusion that I move to address.

[148]

A first relatively minor disagreement arises over the CITIC plaintiffs' proposed Recital B, as seen under exhibit 9.2, viewed against Mineralogy's proposed version of Recital B seen under exhibit 8.1. Both suggested clauses refer to cl 38.2 of the MRSLA. Yet there is no real substantive difference between the two versions.
The next area of disagreement is over a definition of 'Effective Date', as proposed by the CITIC plaintiffs.
The thrust of the 'Effective Date' amendment would effectively render the Balmoral Iron amendments to its MRSLA to be effective only at the date of a completion of the Balmoral Iron Takeover Agreement.
However, on my assessment, the temporal regime of the CPOA by cl 3.6(c)(i) and (iii) and then by cl 3.6(f), ought to have seen all necessary (Balmoral Iron) Project Agreements (as defined) in place by Mineralogy within 20 Business Days after the First Option Exercise Date (which was 13 April 2012) and with notice to that effect being given by Mineralogy.
As mentioned earlier, no side in this action has taken the temporal objection point as against the other over the delay of years in meeting the CPOA cl 3.6 timelines. A (Balmoral Iron) Takeover Agreement was supposed to have been entered into seven business days after the cl 3.6(c)(iii) written notice (see cl 3.6(f)). Again, no party has taken that point against the other at the trial.
But the practical difficulty now arising in December 2020 as specific performance relief is sought, is that many years have now passed since April 2012. Consequently, some degree of mutual 'give and take' is required to sensibly accommodate a 2021 completion on a takeover transaction almost nine years beyond the CPOA's cl 3.6(c) and (f) envisaged Business Day regime. Nevertheless, such pragmatic accommodations must not do violence to the underlying agreed template MRSLA bargain which, I assess, requires the Balmoral Iron MRSLA still to remain substantively the same as the Sino Iron MRSLA.
An obvious point to be extracted, viewing the CPOA objectively, is that the obligation was placed on Mineralogy by the CPOA to ensure the necessary Project Agreements were put in place years ago as (see the CPOA cl 3.6(a) chapeau).
The sentiment as to perfected documentation being swiftly put in place following an option exercise under the CPOA is out of conceptual alignment with the CITIC plaintiffs' drafting approach that the required amendments to the Balmoral Iron Project Agreements to only take effect at a takeover completion date. I respectfully disagree with the CITIC plaintiffs' notion over this issue.
Until a final completion on the further takeover, the corporation Balmoral Iron remains a wholly owned and controlled subsidiary of Mineralogy. So the immediate making of changes, whilst Balmoral Iron still remains under Mineralogy's full control, could be changed later by Mineralogy if, say, the Balmoral Iron takeover did not ultimately proceed to a completion in 2021, or if the envisaged takeover completion were to otherwise be derailed, for whatever reason.
As previously addressed, the as proposed changes to the terms of the Balmoral Iron MRSLA are found marked up, under the CITIC plaintiffs' exhibit 9.3, as compared to the defendants' rival version that is found as the schedule to exhibit 8.1.
To appreciate rival differences as proposed on each side, it is convenient again to use the table at exhibit 12 - this time for item 30 to item 50.
As already indicated, many of the marked up Balmoral MRSLA deletions or insertions by the defendants carry forward, in effect, the 8 January 2008 amendments as made to the Sino Iron MRSLA at that time. Like changes were introduced to the Korean Steel MRSLA, under variation amendments of 22 October 2008. Such changes are legitimate and, indeed, are required by the CPOA.
Beyond that, however, any further changes away from the Sino Iron MRSLA template (unless mutually agreed) need, by reference to Recital 3 and cl 3.6(c)(i) and (f) of the CPOA, to preserve the chosen Sino Iron MRSLA template for Balmoral Iron to remain, as I have earlier canvassed, in substantially the same terms as the Sino Iron MRSLA.
It will also be remembered that by CPOA Schedule 2, part A concluded:

[152]

Of course, it is almost some 15 years since the last amendment to the Balmoral Iron MRSLA. So then, the desire to amend and record what has since matured over an ensuing decade and a half is commercially understandable, perhaps even sensible. Still, what is proposed is not essential. In the end, Recital D of the MRSLA must remain as it appears under the defendants' exhibit 8.1.
Next, item 31 of exhibit 12 presents another disagreement over definitions. As previously mentioned, the CITIC plaintiffs' suggested changes stem from a policy concern about possible specious future demands by Mineralogy to 'start from scratch', as if nothing existed yet at site. The changes are opposed by the defendants.
Again, albeit commercially understandable, even sensible, such changes are not necessary. They are not agreed. Hence, the defendants' rival version under exhibit 8.1 must be preferred.
Like conclusions follow in respect of the CITIC plaintiffs' proposed deletion of a defined term 'Accommodation Camp', proposed but disputed definitions for 'Balmoral Development Plan' and 'Balmoral's Project Facilities' and also for proposed changes to the definition of 'China Project Option Agreement'. A rationale for these suggested changes is understandable. But they are not necessary.
Likewise, a proposed excision of the definition of 'Development Plan' seen under exhibit 9.3, is not essential.
However, the CITIC plaintiffs' proposed reference in exhibit 9.3 to the definition of 'Facilities Deed' as meaning 'the agreement titled "Facilities Deed" between the parties hereto, as amended or replaced from time to time', does both look to be required and sensible, in a context of the specific Project Agreement defined Facilities Deed, referred to in subpar (b) of the definition of 'Project Agreements'.
It is not necessary to alter the definition of 'Korean Steel Takeover Agreement', even though there was minor disputation over that.
Nor am I satisfied it is necessary to amend the definition of 'Mine Facilities' as the CITIC plaintiffs propose.
The exhibit 9.3 proposed definition of 'Mine Participant' appears agreed by Mineralogy and is in alignment with what is proposed by the CITIC plaintiffs. That is seen reflected in exhibit 8.1.
The MRSLA definition of 'Mining Contract' must remain as per the defendants' exhibit 8.1, notwithstanding that the CITIC plaintiffs would like it removed. Again, that is an inessential proposal.
Likewise, Mineralogy's definition of 'Mining Right' should remain. The definition for 'Occupation Fee', albeit now possibly redundant in December 2020, should remain as per exhibit 8.1.
Mineralogy's proposed definition of 'Other Tenements' is also preferred. It is minimalistic in terms of any change.
The same can be said in respect of the definitions of 'Processing Facilities', 'Product', 'Project Agreement' and 'Project Proposals'. Those definitions will all remain as Mineralogy proposes under exhibit 8.1.
The excisions as proposed by the CITIC plaintiffs for 'Sino's Activities' and 'Sino's Development Plan' look to be accepted by Mineralogy. That will be allowed accordingly.
Next, there is a trivial looking disagreement over whether the MRSLA reference to Sino Iron should be by reference to its ABN, rather than by its ACN. Given Sino Iron is long controlled by CITIC, the expressed preference for its ACN number 058 429 708 is harmless and will be allowed. The same should be allowed in respect of the definition of 'Korean Steel'.
Mineralogy appears to oppose the definition for the 'Sino Iron MRSLA' by a reference to that MRSLA between Sino Iron and Mineralogy dated 21 March 2006, as amended. The proposed definition is necessary, useful and wholly benign. It should not be sensibly opposed and hence, will be allowed. The same is allowed for the definition of the 'Korean Steel MRSLA'.
Likewise for the CITIC plaintiffs' proposed definition of the 'Sino Iron Takeover Agreement'. That will be allowed as necessary sensible, useful and innocuous. Again, the same in respect of the 'Korean Steel Takeover Agreement'.
Likewise for the proposed CITIC plaintiffs' definition of 'State Agreement' and 'State Agreement Act'. Again, those proposals are needed. They are helpful and innocuous (see exhibit 9.3).
The CITIC plaintiffs' proposed correction to the definition of 'Tenements', adding a word 'and' after the word 'inclusive' and making the word 'title' plural by adding 's' - again are helpful, sensible and innocuous. They will also be allowed.
So as for the MRSLA definitions, they are resolved accordingly.
Next, there will be no changes to cl 3.2 of the template Sino Iron Project Agreement as proposed in the CITIC plaintiffs' exhibit 9.3 and the defendants' exhibit 8.1. Clause 3.2 will be imported across to the proposed Balmoral Iron MRSLA, as it appears in the consolidated Sino Iron MRSLA - the only change being the excision of all references to 'Sino Iron' and replacement with the word 'Balmoral'.
The next item of disputation as recorded by exhibit 12 at item 33, concerns the Balmoral Iron MRSLA cl 4.2. An objection of, in effect, redundancy is raised by the CITIC plaintiffs. But that is not enough for the changes to be allowed. Clause 4.2(e) as proposed by the defendants, is in alignment with what presents the template Sino Iron (and Korean Steel) MRSLA(s). What is proposed by the defendants brings no conceptual departure from the Sino Iron MRSLA template.
Next in dispute (by item 33A of exhibit 12) sees the CITIC plaintiffs objecting to a phrase advocated by the defendants, namely, 'subject to the consent of Sino Iron and Korean Steel', which is proposed to be inserted at the end of the chapeau to cl 4.2 of the Balmoral Iron MRSLA. The CITIC plaintiffs say this is unnecessary. I agree. Such words are out of alignment with the Sino Iron and Korean Steel MRSLAs. That suggested change by the defendants will not be allowed.
Next is item 34 under exhibit 12. This sees a disagreement over cl 5.1 (Development Plan) and a proposed excision by the CITIC plaintiffs of all of cl 5.1, along with an altered cl 5.2. This is opposed by the defendants. They seek to retain cl 5.1 as it presents, in effect, in the Sino Iron MRSLA. I agree with the drafting position of the defendants, as more in accord with the CPOA's criteria for MRSLA Project Agreement. The wording as proposed by the CITIC plaintiffs might well be more sensibly accommodating to events after March 2006. However, they are not essential. They move too far away from the CPOA's chosen Sino Iron MRSLA.
Likewise, for item 35, which references cl 5.2 and item 36 regarding a disputed proposed new cl 5.2(d). Of course, an implied obligation to co-operate will likely subsist in any event, as a term implied by law (see the observations of Mason J in Secured Income). The CITIC plaintiffs' as proposed drafting augmentations to the MRSLA under exhibit 9.3 in these respects, however, are not essential.
The next dispute by exhibit 12 is item 37, which submits a proposed adjustment to cl 6.1(a) of the draft MRSLA for Balmoral Iron. This is opposed by the defendants.
Again, this is a change driven, it appears, by a fear of future spurious demands, paying no heed to the earlier establishment of significant Cape Preston ore mining processing facilities. What is suggested by the CITIC plaintiffs seeks to negate any future prospect Balmoral Iron would itself need to independently reconstruct for itself all such existing processing facilities. The changes seek, in effect, to thwart potential future arguments by Mineralogy that might ever emerge to that end.
But for reasons as already expressed, a drafting object of seeking to erect a barrier against future spurious demands is not an appropriate drafting approach for amendments to the Balmoral Iron MRSLA, in 2021. Clause 6.1 must therefore remain as proposed by the defendants under their exhibit 8.1.
The next area of MRSLA disagreement between the parties concerns cl 6.3 (as identified under item 38 of exhibit 12). The equivalently worded subclause has already featured heavily vis-à-vis Sino Iron and Korean Steel under prior litigation: see Mineralogy Pty Ltd v Sino Iron Pty Ltd [2020] WASC 40.
In this particular instance, particularly given the litigious history around this subclause which deals with the historically long overtaken issue of a 'commencement of production', I am of the view the CITIC plaintiffs' position excising cl 6.3 completely, should be accepted.
The excision concern goes beyond mere redundancy. Production and processing of Product has plainly commenced long ago at the Cape Preston Project. Consequently, this penalty for delays clause, appropriate as it once was for a greenfields project, has long since been overtaken. Leaving it in place in 2021 only delivers the undesirable potential for it to actively mislead and create chaos or confusion. Consequently, it should be excised. Instead, what was the former cl 6.3, will read 'Not used'.
Next, item 39 of exhibit 12 addresses MRSLA cl 13 and the issue of 'Accommodation Camps'. Redundancy is again raised by the CITIC plaintiffs. But here, it may still be the case one day in the future that a camp licence for an accommodation camp could be needed, say, for further works of an expansionary kind to augment what presently exists and then, to be carried out by a Balmoral Iron construction workforce.
On that basis, consistently with my earlier resolved retention of definitions for 'Accommodation Camps' and 'Occupation Fee', the clause can remain. If it is redundant as a matter of history, then its redundant retention will do no harm and will simply be inconsequential. Thus, Mineralogy's proposed version of cl 13.1 and 13.3 (as revised) should be accepted (see exhibit 5.1).
A status quo position is likewise appropriate regarding item 40 of exhibit 12 as regards the proposed cl 18.2 (Health and Safety Management Plan).
Likewise for item 41, in terms of environment approvals under proposed cl 20.1(a) and for item 42 concerning cl 20.1(b). If cl 20.1(b) has been historically overtaken, then what the defendants propose will merely subsist as irrelevantly innocuous in the future.
Next, item 43 of exhibit 12 concerns a dispute over MRSLA cl 20.6. This clause deals with the SRF. It is, of course, correct that there has now been a trial over which I presided in November 2020 concerning the issues around aspects of the SRF applicable to Sino Iron and Korean Steel under their respective MRSLAs (see my decision Mineralogy Pty Ltd v Sino Iron Pty Ltd [2021] WASC 45).
What is proposed by the CITIC plaintiffs by an introduction of a preface to cl 20.6(c), so as to insert words 'Subject to any order of the court to the contrary', is not appropriate. That insertion would significantly diminish the character of the clause by such a proposed subjugation to the court. Conceptually, it cannot be allowed.
Subclause 20.1(a) as currently phrased, is consistent with the Sino Iron, and indeed, with the Korean Steel MRSLAs as they now stand. The scope for a court to potentially intervene, as regards trustee issues around cl 20.6(c), by reference to either the court's inherent jurisdiction over trustees or by the force of statutory provisions in the Trustees Act 1962 (WA), of course, remain and will not be fettered by the parties' drafting. The words as proposed by the CITIC plaintiffs are not necessary. They will not be allowed.
The next item of MRSLA contention is the proposed cl 20.7 and suggested changes by the CITIC plaintiffs (see item 44 of exhibit 12). In this respect, I can accept a contention by the CITIC plaintiffs that an excision and augmentation adjustment to cl 20.7(a) is necessary, in light of a single Environmental Management Plan for the Project which currently applies for Sino Iron and Korean Steel and should also apply for Balmoral Iron upon completion of this takeover.
I agree it would be commercially absurd to require Balmoral Iron to prepare a separate Environmental Management Plan, given an obvious future joint operation of the Cape Preston Project by Sino Iron, Korean Steel and (on completion) Balmoral Iron.
Consequently, an alteration to cl 20.7(a) as suggested by the CITIC plaintiffs should be accepted. No violence at all is done to the chosen template of the Sino Iron MRSLA by that change which is, on my view, commercially essential. This is particularly so bearing in mind the very long time lag since the Balmoral Iron MRSLA was last amended as at 30 March 2006, and the position at the trial in December 2020 vis-à-vis Balmoral Iron as the Further Company as the subject of the First Option rights of CITIC under the CPOA.
This adjustment is, effectively, one of the requirements by needing to deal sensibly and commercially with the long time lag of years between the exercise of the First Option under the CPOA at 13 April 2012, and a following almost nine years to a takeover completion. This required change should be allowed.
Further and in consequence, the preface to cl 20.7(b) should replace in exhibit 8.1, the word 'The' by the word 'Any'.
Likewise, for cl 20.7(c), the word 'The' should replace the word 'Any' at the beginning of that subclause.
But further changes beyond that to cl 20.7 would deliver a violence to the residue of the cl 20.7 bargain terms as seen stated. I would not allow any further changes than as stated above.
The next area of disagreement captured under item 45 of exhibit 12 concerns cl 28.2 through to cl 28.4, in reference to the subject of an early termination of the MRSLA.
Effectively, this is another redundancy objection by the CITIC plaintiffs, based upon the undoubted historic establishment of the Cape Preston Project.
Clause 28.2 is seen to commence on the basis of a temporal reference 'Prior to the commencement of development activities in the Mine Area or Site Lease Area ...'
Clause 28.3 refers to preparation and submission of a Development Plan by Balmoral Iron. That was to be within five years after the date of the Balmoral Iron MRSLA agreement (ie, five years post 21 (or 30) March 2006) - a time, in any event, now long expired.
Likewise, cl 28.4 was temporally oriented to a period seven years after the date of the Balmoral Iron MRSLA (ie at March 2013) - again in 2021, to be seen as a time long past. That is in the context of the reference under cl 28.4 to Balmoral Iron not having 'commenced development operations within the Mine Area and Site Lease Area following its approval as a Mine Participant ...'.
These clauses are not only redundant, but in 2021, are potentially misleading if left in place unaltered. Where some other potentially now redundant MRSLA clauses present, if left in place, as essentially innocuous in a potential future application, then, taking a minimalistic intrusion approach, they may generally just be left to wither irrelevantly.
But my assessment is to the contrary for the three subclauses concerning potential early termination. They are clearly well out of place in this Balmoral Iron MRSLA in 2021. A need for excisional surgery arises, effectively driven again by the almost nine year hiatus between the exercise of the First Option at 13 April 2012 and these reasons after a December 2020 trial - where a necessary Balmoral Takeover Agreement is yet to be completed. To reinforce the point, the necessary Project Agreements for Balmoral Iron, as was envisaged by the CPOA by cl 3.6(c), have still not been resolved anything close to 20 Business Days under Mineralogy's endeavours.
An adjustment by excision is thus necessary. It does no violence to the CPOA criteria or underlying bargain. Thus, cl 28.2, cl 28.3 and cl 28.4 will be removed and instead these subclauses, as per exhibit 9.3, will read 'Not used'.
The next area of contention seen in exhibit 12 is item 46 - with reference to cl 32.1(c) of the Balmoral Iron MRSLA.
For this dispute, it appears the version as proffered by the defendants by their exhibit 8.1, does not sufficiently take into account variation amendments to the Sino Iron MRSLA under the Deed of Amendment of 8 January 2008. Like amendments were reflected in the amended and consolidated version of the Korean Steel MRSLA at 22 October 2008 and in the Balmoral Iron MRSLA Deed of Variation of 30 March 2006 (see cl 2.1(a)).
The CITIC plaintiffs' proposed amendments (seen in exhibit 9.3) would effectively align cl 32.1 to the Sino Iron (and Korean Steel) MRSLAs as they currently read. That approach appears consistent with the Sino Iron MRSLA template theme of the CPOA, as regards necessary Project Agreements for Balmoral Iron in (a).
Consequently, I prefer the CITIC plaintiffs' version of cl 32.1(c) as regards the issue of encumbrances.
The next area of disagreement is item 47 of exhibit 12, relating to the proposed excision of cl 34.2 by the CITIC plaintiffs.
The issue arises, as the CITIC plaintiffs point out, due to an amendment by s 15 of the Mining Amendment Act 1996 (WA), as further amended by s 103(a) of the Mining Amendment Act 2004 (WA), which took effect at February 2006. In essence, the amendment resulted in s 103C of the Mining Act 1978 (WA) from then only permitting the registration of limited types of dealings. The Balmoral Iron MRSLA does not fall within the as revised categories of documents still registrable under the Mining Act as it is now in force. Still, the defendants oppose the deletion.
Again, however, a need for this revision is a product of over eight and a half years' time elapsed in terms of progressing a 13 April 2012 exercise of the First Option. In 2021, there is simply no point leaving such a long redundant and potentially misleading provision in the agreement. It should be excised. That is wholly benign and does no violence to the substantial form of the underlying bargain.
Mineralogy's argument to the contrary in terms of the former regime of registration possibly reviving one day in the future by potential further amendments to the Mining Act, is simply speculative, as the CITIC plaintiffs correctly respond. A logical excision of cl 34.2 should follow. That excision does no violence at all to the CPOA regime as regards the template Project Agreements.
Item 48 of exhibit 12 identifies disputation over the proposed Schedule to the Balmoral Iron MRSLA. Item 6 of the Schedule in the Sino Iron MRSLA concerns an Occupation Fee of $US250,000 as stated. This relates back to the Accommodation Camp and cl 13.
It may be the case that in the future a freshly assembled Balmoral Iron workforce might then need to be accommodated, depending upon whether expansion work to the existing project facilities is then being undertaken or not.
Given that future potentiality, item 6 of the Sino Iron MRSLA Schedule may possibly be relevant again, if that future contingency were to come to fruition. If it does not occur, then obviously no such Occupation Fee will be incurred. Overall, this presents as a relatively benign provision which can remain in the Balmoral Iron MRSLA.
By reference to item 49 of exhibit 12 and to the column titled 'CITIC's Response', it would appear the CITIC plaintiffs agree with Mineralogy that a plan which is to be Annexure 1 of the Balmoral Iron MRSLA should be the same as the plan contained in Annexure 1 to the Sino Iron MRSLA.
That position seems appropriate. It would do no violence, obviously, to the CPOA's choice of the Sino Iron MRSLA template for the purposes of the Further Company's Project Agreement (a). Consequently, the same plan, as so agreed, should be used.
That was the last item of disagreement between the parties concerning the draft MRSLA for Balmoral Iron.
Out of the defendants' proposed exhibit 8.1, the further disallowances or adjustments which I have now identified whilst working through exhibit 12 should be made and with all changes clearly made visible by an appropriate annotation.
With all the relevant changes in place there must be prepared for execution a 'clean' and consolidated version of a Balmoral Iron MRSLA (like the current consolidated Sino Iron and Korean Steel MRSLA instruments). That version can then be appended as well to the final specific performance orders to be issued. The CITIC plaintiffs' lawyers should attend to that in due course as the moving parties for relief.

[157]

Mineralogy, in effect, opposes, therefore, the forms of orders as sought under par 1 and par 2 of the CITIC plaintiffs' submitted minute.
The first issue to resolve is whether or not there should be a declaration that the CPOA remains in full force and effect. There are three key reasons for me resolving, in the end, not to issue such a standalone declaration as is sought by the CITIC plaintiffs.
First, it is inherent in the final positions of the respective parties as taken at this trial that the CPOA of 22 October 2008 still does remain in full force and effect regarding all of the parties' rights and obligations arising out of and around the 13 April 2012 exercise by CITIC of its First Option, and in respect of all of Mineralogy's and Mr Palmer's CPOA correlatively generated obligations concerning a Further Company - and which the parties in December 2020 ultimately accept will be Balmoral Iron.
Consequently, given an established First Option environment of subsisting enforceable CPOA rights and obligations, some wider generic declaration as to the CPOA simply being in full force and effect is unnecessary. Clearly, the CPOA remains of full force and effect, in relation to the required performance of all the obligations arising from and following upon CITIC's exercise of its First Option under the CPOA and its eventual unconditional acceptance in 2020 of Balmoral Iron as the Further Company.
A second reason for not issuing a general declaration is that the form of the order to issue for specific performance, seen assessed by reference to the forms and precedents as I earlier identified in Seton at chapter L, looks to proceed on the basis that the court will 'declare' a party is entitled to specific performance of a particular agreement. Ultimately, I would propose here to eventually, as I foreshadow, issue a specific performance order concerning the First Option in such terms. Anything beyond that is unnecessary.
My third reason for not issuing any generic declaration about the CPOA is that there were, as now seen, three further options also granted to CITIC under the CPOA (see cl 3.4). However, as things now present in 2021, the allowable time under the CPOA for a possible exercise of those Further Options (three more in all), is governed by the CPOA's definition of 'Option Period' and, from there, to the earlier of three as specified events, assembled under subpars (a) through (c) of the CPOA definition, as they are identified.
Subparagraph (a) of the definition of 'Option Period' in the CPOA refers to 'Expiry Date'. That is another defined term of the CPOA, meaning '120 months from the Commencement Date'. 'Commencement Date' is also a defined CPOA term, identified as 31 March 2006. Allowing 10 years from 31 March 2006 will extend only to 1 April 2016.
The evidence before the court at the trial is that the only option ever exercised or sought to be exercised by CITIC under the CPOA, is its First Option. Consequently, the nominated CPOA Option Period as regards any Further Options under the CPOA for the purposes of cl 3.4, when assessed by reference to the existence of a written notice given to the Seller at any time during the Option Period looks, now in 2021, to have long expired. That position looked to be the case as was contended for under the closing submission by Mr Parmenter QC for the CITIC plaintiffs (ts 585).
I was not asked to make any specific declaration concerning a Further Option(s) under the CPOA by reference to cl 3.4.
But if I were to issue the as requested declaration in the bare generic terms as is sought by the CITIC plaintiffs under their order 1, there could then be some potential created for future confusion concerning the live status of the three Further Options afforded under cl 3.4 of the CPOA, but which now would look to have lapsed by the effluxion of time.
Consequently, I prefer to confine the relief to be granted simply to specific performance orders which will be directed at the rights and obligations arising out of the undoubted 13 April 2012 exercise by CITIC of its First Option under the CPOA and to the ensuing takeover completion events under the CPOA which are to follow concerning the accepted Further Company (Balmoral Iron).
Nor do I assess it as appropriate to issue a generically expressed declaration order sought by the CITIC plaintiffs under par 2 of their proposed orders.
Equally, however, I am not persuaded that the forms of final orders as submitted by the defendants would be appropriate.
Having regard to the now settled final terms for CPOA Project Agreements that were required to be resolved by this trial, and also to issues over the disputed terms of the Balmoral Iron Takeover Agreement, the as now resolved by me resulting clean consolidated versions of those instruments should be appended to the court's final specific performance orders to be issued. There should be no room left for even a whiff of future disagreement over matters of detail as I have needed to resolve by these reasons.

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Judgment (180 paragraphs)

Legislation Cited (7)

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