CITIC LTD -v- MINERALOGY PTY LTD [No 6] [2021] WASC 144 (6 May 2021) - WASC 2021 case summary — Zoe

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CITIC LTD -v- MINERALOGY PTY LTD [No 6] [2021] WASC 144 (6 May 2021)

[2021] WASC 144

Supreme Court of WA|2021-05-06|Before: Martin J

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At a glance

Source facts

Court

Supreme Court of WA

Decision date

2021-05-06

Before

Martin J

Source

Original judgment source is linked above.

Judgment (77 paragraphs)

[1]

After a trial conducted during December 2020, my reserved reasons for decision post trial were delivered on 30 March 2021 - see CITIC Ltd v Mineralogy Pty Ltd [No 5] [2021] WASC 89 (reasons). As canvassed in those reasons, the parties had ultimately reached agreement by the commencement of the trial that orders for specific performance should issue in relation to the exercise of a First Option during April 2012 for CITIC Ltd to acquire control over all shares in a Further Company in accordance with provisions of the parties' China Project Option Agreement (CPOA) of 22 October 2008 (as later varied on 30 March 2012).
Notwithstanding the parties' trial concurrence to the effect that specific performance orders should issue, I needed to be, and ultimately was, independently satisfied that it was appropriate in all the circumstances for the discretionary equitable remedy of specific performance to issue (for instance, see [49] of the reasons).
Due to the complexity of what were essentially drafting disputes unresolved as between the parties, it was necessary for my reasons for decision to grapple with and resolve a host of subsidiary drafting issues, mainly concerning the terms of necessary 'Project Agreements'. The nominated Further Company (Balmoral Iron) would be, or become, a party to those Project Agreements with Mineralogy. Further drafting dispute issues surrounded additional terms in the envisaged Balmoral Iron Takeover Agreement. Those disputes as they presented at trial were also all resolved in the reasons (see [255] - [259], [262] and following).
Having resolved in the reasons all of the many contentious subsidiary drafting issues then raised as between the parties, I proceeded, commencing at [464], to evaluate the rival trial minutes of proposed final orders as submitted by each of the parties at the trial. As canvassed between [464] and [479], I rejected aspects of both protagonists' proposed minutes of final relief as regards a seeking of general declaratory relief and more general orders for specific performance (see [464]). In the course of that evaluation, I observed at [470]:

[49]

The actual plan itself is before me as electronic document 196c. Viewing that document alone it may be observed that the mining lease areas of Mineralogy are identified in bright red by reference to the legend. They look, indeed, to be coloured completely in red rather than only outlined. Accordingly, were the matter now being approached with a blank canvas, as a better drafting suggestion, there may be much to be said for a grammatical selection of the word 'coloured', rather than the word 'outlined' as used in cl 4.1. However, there is no blank canvas. Instead there is a bloodied post‑trial battlefield of Gettysburg dimensions.
My reasons for decision concerning the terms of the CPOA canvas at some length a requirement for Project Agreements to be drawn substantially by reference to the Sino Iron MRSLA, as the CPOA's chosen underlying template. I refer particularly to my observations about that in the reasons at [68] and [69].
By contrast, the CPOA's chosen template for a Further Company Takeover Agreement under the CPOA was the Korean Steel Takeover Agreement. See the reasons at [92]. These template agreement choices were obviously careful and deliberate, objectively assessed. See also my following observations at [150], [151], [152] and [155].
By my assessment, bearing in mind the very same plan in question is referred to by the Sino Iron MRSLA and the Korean Steel MRSLA, it would be curiously grating and inconsistent were differing terminology to be deployed by using the different word 'coloured' in an amendment to cl 4.1 of the Balmoral Iron MRSLA. A need for consistency as between the three MRSLA agreements viewed in overall context is a greater policy concern, which must, in the end, override any rival consideration of using grammatical deviation to use a different word that might, on reflection, have presented as more the appropriate had the position been otherwise unconstrained.
Consequently, Mineralogy's suggested augmentation, as regards substituting the word 'coloured' for the word 'outlined' in cl 4.1 of the Balmoral Iron MRSLA, is rejected.

[57]

Essentially, I had accepted Mineralogy's contended position under what had been submitted as its exhibit 8.1 at trial, concerning then the contended making of very limited amendments to the Balmoral Iron MRSLA as it had been perfected on 21 March 2006, then amended under a Deed of Variation of 30 March 2006. The submission of Mineralogy concerning cl 5.2 under that document had then effectively rejected amendments as suggested by the CITIC plaintiffs. Mineralogy proposed instead incorporating terms rendering cl 5.2 into a direct alignment with the terms of cl 5.2 of the Sino Iron MRSLA, as it had been amended, on 8 January 2008. In short, therefore, Mineralogy won the item 36 contest at the time. For Mineralogy at this point to be permitted to deviate in the wake of the publication of the reserved reasons post trial would, on this issue, effectively be to allow it to reopen its trial case completely. That course, as a matter of policy, would be directly against a necessary need for finality and for the permanent quelling of considered disputes by the trial process.
My second reason for disallowing what is proposed by the defendants by the newly proposed cl 5.2 better reflecting, as Mr Smith says, the content of the Korean Steel MRSLA, is that the explicitly chosen CPOA template for Project Agreements, as the post‑trial reasons discuss at some length, was not the Korean Steel MRSLA. See the definition of 'Project Agreements' in the CPOA, subcl (a), explicitly selecting the template agreements as those between Sino Iron and Mineralogy, not those between Korean Steel and Mineralogy. That, by way of contrast under the CPOA, can be compared with the position concerning the template Takeover Agreement where Korean Steel was selected. See CPOA cl 3.6(f) and Schedule 3 to the CPOA in its preface.
In any event, the settled upon content of cl 5.2 in referring to Sino Iron's project proposals (not to Balmoral Iron's proposals), albeit historic and making no reference to project proposals concerning Balmoral Iron, ultimately, on my assessment, does no violence at all to the content of the proposed Balmoral Iron MRSLA, as a workable future instrument emerging via the CPOA's requirements. To the extent that there are historic redundancies carried over within the content of that agreement, then they will no doubt be viewed and isolated to that extent.

[66]

Accordingly, it may be seen that, objectively assessed, the drafters of the CPOA at October 2008 had addressed the at then hypothetical issue of the appropriateness of the Sellers' warranties that would otherwise apply in the same form as those found within the Korean Steel Takeover Agreement. Critically, any amendments away from the template are seen to be driven by taking account of 'any matter disclosed by Mineralogy or Palmer' (my emphasis in bold). However, there have been no such matters disclosed as a matter of fact by Mineralogy or Mr Palmer.
The present issue concerning the appropriateness of the four warranties seen under the heading 'Licences and Approvals' within Schedule 1 of the proposed Balmoral Iron Takeover Agreement, was not raised at all at the trial. Consequently, it is not the subject of any observations found in the post trial reasons rendered towards the Balmoral Iron Takeover Agreement. See the observations commencing generally at [262].
Nevertheless, were it seriously to be the case that the position at this time was shown to be that Mineralogy was being asked to provide a warranty in respect upon a matter that was demonstrably false, then in the overall interests of justice, notwithstanding the powerful policy considerations of quelling disputes and finality in dispute resolution, I would be inclined to allow at least an opportunity for any unsatisfactory position to be remedied, albeit overlooked till now.
However, the position as was clarified under the opposing written submissions against the defendants filed by the CITIC plaintiffs is otherwise and the submissions persuade me ultimately that that is not the position.
Below I will set out what the CITIC plaintiffs have said about this issue under pars 40 - 54 of their written submissions filed 4 May 2021. In order to better comprehend those submissions, however, it is necessary to appreciate that the proposed Balmoral Iron Takeover Agreement expressly defines the term 'Authorisation' under its definitions found in cl 19.1 as follows (unless the contrary intention appears):