PRACTICE AND PROCEDURE – PARTIES – JOINDER – NECESSARY
PARTY – where the defendants in the proceedings each
make applications to
amend their respective amended defences and counterclaims and add two parties by
Source
Original judgment source is linked above.
Catchwords
PRACTICE AND PROCEDURE – PARTIES – JOINDER – NECESSARYPARTY – where the defendants in the proceedings eachmake applications toamend their respective amended defences and counterclaims and add two parties bycounterclaim – whetherthe proposed defendants by counterclaim are liablewith the plaintiff for the subject matter of the counterclaim – whetherthe relief sought is connected with the original subject matter of theproceeding – whether the proposed defendants by counterclaimare necessaryparties whose rights or liabilities will be directly affected by the relief thatthe defendants seek – whetherany rights of the proposed defendants bycounterclaim may be affected by an order that may be made in the action –whetherthe defendants should be granted leave to amend the counterclaim and tojoin the partiesPRACTICE AND PROCEDURE – PLEADINGS – ADMISSIONS –WITHDRAWAL – where the defendants seek to withdraw two admissions
for
which they require leave under the Uniform Civil Procedure Rules 1999
(Qld) – where the first withdrawal of admission rectifies a fact pleaded
which has since changed – where the second admission
was made in error
– whether leave should be granted to withdraw the admissions
Energy Resources (Common Provisions) Regulation 2016 (Qld) ss 4,
4A
Mineral Resources Act 1989 (Qld)
Uniform Civil Procedure
Rules 1999 (Qld) rr 62 ,69, 178, 188
Aon Risk Services Australia Limited v Australian National University
(2009) 239 CLR 175
[2009] HCA 27, cited
Barnes v Addy [1874] UKLawRpCh 20
(1874) LR 9 Ch
App 244, cited
Avanti Mining and Contracting Pty Ltd v McKelvey
[2020] QLC 20, considered
China First Pty Ltd & Anor v Mount Isa
Mines Limited & Ors [2019] 3 Qd R 173
[2018] QCA 350,
considered
Hanson Construction Materials P/L v Davey & Anor (2010)
79 ACSR 668
[2010] QCA 246, cited
Hartnett v Hynes [2009] QSC
225, considered
John Alexander’s Clubs Pty Ltd v White City Tennis
Club Ltd (2010) 241 CLR 1
[2010] HCA 19, considered
Pegang Mining Co
Ltd v Choong Sam [1969] UKPC 16
[1969] 2 MLJ 52, cited
Wade v NSW Rutile Mining Co
Pty Ltd (1969) 121 CLR 177
[1969] HCA 28, considered
Warner v
Twining (1876) 24 WR 536, cited
Watkins v Plancorp No. 6 Pty Ltd
[1983] 2 Qd R 501, considered
Judgment (67 paragraphs)
[1]
PRACTICE AND PROCEDURE - PARTIES - JOINDER - NECESSARY PARTY - where the defendants in the proceedings each make applications to amend their respective amended defences and counterclaims and add two parties by counterclaim - whether the proposed defendants by counterclaim are liable with the plaintiff for the subject matter of the counterclaim - whether the relief sought is connected with the original subject matter of the proceeding - whether the proposed defendants by counterclaim are necessary parties whose rights or liabilities will be directly affected by the relief that the defendants seek - whether any rights of the proposed defendants by counterclaim may be affected by an order that may be made in the action - whether the defendants should be granted leave to amend the counterclaim and to join the parties
[2]
PRACTICE AND PROCEDURE - PLEADINGS - ADMISSIONS - WITHDRAWAL - where the defendants seek to withdraw two admissions for which they require leave under the Uniform Civil Procedure Rules 1999 (Qld) - where the first withdrawal of admission rectifies a fact pleaded which has since changed - where the second admission was made in error - whether leave should be granted to withdraw the admissions
[1] The defendants, National Gold Pty Ltd in proceeding BS4508/21 and AU Gold Pty Ltd in proceeding BS4509/21 (the Gold parties) each make applications to amend their respective amended defences and counterclaims, add two parties by counterclaim, AMD Resources Limited, now known as Ashby Resources Limited and AMDR Operations (who I will refer to as AMD and AMDR, and collectively as the AMD parties) or orders in the alternative and to withdraw two admissions. That is opposed.
[2] It is necessary to set out some background to the present applications.
[3] The plaintiff, Denjim Pty Ltd (Denjim) held a mining lease in relation to the Hadleigh Castle mine, Mining Lease no 10344 (ML10344). It entered an agreement with National Gold Pty Ltd (National Gold) on 27 February 2019 in relation to the restarting of the mining operations at Hadleigh Castle (ML Agreement). It contends that it subsequently validly terminated the ML Agreement no later than 29 September 2020, which is disputed by National Gold. It further contends that National Gold has no interest in ML10344 arising under the ML Agreement which is also disputed. Denjim instituted proceedings (BS 4508/21) seeking declarations to that effect on 21 April 2021 in this Court. National Gold filed a defence and counterclaim for wrongful determination and sought declarations for specific performance or alternatively for loss of opportunity to develop Hadleigh Castle. According to National Gold it immediately obtained a fifty per cent equitable interest in ML10344 upon execution of the ML Agreement.
[4] Denjim also held three exploration mining permits, numbers 18414, 25663 and 26251 (EPMs) which were proximate to the Hadleigh Castle Mine, ML10344. It entered an agreement with AU Gold Pty Ltd (AU Gold) on 27 February 2019 in relation to the funding of exploration of the EPMs (EPM Agreement). It contends that it subsequently validly terminated the EPM Agreement no later than 29 September 2020, which is disputed by AU Gold. It further contends that AU Gold has no interest in the EPMs arising under the EPM Agreement which is also disputed. Denjim instituted proceedings seeking declarations to that effect on 21 April 2021 in this Court (BS 4509/21). AU Gold filed a defence and counterclaim for wrongful determination and sought declarations for specific performance or alternatively for loss of opportunity to develop Hadleigh Castle. According to AU Gold it immediately obtained a seventy-five per cent equitable interest in each of the EPMs upon execution of the EPM Agreement.
[20]
(a) declaratory relief against the AMD parties as to the ML Agreement and EPM Agreement remaining on foot and as to the Gold parties interests in the ML and EPMs in the same terms as sought against Denjim;
>
> (b) declaratory relief that the TMA is void or alternatively, orders setting aside the TMA and orders restraining the AMD parties from performing the TMA;
>
> (c) an account for received trust property including profits and related declarations;
>
> (d) equitable compensation in the amount of the Received Trust Property and specific restitution of trust property; and
>
> (e) damages.
[21]
[17] Denjim does not oppose the amendments made to the defences, save it opposes the amendments with respect to the TMA Agreement being dealt with as part of the present proceedings which if allowed it agrees would require AMD and AMDR to be joined as necessary parties. Denjim also contends the proceedings should be case managed to be heard separately after the proceedings between it and National Gold and AU Gold are determined in relation to the ML Agreement and EPM Agreement. In relation to the withdrawal of the admissions, Denjim points out that it is the discretionary matter for the Court but contends there is a lack of explanation for the making of the admission in error and there has been delay in seeking leave.
[18] Counsel for AMD and AMDR appeared at the hearing. She contended on behalf of the AMD parties that the proceedings against the AMD parties are premature as the Gold parties have no legal interest in ML10344 or the EPMs to pursue the AMD parties and therefore have no standing to make the claims against the AMD parties, the subject of the proceedings.
[19] In particular, the AMD parties contend that while equitable interest can be created consistently with the Mineral Resources Act 1989 (Qld), an equitable interest in a mining lease or an exploration permit cannot be enforced until the interests are registered as required particularly by ss 17(2) or 17A of the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) (the Act). In that regard, Counsel for the AMD parties points to a number of requirements that would have to be fulfilled in order for registration of any interest of the Gold parties to be approved and the fact that it would lie with the discretion of the Minister, demonstrating there are a number of contingencies that would have to be overcome by the Gold parties, such that their acquiring a legal interest is only a possibility. There is therefore no certainty that the Gold parties' interests would be registered.
[22]
Should leave to amend the counterclaim and join the AMD parties be given?
[23]
[22] Rule 178 of the UCPR relevantly provides as follows:
[24]
(1) A defendant may make a counterclaim against a person other than the plaintiff (whether or not already a party to the proceeding) if -
[25]
(a) the plaintiff is also made a party to the counterclaim; and
[26]
(i) the defendant alleges that the other person is liable with the plaintiff for the subject matter of the counterclaim; or
[27]
(ii) the defendant claims against the other person relief relating to or connected with the original subject matter of the proceeding.
[28]
(2) If a defendant counterclaims against a person who is not a party to the original proceeding, the defendant must -
[29]
(b) serve the defence and counterclaim and the plaintiff's statement of claim on the person within the time allowed for service on a plaintiff.
[30]
(3) A person not a party to the original proceeding who is included as a defendant to a counterclaim becomes a party to the proceeding on being served with the defence and counterclaim."
[31]
[23] Rule 178(1) of the UCPR provides that a defendant may make a counterclaim against a person other than the plaintiff, if two requirements are met. First, that the plaintiff is also made a party to the counterclaim. It is uncontentious that that is satisfied in the present case. The second requirement is that one of the alternatives in r 178(1)(b) is met, which is disputed by Denjim.
[24] The Gold parties contend that both the rr 178(1)(b)(i) and (ii) of the UCPR are satisfied. Denjim contends however that sub-rule (1)(b)(i) is not satisfied if the rule is to be construed that to be liable with the plaintiff the same relief must be sought against the proposed parties or they are liable together, which is not the case in relation to the proposed counterclaim where some of the relief is different from that sought against Denjim and relies on different pleaded facts. As to sub-rule (1)(b)(ii), Denjim contends that whilst it has been recognised there is no limit imposed on the nature of matters that may be the subject of a counterclaim, there does not exist the same degree of freedom to raise issues distinct from those in the original action where a plaintiff seeks to counterclaim against a plaintiff and a person not already a party.[8]
[25] In Watkins v Plancorp No. 6 Pty Ltd,[9] McPherson J stated that the clearest explanation of the function and extent of the power under rules of this kind,[10] of permitting joinder of persons who are not original parties to the action is to be founded in Warner v Twining[11] where Sir George Jessel was said to have stated that "The only purpose for which a person was brought before the court as a co-defendant was to bind him by the action, and preclude him from saying that it had not been properly defended."[12]
[26] In relation to the declarations as to the effect of the ML Agreement and EPM Agreement and that those agreements remain on foot, the same declarations are sought against the AMD parties as Denjim, as is the case with the relief sought regarding the TMA.[13] Orders for account and equitable compensation are sought against both Denjim and the AMD parties. There is an overlap in the relief sought in the two proceedings but the basis of liability of Denjim as opposed to the AMD parties necessarily differs insofar as claims are made against the AMD parties for inducing breach of contract and breach of trust, as opposed to claims for breach of trust and breach of contract against Denjim. I consider effectively the same relief is sought against each but relevant to their basis of liability such that r 178(1)(b)(i) of the UCPR is satisfied.
[32]
[42] In order to be satisfied of the joinder of the AMD parties, the Gold parties must establish that rule 69 of the UCPR is satisfied. It relevantly provides that:
[33]
(1) The court may at any stage of a proceeding order that -
[34]
(b) any of the following persons be included as a party -
[35]
(i) a person whose presence before the court is necessary to enable the court to adjudicate effectually and completely on all matters in dispute in the proceeding;
[36]
(ii) a person whose presence before the court would be desirable, just and convenient to enable the court to adjudicate effectually and completely on all matters in dispute connected with the proceeding."
[37]
[43] The Gold parties contend that both rr 69(b)(i) and (b)(ii) are satisfied, at least insofar as they want the AMD parties to be satisfied by the determination the Court makes with respect to the status of the EPM Agreement and ML Agreement, the nature of the rights and interests that they confer and the relief that concerns the impact of those interests and rights on the TMA. In that respect the Gold parties submit that the impact upon the rights of the AMD parties will be direct because they will not be entitled to the fruits of their agreement with Denjim which conflict with those claimed by the Gold parties insofar as the AMD parties' interest in the EPMs and ML10344 exceed any interest that remains if the rights and interests of the Gold parties are determined in accordance with the relief sought. It contends that the AMD parties ought to be joined consistent with the principles discussed by the High Court in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd[18]where it was said that: "...where a court is invited to make, or proposes to make, orders directly affecting the rights or liabilities of a non-party, the non-party is a necessary party and ought to be joined."
[44] The AMD parties contend that unless the interests of the Gold parties are registered there would be no direct affect. In that regard Counsel for the AMD parties pointed to the decision of PegangMining Co Ltd v Choong Sam[19] (Pegang Mining) discussed in China First Pty Ltd & Anor v Mount Isa Mines Limited & Ors[20] (China First) relied upon by the Gold parties as being a case where there was an actual sublease involved not an equitable right. Gotterson JA in China First referred to Justice Edelman's discussion of Pegang Mining and in particular that:[21]
[38]
"His Honour explained that in Pegang Mining, a non-party, who had contracted with a sub-sublessee of a mining lease for a licence to mine on leased land, was held to be directly affected by litigation over whether there was an entitlement to the sub-sublease. That was because the success or failure of the litigation would affect whether the non-party could exercise separate rights against the sub-sublessee under the licence."
[39]
[45] The AMD parties cannot interfere with the TMA because the Gold parties have an equitable interest which the Minister may or may not exercise.
[46] In China First Justice Gotterson helpfully summarised the approach to be adopted in light of the relevant authorities in considering whether there was a direct effect on the rights or liabilities of a non-party to which I have also have regard.[22]
[47] At present, caveats are in place to protect any interests in the EPMs or ML10344 that may be found by the Court in determining the litigation. The AMD parties like the Gold parties presently have no registered interests in the EPMs or ML10344. Denjim is the only registered title holder. The Court must consider whether any rights of the AMD parties may be affected by an order that may be made in the action. If the Gold parties succeed in establishing that they have acquired rights and interests either directly in ML10344 and the EPMs or the fruits of the mine or exploration in terms of income and the minerals produced, the recognition of those rights will in all likelihood directly affect the enforceability by the AMD parties of the rights and interests they appear to have acquired under the TMA. If orders are made in favour of Gold parties that the ML agreement or EPM agreement have created a trust, that will have a direct affect on the AMD parties rights and interests under the TMA or have "an effect on the legal environment in which the right might be exercised or the liability discharged, such as would impact upon its exercise or discharge from a legal perspective."[23]
[48] I am satisfied that the AMD parties are necessary parties whose rights or liabilities will be directly affected by the relief that the Gold parties seek against Denjim. This is not only on the basis that the relief sought declaring the TMA to be void or setting it aside or restraining Denjim from performing the agreement will have a direct affect on the AMD parties rights or the legal environment in which they are exercised. The rights and interests claimed in at least the minerals and the proceeds of sale of the minerals will directly affect the legal characteristic of the rights the AMD parties have or acquire under the TMA. Similarly, the declaratory relief as to the Gold parties' entitlement to profits will directly affect Denjim's ability to meet its obligations to pay the AMD parties the level of profits it claims from the Project under the TMA.
[40]
[51] Notwithstanding the above the Court must still be satisfied that it is appropriate to exercise its discretion to make the orders sought. In that respect, it is relevant to have regard to the principles from Aon Risk Services Australia Limited v Australian National University[24] conveniently summarised by Justice Applegarth in Hartnett v Hynes.[25]
[52] As to the question of whether the court should exercise its discretion to grant leave to file the amended counterclaim which includes the joinder of the AMD parties, the bulk of the proposed amendments to the counterclaim arise out of the entry by Denjim into the TMA with the AMD parties, which post-dates the present proceedings. In the event that Denjim is successful in obtaining the declarations that it lawfully terminated the deed, the questions in relation to the entry into the TMA do not arise and the foundation for the amended allegations as to the TMA fall away. Thus, Denjim contends that the matters the subject of the counterclaim should be managed separately so as not to delay Denjim's claim in relation to the ML and EPM agreements. It contends there is no prejudice in the amendments regarding the TMA being disallowed or requiring them to be tried separately as no profits have been generated from the EPMs, nor are any expected to be generated in the near future and provision is made for 10 per cent of the profits generated by the production from the mining lease to be retained in a trust account.
[53] Denjim also points to delays by the Gold parties seeking the amendments to their counterclaim since they were told by correspondence on 30 July 2021 that Denjim had entered into the TMA. That letter stated broadly the overall effect of the TMA and informed the Gold parties that 10 per cent of the profits would be held on trust pending the resolution of these proceedings. After that time Denjim had raised deficiencies in the Gold parties' defences and counterclaims. That ultimately led to the Gold parties making amendments to the defences and counterclaims, which included withdrawing of admissions. Orders were made on 9 December 2021 by this Court granting leave and the amended defence and counterclaim were filed in early January 2022. It was not until March 2022 that the Gold parties' solicitors took issue with Denjim's entry into the TMA, foreshadowed taking possible action against Denjim and the AMD parties and sought a copy of the TMA and other information. That was followed up on a number of occasions but was not provided by Denjim to the Gold parties which remains the case. The affidavit of Ms Bennett filed by leave on the day of hearing providing information as to the TMA, in reality did not provide any significant new information. The parties then had disputes in relation to matters such as the scope of the Document Plan which led to the matter being placed on the Caseflow list. According to the Gold parties, the order of Justice Williams which was made by consent ordering that the joinder application be made by 24 September forced the Gold parties to have to make a decision as to whether they would plead without obtaining the TMA and had sufficient basis for amending and joining the AMD parties. No explanation is given for the lack of action in respect of the TMA amendments between 31 July 2021 and March 2022.
[41]
[66] The Gold parties also seek to withdraw two admissions for which they require leave under r 188 of the UCPR. The first withdrawal of admission rectifies paragraph 1 of the amended defence. That arises out of the fact that one of the EPMs expired on 7 February 2022 because no renewal application was lodged. Denjim does not dispute that the proposed amendment is factually accurate in light of that development.
[67] As to the second admission, it relates to paragraph 27 of National Gold's amended defence and paragraph 28 of AU Gold's amended defence which admit Denjim's allegation that "on or about 23 September 2020 the Investor[26] wrote to Mr Duck and Mr Quinn and asserted it owns 50% of the Mining Lease and 75% of the EPMs." The Gold parties state the admissions were made in error as National Gold and AU Gold did not both assert interests in the mining lease and EPMs. The assertion concerning the mining lease was made by National Gold and the assertion concerning the EPMs was made by AU Gold. The solicitor has deposed to the fact that the admission was made in error. Although the basis upon which the error was made is not properly explained as opposed to the fact of an error having been made[27], it is submitted by the defendants' Counsel that the basis of the error is that it is inconsistent with the terms of the letter of 20 September 2020. That is apparent from the terms of the letter. It is clear that the Gold parties assert a position under the ML and EPM agreements that is a matter of dispute.
[68] While there has been some delay in seeking leave, no prejudice is said to arise as a result of the withdrawing of the admissions and the permitting the admission to be withdrawn will permit a resolution of the real issues in dispute. In the circumstances I consider it is appropriate to grant leave.
[42]
[69] The Gold parties have been successful in their application to amend the counterclaim to extend the time to make the counterclaim pursuant r 178 of the UCPR and for orders for joinder of the AMD parties pursuant to rr 62 and 69 of the UCPR and s 16 of the Civil Proceedings Act2011 (Qld). While leave to amend the counterclaim extends to the AMD parties, I consider that it is also appropriate to make the orders as to joinder as well, notwithstanding it is implicit from leave being given in relation to the proposed counterclaims. I am satisfied the Gold parties should have leave to file amended pleadings in the proposed form and for leave partially to withdraw two admissions made in their defences.
[43]
[70] After the application was issued, the legal representatives confirmed that AMD Resources Limited changed its name to Ashby Mining Limited. That will require amendment to the counterclaims against AMD Resources Limited in BS 4508/21 and BS 4509/21. I have provided for liberty to apply in relation to the form of orders in the event any further order is required given the name change to Ashby Mining Limited.
[71] The Court orders that in each of BS 4508/21 and BS 4509/21:
[44]
(a) the time for the respective defendant in each proceeding to make and serve a counterclaim against Ashby Mining Limited (formerly known as AMD Resources Ltd) and AMDR Operations Pty Ltd under r 178(2) be extended;
>
> (b) pursuant to s 16(2) of the Civil Proceedings Act 2011 (Qld) and rr 62 and 69 of the UCPR Ashby Mining Limited and AMDR Operations Pty Ltd be joined as the second and third defendants to the counterclaim;
>
> (c) to the extent necessary the defendant in each proceeding has leave to file a further amended defence and further amended counterclaim substantially in the forms proposed which are exhibited to the affidavit of Maroun Draybi sworn 31 October 2022, save that it be amended to change reference to AMD Resources Limited to Ashby Mining Limited to the extent necessary;
>
> (d) pursuant to r 188 of the UCPR the defendant in BS 4508/21 be granted leave to withdraw:
>
> > (i) the admission at paragraph 1(a) of its amended defence insofar as it concerns paragraph 1(c) of the amended statement of claim; and
> >
> > (ii) the admission at paragraph 27 of its amended defence insofar as it concerns the EPMs referred to at paragraph 27 of the amended statement of claim;
>
> (e) pursuant to r 188 of the UCPR the defendant in BS 4509/21 be granted leave to withdraw:
>
> > (i) the admission at paragraph 1(aa) of its amended defence insofar as it concerns paragraph 1(c) of the amended statement of claim; and
> >
> > (ii) the admission at paragraph 28 of its amended defence insofar as it concerns the mining lease referred to at paragraph 28 of the amended statement of claim;
>
> (f) there be liberty to apply as to the form of the above orders;
>
> (g) the parties file and serve submissions as to costs by 17 January 2023 and email a copy of the submissions to the Associate for Brown J by 17 January 2023.
[45]
[1] The detail of which is set out in the Affidavit of Meredith Bennet sworn 27 November 2022.
[46]
[2] Affidavit of Draybi filed 26 October 2021 at pp. 57-58.
[8]Watkins v Plancorp No. 6 Pty Ltd[1983] 2 Qd R 501 at 504 in relation to s 244(3) of the Supreme Court Act 1995 (Qld) said to be in similar terms to r 178(1)(b)(ii) of the UCPR.
Energy Resources (Common Provisions) Regulation 2016
Resources Act 1989
Court Act 1995
Judicature Act 1876
Cases Cited (3)
(2009) 239 CLR 175
(2010) 241 CLR 1
(1969) 121 CLR 177
[5] The construction of the ML Agreement and the EPM Agreement is the subject of controversy between the parties, and each relies on extrinsic facts as being relevant to their construction.
[6] There was considerable dispute as to the adequacy of the defences and counterclaims filed by National Gold and AU Gold which resulted in the exchange of considerable correspondence, applications being made to withdraw admissions and the filing of amended defences and counterclaims in each proceeding by National Gold and AU Gold on 4 January 2022.[1]
[7] Following the filing of the amended defences and counterclaims, the parties engaged in correspondence as to a Document Plan which was the subject of some negotiation between the parties. That was not agreed on dates set by the Resolution Registrar and a Caseflow intervention notice was issued on 18 July 2022. That resulted in extensions being sought particularly by the Gold parties to enable them to obtain instructions and respond to proposed orders. On 5 September 2022 the Gold parties notified Denjim that it needed to provide time for them to file applications to join the AMD parties. Subsequently, orders were made on 29 September 2022 by consent placing the matter of the Supervised Case List and requiring any application for joinder to be made by 24 October 2022.
[8] The subject of the defences and counterclaims is the entry by Denjim into an agreement with the AMD parties which post-dates the institution of these proceedings. In very simplistic terms, the circumstances giving rise to the applications to amend and join AMD and AMDR to the counterclaims have arisen in this way.
[9] On 30 July 2021, Denjim's solicitors informed the Gold parties' solicitors by letter[2] that Denjim had recently entered into a Tribute Mining Agreement (TMA) with AMD Resources Limited (AMD)[3] and AMD Operations Pty Ltd (AMDR) to "preserve the tenements and progress the development of the Burdekin project", which is also referred to as the Hadleigh Castle mine. According to the correspondence, the TMA gave AMD and AMDR an exclusive right to enter, explore, develop and mine the tenements the subject of ML10344 and the EPMs within statutory constraints, management of the Burdekin Project (the Project). Under the TMA, AMD and AMDR were to provide funding to explore, develop and mine the Project but without any changes being effected to the ownership of ML10344 and the EPMs. Under the TMA, the AMDR was to be paid 80 per cent of the net profit interest generated from the Burdekin Project in consideration for funding the development of the project. The remaining 20 per cent of the net profit interest would be paid to Denjim and to a trustee to be held on trust pending the determination or settlement of these proceedings in the following proportions. In respect of ore extracted from the mining lease, 10 per cent would be paid to Denjim and 10 per cent would be paid to the trustee, and in respect of any ore extracted from the EPMs, it would be held in proportions relevant to the project to the trustee. The letter informed the Gold parties that the portion of the Tenement Holder Interest held on trust would be distributed in accordance with the resolution of the proceedings. It further stated that subsequently the Tenement Holder Interest would be paid in accordance with the parties' respective determined holdings in the Burdekin Project and contended that there would be no prejudice to the Gold parties as a result of the TMA.
[10] Rather surprisingly, the Gold parties did not respond to that letter until 11 March 2022[4] taking issue with the position stated in that letter and entry by Denjim into the TMA, stating that in light of the interests which the Gold parties claimed in ML10344 and the EPMs "It is not clear how paying AMDR 80% of the net profits from both the Mining Lease and the EPMs could possibly be consistent with our clients' rights..." It further contended that Denjim had breached the ML Agreement and EPM Agreement by entry into the TMA. The Gold parties' solicitor requested a copy of the TMA and information as to the trust as well as an explanation of why their clients' concerns about the TMA were misplaced. The letter stated that the Gold parties reserved all rights "including to further amend their pleadings in the current proceedings ...to apply to join AMDR and/or AMDR Operations as parties to those proceedings, or to commence further proceedings in relation to matters the subject of this letter."
[11] That request was followed up by the Gold parties' solicitors on three occasions[5] but the TMA and the information requested was not forthcoming prior to the joinder application.
[12] In the proposed amended defences and counterclaims, the Gold parties plead two new claims against Denjim arising from the entry into the TMA, asserting that entry into the TMA was a breach of the ML Agreement and EPM Agreement, that entry into the TMA was a breach of trust on the basis that the ML Agreement and EPM Agreement create a relationship of trust and that the TMA was beyond the power of the trustee and is either void or entered into in breach of the trustee's duties. Various alternative relief is sought.
[13] As to the allegations of breach of trust, the Gold parties rely upon the legal character of the transactions based on cl 18 of the ML Agreement and cl 9 of the EPM Agreement deed as operating as a declaration of trust by Denjim, or alternatively as an assignment of an equitable interest, or in the further alternative as a purported assignment of the legal interest which was effective in equity. The Gold parties allege that as a result of the ML Agreement and EPM Agreement they are respectively part equitable owners of ML10344 and the EPMs and the statutory rights attached to the tenements. The amendments also assert in the alternative that the Gold parties are part equitable owners of any income derived from the sale of minerals lawfully mined pursuant to the mining lease or any mining lease granted within the area of 50 kilometres of the EPM.
[14] The ML Agreement and the EPM Agreement provided for the lodging of caveats by the Gold parties by consent which was done. Proceedings were brought in the Land Court by Denjim to remove the caveats. They have been stayed until further order pending the resolution of these proceedings.
[15] The additional relief sought in the amended defence and counterclaim in relation to Denjim includes: declarations that the Denjim holds the Gold parties interests in ML10344 and EPMs[6] and statutory rights of a holder of the rights to any minerals lawfully mined under the authority of the ML10344 and the rights to any income from the sale of minerals on trust; alternatively, that Denjim holds on trust any minerals lawfully mined under the authority of the ML and the rights to any income from the sale of minerals on trust; claims for restitution; a declaration that the TMA is void, and seeking to set it aside or to restrain Denjim from performing the TMA; orders that Denjim pay the amount of trust property transferred to AMD parties in breach of trust, declarations as to profits made by reason of breaches of trust and that a lien or charge is held over trust property; account as to property held on trust, equitable compensation in the amount of Received Trust Property and restitution of trust property; and damages.
[16] The Gold parties' claims against the AMD parties in the respective proceedings in the proposed counterclaims include claims that the AMD parties were liable for inducing a breach of trust, inducing a breach of contract and receiving trust property or the fruits of a breach of trust within the principles of Barnes v Addy[7] as a result of entry into the TMA. The relief the Gold parties seek includes:
[20] The critical issue which occupied most oral argument is whether the Gold parties should be given leave to amend the counterclaim to add the AMD parties in the respective proceedings out of time prescribed under the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) in the terms proposed and/or for them to be joined as defendants or alternatively as third parties.
[21] The Gold parties provided draft pleadings in relation to each of the proceedings with the proposed amendments. Denjim has no issue in relation to the form of pleading. The AMD parties orally raised some criticisms of the proposed counterclaim in terms of the allegations of the AMD parties being knowing parties to inducing or procuring Denjim to commit breaches of trust and receiving property held by Denjim on trust for the AMD parties or being a knowing party to a recipient of property held by Denjim on trust for the AMD parties. While Counsel for the AMD parties framed the complaints in terms of deficiency of pleading material facts, it became evident that the complaints really related to an apparent lack of particulars. I do not consider the alleged pleading deficiencies are a factor which weighs in any material way against the granting of leave for the filing of the amended counterclaim.
[27] In any event, I find that the second limb of r 178(1)(b)(ii) of the UCPR is satisfied. The relief sought in relation to the ML Agreement and the EPM Agreement against the AMD parties is connected with the original subject matter of the proceeding. Notwithstanding the AMD parties are not party to either of those agreements, the relief sought against them is connected to the rights and interests claimed by the Gold parties under those agreements which potentially impacts on the rights and interests said to have been granted to the AMD parties under the TMA and to its validity, or the enforceability of those rights and interests under the TMA in the face of the rights and interests said to be granted under the ML Agreement and EPM Agreement.
[28] The AMD parties contend that any rights or interests of the Gold parties in ML10344 or the EPMs are inchoate and until any right or interest which may be determined to exist by the Court under the ML Agreement or the EPM Agreement is so determined, will not constitute a legal interest capable of supporting the claims and against the AMD parties and providing the Gold parties with the relevant standing until registered under the mineral resources legislation.
[29] The AMD parties contend that the litigation against them is therefore speculative, not founded on a factual dispute and may not survive a summary judgment application made by the AMD parties on the basis that the claims would have no reasonable prospects of success. AMD further asserts that in relation to the deed, that is a contractual issue between Denjim and the Gold parties which does not involve the AMD parties. The AMD parties contend that given the causes of action pleaded against them assume a favourable outcome by the defendants, they could be put to the expense of having to engage in a trial which was essentially a speculative one against the AMD parties and would be an inefficient use of the resources of the court and the parties. The AMD parties submit that the current proceedings should be concluded and if the Gold parties are successful and are able to obtain registration of their interest then they may call upon the AMD parties to account under the TMA if appropriate.
[30] The AMD parties further contend that the more appropriate course would be that if the Gold parties have a current enforceable claim against the AMD parties, they could file a counterclaim in respect of those matters in the Federal Court proceeding rather than burden AMD, Denjim and the Supreme Court with AMD parties being joined in the Supreme Court proceedings. There is no compelling reason as to why that would be a more efficient or appropriate course to the present proposed counterclaim for the reasons which I have discussed below.
[31] The AMD parties develop their argument as to the Gold parties lacking standing because they have no enforceable right in relation to ML10344 or the EPMs. They are creatures of statute under the mineral resources legislation. While the AMD parties do not contend equitable interests in mining leases or exploration permits cannot be created by reason of the mineral resources legislation, they contend that until registered there is no interest which can be enforced. The AMD parties assert that they were transferable by the operation of law based on the authority discussed below. According to the AMD parties the interests were registerable under s 17 or s 17A of the Act_._ The AMD parties contend that there is a deficiency in the pleading of the counterclaim, given the absence of pleading of this element notwithstanding it is necessary to support the second prayer of relief.[15] According to the AMD parties a declaration that the Gold parties have registerable interests in ML10344 and EPMs is not sufficient to give it standing to found an action against the AMD parties. Registration must occur and it requires the Gold parties to succeed in navigating the requirements of the mineral resources legislation to achieve registration. Otherwise only Denjim as the holder of the EPMs and mining lease has a legally enforceable right in respect of those tenements.
[32] Under s 17 of the Act a 'prescribed dealing' has no effect unless and until it is approved by the Minister under this part and registered. 'Dealing' is defined in s 16 to have a broad meaning and includes "any transaction or arrangement that causes the creation, variation, transfer or extinguishment of an interest in the resource authority". 'Prescribed dealing' is defined in s 4 of the Mineral and Energy Resources (Common Provisions) Regulation 2016 (Qld) (the Regulation). The AMD parties contend that the transaction under the ML Agreement or EPM Agreement if construed as contended for by the Gold parties would constitute "a non-assessable transfer".
[33] The term "non-assessable transfer" is also defined in schedule 3 of the Regulation. The AMD parties submit that to the extent that it may be relevant it includes "a transfer of a resource authority or share in a resource authority by operation of law". Otherwise, it would be an assessable transfer, which "means a transfer of a resource authority or a share in a resource authority other than a non-assessable transfer."
[34] The AMD parties contend that some support for their contention is found in the case of Avanti Mining and Contracting Pty Ltd v McKelvey[16] (McKelvey) which suggests that the present transaction may be regarded as a non-assessable transfer. Although leave was not given to provide further submissions in relation to the applicability of McKelvey to s 17 of the Act_,_ further submissions were made by the AMD parties and the Gold parties. As it was consented to by all parties, I have taken account of those further submissions. McKelvey was directed at a different point from the present, namely which party was entitled to a 50 per cent interest in a lease, a company or an individual where there was an oral agreement between two parties whereby one party agreed to transfer their 50 per cent interest in the project to the other party at a particular point in time. The Land Court found that the agreement was a transfer of interest to an individual that occurred by operation of law and declared each party to be a 50 per cent interest in the mining lease. Following that declaration, it was recognised that the interest of the transferee may be registered as a transfer of share in a resource authority by operation of law. After that decision, s 17 was repealed and now appears in the form discussed above. However, the AMD parties contend the relevance of the decision is that registration was not automatic even if Avanti Mining held the interest contended and that it recognised an interest could not be held until registered and that it still has relevance given the provisions introduced in place of the repealed s 17, ss 17 and 17A of the Act were of similar effect. The Gold parties contend the decision has no relevance given it is based on a repealed provision and in any event is not a binding decision which carries any weight. It contends that the decision does not address whether prior to registration the proposed transferee would have been able to bring an action in the Supreme Court against a third party if the interest was not registered. While reference was made to the interest in McKelvey being transferred by operation of law and being registerable, the decision is not, as submitted by the Gold parties, of any significant weight in the context of the issue of standing in the present case. The real issue in the case of McKelvey was whether the other contracting party was an individual or a company.
[35] The AMD parties contend in any event that even if it is a non-assessable transfer that is a notifiable dealing under regulation 4A of the Regulation. Under s 17A of the Act a notifiable dealing has no effect unless and until it is notified to the chief executive under and registered. It is not however subject to approval by the Minister like a prescribed dealing. Registration cannot however occur until unpaid royalties are paid and contributions to the scheme fund under s 21 of the Act are paid if in fact the notifiable dealing falls within one of those prescribed in s 21(1)(a). It is not immediately evident that that would be the case here.
[36] The Gold parties contends there is a distinction between the wording for an assessable transfer in the Regulation which refers to a transfer of a resource authority or share in a resource authority, whereas the definition of "dealing" in s 16 of the Act refers to, inter alia, a transfer of an interest in the resource authority. They contend that the latter could be construed as referring to a legal interest as opposed to an equitable interest. Neither party were able to locate any authority in this regard.
[37] According to the AMD parties the Queensland Parliament clearly intended to derogate from any rights in equity which the Gold parties assert they have under their respective deeds as against a third party such as the AMD parties by the requirement that registration of any interest on the mining register is required to have any enforceable right. In order to derogate from such rights, the intention of Parliament must be clear.[17] The Gold parties dispute AMD's construction of the Act and contend they have standing to sue based on equitable rights in the EPMs or ML10344 and the difference in language, which is supported by the inclusion of a statutory right to lodge a caveat. The Gold parties also identified the difference in language between for example s 17 and a prescribed dealing, "creation...of an interest in the resource authority" as opposed to "transfer of a resource authority or a share in a resource authority" with the latter being narrower concept which looks to the transfer of a legal interest and would not effect equitable contractual rights under an agreement.
[38] Whilst the contention by the AMD parties is not without foundation, I am not presently persuaded that it is clear that Parliament did intend to derogate from the private rights of parties in terms of enforceable rights and there are not contrary interpretations on the relevant provisions open. There is recognition of equitable interests being able to be protected by the lodgement of caveats pursuant to s 25 of the Act, albeit that a caveat does not create an interest in the affected resource authority. The claimed interest in a resource authority must be otherwise established. While it does appear that registration is required in order to establish a legal interest, whether it would prevent a party from enforcing equitable interest is far from clear. As the Gold parties submitted. The AMD parties can take summary steps to seek judgment on this basis after they have defended the allegations if they consider it is open and at that stage the issues can be properly ventilated which is not presently the case.
[39] More significantly for the present application is that even if the contentions of the AMD parties were accepted, any requirement to have a registered interest in a mining lease or EPM would not exclude the Gold parties standing to pursue claims against the AMD parties in respect of inducing a breach of contract and breach of trust or being knowing recipients of trust property and the narrower declaration that it has an entitlement to the minerals and the distribution of profits even if they do not have an interest in the EPM or ML10344. The trust created by the deed is in the alternative alleged to be limited to a 50 per cent interest in the minerals lawfully mined under the authority of the mining lease and any income from the sale of the minerals lawfully mined under the authority of the mining lease.
[40] The Gold parties also point to the fact that they seek specific performance of the EPM Agreement. Under the Agreement provision is made for the parties seeking registration of the interests to reflect the equity proportions referred to in cl 9 of the EPM Agreement only after the raising of particular funds and expenditure on exploration with the parties using their best endeavours with the relevant department to ensure that the titles are registered to reflect the equity proportion.
[41] I do not accept the contention of the AMD parties that all of the causes of action raised in the counterclaim without the registration of the Gold parties' interests are speculative and not a factual dispute capable of litigation, although I do take into account the potential impediments to the Gold parties succeeding insofar as they seek relief declaring their interests in the EPM Agreement and ML Agreement. However, the claims made by the Gold parties are broader than that and it is not contended could not be pursued by reason of the mineral resources legislation.
[49] Denjm has conceded quite properly that if the TMA amendments were allowed, the AMD parties are necessary parties to the resolution and that if the counterclaim against AMD parties was dealt with separately the AMD parties could arguably put inconsistent arguments forward in respect of the EPM and ML Agreements.
[50] I am satisfied the AMD parties should be joined satisfying both limbs of r 69(1)(b) of the UCPR.
[54] Presently the EPMs have not resulted in any new mining leases and therefore no profits can be expected in the near future. In relation to the mining lease, it is said on information obtained and believed by Ms Bennett that it is unlikely any profits will be generated before mid-2024, although it is noted that there is reference in one of the documents to potential cash flow being generated in 2023. On this basis, Denjim contends there is no prejudice in the Gold parties having their amendments disallowed or requiring them to be tried separately. Denjim contends that expanding the action to allow the counterclaim to raise the issues with respect to the TMA and against the AMD parties will cause prejudice to it because of the delays to the prosecution of the proceedings and the fact it is holding funds on trust which it has agreed it will not utilise pending the outcome of the proceedings. The amount proposed to be retained falls well below that claimed by the Gold parties as their entitlement under the ML and EPM agreements, thus it does not substantially allay the prejudice that may be suffered by the Gold parties if they are successful.
[55] As submitted by Denjim the proceedings are presently restricted to the construction of the deed and the circumstances of termination.
[56] While one may accept that the expanded nature of the action will cause some delay as the proposed amendments expand to the entry into the TMA, they do not expand the scope of the proceedings significantly. As to any prejudice suffered due to Denjim causing 10 per cent of net profits to be held on trust pending the outcome by the proceedings, that presently does not appear likely to cause any significant prejudice as even on Denjim's own material it is unlikely profits will be generated before mid-2024 and the case is being case managed.
[57] While I accept having reviewed Ms Bennett's first affidavit, that the Gold parties have been guilty of some delay, some of the delay is explicable by the Gold parties seeking a copy of the TMA and some genuine disputes arising between the parties. Denjim attributes the delay in the proceeding to the Gold parties. There does however seem to have been some delay by both sides at least since January 2022. The action has not been executed with any great expedition and remain at an early stage.
[58] Disclosure is yet to occur. No evidence has been filed and no other pre-trial directions have been made. Given the proceedings are now case managed on the Supervised Case List, any interference and delay caused to any potential trial date would not be expected to be significant nor would the length of trial be significantly longer, albeit I accept it will be longer than it otherwise would have been on the present state of the pleadings. Many of the allegations in the counterclaim relate to the AMD parties' knowledge of the EPM and ML agreements and rely on the inconsistency of what Denjim has apparently agreed with the AMD parties under the TMA, the terms of which are alleged to be in breach of the EPM or ML agreements and induced a breach of contract or breach of trust and has provided benefits to the AMD parties which are alleged to have been held on trust for the Gold parties. While the evidence will be expanded from what would presently be relevant in the proceedings, the further evidence that would result from the proposed amendments is of reasonably narrow scope.
[59] One matter which is of significance to the exercise of the Court's discretion which has been raised by Gold parties is that if the Court does not at least permit the joinder of the AMD parties there is the potential for inconsistent findings to arise. The AMD parties have stated in a public document that the TMA will not be affected by the outcome of the present proceedings even if the Gold parties are successful, insofar as it has asserted Denjim would have no right of termination. Given the interconnection between the rights and interests claimed by the Gold parties under the EPM and ML agreements and the rights and interests said to have been obtained by the AMD parties under the TMA under the proposed amendments if the TMA proceedings were to be heard separately, there is the real potential for conflicting findings in relation to the scope and meaning of the ML and EPM agreements when considering the potential claims arising out of entry into the TMA because of the pre-existing ML and EPM agreements between Denjim and the Gold parties. Given the fact that the counterclaim against the AMD parties relies on the construction of the ML and EPM agreements there is a real potential for inconsistent findings if the counterclaim is heard separately. Counsel for the AMD parties contends that the ML and EPM agreements should be construed differently, particularly given the AMD parties' alleged knowledge of those agreements is relevant to the claims made against them. I accept there is potential for inconsistent findings to arise. That is a significant factor which weighs in favour of granting leave for the amendments to the counterclaim and joinder of the AMD parties. While as the AMD parties submit, they were not parties to the ML and EPM agreements and both Denjim and the Gold parties raise extrinsic facts as being relevant to the question of construction, that does not preclude the AMD parties contending a different construction should be adopted by the Court.
[60] The fact that the Gold parties can amend the defence and counterclaim against Denjim to raise the claims in respect of the TMA without the Court's leave given the matter has not been set down for trial, supports the relief sought by the Gold parties to include the AMD parties given the impact upon them. As was properly conceded by Denjim, if the claims with respect to the TMA are allowed the AMD parties are necessary parties for the adjudication of the matters that will be in dispute in respect of the TMA.
[61] Notwithstanding that the amendments to the counterclaims relate to events which have occurred subsequently to these proceedings being instituted, the impact of entry into the TMA upon any rights and interests that may be found to have accrued to the Gold parties under the EPM and ML agreements and the effect on the legal environment that will apply to the AMD parties rights and obligations under the TMA if the Gold parties are successful in their construction of EPM and ML agreements satisfy me that the just and expeditious resolution of the real issues in dispute should extend to the allegations that are the subject of the amended defences and counterclaims in respect of the TMA made against Denjim and the AMD parties. I am satisfied there is a sufficient basis for the pleaded causes of action against the AMD parties and that they are not speculative notwithstanding the Gold parties do not have the TMA.
[62] I am therefore satisfied that leave should be granted to the Gold parties to file the amended counterclaim and join the AMD parties as necessary parties for the adjudication of the matters that will be in dispute in relation to the TMA, which will be affected by the determination of the terms of the EPM and ML agreements or on the basis of r 69(1)(b)(ii). While the AMD parties obviously were not parties to the EPM and ML Agreements nor privy to the pre-contractual negotiations, given the allegations that the TMA breached the EPM and ML agreements which the AMD parties are said to know and the allegation that the AMD parties were aware of the terms of the deeds, inconsistencies could arise if they are not parties to the proceedings. Their rights or liabilities will be directly affected by the relief the Gold parties seek against Denjim and orders the Court may make, given the rights asserted to arise under the ML and EPM agreements will affect the legal characteristics and the legal environment relating to the rights of the AMD entities have and will acquire under the TMA. While the defences and counterclaims will fall away against the AMD parties if Denjim is correct as to its construction of the ML and EPM agreements, the inter-relationship between the Gold parties' construction of the deed and any rights acquired under the TMA as well as the potential for inconsistent findings if heard separately persuade me that the most expedient course is to grant leave. As discussed above, given the stage of the proceedings the joinder of the AMD entities will not lead to significant delay in the conduct of the proceedings or prejudice to Denjim.
[63] While I have considered AMD parties' submission that the better and more expedient course if the Court concluded that the Gold parties had arguable rights which could be enforced against the AMD parties would be for the Gold parties to make a counterclaim in the Federal Court proceedings brought by the AMD (not AMDR) against the Gold parties, I do not consider that is a more appropriate or expedient way of resolving the issues between all of the parties. Those proceedings themselves have only been recently instigated, seek relief for misleading and deceptive conduct due to an assertion of rights which the Gold parties claim arise under the deed, whereas the relief under the counterclaim is far broader and would require the joinder of Denjim and AMDR and could lead to inconsistent findings in relation to the construction of the ML and EPM agreements from this Court. The suggestion that this application was brought in response to the Federal Court proceedings was not borne out by the facts and not ultimately pursued on behalf of the AMD parties.
[64] In this regard I am conscious of the fact that there is a threshold issue in relation to the EPM and ML Agreements as to whether they have been lawfully terminated by Denjim. It is not appropriate in the context of the present application to make directions in relation to any question of whether there ought to be a separate determination of the questions of the construction and terms of the deed and the termination of the deed, until pleadings have closed. Given the fact that this matter is to be case managed that is a matter which can be considered by the judge responsible for case management at the appropriate time.
[65] It is not necessary for me to consider the alternative bases of relief sought by the Gold parties given my determination above.