HONGKONG XINHE INTERNATIONAL INVESTMENT COMPANY LIMITED -v- BULLSEYE MINING LIMITED [No 6] [2023] WASC 131 (28 April 2023)

1. I summarise below the matters in the Annual Report to which Xinhe drew attention in its application.
2. In Note 3 to the financial statements, the following was recorded:

Correction of error

An error was discovered during the course of the reporting period whereby a share based payment made in FY22 related to prior periods which had been omitted in the financial statements for FY18 to FY21. The error resulted in the other expenses, other current liabilities and accumulated losses being understated, across the four year period by $1,657,084. Subsequent to year end the Board has engaged the Company's legal advisors to undertake an examination of the matter. Extract (being only those line items affected) are disclosed below.

1. The extract set out in Note 3 reflected an adjustment of an additional loss of $485,000 for FY21. That is, of the previously unaccounted-for share-based payment to the value of $1,657,084 relating to the period FY18 to FY21, $485,000 was attributed or allocated to FY21.
2. Notes 15 and 20 to the financial statements also disclosed that the $1,657,084 share-based payment represented the issuing of 8,285,420 shares at $0.20. Those shares were payable for the period 28 November 2017 to 30 June 2021 but were in fact all issued in FY22. Note 20 disclosed that the total relevant number of shares issued in FY22 was 9,700,000 at a total value of $1,940,000.
3. Notes 20 and 31 to the financial statements also disclosed that the issue of the 9,700,000 shares was to unrelated third parties for 'consulting and advisory services provided'.
4. From the combined effect of Notes 3, 15, 20 and 31 to the financial statements in the Annual Report it emerged that:
   1. in FY22 9,700,000 shares were issued at $0.20 per share for a total value of $1,940,000 to unrelated third parties for consulting and advisory services;
   2. of the 9,700,000 shares issued in FY22, 8,285,420 shares at a total value of $1,657,084 were issued in respect of the period from 28 November 2017 to 30 June 2021;
   3. the balance of the 9,700,000 shares were issued in respect of the period from 1 July 2021 to 28 November 2021; and
   4. the current liabilities in FY21 were retrospectively adjusted by $485,000 to account for the value of the shares payable in that year.
5. Counsel for Bullseye explained from the bar table that the figure of $485,000 shown as an additional current liability for FY21 was the result of dividing the total dollar value of the issued shares ($1,940,000) equally across the four years in which it was payable. I understood Bullseye's counsel's explanation to be that where the entitlement extended across a full year, that is, FY19, FY20 and FY21, the relevant adjustment to the current liabilities was a full quarter of the total value of the shares issued, i.e., $485,000, and where the entitlement related to less than a year (FY18 and FY22) a pro-rata adjustment was made. It is not possible to ascertain from the Annual Report itself whether the allocation for current liabilities was adjusted in the manner explained by Bullseye's counsel for the years prior to FY21, or if that was indeed done, the basis for so doing. Whether the allocation in respect of any of the financial years reflects the actual contractual entitlement for that year, or some form of retrospective accounting allocation, is not apparent.
6. In addition, Notes 20 and 31 also disclosed that a further 630,000 shares were issued in FY22 at $0.20 for a total value of $126,000 to an unrelated third party or parties for a 'Ball Mill finders fee'. It does not appear to be suggested in the Annual Report that those shares were payable in a previous year or years so as to warrant a correction to the current liabilities for previous financial years. However, Xinhe pointed to documents that suggested that the payments for a ball mill by Bullseye were concluded in 2020. The annual report for FY20 (Ex-1132) referred to a purchase agreement for a ball mill dated 18 November 2019 and payment of a significant proportion of the purchase price. The minutes of Bullseye's AGM of 30 November 2020 (Ex-1156) records advice given to the meeting by the third defendant, Mr Peter G Burns, which confirmed that the ball mill the subject of the purchase agreement had been fully paid as at the date of the meeting. In light of those documents, the payment of a finder's fee in FY22 appears curious.
7. Following receipt and consideration of the Annual Report, Xinhe's lawyers wrote to Bullseye and separately to its auditors, with a fairly lengthy series of questions in relation to matters contained in the Annual Report. These questions included, but were not limited to, the matters the subject of this application.
8. Through correspondence and its own investigation of publicly available documents, Xinhe drew the inference, and effectively invites the court to draw the inference, that the 9,700,000 shares issued in FY22 referred to above were likely to have been issued to two shareholders resident in Ireland, a Mr Brian Conway and a Mr John Joseph McKenna, and that the services provided were likely to have been provided in respect of fundraising for Bullseye. Xinhe submits that it must be the case that there was an agreement or agreements around November 2017, pursuant to which Mr Conway and Mr McKenna were to receive consideration for consultancy services which was ultimately satisfied in December 2021 by the issuing of 9.7 million shares at a value of $1.94 million. The liability for these payments was only disclosed in the Annual Report and the agreement or agreements with Mr Conway and Mr McKenna, and the associated documentation, have still not been disclosed.
9. In addition, Xinhe submitted on the basis of its analysis of the relevant documents that it ought to be inferred that the finder's fee for the purchase of the ball mill was also paid to Mr McKenna.
10. In its application, Xinhe seeks orders for:
    1. ...further and better discovery of documents relating to:
       1. the issue of 8,285,420 shares at $0.20 in lieu of consulting services provided during the period 28 November 2017 to 30 June 2021, including any agreement or document(s) recording the terms of an agreement for the consulting services and/or the issue of shares in lieu of services or payment;
       2. the purchase by the first defendant of a ball mill and any agreement or document(s) recording the terms of an agreement for the payment (whether in cash or otherwise) of a finder's fee; and
       3. correspondence between the defendants or any of them and John McKenna and/or Brian Conway in the period November 2017 to December 2021.'
11. The documents sought by Xinhe are of a wide class, particularly as what is sought are all documents 'relating to' the matters identified.

1. Order 26 rule 2 provides that a party is under a continuing obligation to give discovery of any document relevant to any matter in question 'until the conclusion of the trial'. Whether or not that obligation continues after the close of the trial, there would appear to be no doubt that an application for further discovery can be made after the close of the trial before judgment is delivered. Order 26 rule 7 provides that such an application can be made 'at any time'. Until judgment is delivered the proceedings are plainly still on foot and fall within the scope of the words 'any time'. It is therefore not necessary for a party's case to be re-opened in order for an order for discovery to be made: see Matson v Attorney-General [2020] FCA 1558 [365].
2. The principles applicable to an application for further discovery are settled and need not be repeated. One aspect however warrants particular attention.
3. Order 1 rule 4A provides:

The practice, procedure and interlocutory processes of the Court shall have as their goal the elimination of any lapse of time from the date of initiation of proceedings to their final determination beyond that reasonably required for interlocutory activities essential to the fair and just determination of the issues bona fide in contention between the parties and the preparation of the case for trial.

(1) Actions, causes and matters in the Court will, to the extent that the resources of the Court permit, be managed and supervised in accordance with a system of positive case flow management with the objects of -

(a) promoting the just determination of litigation; and

(b) disposing efficiently of the business of the Court; and

(c) maximising the efficient use of available judicial and administrative resources; and

(d) facilitating the timely disposal of business; and

(e) ensuring the procedure applicable, and the costs of the procedure to the parties and the State, are proportionate to the value, importance and complexity of the subject matter in dispute; and

(f) that the procedure applicable, and the costs of the procedure to the parties, are proportionate to the financial position of each party.

1. Rule 4B(2) requires the rules to be construed and applied, and the processes and procedures of the court conducted, so as best to ensure the attainment of the objects referred to in subrule (1).
2. The principles embodied in those rules have been applied consistently by this court in the context of applications for discovery.[3] In Kelbush Pty Ltd v Australia and New Zealand Banking Group, Martin CJ stated that it is difficult to overstate the importance of proportionality embodied in O1 r 4B.[4] In light of the background I explained at the beginning of these reasons, the considerations mandated by O1 r 4A and 4B are of particular importance in assessing the plaintiff's application for discovery in the context of a foreshadowed further application to re-open the matter. In the present circumstances, these principles require that any order for discovery or re-opening of the matter can only be justified if such a course is required to effect the fair and just determination of the issues bona fide in contention.
3. In that context it is important to observe that there has been no foreshadowed amendment to the pleadings nor any suggestion of, or anything akin to, pre-action discovery. The application falls to be determined in light of the pleadings as they stand. Although the evidence at trial, and in particular aspects of cross examination strayed somewhat liberally beyond the strictly pleaded issues into matters of background, context and issues of credit, it was not the case that the parties litigated the case at trial in a manner that was materially different from the pleadings. On the contrary, all parties were careful to remind each other and the court that the issues at trial were defined by the pleadings: see Gunn v Meiners [2022] WASCA 95 [110] ‑ [113].
4. Xinhe submitted that discovery in the terms it seeks will likely give rise to the disclosure of the consultancy agreement or agreements as well as the disclosure of the following matters:
   1. In respect of what matter were Messrs Conway and McKenna engaged as consultants to Bullseye?
   2. Who engaged them?
   3. What services did they provide pursuant to the Consultancy Agreement over the span of November 2017 to December 2021?
   4. Why were the consultancy fees not disclosed in the annual accounts for 30 June 2018, 30 June 2019, 30 June 2020 and 30 June 2021?
   5. Who was responsible for the omission to refer to these significant payments in the annual accounts of Bullseye?[5]
5. Xinhe identified the aspects of the pleading to which it contended the documents are relevant. It identified the relevant paragraphs of the statement of claim as follows:
   1. Whether Bullseye carried out its principal activities of gold exploration - paragraphs 65.3, 77 and 158L of the Statement of Claim;
   2. Bullseye's solvency and financial performance - paragraphs 65-65A, 158I-158M and 159.11 of the Statement of Claim;
   3. The performance and therefore the remuneration of the directors - paragraph 70 of the Statement of Claim and of the respective Defences.[6]
6. It follows that any order for discovery or re-opening of the matter is only justified if it is required to effect the fair and just determination of the issues identified by Xinhe and set out at paragraph [28] above. I shall deal with each of those issues in turn.

Whether Bullseye carried out its principal activities of gold exploration

1. Paragraph 65 of the statement of claim concerns certain matters disclosed by Bullseye's 2019 annual report. At paragraph 65.3 of the statement of claim, Xinhe refers to Bullseye's loss for that year in excess of $3.8 million, which included expenditure on employee benefits of $905,865 and legal costs of $1,178,410. By reference to that expenditure and loss, Xinhe pleads that Bullseye 'thereby failed to conduct its principal activities of exploration for and development of mineral resources in the interests of its members'.
2. Paragraphs 72 to 76J of the statement of claim plead a range of matters relating to the mineral tenement portfolio of Bullseye. Xinhe alleges that a significant proportion of the tenements are the subject of applications for exemption from expenditure by Bullseye (some of which are the subject of objections by third parties) and applications for forfeiture by third parties. Xinhe also pleads various failures on the part of Bullseye to satisfy its minimum statutory expenditure requirements on various tenements. Xinhe further pleads that there was no reasonable basis for the advice of Bullseye's directors to shareholders that the objections to expenditure exemption and the forfeiture applications were groundless. Xinhe also pleads that Bullseye undertook some last-minute expenditure on a prospecting licence. The prospecting licence lapsed, there has been no reporting of the drilling results and the expenditure was not reported to the relevant statutory authority. The expenditure was therefore allegedly of no value. Moreover, it is alleged that Bullseye failed to comply with its statutory rehabilitation obligations for the prospecting licence.
3. At paragraph 77 of the statement of claim Xinhe pleads that by reason of the matters summarised at paragraph [31] above, Bullseye again 'failed to conduct its principal activities of exploration for and development of mineral resources in the interests of its members and has jeopardised the value of its exploration and development assets'.
4. At paragraph 158I Xinhe pleads certain matters disclosed in Bullseye's 2020 annual report regarding its financial position. In particular, Xinhe refers to a significant loss, a decrease in net assets, a significant surplus of current assets over current liabilities, and to Bullseye's incurred expenditure on exploration and contracted expenditure for exploration for FY21. Paragraph 158J pleads various other financial matters disclosed in the 2020 annual report including the assumption of debt, entry into an early works agreement with a third party, payment for a ball mill and funds raised from a share placement. Paragraph 158L pleads that by reason of those matters, Bullseye again 'failed to conduct its principal activities of exploration for and development of mineral resources in the interests of its members'.
5. Presumably, Xinhe contends that the payments disclosed in the Annual Report may further exemplify expenditure that undermined the financial health of Bullseye and did not contribute to its exploration and development of mineral resources. In broad terms it might be said that any conduct of Bullseye that impacted adversely on its financial position or impeded its capacity to explore and develop mineral resources is relevant to an allegation that Bullseye failed to conduct its exploration activities in the interests of its members or jeopardised the value of its assets. And that in turn may be relevant to the oppression action to which these allegations are directed. However, it is not immediately clear how the documents sought in this application relate in any particular way to the matters summarised at paragraphs [30] to [33] above so as to render their production necessary for the fair and just determination of those issues. In the present circumstances, a broad, unparticularised and somewhat speculative connection between the documents sought and the allegations contained in paragraphs 65.3, 77 and 158L and in turn the allegation of oppression, is not sufficient to require the broad sweep of documents pressed by Xinhe.
6. Accordingly I am not persuaded to make orders for discovery as sought by Xinhe on the basis that they are relevant to the issue of whether Bullseye carried out its principal activities of gold exploration as pleaded at paragraphs 65.3, 77 and 158L of the statement of claim. It also follows that I would not be prepared to permit Xinhe to re-open its case on that basis.

1. Xinhe pleads at paragraph 65A of the statement of claim that Bullseye was insolvent or likely so as at 11 May 2020. Xinhe particularises that allegation by reference to paragraphs 65, 95, 96, 97 and 100A to 100F of the statement of claim and alleges that as at 6 May 2020, investors under subscription agreements (referred to below) had only provided funds of $593,611.04 'before deduction of capital raising costs or fees'. Paragraph 65 refers to aspects of the financial position reflected in Bullseye's 2019 annual report. The balance of the paragraphs relied upon for the allegation of insolvency come under the heading 'Subscription Agreements' commencing with paragraph 95. Paragraphs 95, 96 and 97 refer to Bullseye's endeavours in 2019 and 2020 to raise $13.6 million through subscription agreements, that by 13 May 2020 Bullseye had raised only about $2.1 million by subscription for shares, and that aspects of the subscription agreements and the funds raised were not reported accurately to shareholders and demonstrate that the subscription agreements were not as successful or as valuable to Bullseye as appeared from Bullseye's communications with shareholders. Paragraph 100A pleads four specific subscription agreements entered into by Bullseye in early July 2019 to raise approximately $13.75 million. One of those subscription agreements was with Mr John Joseph McKenna. Paragraphs 100B to 100F are relevantly directed to allegations that aspects of the agreements were such that, when properly understood, they were of considerably less value to Bullseye than might otherwise have been assumed by shareholders, and these matters were not disclosed to shareholders.
2. Paragraph 65A goes on to plead that 'the plaintiff intends to lead expert evidence on the issue of insolvency'. No such evidence was adduced.
3. Paragraph 158M pleads that Bullseye was or was likely to be, insolvent as at 5 November 2020. Xinhe particularises that plea by reference to:

(a) the same paragraphs as the plea in relation to insolvency as at May 2020;
>
> (b) in addition, paragraphs 158H to 158K; and
>
> (c) the fact that as at 5 November 2020 the subscription agreements had only raised $1.82 million including transaction costs.

4. Paragraph 158M again pleads Xinhe's intention to lead expert evidence which did not eventuate.
5. Paragraphs 158H to 158K refer to financial matters regarding Bullseye disclosed in Bullseye's 2020 annual report, the substance of which is set out at paragraph [33] above.
6. The pleaded allegation of insolvency thus rested on the matters in Bullseye's 2019 and 2020 annual reports and the range of matters pleaded about the lack of value and success of the subscription agreements in 2019 and 2020. The pleadings and the evidence did not descend into a general investigation of common indicia of insolvency such as whether creditors were able to be paid as and when debts fell due. Contrary to what appears to be the suggestion of Xinhe in its closing written submissions,[7] this course was not in substance 'at the direction of Justice Hill'. Rather, the relevant orders given by her Honour Justice Hill concerned the parameters of discovery on the basis of the Xinhe's own confined plea relating to insolvency. The matters disclosed by the 2019 and 2020 annual reports showed a significant excess of assets over liabilities and certainly well in excess of the additional current liability belatedly disclosed in the Annual Report. The lack of value or success of the subscription agreements and their impact upon Bullseye's solvency are matters that fall to be considered in the assessment Xinhe's claim of insolvency. However, in my view, the relevant matters belatedly disclosed in the Annual Report can only at best be marginally relevant to Xinhe's pleaded allegations of insolvency. To the extent that they are relevant, the parties have consented to Xinhe re-opening its case to tender the Annual Report and to make submissions in respect of the relevant disclosures. In my view, that is sufficient to effect the fair and just determination of the pleaded issue in respect of insolvency.
7. In the circumstances, I do not consider that the further discovery sought by Xinhe is required to effect the fair and just determination of the pleaded issue in respect of insolvency pleaded at paragraphs 65‑65A, 158I-158M and 159.11 of the statement of claim. It also follows that I would not be prepared to permit Xinhe to re-open its case on that basis.

1. Xinhe pleads at paragraphs 70 and 71 of the statement of claim that remuneration paid to the directors, Mr Peter J Burns (second defendant), Mr Peter G Burns (third defendant) and Ms Dariena Mullan (fourth defendant) were made in contravention of s 208 of the Corporations Act. That section relevantly provides that a financial benefit given to a director by a public company requires the approval of the company's members unless it falls within specified exceptions. At paragraph 159.9 of the statement of claim, Xinhe pleads that the remuneration paid was not reasonable given the respective roles or Messrs Burns and Ms Mullan and Bullseye's financial position and it was therefore oppressive to, unfairly prejudicial to or unfairly discriminatory against Xinhe and other shareholders.
2. Section 210 provides that member approval is not required if the benefit would be reasonable in the circumstances if the company and the director were dealing at arm's length or the terms are less favourable to the director than would be the case in those circumstances. Section 211 provides that member approval is also not required for remuneration to a director of a public company if the remuneration is reasonable in the circumstances of the public company. The defendants plead that the remuneration paid to Messrs Burns and Ms Mullan came within one of or both the relevant exceptions in ss 210 and 211. In its reply, Xinhe denies that those exceptions applied in the circumstances. Xinhe further alleges that the remuneration paid to the directors exceeded their contractual entitlements.
3. Xinhe's focus at trial, as reflected in its closing submissions, directed attention to what Xinhe alleged was the absence of shareholder approval. That is alleged to have occurred where the directors were in a position of conflict and personally participated in fixing, and facilitating, the allegedly offending remuneration. Xinhe emphasised also what it characterised as Bullseye's parlous financial circumstances and the difficulties associated with the performance milestones fixed under the remuneration agreements which were selected by Mr Peter G Bruns and Ms Mullan themselves, and according to Xinhe, not satisfied on the evidence in any event.
4. A significant focus of the evidence at the trial was whether the terms of the remuneration were reasonable or at arm's length in the circumstances, and whether the payments reflected remuneration that was consistent with relevant market practice. Each party called expert evidence on those matters. The expert evidence was directed largely to whether the quantum and form of the remuneration was consistent with comparable market practice in Western Australia. To that end, the expert evidence included information and analysis in relation to remuneration practices in other companies in the mining industry. That evidence also included information and commentary from the experts regarding remuneration practices for junior exploration companies which, like Bullseye, were still working towards the point of producing income and had significant pressing and ongoing expenditure commitments. The parties' closing submissions reflected the significance of the expert evidence to their respective positions.
5. In closing submissions, counsel for Xinhe placed particular emphasis on the remuneration aspect of Xinhe's case and remarked that notwithstanding the more than 8,000 pages of transcript the issue of remuneration paid to the directors presented 'an amazingly clear path through to an unarguable finding of oppression'.[8] In that context, counsel for Xinhe emphasised the absence of shareholder disclosure and approval, the directors' position of conflict, the directors' crafting of their own agreements based on their own assessment of their competence and worth, and the problems associated with the content and fulfilment of the performance milestones.
6. The necessity of the documents sought in this application to effect the fair and just determination of the pleaded issue in respect of the directors' remuneration does not emerge simply or clearly from the pleadings or the parties closing submissions. However, Xinhe submitted that Bullseye's financial predicament was relevant to the reasonableness of the remuneration. The matters disclosed by the Annual Report, and in turn the documents sought, were therefore necessary to evaluate that issue. Xinhe also contended that the disclosures in the Annual Report plainly reflect error in the preparation of previous annual reports and are strongly suggestive of issues that would impact on the assessment of the directors' competence and worth, which in turn is relevant to the reasonableness of the remuneration they received.
7. In my view, the financial errors disclosed by the Annual Report do not render the discovery sought by Xinhe necessary in order to effect the fair and just determination of the pleaded issues in respect of the directors' remuneration. That is for the following reasons.
8. First, the retrospective impact of the error on Bullseye's financial position at the relevant times is now apparent in light of the disclosures in the Annual Report. The parties have all agreed that Xinhe may re‑open its case for the purpose of tendering the Annual Report and advancing submissions on the matters it discloses. The parties will now have the opportunity to make submissions in that regard.
9. Secondly, given the significant losses reported in each annual report over the relevant time, it appears to me unlikely that the additional losses now disclosed will make a sufficiently material difference to the pleaded issues regarding remuneration so as to necessitate discovery of the documents sought by Xinhe.
10. Thirdly, although Xinhe's case in respect of remuneration does not rest solely on matters the subject of expert evidence, that evidence was a prominent and fairly central plank in Xinhe's case on oppression caused by the payment of remuneration. Xinhe's own expert witness, Mr Turnbull disavowed any statistical link between the market levels of remuneration and increased financial distress of a company.[9] The expert called by the directors (Mr Edwards) similarly gave evidence that a company's precarious financial position would not necessarily reflect lesser remuneration for its executives, provided the company remained a going concern.[10]
11. The Annual Report's potentially adverse reflection on the directors' competence and the consequential impact on appropriate remuneration, is less clear. In my view, the matters disclosed by the Annual Report may well be relevant to an assessment of the appropriateness of remuneration paid to the directors over the relevant period. Counsel for the directors sought to address that proposition by submitting that if the court were ultimately persuaded that the directors' competence and skill level did not justify the remuneration they were paid, then any deficiency manifest in the errors disclosed by the Annual Report would not add materially to that conclusion; it would just be another example, or simply more of the same. I am not attracted to a submission predicated as it was on the suggestion that I should not be concerned with the evidence of potential incompetence because it may just be one episode of many in a chain of deficiencies. Nevertheless, in the present circumstances I am concerned to ensure that any further agitation of the issue of skill and competence that may arise from the disclosures in the Annual Report is proportionate to the issues in the case as a whole. I am not persuaded that the suite of documents sought by the application is required for the just determination of Xinhe's claim of oppression based on the remuneration paid to Messrs Burns and Ms Mullan.
12. In the circumstances I consider that the interests of justice (including the public interest in the efficient deployment of judicial resources) and an appropriate balance of the competing concerns may be accommodated in the following manner. The disclosures in the Annual Report in my view are plainly capable of providing a foundation for the drawing of adverse inferences as to the skill and competence of those directors involved in the financial management of Bullseye and the preparation of its financial statements for the years the subject of the now disclosed errors. Bullseye and its directors are by these reasons put on notice that the court regards adverse inferences as open on the evidence which will now include the Annual Report. Under the agreement of the parties and the consequential orders of the court that I intend to make, the parties, including the directors, will have an opportunity to make submissions about those matters. Following that process, Bullseye and/or the directors may consider they require the opportunity to re-open their cases to adduce further evidence and submissions to rebut the adverse inferences of which notice has been given. At that point I will consider any application to re-open a party's case that may be advanced. I decline therefore at this stage to order the discovery sought by Xinhe and I will consider any limited application to re-open in respect of the directors' skill and competence and its relevance to Xinhe's claim of oppression based on remuneration, at the appropriate time.

1. I also note that Xinhe has issued two further sets of proceedings, now consolidated into COR 159 of 2022. Paragraph 5 of the 'Details of Application' in Xinhe's originating process seeks relief under sections 233, 670B, 1317H, 1324, 1325A and 1325C of the Corporations Act for:

the first defendant incurring and failing to disclose certain of its liabilities in its annual financial reports for the years ended 30 June 2018, 30 June 2019, 30 June 2020 and 30 June 2021, in contravention of section 297 of the Corporations Act.

1. It follows that Xinhe's complaints in relation to the failure to disclose the financial matters now apparent from the Annual Report are sought to be advanced in those proceedings.
2. I should also add that in my review of the parties' positions and the issues raised in this application generally, I have not overlooked that the disclosures in the Annual Report may raise other issues that were touched upon by the evidence as it unfolded at trial. For example, Xinhe contends that on the available evidence, the consultancy services that earned the additional shares likely related to fund raising activities in circumstances where it is quite possible that the funds were in part provided by the consultants themselves. That may mean, in effect, that the consultants were paid for raising money from themselves and that might add to Xinhe's concerns regarding the level of disclosure that was made in relation the subscription agreements and fundraising more broadly. Putting to one side the speculative nature of these contentions, I am not persuaded that these matters would in any event be sufficiently relevant to the pleaded issues so as to render their exploration necessary for the just determination of the pleaded issues. Indeed, I note that matters of that nature were touched on by Xinhe in opening submissions[11] and were the subject of questions in the course of the evidence in the cross examination of Mr Peter G Burns[12] and Mr Peter J Burns.[13] It was also mentioned in passing by Ms Mullan.[14] As I have noted at paragraph [36] above, Xinhe's statement of claim also referred to the funds obtained from the subscription agreements 'before deduction of capital raising costs or fees'. Notwithstanding those references in the opening submissions, the evidence and the statement of claim, the issue was not in substance agitated in the pleading or the written closing submissions by Xinhe. It was referred to by Xinhe in closing submissions merely in passing.[15] I acknowledge that from the figures provided in the Annual Report it would appear that the quantum of the liability was significantly greater than the commissions touched upon in the evidence. Nevertheless, the issue remains one that in substance was not agitated in the proceeding.
3. The same may be said for Xinhe's submission[16] of the alleged inconsistency between the disclosure regarding the ball mill purchase in the Annual Report and the minute of Mr Peter G Burns' comments to the 2020 annual general meeting of Bullseye.[17] This was not a pleaded issue.

1. In all the circumstances I am not satisfied that the discovery sought by Xinhe is appropriate. I propose to make orders dismissing the plaintiff's application and programming a limited opportunity for the re-opening of a party's case.

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

[1] Transcript, Hongkong Xinhe International Investment Company Ltd v Bullseve Mining Ltd & Ors, Supreme Court of Western Australia, 28 February 2023, 8600.

[2] Hongkong Xinhe International Investment Company Ltd v Bullseye Mining Ltd [No 3] [2021] WASC 260 [13] - [15].

[3] See for example Roe v The State of Western Australia [2013] WASC 130.

[4] Kelbush Pty Ltd v Australia and New Zealand Banking Group [2016] WASCA 14 [2].

[5] Plaintiff's Submissions in Respect of Re-Opening (3 February 2023) [12].

[6] Plaintiff's Submissions in Respect of Re-Opening (3 February 2023) [15].

[7] Plaintiff's Outline of Closing Submissions (7 November 2022) [580].

[9] Transcript, 22 August 2022, 7304 - 7306.

[11] Transcript, 14 September 2021, 1040 - 1041.

[12] Transcript, 11 March 2022, 3933 - 3935.

[13] Transcript, 22 March 2022, 4594 - 4596.

[15] Transcript, 18 November 2022, 8258, 8468.

[16] Plaintiff's Submissions in Respect of Re-Opening (3 February 2023) [13].