Should the trial dates be vacated?
4 On 30 June 2014, the Court set trial dates in the proceeding and made programming orders designed to bring the matter to a three week trial in March 2015, having previously vacated trial dates in December 2013 and March 2014.
5 As the respondents put it, over the past 10 weeks and most recently on 25 November 2014, Mineralogy has issued a rolling series of termination notices in relation to variously, the Mining Right and Site Lease Agreements (MRSLAs) and the Facilities Deeds mentioned in the pleadings.
6 From the respondents' point of view, Mineralogy has:
(1) issued the notices without warning in respect of both the two MRSLAs and the Facilities Deeds and sought to have the respondents and related companies (together the CITIC parties) vacate the area on which an essential part of their project is being conducted in the Pilbara region of Western Australia and in relation to which Mineralogy seeks relief in the proceeding;
(2) pursued this path notwithstanding the fact that a large number of factual and legal matters which underlie the notices are the subject of dispute in the proceeding and in related proceedings in the Supreme Court of Western Australia;
(3) foreshadowed and now served late on 26 November 2014 a proposed second further amended statement of claim;
(4) failed to comply with the Court's programming orders in the proceeding, such that discovery and a costs order remain outstanding;
(5) returned to a position adopted in late 2013 to allege that the MRSLAs, the Coordination deed and the CPOA have been terminated, and has done so without seeking to align its pleadings in this proceeding with its changed position in the other Supreme Court proceedings.
7 The respondents say the consequence of this "manoeuvring" by Mineralogy is that the CITIC parties are now forced to protect their position by seeking interlocutory and permanent injunctions together with leave to amend their cross-claim. They say that if leave to amend is granted, the factual matters which are the subject of dispute in the proceeding will significantly expand. Not only will there be a need for Mineralogy to amend its pleadings, but the parties are also likely to require further discovery and to prepare new or amended witness statements.
8 Additionally, they say that Mineralogy's apparent concerted strategy to terminate the suite of project agreements also leads to a serious question as to the utility of this proceeding. They say that if the MRSLAs have been terminated (which is a matter again before the Supreme Court), this proceeding may be moot. Fundamentally, the respondents submit, if the CITIC parties are not entitled to enjoy the right to mine, the question of control and operation of the Port, which is at the root of this proceeding, becomes academic or, possibly, the subject of a particularly complex claim in restitution.
9 As it transpires, there have been some developments since the notices of termination in September and October were issued. By letter dated 10 October 2014, the respondents' solicitors requested Mineralogy to withdraw the 22 September 2014 and 1 October 2014 termination notices and provide an undertaking not to rely on those notices and not to issue any further notices to the same effect.
10 In making that request, they noted that on 26 September 2014, the Supreme Court enjoined Mineralogy from issuing or purporting to issue any notice to terminate or suspend the MRSLAs or from terminating or purporting to terminate them "in reliance on any past or future notice or otherwise".
11 Nonetheless, they noted, two business days after that hearing, Mineralogy issued the 1 October 2014 termination notice, purporting to terminate the Facilities Deeds. The notices relied on alleged breaches of the Facilities Deeds, which are issues to be determined by the Court, including whether Mineralogy has the right to be the operator of the Port.
12 The respondents noted they disputed the factual basis for all of the alleged breaches.
13 They also disputed the proper construction of the clauses on which Mineralogy relied for the purpose of issuing the termination notices.
14 On 16 October 2014, Mineralogy's solicitors indicated their client refused to withdraw the September and October notices or provide the requested undertaking.
15 Nonetheless, a month later, by its solicitors' letter dated 25 November 2014, Mineralogy purported to withdraw the 22 September 2014 and 1 October 2014 notices without accepting they were invalid, and issued the 25 November 2014 notices, offering an undertaking not to take any step consequent upon the termination of the Facilities Deeds for non-compliance with those notices.
16 The respondents say that, in other words:
The alleged defaults the subject of the termination notices remain extant and Mineralogy is capable of issuing fresh notices at any time.
An undertaking is proffered in respect of the fresh notices in circumstances where Mineralogy offered undertakings in the Supreme Court, then immediately issued fresh notices, of which Edelman J commented that while they were not violated in their strict terms, "the spirit of those undertakings was not abided by".
The fresh notices, Mineralogy says, terminate the Facilities Deeds in any event before the presently listed date for trial.
17 It is in these circumstances that the respondents say service of the termination notices gives rise to substantial additional questions of fact and law and should be determined in this proceeding including:
(1) An examination of the events associated with each of the allegations contained in the underlying alleged breaches referred to in the termination notices.
(2) The questions of construction referred to above.
(3) Whether or not Mineralogy has engaged in waiver or election which precludes it from relying on particular breaches alleged.
(4) Whether or not an estoppel has arisen in connection with particular alleged breaches.
(5) Whether the Facilities Deeds impose good faith obligations and whether Mineralogy has failed to act reasonably or in good faith.
(6) Alternatively, if Mineralogy is entitled to terminate the Facilities Deeds, whether or not Sino Iron and Korean are entitled to relief from forfeiture of the Facilities Deeds.
18 The respondents say that it is evident from the terms of their proposed amended statement of cross-claim that these matters will likely require substantial amendment to Mineralogy's pleadings by way of response, as well as significant additional discovery, substantial further evidence from lay witnesses and additional hearing days.
19 Further, they say that Mineralogy's own continual manoeuvrings have put in a state of flux the validity of the key instruments which govern the rights of the parties to be determined in this proceeding.
20 In that regard, they contend that it appears that Mineralogy has returned to its position of late 2013 that the MRSLAs have come to an end as well as the Coordination deed and the same reasons which informed the Court's decision to vacate trial dates earlier this year, apply again.
21 Mineralogy broadly rejects the various propositions put on behalf of the respondents and wishes to maintain the trial dates, rejects the need for any injunctive relief and says it is prepared to offer certain undertakings to allay the respondents' concerns.
22 In the course of oral submissions, senior counsel for Mineralogy made it clear that his client would undertake to the Court not to rely ever on the default specified in the September and October 2014 notices, except to the extent that those defaults are specifically relied on in the termination notices dated 25 November 2014. Senior counsel accepted that, whether as a matter of res judicata or Anshun estoppel, it would not be open to Mineralogy to ever litigate on the basis of any of the defaults specified in those old notices, except to the extent they had been specifically relied upon in the new notices of 25 November 2014. Mineralogy, on that basis, was invited to submit terms of any undertaking that it would give in that regard.
23 Following the hearing of the application, the solicitors for Mineralogy indicated that their client would offer an undertaking in the following terms:
The applicant undertakes that it will not, at any time, rely on the defaults referred to in the Termination Notices addressed to the first and second respondents dated 22 September 2014 and 1 October 2014 in respect of the Facilities Deeds, except to the extent that those defaults are specifically relied upon in the Termination Notices addressed to the first and second respondents dated 25 November 2014, as a basis for issuing further Termination Notices or otherwise as a basis for terminating the Facilities Deeds.
24 It must be said, that by its terms, this proposed undertaking expressly provides that the defaults relied upon in the 25 November 2014 notice, and said to be drawn from the September and October 2014 notices, might be the basis for further termination notices "or otherwise as a basis for terminating the Facilities Deeds".
25 In other words, the proposed undertaking does not finally remove any concern, that the respondents might have, that additional or new termination notices or other action designed to terminate the Facilities Deeds might ensue.
26 In any event, there remains the question of the termination notices issued 25 November 2014 and their potential effect.
27 In that regard, Mineralogy said it was prepared to undertake not to take any steps in reliance upon the expiry of the time under those termination notices until hearing and determination of this proceeding in the Court. It says it does not see the need to extend the undertaking period by, say, 90 days from the making of any final orders in the proceeding, or earlier order, as proposed in the interlocutory application in relation to the injunction sought, but indicated it would take instructions on such a proposal and would also submit terms of any undertaking it thought were appropriate.
28 After the hearing the solicitors for Mineralogy indicated that their client was prepared in this regard to undertake as follows:
The applicant undertakes that, until the hearing and determination of these proceedings, or earlier order, it will not take any step in respect of the Facilities Deeds consequent upon the termination of the Facilities Deeds pursuant to any of the Termination Notices dated 25 November 2014 or consequent upon the expiry of the time to remedy the breaches specified in the Termination Notices dated 25 November 2014.
29 At the hearing, senior counsel for Mineralogy submitted that, if it were appropriate, the Court at the conclusion of any determination of the proceeding, could order a stay should there be any subsequent appeal and deal with the consequences of the November 2014 termination notices in that way.
30 Mineralogy also contended that the proposed terms of the interlocutory injunctions sought were too wide, especially in relation to the restraint "in reliance on any past or future notice or otherwise" and "in reliance upon, or in respect of, any alleged default under and/or non-compliance with the terms of the Facilities Deeds or otherwise" respectively and that the contractual rights of Mineralogy could not validly be so constrained. It made this submission notwithstanding that a similar order had been made in the Supreme Court, albeit subject to the leave of the Court.
31 Mineralogy contended that as a result of its proffered undertakings, the termination notices from September and October were irrelevant.
32 Further, it submits that there is no basis for the respondents/cross-claimants to amend their cross-claim "to seek to manufacture a hypothetical dispute" in respect of the notices issued in November.
33 As to the four notices issues on 25 November 2014, Mineralogy notes that one relates to the refusal of the respondents to permit Mineralogy to operate the Port and the denial of Mineralogy's rights to have the Port facilities vest in it as a basis for termination and that this raises no new issues in the proceeding.
34 As to the second notice, Mineralogy says it identifies the relevant breach as being the refusal of the respondents to comply with the by-laws annexed to the Facilities Deeds and their assertion that the by-laws are invalid. It says the issues are alive in the current proceeding and no new factual issue of substance arises from that notice.
35 As to the third notice, Mineralogy says it relies upon the failure of the respondents to supply shipping schedules in advance as required by the Facilities Deeds. It submits it is likely to be uncontentious that Mineralogy requested shipping schedules and they were not supplied and so any factual dispute "will be of very short compass".
36 As to the fourth notice, Mineralogy says it relates to the refusal by the respondents to accept that Mineralogy had made a valid nomination of Australasian Resources Limited as a user of Port facilities under cl 8.7(c) of the Facilities Deeds, and again there is little scope for any factual dispute.
37 Mineralogy submits that the bases advanced by the respondents for vacation of the trial dates are founded upon a number of fallacies:
(1) That substantial additional questions of fact and law will arise, which as noted above is wrong.
(2) The questions of construction which remain are as to cll 8.7 and 33(c) of the Facilities Deeds, and are not long or difficult questions.
(3) The issues of waiver or election involve no factual complexity and the same is true of the allegation of estoppel.
(4) The implication of good faith obligations is a matter which can be argued without difficulty on either side.
(5) As to the question of relief from forfeiture, if the allegations in the proposed [35] of the amended statement of cross-claim are not struck out as being untenable, then it may be expected that any evidence given on behalf of the respondents as to their readiness, willingness and ability to remedy the defaults would be brief and otherwise the matter concerns propositions of law.
(6) The respondents make assertions as to the extent to which these issues arise, but what is now said did not appear in a draft of the amended statement of cross-claim provided to Mineralogy's solicitors with their solicitors' letter of 10 October 2014.
(7) As to the MRSLAs, Mineralogy is content to deal with the construction issues on the basis that they are on foot and that it is not seeking to contend in the proceeding that they have been terminated.
(8) Further, as to the respondents' point that the Court should not deal with the question whether the Facilities Deeds will be terminated on the expiry of the 25 November 2014 notices because it might not be necessary if they had been terminated by the notice, Mineralogy submits this is not a proper basis for the Court to decline to deal with issues properly raised before it. Mineralogy says no proper reasons are advanced to delay the proceedings while those issues are ventilated in the Supreme Court.
(9) As to the Coordination deed, Mineralogy says it is prepared to deal with the issues raised by the respondents concerning the construction and effect of this deed in this proceeding on the basis that it remains on foot.
38 Mineralogy acknowledges that it is currently in non-compliance with discovery orders but will shortly be in a position to remedy the default.
39 Similarly, Mineralogy says it will shortly pay the outstanding costs order.
40 It also says it does not intend to amend its pleadings to contend that the MRSLAs and the Coordination deed are not on foot.
41 However, it does seek to amend its current statement of claim. It denies, however, that there is anything in the proposed amendment that gives rise to any factual questions of any complexity that should result in the trial dates being vacated.
42 Of the various proposed amendments to the statement of claim, the respondents particularly focus on proposed [52] which would plead that Mineralogy is entitled to an order, pursuant to cl 33(h) of the Facilities Deeds that the respondents "vacate the Preston Area".
43 In relation to this plea, the respondents/cross-claimants say they would wish to seek relief from forfeiture and that in maintaining that case, it would be necessary for the historical relationship of the parties to be explored.
44 Mineralogy says that the factual complexity of those issues now suggested in oral argument is not supported by any draft pleading and the complexity now contended for was not exhibited in the draft amended statement of cross-claim provided to Mineralogy's solicitors some weeks ago.
45 The question of whether or not the current programming orders and the trial dates should be vacated is not easy to determine. On the one hand, there is no doubt, as the respondents put it, that Mineralogy has been engaged in manoeuvring in recent times with the issue of the purported notices of termination of September and October. It then withdrew those on the basis described above, but replaced those notices, as to certain alleged defaults, with four fresh notices on 25 November 2014.
46 In considering the respondents' submissions concerning the vacation of the trial dates, I place no real weight on the submissions that the manoeuvring of Mineralogy, by issuing the recent notices, has put in a state of flux the validity of the key instruments which govern the rights of the parties to be determined in the proceeding. I accept the submissions made on behalf of Mineralogy that the validity of the relevant key instruments, for example, will not be an issue in the proceeding. Their validity is assumed for the purposes of the proceeding.
47 I also accept that questions of discovery and costs are matters that will be satisfied shortly and of themselves should not lead to the making of orders requested by the respondents.
48 It is difficult for the Court finally to make assessments about any proposed, but yet to be seen, amendment of the cross-claim and the extent of a response to the further amendment of the statement of claim now proposed by Mineralogy and so the effect these may have on the current trial dates.
49 Until the recent spate of termination notices and the proposed amendment to the statement of claim, this proceeding in this Court appeared to be progressing in a reasonably orderly fashion in accordance with the programming orders made in June, with the trial set for three weeks in March 2015.
50 There is a risk, however, that the 25 November 2014 notices, although they rely on a "subset" of defaults specified in the earlier matters, as senior counsel for Mineralogy puts it, may raise additional factual issues. For example, the question concerning the non-acceptance of Australasian Resources Limited is said by the respondents possibly to raise a range of issues identified by them.
51 More significantly, perhaps, the proposed amendments to the current statement of claim by Mineralogy, including the proposed [52] referred to above, would, on the face of it, appear to justify the response foreshadowed on behalf of the respondents, that they would be entitled to relief against forfeiture, if Mineralogy were entitled to an order that they vacate the Preston Area.
52 It is not clear to the Court that the relief against forfeiture issue, if it is to be pursued, and other questions relating to a possible implied duty of good faith under the Facilities Deeds in relation to the issuing of the September notices (in particular), and questions of waiver, election and estoppel will add to the factual complexity of the proceeding.
53 The position I have finally arrived at is that I can see that there is some potential, depending upon whether or not the cross-claim of the respondents is amended, and depending upon what is put in issue in an amended defence to a further amendment of the statement of claim and particularly the [52] issue, that some factual matters might fall into issue for the first time or some existing factual issues might be expanded, which would suggest that the current three week trial in March 2015 may be both too soon and too short in timeframe. I am not, however, entirely convinced about that.
54 In many ways, I can see that the point made on behalf of Mineralogy, that the four notices issued in November 2014 do not add to the factual complexity of the current proceeding, and only add legal issues in the main, has some merit to it.
55 All that being said, the fact is that the applicant, Mineralogy, does propose to amend its statement of claim in a manner which may, on the material before me, but not self-evidently as yet, increase both the factual and legal complexity of the proceeding. Also, Mineralogy has issued the recent November 2014 notices of termination and has potentially raised legal and factual issues currently not in issue.
56 In all of these circumstances, I am minded to vacate the current March 2015 trial dates, but only on the basis that there will be a relatively short adjournment of the trial so it should now commence in June 2015. In that way, I consider the objectives described in s 37M of the Federal Court of Australia Act 1976 (Cth) will also be accommodated.
57 In those circumstances, I will invite the parties, through their legal representatives, forthwith to confer with a view to bringing in a proposed minute of new programming orders that will permit leave to the filing of an amended statement of claim, a possible amended cross-claim and relevant amended defences, as well as other matters currently outstanding in respect of discovery and the costs, as well as any other further pre-trial matters that might require consideration in light of the movement of the trial to June 2015.