MINERALOGY PTY LTD -v- SINO IRON PTY LTD [2015] WASC 454 (27 November 2015)

Supreme Court of WA|2016-01-18|Before: Chaney J

1 CHANEY J: By chambers summons issued on 14 September 2015 in proceeding CIV 2303 of 2015 (CIV 2303) and 2 October 2015 in proceeding CIV 2368 of 2015 (CIV 2368) (together the new actions) the defendants seek orders that each of the new actions be permanently stayed or dismissed, or alternatively that the statements of claim in each of the new actions be struck out on the basis that the proceedings are vexatious or are an abuse of process. In essence, the defendants' contentions are based upon the fact that there is very significant overlap between the issues raised in the pleadings in the new actions with issues which are, or have at some time been, the subject of pleadings in another extant action between the same parties, CIV 1808 of 2013 (CIV 1808). Central to all three actions are issues concerning construction, alleged breaches and claimed termination, of two agreements that are referred to as Mining Right and Site Lease Agreements (MRSLAs), one being between the plaintiff (Mineralogy) and the first defendant (Sino Iron) and the other being between Mineralogy and the second defendant (Korean Steel).

2 The plaintiff accepted that there is a substantial overlap between these two proceedings and CIV 1808. It could hardly have contended otherwise.

3 CIV 2303 is a claim against each of Sino Iron and Korean Steel for what is said to be a breach of cl 6.3(b) of the MRSLAs by each of Sino Iron and Korean Steel to pay a royalty arising from a failure to produce no less than 6 million tonnes of product no later than seven years from the date of each of the MRSLAs. The claim is for payment of a sum of US$98,298,000 by each of Sino Iron and Korean Steel. A claim is also made against the third defendant (CITIC) pursuant to a guarantee under cl 11.5 of an agreement known as the Fortescue Coordination Deed by which CITIC provided a guarantee for the performance of the obligations of Sino Iron and Korean Steel. The claim against CITIC is therefore for the total amount said to be due from Sino Iron and Korean Steel pursuant to cl 6.3(b) of the MRSLAs, being $196,596,000.

4 The question of proper construction of cl 6.3(b) of the MRSLAs is raised by the defendants in the counterclaim in CIV 1808. Various alternative constructions of cl 6.3(b) are raised in [23], [24] and [25] of the counterclaim in support of a claim for declarations as to the proper construction of cl 6.3(b), which would affect the question of the amount, if any, payable pursuant to that clause. The defendants also plead that they have no liability to make a payment under cl 6.3(b) of the MRSLAs because the failure to produce 6 million tonnes within seven years of the date of the MRSLAs occurred by reason of matters or things outside of Sino Iron and Korean Steel's control and are thus excused by cl 6.3(a) from the requirement to make the payment under cl 6.3(b). Apart from an admission as to one aspect of one of the alternative pleaded constructions, Mineralogy's defence to counterclaim puts the defendants' pleas as to the construction of cl 6.3(b) in issue. Although the money claim made in CIV 2303 does not presently form part of Mineralogy's pleading in CIV 1808, it did form a component of five of the eight previous versions of Mineralogy's statement of claim. It is clearly a matter capable of being dealt with in CIV 1808. Similarly, CITIC's liability under the Fortescue Coordination Deed has previously formed part of the claim in earlier versions of Mineralogy's statement of claim in CIV 1808, and whilst not part of the present pleading, it clearly could form part of the claim in CIV 1808. It is clear that determination of the cl 6.3 construction issues in CIV 1808 directly affects the determination of the amount, if any, to which Mineralogy is entitled to be paid under cl 6.3(b).

5 CIV 2368 involves a claim that Sino and Korean have each repudiated the MRSLA to which they are a party. The repudiation is said to comprise:

(i) the failure to pay what is referred to in the MRSLAs as royalty component B on production up to 30 September 2014;

(ii) Sino Iron and Korean Steel's failure to join in the appointment of an expert in respect to the dispute concerning calculation royalty component B being said to be a breach a cl 33.2(b) of the MRSLAs or alternatively breaches of obligations of good faith;

(iii) a wilful failure by Sino Iron and Korean Steel to pay royalty pursuant to cl 6.3 of the MRSLAs;

all of which are said to manifest an intention by Sino Iron and Korean Steel not to perform their obligations under the MRSLAs.

6 Mineralogy also claims that Sino Iron and Korean Steel failed to comply with what are described in the MRSLAs as 'legal requirements' and with the Iron Ore Processing (Mineralogy Pty Ltd) Agreement (State Agreement), as they were required to by the MRSLAs. In particular, Mineralogy's claim relates to the requirements to construct a pellet plant capable of producing 6 million tonnes of pellets per annum, and a requirement to produce 21.6 million tonnes of concentrate per annum. Mineralogy plead that Sino and Korean did not, and did not intend to, construct a pellet plant in compliance with the requirements, and intentionally constructed insufficient production lines necessary to produce the required amount of concentrate. These matters are said to evince an intention by Sino and Korean not to perform their obligations under their respective MRSLAs, and are therefore said to lead to the conclusion that Sino and Korean thereby repudiated the MRSLAs by no later than 30 September 2014.

7 There is a further claim of repudiation said to arise by reason of a breach of what is referred to as a standard of work provision contained in cl 16.1 of the MRSLAs. It is pleaded that each of Sino Iron and Korean Steel was aware from February 2008 that their contractor was not carrying out work to the standard required by cl 16.1 of the MRSLAs and they took no steps to comply with that clause, thereby evincing an intention not to carry out obligations in accordance with the MRSLAs and consequently repudiating the MRSLAs.

8 There is then a claim for unlawful removal of magnetite ore post termination of the MRSLAs and a claim for the value of the ore removed.

9 Mineralogy claims damages for the repudiation of the MRSLAs.

10 Further, a claim is made in relation to an agreement known as the China Project Option Agreement which is said to have come to an end by reason of the termination of the MRSLAs, resulting in loss and damage to Mineralogy. Finally there is a claim for a declaration as to the termination of the Fortescue Coordination Deed.

11 Most of the matters raised in the statement of claim in CIV 2368 overlap with issues in CIV 1808. They include the failure to pay royalty component B, the failure to join in the appointment of an expert and issues surrounding cl 6.3 of the MRSLAs. There is, of course, overlap between CIV 2303 and CIV 2368 in relation to cl 6.3, although curiously, the amount of the royalty said to be payable by each of Sino Iron and Korean Steel in CIV 2368 is almost US$22 million less for each of Sino Iron and Korean Steel than is claimed in CIV 2303. Various other issues are either currently raised in the pleadings in CIV 1808, or were previously the subject of pleadings in that action which have since been superseded. Neither of the parties has submitted that any of the issues raised in CIV 2368 are not capable of being dealt with in CIV 1808.

The requirement for leave to amend pleadings in CIV 1808

12 At a directions hearing on 20 March 2014, the previous case manager, Justice Edelman, directed that after the filing of the then proposed third further amended statement of claim and consequential amendments by the defendants, there were to be no further amendments without leave. In reasons given in relation to a subsequent application for leave to amend the statement of claim see Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 4] [2014] WASC 282 [5] [6] Edelman J explained that that order was made against a background of Mineralogy having pleaded, amended or provided proposed amendments to its pleadings on eight occasions between March 2013 and July 2014. At [53], Edelman J said:

Although I allow Mineralogy's application to amend, it should not be assumed that further applications will be granted. Mineralogy's numerous, and sometimes very significant, changes to its case have slowed these proceedings down dramatically. There will soon come a point, if it has not already been reached, when a line must be drawn so that the defendants can be clear on the detail of the case which they have to answer. I reiterate the remarks of Gummow, Hayne, Crennan, Kiefel and Bell JJ in Aon Risk Services Australia Ltd v Australian National University where their Honours gave examples why corporations are not immune from the effect of delay and disruption to the orderly progress of litigation:

'A corporation in the position of a defendant may be required to carry a contingent liability in its books of account for some years, with consequent effects upon its ability to plan financially, depending upon the magnitude of the claim. Its resources may be diverted to deal with the litigation. And, whilst corporations have no feelings, their employees and officers who may be crucial witnesses, have to bear the strain of impending litigation and the disappointment when it is not brought to an end. The stated object in the Court Procedures Rules [2006 (ACT)], of minimising delay, may be taken to recognise the ill-effects of delay upon the parties to proceedings and that such effects will extend to other litigants who are also seeking a resolution in their proceedings.'

Mineralogy's reasons for commencing separate proceeding

13 Mineralogy frankly accepted, both at the hearing of these applications and in earlier correspondence between the parties' solicitors in relation to the applications, that there were several reasons for seeking to proceed by way of separate actions rather than seeking leave to amend the pleadings in CIV 1808.

14 The first reason was that it was considered more efficient to avoid what Mineralogy anticipated would be a dispute as to whether leave should be granted. Mineralogy contended that there was no basis upon which leave to amend would not be granted given the significance of the claims sought to be agitated, which involve hundreds of millions, and in some cases billions, of dollars.

15 Secondly, Mineralogy intended to make, and has made, applications in each of the new actions for summary judgment. The applications for summary judgment have been made within 21 days after appearance by the defendants as required by O 14 r 1 of the Rules of the Supreme Court 1971 (WA). In CIV 2303, summary judgment is sought for payment of the amounts claimed as payable under cl 6.3(b). In CIV 2368, summary judgment is sought for declarations that Sino Iron and Korean Steel repudiated the MRSLAs, various alternative declarations that the MRSLAs were lawfully terminated by Mineralogy, an order for assessment of damages for repudiation (placed as being approximately $6.4 billion) and a declaration that CITIC is liable to pay those damages to Minerology. If the applications for summary judgment were to be brought in CIV 1808, an extension of time to bring the applications would be required. By commencing fresh actions, the requirement to obtain an extension was avoided.

16 Third, although counsel for Mineralogy did not rely heavily on this reason, it was suggested that isolating the separate causes of action into separate pleadings was simpler and more efficient than amending the existing pleadings in CIV 1808.

17 In Kermani v Westpac Banking Corporation [2012] VSCA 42; (2012) 36 VR 130 (Kermani) Robson AJA set out some principles in relation to abuse of process which he had identified in an earlier decision in Re AWB Ltd [No 10] [2009] VSC 566. Neave JA and Harper JA agreed with Robson AJA. The principles which he identified, at [97], are as follows:

(1) The court possesses an inherent jurisdiction to stay its proceedings as an abuse of process if the proceedings are unjustifiably oppressive and vexatious or manifestly unfair or otherwise bring the administration of justice into disrepute among right-thinking people: Walton v Gardiner; Rogers v R and PNJ v R; Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd.

(2) The jurisdiction should only be exercised in exceptional cases or sparingly with the utmost caution: Jago v District Court (NSW).

(3) The jurisdiction to stay for abuse of process is not limited to cases where the proceedings have been brought for an improper purpose or where there is no possibility of the court affording the affected party a fair hearing: Walton v Gardiner; Rogers v R.

(4) The circumstances in which abuse of process may arise are extremely varied and the courts have refrained from limiting the circumstances to fixed categories: Hunter v Chief Constable of the West Midlands Police; Rogers v R; Batistatos v Roads and Traffic Authority (NSW).

(5) In considering whether to grant a stay as an abuse of process, the court should undertake a weighing process involving a subjective balancing of a variety factors and considerations: Walton v Gardiner.

(6) Among those factors and considerations are the requirements of fairness to the accused, the legitimate public interest in the disposition of charges of serious offences and in the conviction of those guilty of crime, and the need to maintain public confidence in the administration of justice: Walton v Gardiner.

(7) These principles apply to civil penalty proceedings: Gill v Walton.

(8) The rationale underlying the principle against double jeopardy, in that an individual should not be vexed twice for the same cause, is a factor properly to be taken into account in the weighing exercise: Walton v Gardiner.

(9) It is prima facie vexatious to bring two extant civil actions where one will lie: Moore v Inglis; Thirteenth Corporation Pty Ltd v State.

(10) This prima facie rule applies whether or not the two proceedings are in separate courts or one: Branir Pty Ltd v Wallco Pastoral Co Pty Ltd.

(11) The prima facie rule applies where the issues overlap or significantly overlap or there is a similarity of subject matters of the proceedings.

(12) The fact that the parties may not be identical, or the relief different, does not necessarily disentitle relief under this principle: Moore v Inglis.

(13) In considering whether the rule should apply, the court should consider whether there was no reasonable justification for the second proceeding based on legitimate considerations of convenience, cost or the like: Thirteenth Corporation Pty Ltd v State.

(14) The guiding considerations are oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice. Regard may be had to:

(a) the importance of the issue in and to the earlier proceeding, including whether it is an evidentiary or ultimate issue;

(b) the opportunity available and taken to fully litigate the issue;

(c) the terms and finality of the finding as to the issue;

(d) the identity between the relevant issues in the two proceedings;

(e) any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceeding;

(f) the extent of the oppression and unfairness to the other party if the issue was relitigated and the impact of the relitigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and

(g) an overall balancing of justice to the alleged abuser against the matters supportive of abuse of process: Rippon v Chilcotin Pty Ltd.

(citations omitted)

18 The defendants relied in particular on the principle, extracted from Moore v Inglis (1976) 9 ALR 509, 514 515 and Thirteenth Corporation Pty Ltd v State [2006] FCA 979; (2006) 232 ALR 491 [41] [42], that it is prima facie vexatious and an abuse of process to bring two extant civil actions where one action will lie. Reliance was also placed on the principles identified by Robson AJA in Kermani numbered 3, 4, 11, 12, 13 and 14, as set out above.

19 Particular reliance is placed by Mineralogy on the second principle, extracted from Jago v District Court of New South Wales [1989] HCA 46; (1989) 168 CLR 23, 76 (Gaudron J) (Jago) that the jurisdiction should only be exercised in exceptional cases or sparingly with the utmost caution. In that case, Gaudron J said (76):

The nature of the power to grant a permanent stay of proceedings itself reveals an important principle which confines its exercise. The power is, in essence, a power to refuse to exercise jurisdiction. It is thus to be exercised in the light of the principle that the conferral of jurisdiction imports a prima facie right in the person invoking that jurisdiction to have it exercised. In this context it is relevant to note the remarks of Deane J in Re Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia [1987] HCA 27; (1987) 61 ALJR 393 at 399 ; [1987] HCA 27; 72 ALR 1 at 12, that the 'prima facie right to insist upon the exercise of jurisdiction is a concomitant of a basic element of the rule of law, namely, that every person and organisation, regardless of rank, condition or official standing, is "amenable to the jurisdiction" of the courts and other public tribunals'. Thus, the power is one that is readily seen as exercisable (whether in civil or criminal proceedings) only in exceptional cases or, as was said by this court in refusing special leave to appeal in Attorney-General (NSW) v Watson (1987) 20 Leg Rep SL 1 'sparingly, and with the utmost caution'.

The power of a court to control its own process and proceedings is such that its exercise is not restricted to defined and closed categories, but may be exercised as and when the administration of justice demands ...

... [A]t least in civil proceedings, the power to grant a permanent stay should be seen as a power which is exercisable if the administration of justice so demands, and not one the exercise of which depends on any nice distinction between notions of unfairness or injustice, on the one hand, and abuse of process, on the other hand.

Should the actions be permanently stayed or struck out?

21 Having regard to the principles outlined above, the starting point is that, having regard to the significant overlap and similarity of subject matter of the three proceedings, the commencement of two additional sets of proceedings where all issues are capable of resolution in CIV 1808, renders the new actions, prima facie, an abuse of process. The question which then arises is whether that prima facie rule should apply having regard to any justification for the additional proceedings based on legitimate considerations of convenience or cost or other justifying circumstances.

22 I have set out above the plaintiff's reasons for commencing a separate action. The first two of those reasons are directed to avoiding the consequences of the requirement, specifically imposed by the direction given by Edelman J, to obtain leave to amend pleadings in CIV 1808. The second is directed to avoiding the requirement for an extension of time within which to apply for summary judgment in respect of aspects of the proposed claims. Those reasons tend to reinforce rather than displace the prima facie conclusion of abuse of process.

23 Mineralogy contends that it is inconceivable that leave to amend in CIV 1808 would be refused having regard to the nature and quantum of the claims as they are pleaded in CIV 2303 and CIV 2368. It contends therefore that there is no prejudice to the defendants in having the various claims the subject of different actions rather than all brought in CIV 1808, and that the prosecution of the claims in separate actions involved no unfairness to, or oppression of, the defendants. In large part, that proposition is based on the submission that 'it appears to be common ground' that if the new actions are not struck out, stayed or dismissed, those proceedings should be heard and managed together with CIV 1808. Two things can be said about that submission. The first is that it reinforces the proposition that all issues can be dealt with in a single action. Secondly, the submission pre-empts a decision which is ultimately a question for the court, namely how the separate matters might be dealt with. The parties have spent a good proportion of the past year endeavouring to reach some common position as to whether all issues in CIV 1808 should be dealt with in the one trial, or whether some issues should be heard first. To date, they have been unable to reach a common position on that question. Having overlapping issues raised in three different sets of proceedings adds an additional layer of complication to resolution of that question. There may be other factors which affect a decision as to whether all three actions should be heard together. While there are obvious reasons as to why they might be, Mineralogy cannot justify its decision to institute separate actions on the assumption that the court would accede to the proposition that all matters be heard together. That remains a matter for the court.

24 When CIV 2303 and then CIV 2368 were initially instituted, the defendants' solicitors immediately wrote to the plaintiff's solicitors contending that the proceedings were an abuse of process and that the appropriate course to introduce the claims now sought to be made was to seek leave to amend the statement of claim in CIV 1808. Mineralogy's response was to indicate that it was prepared to take that course provided the defendants consented to leave being granted for the amendments and to an order extending time for the making of an application for summary judgment. The defendants, not surprisingly, rejected that condition. They invited Mineralogy to provide a proposed minute of amended statement of claim so that they could consider whether or not they would consent to the amendments. Mineralogy declined to do so until consent to the amendment and the extension of time was first given.

25 That exchange of correspondence again confirms that Mineralogy accepted that the matters sought to be raised in the two new actions were capable of being raised in CIV 1808 by way of amendment to the pleading. It also demonstrates (as Mineralogy accepted) that its motivation in commencing separate actions was to avoid any dispute as to leave or as to an extension of time to seek summary judgment.

26 Mineralogy contended that it was unnecessary for it to provide a proposed amended statement of claim in CIV 1808 to the defendants because the claims which would be introduced in the amendment are fully pleaded in the statements of claim pleaded in the new actions. I do not accept that submission. Because of the significant overlap in the issues raised in each set of proceedings, questions of internal consistency, and the relationship between various alternative causes of action that are pleaded, it is entirely reasonable and appropriate for the defendants to see the proposed amendments before giving their consent to leave. A simple illustration of the point is the different quantification of precisely the same claim under cl 6.3 of the MRSLAs in CIV 2303 and CIV 2368 respectively, and the relationship that any quantification of those claims bears to the method of calculation of royalty component B (which is the subject of various alternative formulations in the pleadings in CIV 1808) upon which the amount payable under cl 6.3 is based.

27 It can be presumed that, if CIV 2303 and CIV 2368 are permanently stayed or struck out, an application will be made in CIV 1808 for leave to amend the statement of claim. Mineralogy's position is that that leave will be granted because the defendants have not identified any basis upon which leave might be refused, and that there is no conceivable argument that leave should be refused. It contends, therefore, that the claims should be permitted to proceed on the basis of the separate actions being dealt with together rather than requiring an application for leave to be made in CIV 1808 with the attendant delays and expense which will result from such an application. That contention again involves Mineralogy simply assuming the outcome of the court's discretion to grant leave. That assumption is not justified. Although it is true that the defendant in their submissions did not address arguments as to whether leave should be granted, that is understandable given that no application for leave was before the court, and the defendants' contentions as to abuse of process were founded upon principles independent of the question of whether or not, in a different action, leave might be granted if an application had been made. No application for leave having been made, the defendants have not had a proper opportunity to address any question of leave. It would be inappropriate for the court to adopt the assumption upon which Mineralogy has proceeded without the defendants having been heard on that issue.

28 Mineralogy expressed concern that, if it is required to make an application for leave in CIV 1808, and if that application is granted, the practical effect is no different from the effect of permitting it to proceed with the new actions on the basis that they are dealt with together with CIV 1808 and that all that would be achieved is further delay and expense. There are two reasons why that submission may not be correct. One is that amendment of the pleading in CIV 1808 will facilitate an analysis of consistency in the pleading of the various claims as discussed above. The other is that questions of splitting any trial will more easily be dealt with if there is only one proceeding. But even if Mineralogy's contention is accepted, it has brought the consequences of any additional delay and expense upon itself. It issued the new proceedings without prior consultation with the defendants. The defendants' contention that the proceedings amounted to an abuse of process was communicated very shortly after the proceedings were instituted. Mineralogy was invited to provide a proposed amended pleading in CIV 1808 to enable the defendants to consider whether leave would be opposed. It declined to do so unless the defendants complied with unreasonable conditions. Its objective of avoiding dispute in relation to a question of leave, and thus promoting the efficient progress of the proceeding, was misconceived. It should have been obvious even before the defendants were served with the new proceedings that the defendants would resist the institution of multiple new proceedings against them. If it was not obvious before service, it was obvious shortly afterwards when the defendants advised Mineralogy of their contention that the proceedings were an abuse of process. Any argument on abuse of process was likely to consume at least as much expense and time (and in the event it has probably consumed more expense and time) than would have been consumed by an argument on leave. In those circumstances, Mineralogy has brought on the delay or expense by its own actions.

29 In the absence of any satisfactory explanation, the commencement of two additional actions to litigate issues which are already raised in, or where a complete remedy is available in, an existing extant action, is vexatious and an abuse of process. In this case the explanation for separate actions is to circumvent procedural requirements affecting the introduction or reintroduction of the claims into CIV 1808. The plaintiff's unilateral assumption that those procedural requirements will ultimately be resolved in its favour is not a justification for that circumvention.

30 I am mindful that the power to permanently stay or strike out proceedings should be exercised with great caution and in exceptional cases. As Gaudron J observed in Jago, it is in essence a power to refuse to exercise jurisdiction. In this case, however, it remains open to Mineralogy to seek to access the jurisdiction of the court in relation to the claims it wishes to pursue by way of an application for leave to amend in CIV 1808. Whether or not Mineralogy succeeds in that application will turn upon proper considerations as to the grant of leave having regard to, amongst other things, the background to the requirement for leave. That is the appropriate course to be followed.

31 For those reasons, I consider that the institution of CIV 2303 and CIV 2368 is an abuse of process, and both of these actions should be permanently stayed.

32 I will hear the parties as to the precise form of the orders to be made and on the question of costs.

CITATION : MINERALOGY PTY LTD -v- SINO IRON PTY LTD [2015] WASC 454 (S)

Practice and procedure - Costs - Indemnity costs - Exceptional circumstances - Abuse of process

1 CHANEY J: By substantive reasons published on 27 November 2015, I determined that the institution of each of these actions constituted an abuse of process, and directed that both actions should be permanently stayed: see Mineralogy Pty Ltd v Sino Iron Pty Ltd [2015] WASC 454 (Stay Decision). I indicated that I would hear from the parties as to the precise form of the orders to be made, and on the question of costs. The parties have subsequently filed written submissions on the question of costs, and have agreed that the proceedings be permanently stayed and that the question of costs should be dealt with on the papers. Accordingly, on 22 December 2015, in each of these actions I ordered that the proceedings be permanently stayed and the question of costs is to be dealt with on the papers.

2 There is no dispute that the plaintiff should pay the defendants' costs of the proceedings. The defendants contend that those costs should be paid on an indemnity basis or alternatively that there should be special costs orders pursuant to s 280 of the Legal Profession Act 2008 (WA) removing limits on costs allowable under the Legal Profession (Supreme Court) (Contentious Business) Determination 2014 (WA) in relation to each action. The plaintiff contends that the appropriate order is for the costs to be taxed if not agreed.

3 The legal principles in relation to indemnity costs orders are well settled. The costs of and incidental to proceedings in the court are in the discretion of the court (Supreme Court Act 1935 (WA) s 37(1)).

4 An order for indemnity costs is a departure from the ordinary principle that costs are awarded on a party party basis. There must be some special or unusual feature in the case to justify the court exercising its discretion to depart from the ordinary practice: Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [8] (Pullin J).

5 An order for indemnity costs is a mark of disapproval on the part of the court about the improper or unreasonable conduct of a party in the litigation: Flotilla Nominees [9] (Pullin J).

6 An indemnity costs order will only be made in exceptional circumstances: Re Malley SM; Ex Parte Gardner [2001] WASCA 83 [2] (Malcolm CJ).

7 In this case the defendants contend that special circumstances exist warranting the award of indemnity costs by reason of the following (paragraph references are to paragraph numbers in the Stay Decision):

(a) the Plaintiff's conduct in commencing two additional sets of proceedings (the MPR Proceeding and the MRSLA Termination Proceeding), being proceedings which had no chance of success in circumstances where:

(i) the Plaintiff 'accepted that there is a substantial overlap' between the new proceedings and the Main Proceeding and 'could hardly have contended otherwise'; [2]

(ii) the Plaintiff by its conduct 'accepted that the matters sought to be raised in the new actions were capable of being raised' in the Main Proceeding; [21], [25]

(iii) the new proceedings were therefore a prima facie abuse of process; [21] and

(iv) the Plaintiff provided no legitimate justification for its decision to commence new proceedings; [22]

(b) the Plaintiff's conduct in commencing the MPR Proceeding and MRSLA Termination Proceeding without conferral or prior consultation with the Defendants; [28]

(c) the Plaintiff's unreasonable insistence that the Defendants prepare and file defences in the MPR Proceeding and MRSLA Termination Proceeding, notwithstanding the Defendants notifying the Plaintiff of their intention to apply to strike out or permanently stay both proceedings;

(d) the Plaintiff's conduct in refusing the Defendants' requests (communicated very shortly after the proceedings were instituted) [24], [28] to withdraw their claim on the basis that it constituted an abuse of process;

(e) the Plaintiff's motivation for commencing the MPR Proceeding and the MRSLA Proceeding, which 'tended to reinforce rather than displace the prima facie conclusion of abuse of process', being: [22], [25], [29]

(i) to circumvent orders of this Honourable Court in the Main Proceeding that leave be required for further amendments; [14] and

(ii) to avoid the need to obtain an extension of time to seek summary judgment in the Main Proceeding; [15]

(f) that, in commencing the MPR Proceeding and MRSLA Termination Proceeding, the Plaintiff disregarded known facts and established law by:

(i) assuming, unilaterally and without justification, that procedural requirements and the exercise of the Court's discretion concerning pleadings amendments would ultimately be resolved in the Plaintiff's favour, allowing the introduction or reintroduction of the relevant claims; [27] - [29]

(ii) inappropriately asking the Court to adopt the Plaintiff's assumption that it would have been granted leave to amend its pleading to raise the claims in the Main Proceeding, without the Defendants having any proper opportunity to address the Court on that question, either by filing material with the Court or being heard during argument; [28] and

(iii) bringing the consequences of any additional delay and expense upon itself by taking a course (namely, commencing the MPR Proceeding and the MRSLA Termination Proceeding) which it should have been obvious would consume at least as much (if not more) expense and time than the alternative course (namely, applying for leave to amend in the Main Proceeding); [28] and

8 Mineralogy submits that, although it has been found that it should not have commenced the two sets of subsequent proceedings, there is no suggestion that it has made allegations which should never have been made or cannot be made. It further contends that there was 'one further aspect' of its reasons for commencing the new proceedings namely that, if there had been any basis to refuse leave in CIV 1808 of 2013 (CIV 1808), it is strongly arguable that that basis would not preclude Mineralogy from commencing fresh proceedings on any such aspect of its claims.

9 Finally, Mineralogy submits that it could rationally take the view that all claims would end up in the same court managed together.

10 The matters identified by the defendants amount to exceptional circumstances that support the making of an indemnity costs order. I accept Mineralogy's submission that simply because proceedings may attract the description 'abuse of process' an order for indemnity costs will not necessarily follow. It is necessary to examine the circumstances of each particular case. In this case, Mineralogy was put on notice immediately after instituting these two proceedings as to the defendants' contention that they were an abuse of process. It nevertheless chose to pursue the proceedings in order to circumvent procedural requirements which it would have to meet if it were to seek to bring the claims in CIV 1808. Those circumstances justify the making of an indemnity costs order.

11 None of the contentions raised by Mineralogy displace that conclusion. The fact that the allegation could have been made in CIV 1808 does not justify the commencement of duplicated proceedings.

12 Nor does the fact that some residual capacity to commence a fresh action might exist, if leave to amend in CIV 1808 is refused, justify the course taken by Mineralogy. Mineralogy's position was that there is no basis to refuse leave in CIV 1808. Its primary position therefore supports the proposition that an application for leave to amend should have been made in CIV 1808 rather than the commencement of fresh actions.

13 Nor does the argument that Mineralogy could rationally take the view that all claims would end up managed together in the same court justify the commencement of separate actions.

14 There should be orders in terms sought by the defendants, namely that, in CIV 2303 of 2015:

The plaintiff pay the defendants' costs of the proceeding, including the costs of the defendants' application by chamber summons dated 14 September 2015, on an indemnity basis.

The plaintiff pay the defendants' costs of the proceeding, including the costs of the defendants' chamber summons dated 25 September 2015 and amended chamber summons dated 2 October 2015, on an indemnity basis.

At a glance

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Judgment (69 paragraphs)

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