MINERALOGY PTY LTD -v- SINO IRON PTY LTD [2021] WASCA 53 (25 March 2021)

(a) subject to certain specified matters, Sino must produce no less than 6 million tonnes of Product by no later than 20 March 2013;

(b) if Sino fails to do so, it must, by no later than one month following 20 March 2013, pay to Mineralogy an amount equivalent to the Mineralogy Royalty payable on the amount of Magnetite Ore required to produce 6 million tonnes of Iron Ore Concentrate.

1. The principal claim in the primary proceedings concerned a claim by Mineralogy pursuant to cl 6.3 of the Agreements. In addition to the claim under cl 6.3 of the Agreements, Mineralogy also claimed that the third respondent (CITIC) was liable as a guarantor and/or an indemnifier, under a deed dated 22 October 2008 called the 'Fortescue Coordination Deed' (FC Deed), for the non‑payment of the money allegedly due under cl 6.3. The judge described Mineralogy's claim under cl 6.3, and the related claim under the FC Deed, as the 'MRP money claim'.[3]
2. There was also a claim by Mr Palmer, described by the judge as Mr Palmer's 'personal' claim.[4] Mr Palmer's claim was to the effect that if Mineralogy, for any reason, was precluded from prosecuting an action with respect to the recovery of money under cl 6.3 of the Agreements, he would suffer personal loss that was compensable under the FC Deed. Mr Palmer contended that, although he was not a party to the FC Deed, he was an express object of the guarantee and indemnity given by CITIC. He contended that as a shareholder of Mineralogy, if Mineralogy were precluded from pursuing its claims in the primary proceedings, the value of his shareholding in Mineralogy would be diminished in an amount equivalent to the chose in action under cl 6.3 that had been lost by Mineralogy, and that CITIC was liable for his loss under the FC Deed.[5]
3. Claims under cl 6.3 of the Agreements and associated claims under the FC Deed (Clause 6.3 Claims) were made in earlier proceedings between Mineralogy and Sino, Korean, and CITIC (CITIC defendants). In particular, Mineralogy, in proceeding CIV 1808 of 2013 (CIV 1808), had alleged a variety of claims against the CITIC defendants, including Clause 6.3 Claims, and later deleted them (with leave of the judge) from the pleading on which that action ultimately went to trial in 2017, in which Mineralogy was successful.[6] The deletion of the claims, including the Clause 6.3 Claims, occurred in a context in which Mr Palmer had affirmed an affidavit containing an undertaking to the effect that certain claims in CIV 1808, including the Clause 6.3 Claims, would not be pursued. Counsel for Mineralogy referred to the undertaking at a hearing on 20 January 2017 in relation to the dates for, and scope of, a proposed trial of the issues in CIV 1808.
4. In the CITIC parties' application to stay the proceedings in CIV 3129, Mr Palmer's evidence included:[7]

The undertaking was given because the failure to have an early hearing of the matter would have threatened Mineralogy's solvency and the employment of its staff. I concluded that the CITIC parties were not acting in good faith and seeking to delay matters in breach of their obligations and there was no other way that the matter could proceed to trial in the short term without giving the undertaking.

1. The judge upheld the CITIC parties' application, finding that the proceedings in CIV 3129 constituted an abuse of process, and made the orders referred to in [3] above.

The basis of the appellants' application for an adjournment - the Fulcrum Evidence[8]

1. The appellants' contended, in effect, that fresh evidence has emerged, since the primary judge's orders on 20 February 2020, which is relevant to an assessment of whether the commencement of proceedings in CIV 3129 constituted an abuse of process. The evidence allegedly emerged in other proceedings, namely CIV 2840 of 2018 (CIV 2840). The appellants described the evidence (Fulcrum Evidence) as follows:[9]

In [p]roceeding CIV 2840 and during the trial, documents were discovered and tendered and testimony was given in respect of a group formed within the CITIC Respondents referred to as the 'Fulcrum Group'. The Fulcrum Group was a group of employees of the CITIC Respondents and their external lawyers. Part of its task was to try and alter and normalise the existing contractual arrangements with Mineralogy because [Sino] and [Korean] considered the commercial terms unsatisfactory.

The evidence and testimony in [p]roceeding CIV 2840 was of limited scope but still:

(a) established the existence of the Fulcrum Group;

(b) recorded the purposes and motives of the Fulcrum Group; [and]

(c) recorded the pursuit of the purposes and motives of the Fulcrum Group. (footnote omitted)

1. The appellants further contended that, in light of the Fulcrum Evidence, they have brought an application for a permanent stay against Sino, Korean and CITIC, in other proceedings commenced by those parties against Mineralogy and Mr Palmer, being CIV 1915 of 2019. In that application (Appellants' Permanent Stay Application), the appellants have contended that the purposes of the Fulcrum Group were to:
   1. Use legal proceedings, including as moving party and resisting party, to apply commercial pressure to Mineralogy and Mr Palmer to agree to alter the contractual relationship between the parties, rather than to vindicate any bona fide claim or defence.
   2. Use legal proceedings by complaints to regulatory and law enforcement authorities to apply commercial pressure to Mineralogy and Mr Palmer to agree to alter the contractual relationship between the parties, rather than to have some bona fide wrong sanctioned or loss recovered.
   3. Enable CITIC, by the use of legal proceedings as alleged in 1 and 2 above, to recoup unexpected costs of developing the Sino Iron project directly from Mineralogy or indirectly from Mineralogy by denying to it sums to which it was entitled, including royalties, and potentially thereby rendering it insolvent and leaving CITIC to be able to pursue the Sino Iron project on terms more favourable to it.
   4. Thereby to engage legal processes in the manner alleged in 1 ‑ 3 above not for the purpose of vindicating any legal right or defence at law or complaint about a loss or injury bona fide held, but rather to achieve a collateral purpose, being the Contract 'Normalisation' Objective.
2. In relation to the Appellants' Permanent Stay Application, (1) Mineralogy and Mr Palmer have sought discovery of documents from Sino, Korean and CITIC in relation to the alleged abuse of process, and (2) Sino, Korean and CITIC have themselves applied to have the Appellants' Permanent Stay Application struck out as an abuse of process. The Chief Justice is hearing the discovery application and the strike‑out application on 15 April 2021.
3. In this context, and in the context of Mr Palmer's evidence referred to in [9] above, the appellants contended that the Fulcrum Evidence indicates that Mineralogy's deletion of its Clause 6.3 Claims in CIV 1808 occurred in a forensic context in which the CITIC parties were themselves using legal processes for collateral purposes such as to constitute an abuse of process. It is contended that this evidence, and the evidence that may be obtained on discovery in the Appellants' Permanent Stay Application, is relevant to the primary judge's assessment that the appellants' proceedings in CIV 3129 constituted an abuse of process.
4. The appellants further contended that (1) the judge's orders were interlocutory[10] and that the evidence may be used by the appellants in an application to the primary judge to reopen the question of whether the commencement of CIV 3129 constituted an abuse of process, and (2) further or alternatively, that such evidence would be admissible as fresh evidence in the appeals.
5. In their submissions, the appellants said that they 'acknowledge' the observations of the primary judge in a judgment in CIV 2840 in Mineralogy Pty Ltd v Sino Iron Pty Ltd.[11] In that judgment, his Honour said, with respect to the topic of the Fulcrum Evidence:[12]

During the course of senior counsel for Mineralogy's closing submissions, it appeared then that much was sought to be made by Mineralogy of what allegedly had emerged out of Ms Rifici's evidence concerning an existence or objectives of the Fulcrum group. In particular, the admission elicited in cross‑examination from Ms Rifici about difficulties with the commercial terms of [Sino] and [Korean's] agreements with Mineralogy was heavily emphasised as suggesting something rather sinister (see ts 597).

However, I did not and do not draw any such sinister inferences from this evidence or, indeed, from any of the limited trial evidence concerning the Fulcrum group. As I indicated in my dialogue with senior counsel for the CITIC defendants during closing submissions, I do not infer anything sinister around the fact of a contracting party's desire to renegotiate over, or to revise or to amend the terms of an existing arrangement (ts 568). An issue of possible concern about such objectives might emerge, if some illegitimate or unlawful means had been suggested or resolved upon to further that end. However, I saw nothing to support such a conclusion by way of inference or otherwise from out of the evidence put before me in this trial.

There was a document relied upon by Mineralogy suggesting, it was put, a nefarious intent towards the renegotiation of contracts. The document consists of an internal Excel spreadsheet or worksheet of CITIC, which looks to be an internal CITIC document with the heading 'CITIC Risk Management Library' and displaying inputs that are seen written in both English and Chinese. In the worksheet titled 'Risk Assessment' column F is seen headed, 'Second Degree Risk Definition' and reads in general and non-specific terms.

Included in the worksheet is a sentence directed towards legal risk. Part of the risk seen as referred to is administrative liability or criminal liability risk. But nothing tangible emerges out of that, on my assessment. At column H, under a heading 'Risk Elements' (for reference only - being an English translation of the [Chinese] written column G) there is seen an input at cell H119 as follows:

'Legal Dispute Prevention Mechanism Risk

Civil or criminal suit to deal with the risk Business Partners Debt Transfer Risks (row 89)'

But again, that is simply all too broad and non‑specific, by my assessment, to be of any present forensic significance. Further seen along row 119 at column AE, under a heading, 'Commentary and description of risk management status', the worksheet input reads (cell AE119):

'Risks are currently being adequately managed. CPM has a dedicated Special Projects Team to manage the major litigations with Mineralogy.'

Again, I would assess that statement as both bland and wholly benign. Likewise, cell AG119 reads in generic terms as regards an establishment of a specialised legal team. I assess that as equally benign. Indeed, I would be very surprised if there were not specialised legal terms in place for parties on both sides of this litigation - given these parties profligate other litigation commitments as against each other. Likewise, for column AI119, I assess that as equally benign.

Consequently, the endeavour of Mineralogy to suggest some sinister background underlying conspiracy involving the Fulcrum group as it was established by the CITIC defendants and towards some illegitimate or unlawful end directed against Mineralogy, in my view, is unsupportable. Ultimately, I assess it to be an irrelevant distraction in the present litigation.

...

Mineralogy also advances a view that the CITIC defendants, through their attempt to replace Mineralogy as trustee, are strategically attempting to fundamentally alter the [Agreements'] contractual relationship and bargain subsisting between the parties, so as to achieve an outcome that better suits their commercial ends. Such a strategy is referred to by [Mineralogy] as being the sinister function of a comprehensive and targeted taskforce - the aforementioned 'Fulcrum group'.

Under Mineralogy's closing (at pars 217 - 226), various submissions and allegations are put concerning illegitimate activities of the Fulcrum group. I have previously outlined the basis of this argument and concluded, in my opinion, that the allegations of illegitimate or sinister activities are not established and are a distraction in this litigation. (footnotes omitted)

1. In support of their application for an adjournment of these appeals, the appellants submitted:[13]
   1. [The appellants seek] an adjournment of the appeal to enable the issues regarding the Fulcrum Group to be properly and fully ventilated, including in [p]roceeding CIV 1915 [of 2019], and for appropriate steps to be taken in this appeal.
   2. An adjournment of the appeal is the most efficient course given the evidence regarding the Fulcrum Group. It is probative of an abuse of process and relevant to the issues in the appeal.
   3. The Fulcrum [E]vidence in the Iskander affidavit is capable of materially affecting the resolution of the appeal and is relevant to [the] permanent stay application the subject of the judgment under appeal. It is direct evidence of an intention to exert commercial pressure on Mineralogy and Mr Palmer to procure outcomes of the kind the subject of this proceeding. That is, compelling Mineralogy and Mr Palmer to abandon viable claims or face financial jeopardy. Evidence of the commercial pressure being brought to bear is relevant to the conduct of Mineralogy in formulating the claims it took to trial and those it did not. It is also relevant as to whether Mineralogy doing so, where that pressure is evident, could constitute an abuse of the process of the Court.
   4. Difficult questions may arise if the adjournment is refused. If the appeal is unsuccessful however the Abuse of Process Application is successful and findings of fact are made relevant to the appeal, that will produce a confluence of circumstances apt to be a rare occasion for the reopening of the appeal. In particular, through no fault of the [appellants], the court will have proceeded on a misapprehension as to the facts and/or law, in respect of which the [appellants] will never have been provided an opportunity to have properly developed them.[14] Those circumstances would therefore be prone to provoke further litigation between the parties, including potentially a reopening of the appeal.

1. But in any event, the CIV 2840 Reasons did not finally determine the relevance of the Fulcrum [E]vidence nor foreclose reliance on it in other fact patterns, such as the one facing this Court. The pleaded issues in [p]roceeding CIV 2840 did not directly involve consideration of the Fulcrum [E]vidence. The evidence was of tangential relevance. The limited evidence in that proceeding was described by [Kenneth] Martin J as an irrelevant distraction in that litigation (see CIV 2840 Reasons, [212], [550]). The evidence considered by [Kenneth] Martin J does not address the spectrum of evidence available. The obiter observations by [Kenneth] Martin J are thereby of diminished importance.
2. In any event, as expressly recognised by [Kenneth] Martin J, issues of 'concern about such objectives might emerge, if some illegitimate or unlawful means had been suggested or resolved upon to further' the purposes and motives of the Fulcrum Group (see CIV 2840 Reasons, [212]). The [appellants contend] such means have been demonstrated by the matters identified in the Abuse of Process Application, and will be further illuminated by the discovery sought in the Discovery Application. The resolution of this appeal should await those processes.
3. No prejudice is suffered by the CITIC Respondents. The primary proceeding was permanently stayed. It is not a case, for example, where the CITIC Respondents are being restrained or held out of money.
4. The adjournment will be finite and its length dependent on events to occur shortly in the future. The parties in [p]roceeding CIV 1915 [of 2019] are next before the Court on 15 April 2021. Given the seriousness of the allegation in the Abuse of Process Application, it may be expected the issues will be resolved expeditiously enabling the [appellants] to return to the court for a relisting.
5. There has been no delay in prosecuting the appeal. The adjournment is a consequence of events outside the control of the [appellants]. No other countervailing considerations arise. (original emphasis)

The CITIC parties' response to the appellants' adjournment applications[15]

1. The CITIC parties contended that an adjournment should not be granted, having regard to:
   1. The lateness of the application - less than two weeks before the hearing of the appeals in a context where:

(a) the documents in relation to the Fulcrum Evidence were discovered in CIV 2840 in May 2020;

(b) the listing of these appeals occurred on 10 August 2020;

(c) the documents were the subject of evidence at the hearing of the trial in CIV 2840 in November 2020; and

(d) Mr Palmer held suspicions about the existence of the Fulcrum Group as early as December 2012.[16]

1. The Fulcrum Evidence is not relevant to any alleged issue in the primary proceedings or in the appellants' case, and no serious attempt has been made to demonstrate its relevance.
2. The significance of the Fulcrum Evidence was rejected by the primary judge in the decision in CIV 2840 referred to in [16] above.
3. In other proceedings between the parties, namely CIV 1514 of 2016, the judge refused to allow the appellants to plead allegations, or issue subpoenas, in respect of the Fulcrum Evidence: CITIC Ltd v Mineralogy Pty Ltd [No 4].[17]
4. The application effectively seeks an adjournment for an indefinite duration in the context that the Clause 6.3 Claims were originally raised by Mineralogy in litigation in 2013, and have been the subject of multiple earlier proceedings.
5. Speculation about what evidence might emerge through fishing expeditions in other proceedings is not a proper basis for adjournment of the appeals.

1. The CITIC parties submitted, by way of summary, that the appellants have:
   1. engaged in egregious, unexplained, delay where the appeals were set down seven months ago and are due to be heard next week;
   2. further drawn out the litigation between the parties;
   3. made an application for an ill‑defined, open‑ended adjournment that may delay finally resolving the claim first made eight years ago by a further period of years; and
   4. made no serious attempt to explain the relevance of the further evidence sought to be relied on to the outcome of the primary proceedings.

1. In considering an application to adjourn the hearing of an appeal, the court evaluates the interests of justice and is informed by the goals and objects of O 1 r 4A and r 4B of the RSC. Insofar as the time of the court is a publicly‑funded resource, inefficiencies in the use of that resource arising from the vacation or adjournment of hearings is properly taken into account in the exercise of the discretion. The public interest in the efficient use of court resources is a relevant consideration in the exercise of the discretion to adjourn.[18]
2. The considerations which will inform the interests of justice include (1) the lateness of the adjournment application, (2) whether the adjournment arises in the broader context of lengthy and drawn out litigation between the parties, (3) the prejudice to the applicant if the adjournment is not granted, (4) the prejudice to the respondent to the application if the adjournment is granted, and (5) case management considerations and the efficient use of the court's resources.[19]

1. Whilst having considered all of the factors pressed by the appellants, we were not satisfied that it was in the interests of justice to grant the adjournment. The following matters appeared to us to be the most significant.
2. First, the adjournment application was brought very late. These appeals were listed on 10 August 2020 and the adjournment application emerged less than two weeks before the hearing. There is no satisfactory explanation for the delay, including in a context where the documents in relation to the Fulcrum Evidence were discovered in May 2020, and were the subject of cross‑examination at the trial of the issues in CIV 2840 in November 2020.
3. Secondly, in substance, the appellants are seeking a stay of indefinite duration. It is to be expected that if the Chief Justice, on 15 April 2021, dismissed the CITIC parties' application to dismiss the Appellants' Permanent Stay Application, and ordered discovery, the Appellants' Permanent Stay Application would wend its way through further interlocutory procedures to a final hearing at some distant point in the future. If, on the other hand, the Chief Justice were to summarily dismiss the Appellants' Permanent Stay Application and/or dismiss the appellants' application for discovery in that regard, there would most likely be appeals in respect of those orders. Those appeals would take time to be prepared and heard. If the appellants were successful, the Appellants' Permanent Stay Application would resume its course along the lines just mentioned.
4. Thirdly, the litigation between these parties has spanned eight years already. If the appeals are successful, the result will be that the Clause 6.3 Claims that were first raised in 2013 may be litigated and (if experience is any guide) the litigation of those claims will likely last some years. A delay in the disposition of these appeals in that context is prima facie not in the interests of justice.
5. Fourthly, if the orders of the primary judge permanently staying CIV 3129 as an abuse of process were interlocutory orders (as the appellants contended), and if this court, in due course, were to dismiss the appeal, there would be no res judicata or issue estoppel, and prima facie no abuse of process consideration precluding the appellants from seeking to have the permanent stay lifted in light of the Fulcrum Evidence and the associated matters raised in the Appellants' Permanent Stay Application. On that basis, the proposed point of the adjournment loses its force. No real prejudice is suffered by the appellants in that event.
6. Further, on the appellants' submissions, even if the orders of the primary judge were final and, in due course, an appeal were dismissed and the court entered orders to that effect (ie, the orders were perfected), the court would retain the power to reopen the appeal in light of the Fulcrum Evidence and the matters associated with the Appellants' Permanent Stay Application. Again, on that basis, no real prejudice is suffered by the appellants (although these observations are not to be taken as necessarily accepting the correctness of the appellants' contention as to the position with respect to perfected orders).[20]
7. Fifthly, the CITIC parties will, objectively, suffer prejudice insofar as the question of whether the Clause 6.3 Claims may be litigated will effectively be put on hold during the period of the proposed adjournment. Whilst that is a factor, its weight is somewhat attenuated by the fact that it appears that these parties have a variety of other disputes that currently are or will be the subject of further litigation, so that it cannot be said that the Clause 6.3 Claims are the end of the line, as it were.
8. Sixthly, case management considerations and the efficient use of the court's resources point in favour of utilising the days allocated for these appeals.
9. In our view, the above matters were sufficient to conclude that the appellants had not established that an adjournment was in the interests of justice. A further matter confirmed that conclusion. We were not persuaded that the Fulcrum Evidence had the alleged forensic significance for which the appellants contended in relation to the issues for determination in these appeals. Amongst other things, the appellants' arguments appeared to skate over, rather than demonstrate, an alleged connection between the Fulcrum Evidence and Mineralogy's conduct in relation to the prosecution of the Clause 6.3 Claims up to and including 20 January 2017.

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

Research Associate to the Honourable Justice Murphy and the Honourable Justice Mazza

[1] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2020] WASC 40 (primary decision).

[6] Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16] [2017] WASC 340. An appeal against that decision was dismissed: Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80; (2019) 55 WAR 89.

[7] C Palmer affidavit affirmed 8 May 2019, par 57; GB 423 - 424.

[8] The appellants relied on an affidavit of S Iskander sworn 9 March 2021 in CACV 29 of 2020, and an identical affidavit in CACV 27 of 2020.

[9] Appellants' outline of submissions, pars 17 - 18.

[10] Tyne v UBS AG [2016] FCA 241; (2016) 338 ALR 624 [31] - [34]; Re Luck [2003] HCA 70; (2003) 203 ALR 1 [9].

[11] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2021] WASC 45.

[12] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2021] WASC 45 [211] - [217], [549] - [550].

[13] Appellants' submissions, pars 28 - 31, 34 - 38.

[14] Reference was made to Mount Lawley Pty Ltd v Western Australian Planning Commission [No 2] [2008] WASCA 1 [5].

[15] The CITIC parties relied on the affidavit of H Chan affirmed 17 March 2021.

[16] Exhibit HC‑1 annexed to the affidavit of H Chan affirmed 17 March 2021.

[17] CITIC Ltd v Mineralogy Pty Ltd [No 4] [2020] WASC 439.

[18] JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [2020] WASCA 38 [3] ‑ [4]; La Mela v Franklexis Pty Ltd [2020] WASCA 83 [53].

[20] See, eg, Bailey v Marinoff [1971] HCA 49; (1971) 125 CLR 529; Burrell v The Queen [2008] HCA 34; (2008) 238 CLR 218 [19] ‑ [20]; Wentworth v Woollahra Municipal Council (No 2) [1982] HCA 41; (1982) 149 CLR 672, 683 ‑ 684; Mount Lawley [5] concerned an appeal where the orders had not been perfected.