MINERALOGY PTY LTD -v- SINO IRON PTY LTD [No 14] [2017] WASC 17 (27 January 2017)

Supreme Court of WA|2017-01-27|Before: Martin J

Intervenor on Counterclaim : State Solicitor for Western Australia

1 In the aftermath of my reasons for decision of 13 December 2016, Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 13] [2016] WASC 403, a number of issues now present for resolution upon that application made by Mineralogy seeking mandatory interlocutory injunctive orders by reference to its claims for liquidated amounts said to be due to it by Sino Iron and Korean on account of Mineralogy's entitlement to receive Royalty Component B (RCB) under cl 8.2 of the two MRSLAs. These brief reasons finalising orders are to be read with the 13 December 2016 reasons.

3 Mineralogy filed at the court a list of material to be read at the hearing dated 20 January 2017. Of that list, Mineralogy relies upon:

the outline of submissions dated 21 December 2016;
outline of submissions regarding adjournment dated 16 January 2017;
outline of submissions in reply dated 19 January 2017;
the chamber summons for leave to amend filed on 11 January 2017;
the affidavit of Scott Birkett filed 8 December 2016;
the affidavit of Robert Brierley filed 20 December 2016;
the affidavits of Clive Frederick Palmer filed 21 December 2016 and his further affidavit filed 16 January 2017;
undertaking of the plaintiff filed 19 December 2016 and a second undertaking of the plaintiff as to damages dated 21 December 2016; and
the affidavit of Mr Kane Christopher Jones filed 17 January 2017.

4 In terms of the evidentiary materials relied upon by the CITIC parties for this hearing, I hold the following materials, namely:

the affidavits of Mr Ian Peter Scott O'Donahoo, sworn 13 January 2017 and filed 18 January 2017, and his further affidavit sworn 17 January 2014 and filed of 19 January 2017; and
the affidavit of Ms Tania Cini, sworn 17 January 2017 and filed 19 January 2017.

Further documents handed up and relied on during the special appointment hearing

a revised version of the Minute of Proposed Fifth Further Amended Statement of Claim dated 20 January 2017;
a letter dated 22 October 2008 from Mineralogy to the Directors, Korean Steel Pty Ltd and Sino Iron Pty Ltd c/ CITIC Pacific Mining Managements Pty Ltd, titled General Arrangement Map (GA);
the plaintiff's response to the defendants' objections to evidence;
the plaintiff's revised proposed timetable of programming orders of the matter to trial;
two further executed undertakings as to damages - one dated 14 December 2016 and another dated 20 January 2017.

a copy of the open letter from Allens Linklaters dated 19 January 2017 addressed to Mr Kane Jones of Mineralogy Pty Ltd regards the undertakings of Mineralogy to the CITIC parties; and
the defendants' rival revised proposed timetable of programming orders of the matter to trial.

Subsequent procedural history following 13 December 2016

7 On 14 December 2016, after the parties received an advance copy of the 13 December reasons, I convened an appointment that afternoon to deal with orders and the ramifications of the published reasons. At the conclusion of that appointment, I then made some limited orders in the following terms below (chiefly by reference to the amounts of US dollars identified in [218] of those reasons where I had said):

[218] Given what has now been canvassed, I am of the view that there should presently issue some equitable relief by way of an interlocutory mandatory injunction to compel Korean and Sino to pay one-half of $US21,380,541 to Mineralogy within 30 days. The other half of that amount is to be paid into court - to abide there the outcome of a trial of all issues presently in dispute as between the MRSLA parties concerning RCB: see table 9 of Mr Birkett's report for derivation of this figure.

8 My orders of 14 December 2016 were in the following terms:

Upon the timeous filing and service of the usual sealed written undertaking as to damages by the plaintiff concerning the interlocutory injunctions, the first and second defendants are hereby ordered by 4 pm on 30 January 2017 to pay:

(a) into Court the sum of $US10,690,270.50 (or the Australian dollar equivalent on the day that the funds are provided to the Court) to abide further orders of the Court; and

(b) to the plaintiff, the sum of $US10,690,270.50.

The matter is listed for a hearing of (a) the plaintiff's pending application for leave to amend its current statement of claim and (b) any further issues arising out of the reasons for decision of the Honourable Justice Kenneth Martin published on 13 December 2016, at 09.15 am on Friday, 20 January 2017.
The costs of the application, now determined, shall be costs in the cause.
The plaintiff's obligation to comply with order 2 of the orders made by the Honourable Justice Chaney on 12 October 2016, relating to a response by the plaintiff to a letter from the defendants' solicitors dated 5 September 2016, is now formally discharged, with leave to the defendants to request such particulars again in the future should they ever again be made relevant by the state of the pleadings in this action.
The plaintiff's chamber summons of 2 December 2016, seeking orders for mediation, is mentioned and is adjourned to the hearing on 20 January 2017.

9 As may be seen, order 2 fixed at that time a further special appointment for Friday, 20 January 2017, at 9.15 am to deal with issues still then unresolved. Chiefly, these concerned the foreshadowed amendments by Mineralogy to its current statement of claim - in order to withdraw all previous pleas to the effect that the MRSLAs had been terminated by it or that their ongoing performance had been brought to an end.

10 The second aspect to be addressed was the need for Mineralogy to provide evidence to satisfy me that it was from this point ready, willing and able to perform all of its own obligations under the MRSLAs on an ongoing basis. This was necessary, in my view, in order for it to 'do equity' towards the other MRSLA contracting parties (namely, the first and second defendants, Sino and Korean) in order to obtain exceptional interlocutory injunctive relief by way of money payment orders against the defendants. See generally, [227] of my 13 December 2016 reasons, where I said:

Mineralogy needs to demonstrate to the court that it is ready, willing and able to perform its ongoing obligations to the CITIC parties under the MRSLAs to obtain any further equitable relief for the post October 2014 period. If it does that, sooner rather than later, then I can see no present reason, conceptually, why a similar 50/50 receipt/payment into court interlocutory regime would not be appropriate as regards a $US59,603,625 amount - assessed by table 10 in Mr Birkett's report.

11 Allied to those issues were further applications by Mineralogy seeking an early trial of this action CIV 1808 of 2013 and, in addition, urgent mediation orders: see Mineralogy's chamber summons filed 21 December 2016 seeking leave to amend and further directions and orders and, as well, Mineralogy's chamber summons for mediation orders of 2 December 2016 (which I had also made returnable at the 2.15 pm appointment on 14 December 2016).

12 The special appointment date for these unresolved issues to be dealt with, in the end, was later than I had initially wanted (having offered the parties time on either 21 or 22 December 2016). Mineralogy was amendable to and pressed for those dates but, in the end, I accepted the submissions of senior counsel for the defendants, essentially to allow them more time to consider Mineralogy's proposed amendments to its current statement of claim (Mineralogy requiring leave to amend its pleadings under orders made by Edelman J in 2014 - issued then by reason of the volume and nature of the changes which had been made to that point). Accordingly, I allowed the defendants more time and I fixed the appointment for Friday, 20 January 2017.

13 On 14 December 2016, I also refused the defendants' application, advanced orally through senior counsel, to stay the operation of the payment orders, which I ultimately made that day. I refused the stay as I assessed it as being inappropriate in all the circumstances, providing brief extempore reasons at that time: see transcript of 14 December 2016 hearing at pages 1508 - 1510. At that time, the potentiality of an appeal by the defendants to the Court of Appeal against my orders was flagged as a possibility, with the defendants then considering that option, I was told. They enjoy an appeal as of right against injunctive orders notwithstanding their interlocutory character: see s 60(1)(f)(ii) of the Supreme Court Act 1935 (WA) as amended.

14 On 19 December 2016, I issued further orders administratively in the following terms towards the logistics of the 20 January 2017 appointment:

By 4 pm (WST) on Wednesday 21 December 2016, the plaintiff shall file and serve:

(a) its chamber summons applying for leave to file its Fifth Further Amended Statement of Claim and Minute annexing the Fifth Further Amended Statement of Claim;

(b) any affidavits in support of its application for leave to file its Fifth Further Amended Statement of Claim;

(c) any further affidavit evidence to support the submission of the plaintiff that it is and remains ready, willing and able to perform all its obligations under the MRSLA contracts - entered as between the plaintiff and the first and second defendants respectively; and

(d) a written outline of submissions in support of its application for leave to amend and in respect of any further orders it seeks.

By 4pm (WST) on Friday 13 January 2017, the defendants, the Attorney General of Western Australia and the State of Western Australia shall file and serve any affidavit and outline of submissions in respect of the issues referred to in order 1 above.
By 4pm (WST) on Wednesday 18 January 2017 the plaintiff shall file and serve any outline of reply submissions in respect of the issues referred to in order 1 above.

15 Subsequently, on Friday, 13 January 2017, the CITIC parties, through their lawyers of record, Allens Linklaters, submitted a request to my associate for an adjournment of the special appointment on Friday, 20 January 2017. This was made on the apparent basis that the CITIC parties then said they wished to file further evidence, but which would not be ready within that time frame, and engaging with the $US6 per tonne orders which I foreshadowed (but had not been made) under [231] - [236] of the 13 December reasons.

16 Having received the solicitors' affidavit of Mr Peter O'Donahoo by email, received only minutes before the 4.00 pm deadline under par 2 of my 19 December 2016 orders, I considered that request over the ensuing weekend. Ultimately, I summarily refused the request to defer the special appointment by a communication sent by my associate at my behest to the parties on Monday, 16 January 2017. The communication read, in part:

His Honour has asked me to let the parties know that he has now read and considered Mr O'Donahoo's most recent affidavit of Friday 13 January 2017 which I received as an email attachment from Allens Linklaters shortly before 4.00 pm WST on Friday.

The O'Donahoo affidavit looks to be sworn in support of the CITIC Parties' request to vacate the all-day Special Appointment in this matter fixed for Friday 20 January 2017.

The basis for the CITIC Parties' request seeking that the appointment be delayed for a period for at least a further 21 days is the expressed desire to put further evidence before the court - of the nature as outlined at paragraphs 15-19 of the O'Donahoo affidavit, concerning the asserted impact of a $US6.00 per tonne order - as foreshadowed by the reasons.

The paragraphs of the O'Donahoo affidavit refer very generally to possible "serious implications" of such order.

However, the character of the foreshadowed further evidence, assuming it were open for acceptance at this stage, does not bear upon the major items of business set down in December 2016, to be dealt with at the 20 January 2017 appointment, namely:-

Mineralogy's application for leave to further amend its statement of claim;
Mineralogy's demonstration of its readiness, willingness and ability to perform its obligation under the MRSLAs on an ongoing basis;

The trial timetable, given the provisional listing for trial of this action for 10 days in June 2017;

Mineralogy's chamber summons seeking directions towards mediation before trial.

In light of all those considerations, and as a matter of case management efficiency and to avoid unnecessary wastage, the Special Appointment on Friday 20 January 2017 should proceed as programmed.

Any application by the CITIC Parties to adjourn an aspect of that appointment's business concerning a $US6.00 per tonne order for the payment of further funds into court can be argued, if necessary, and determined at the Special Appointment.

17 The key issues now presenting for resolution (which, in my assessment, are closely interrelated) as at 20 January 2017 were:

(a) Whether Mineralogy should have leave to amend its current statement of claim - which is its fourth further amended statement of claim filed pursuant to the order of Justice Chaney of 31 March 2016 (filed 1 April 2016).

In short, as these reasons will briefly explain, my view is that there should be leave to amend, but only by way of deletion from the current statement of claim - in order to confine the ensuing trial essentially to RCB issues.

(b) Timing of a trial in 2017 to finally resolve RCB issues as between the parties.

After the distillation of the parties' positions throughout the course of argument during Friday, 20 January 2017, the issue between the parties had essentially reduced to whether there should be, as Mineralogy contended, an early trial commencing in the middle of this year (ie midJune) and running for a period of approximately three weeks or whether, as the CITIC parties submitted through senior counsel, this was too early and that a fourweek trial should proceed not earlier than at the commencement of September 2017. As these reasons will briefly explain, having deliberated over that clash of positions and the respective draft timetables submitted by both sides throughout the course of another weekend, I am of the view that the trial should be listed (still at this stage on a provisional basis to ensure that all time lines are met) as Mineralogy submits, commencing in midJune 2017 for three weeks and that the time line is both fair, feasible and just to all sides. The parties were advised of that view by a communication from my associate on Monday, 23 January 2017.

(c) My assessment as to the residual question left for Mineralogy to satisfy arising out of the 13 December 2016 reasons concerning whether or not Mineralogy had satisfied me that it was ready, willing and able to perform its obligations under the MRSLAs on an ongoing basis assuming Mineralogy withdrew all pleas and submissions to the effect that the MRSLAs had been terminated in their future performance by it (as it now has).

This is the substantive issue which has required me to reserve until now and give deep consideration to whether or not on an interlocutory basis, I am satisfied that Mineralogy is now ready, willing and able to perform its obligations under fully operative and efficacious MRSLAs on an ongoing basis - in order for Mineralogy to claim payments and entitlements on an interlocutory basis before the trial by reference to its rights to receive royalty moneys as RCB - a part of the Mineralogy Royalty (as defined in the MRSLAs). In short, and as at this point in time, I conclude, for reasons that I will briefly give, that Mineralogy has met that threshold at this time.

(d) The issues surrounding the foreshadowed interlocutory injunctive payment orders which I foreshadowed under [230] and [235] of my 13 December 2016 reasons.

18 I will proceed to further address each of the four key residual issues briefly in turn from this point.

Whether Mineralogy should have leave to amend its current statement of claim

19 Since 13 December 2016, Mineralogy has circulated a number of draft minutes of proposed amendment to its statement of claim. All of these proposed amendments have met with criticisms and disapprovals from the defendants for various reasons exchanged either in correspondence or in written submissions put to the court.

20 Presently, the pleadings are formally closed and it has taken since the inception of the present action, almost three and a half years, for that objective to be achieved. A prospect of opening up the pleadings to further issues with consequent delay and expense, in short, is abhorrent.

21 I should note that a key feature of all of Mineralogy's four or five proposed minutes of amendment as circulated show an unequivocal withdrawal of its former pleas to the effect that the MRSLAs had been brought to an end by it in terms of their ongoing performance and implementation.

22 My 13 December 2016 reasons deal repeatedly with the problematic consequences of such a stance by Mineralogy, in the context of its present application for liquidated amounts of money to be paid to it under mandatory interlocutory injunctive orders assessed by reference to its rights to receive ongoing royalty payments by reference to cl 8.2 of the MRSLAs as RCB. The communicated unequivocal withdrawal of such termination pleas by Mineralogy is a positive development in the rationalising of its case for relief. But Mineralogy also added in these minutes of proposed amendment some new or modified pleas which have given rise to heavy disputation and opposition expressed by the defendants.

23 Given all that, I indicated to senior counsel for Mineralogy at an early point at the 20 January 2017 appointment, that I was troubled by its proposed augmentations to its statement of claim under these foreshadowed additional pleas. For my part, they seemed inconsistent with achieving the objective of there being an early final resolution of the RCB issues which I had anticipated at [234] of the 13 December 2016 reasons, and which I had been led to believe through the submissions of senior counsel for Mineralogy on 14 December 2016 (Mr Zappia QC by videolink from Melbourne) would be the thrust of Mineralogy's amendments to its pleadings. However, analysis of the ensuing proposed minutes of amendment since then demonstrated that not to be the case. Most of the proposed augmentations were also, on my assessment, conceptually problematic, essentially for the reasons which were pointed up in passing correspondence emanating from the defendants' legal advisers.

24 I indicated to senior counsel for Mineralogy that, whilst it was entirely a matter for Mineralogy, I would be prepared to grant it leave to amend in respect of its current statement of claim (the fourth FASOC) but only by way of deletions from its existing 53page content. Any application for leave to add further claims by way of augmentation beyond the existing RCB case would need to be argued and determined. A truncation in Mineralogy's pleaded case would be consistent with the observations in [234] of my reasons and lend itself to the feasibility of conducting a trial sooner rather than later. The defendants, of course, were not indicating any opposition to Mineralogy having leave to amend by way of deletions of existing claims by way of a truncation in the case they faced. In the end, Mineralogy only pressed to keep pars 1 to 45, 133 and 134 of its existing pleaded statement of claim and its accompanying prayers for relief under pars 1, 5, 6 and 8 to 10 in the fourth FASOC (and pars A to F of the prayer for relief in the defendants' sixth further amended counterclaim).

25 All questions of costs associated with a deletion amendment of this character will be reserved, to be dealt with on the papers by written submissions exchanged between the parties in due course.

26 Consequently, the scope of the dispute in this action will, upon such excision amendments being made, be significantly reduced to essentially the issues surrounding cl 8.2 in the MRSLAs, as regards the RCB obligation as a component of the Mineralogy Royalty - which to date has only been addressed at interlocutory level, by reference to the arguments of Mineralogy to the effect that it is entitled to receive some royalty money upon product produced by Sino and Korean, and the first tier counter-proposition of the defendants that cl 8.2 of the MRSLAs as regards RCB is dysfunctional, but capable of effective severance from the MRSLAs and that Mineralogy is not entitled to any payment at all in respect of RCB whatsoever.

27 I am of the view that Mineralogy should have leave to amend its pleading upon the excisional basis which has been identified and these amendments can be effected by leave which I will grant. These amendments should be effected by 4.00 pm on Tuesday, 24 January 2017 WST - as Mineralogy proposes. As part of those amendments, however, Mineralogy will be entitled to update its payment claim calculations as regards its RCB claims over time as they continue to accrue (on its case) subsequent to 1 April 2016 when its last pleading was filed.

The timing of a trial to finally resolve the present cl 8.2 MRSLA (RCB) payment disputes

28 This action has now been running since 18 March 2013, when it was commenced in the Supreme Court of New South Wales and before it was remitted under the cross-vesting legislation to this court. It is clearly time that the RCB issues which have now distilled to their essence and are no longer surrounded by problematic and diverting pleas can be dealt with once and for all (at least at first instance).

29 Since my case management involvement with this action began in October 2016, my assessment, viewing its overall procedural history, is that it has been bedevilled by ongoing interlocutory disputation - which has proven costly, wasteful and overall, substantially unproductive. Ongoing delays and wastages from more interlocutory disputation is both unacceptable and unsustainable.

30 As seen on 19 December 2016, I provisionally allocated (at Mineralogy's behest, with Mineralogy at the time seeking a two-week trial of all issues in May 2017 on an urgent basis) that a trial be provisionally set down for a period of two weeks, commencing in midJune 2017 - for a trial, as I envisaged at the time essentially confined to RCB issues, but including all expert evidence. I envisaged a trial dealing essentially with the following issues, namely:

(a) the contractual interpretation and meaning of cl 8.2 in the two MRSLAs, assessed in their overall surrounding and contractual context as regards RCB;

(b) resolving all arguments over asserted dysfunctionality by the defendants, or as to the uncertainty of cl 8.2 within the MRSLAs;

(c) as contended by the defendants, resolving the common law or contractual severance of RCB provisions within cl 8.2 of the MRSLAs, but leaving say the CITIC parties, residual performance of those agreements intact and otherwise fully efficacious and functional;

(d) the lesser tier arguments advanced by the defendants in the alternative, concerning a possibility of royalty payments assessed by reference to product to Mineralogy by the defendants and assessed as a reasonable royalty following negotiation or otherwise in lieu of RCB and various obligations of good faith and the like concerning negotiations or expert determinations to that end; and

(e) all expert evidence bearing upon these issues, including as to the quantification of RCB or a reasonable amount of royalty assessed by reference to product produced, in lieu of RCB.

31 With the benefit of the argument on Friday, 20 January 2017, there would also need to be included within this agenda, in order for the exercise to be feasible, a determination of Mineralogy's alternative submission concerning rectification of the MRSLAs, as is pleaded at par 134 of its current pleadings.

32 I had further envisaged that the exercise would need to deal with Mineralogy's alternate case seeking restitutionary relief (see par 135 of the fourth FASOC). However, during argument, senior counsel for Mineralogy, Mr Bradley, also indicated that Mineralogy would seek leave to also excise those restitutionary pleas from its amended pleading. Clearly, that is of assistance in further narrowing issues for trial and limiting the duration of any trial.

33 I also envisaged that the defendants' counterclaim might then consequentially also be narrowed, essentially to what manifests currently under pars A through F of its counterclaim's prayers for relief concerning the construction and application of the terms of the MRSLAs concerning the Mineralogy Royalty and RCB (see pages 129 130 of its existing counterclaim within the defence to the fourth FASOC and proposed fifth further amended counterclaim of 29 April 2015). I cannot envisage the defendants to be unduly troubled in responding to significant deletion amendments by Mineralogy as regards the existing statement of claim, although they should, of course, have a reasonable opportunity to review their defence and counterclaim pleadings in the light of all the excisions.

34 Overall however as regards the timing of a trial, it should be remembered that the problematic issues surrounding cl 8.2 in the MRSLAs as regards RCB, have now been live for some years. The defendants' pleaded resistance position in that respect has been articulated since 29 April 2016 in its current defence and counterclaim settled by senior counsel and two junior counsel (Mr Scerri QC and two junior counsel, Mr S H Parmenter and Ms T SpenceBruce). The issues surrounding the meaning and functionality of cl 8.2 within the MRSLAs as a matter of contractual construction and overall functionality have now been heavily canvassed in this court before Tottle J in December 2015 and then the Court of Appeal (where the CITIC parties were appellants) in March 2016 and, finally, before me on the renewed interlocutory application of Mineralogy during October 2016.

35 The point to be made is that the issues of construction, law and surrounding circumstances evidence assisting in the interpretation of these RCB provisions of the MRSLAs in context, have been actively traversed for some years now, in one context or the other. True it is that the RCB issue has not yet presented for determination on a final basis at a trial. But, nevertheless, it is just unthinkable that these heavily resourced defendants have not been giving active consideration to the meaning and ramifications of cl 8.2 to this point for some considerable period already. My observations are made in the context of assessing the time needed for the defendants to be fairly ready for a trial, either commencing in midJune 2017, as Mineralogy would seek, or commencing in early September 2017, as the defendants say is the more sensible and workable starting objective from their perspective.

36 To advance the cause of seeking the earliest possible trial to finally resolve the RCB issues, Mineralogy has said that it will waive its right to seek discovery and inspection of documents from the defendants, in order to assist the objective of an early trial. Mineralogy is also willing to subject itself to tight time limits in terms of pre-trial preparations. On 20 January 2017, as I have mentioned under related issue (a) above, Mineralogy through senior counsel effectively agreed to amend its statement of claim on a basis of only wholesale deletions, by not pressing any further or amended claims beyond the RCB arguments in order to assist the objective of final determination at trial.

37 The defendants, whilst not objecting to (other than foreshadowing their seeking costs thrown away on an indemnity basis) Mineralogy's deletions of pleas from its existing fourth FASOC, nevertheless still strongly contend that they can only be ready for a trial (they say of four weeks' dimension) even for the heavily truncated scope of a trial essentially confined to RCB issues before September 2017. That is their position, albeit that they recognise that they would be relieved in their preparations from any obligation to give discovery or inspection on their part.

38 The defendants, by an affidavit of Tania Cini of 17 January 2017 (Ms Cini being a partner of Allens, the solicitors for the defendants) suggest that they will need to call at any trial up to nine expert witnesses and between five to seven lay witnesses.

39 The nature of the lay witness evidence the defendants foreshadow would be directed at surrounding circumstances or factual matrix evidence existing at the time the MRSLAs were perfected at 21 March 2006, or subsequently varied.

40 The nature of the proposed expert evidence was also identified during argument by Mr Scerri on 20 January as essentially lying in five areas, namely:

(4) freight issues in relation to the comparison of iron ore and iron ore product pricing issues concerning freight and, say, the comparison of CIF prices to FOB prices; and

41 Ms Cini's affidavit displays a number of predictions and assumptions about the dimensions of and the duration of a trial in action CIV 1808 of 2013. She also proceeds on the assumption that another action, CIV 1431 of 2015, would be determined at the same time. I do not accept that assumption.

42 Furthermore, Ms Cini's affidavit, without criticism, looks to me now to have been overtaken by the truncation in events as proposed under Mineralogy's deletion amendments to its statement of claim. Whilst Mr Scerri submitted that such deletions were mainly in areas concerning legal argument and therefore had done little to reduce the scale of evidence at a trial, my assessment is that that is an unduly pessimistic view looking at the timetable under par 38 of Ms Cini's affidavit.

43 Ms Cini's affidavit, however, does reveal that the defendants have been doing considerable work in anticipation of advancing matters towards a trial (and only as I would expect). Part of that work included identifying, on 10 October 2016, the categories of documents which the defendants would be seeking from Mineralogy assessed at that time upon discovery. She points out at par 16 that there has not been a response to this correspondence from Mineralogy.

44 The 10 October 2016 letter identified some 25 categories of discoverable documents, called for as likely to be relevant. But assessed by reference to the truncation in issues now delivered by the excision amendments which Mineralogy will make, it looks to me on a provisional basis that requested categories 10, 11, 12, 13, 14, 15, 16, 17, 19, 20, 21, 22, 23 and 24 would now lack sufficient relevance to need to be discovered upon by Mineralogy.

45 Moreover, drafts of documents requested under category 4, even allowing for the reception of surrounding circumstances context evidence in line with the contemporary approach to the interpretation of commercial agreements (see Electricity Generation Corporation v Woodside Energy Pty Ltd [2014] HCA 7; (2014) 251 CLR 640 and Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104) would still not be admissible towards construction issues, in line with the range of evidence which would be admissible to assist in exercising construction and interpretation. Different issues, of course, might apply in respect of a rectification argument which, on the face of it, is still live.

46 On my view, given the significant truncation in the scope of the defendants' pleaded case by way of excision which is imminent, and that the defendants are completely relieved of any obligation to give discovery and inspection of documents to the plaintiff, they should be able to be ready to proceed with a three-week trial of the action by the middle of June 2017. The defendants, on my assessment, enjoy an advantage of having almost limitless legal resources at their disposal such that they can, on my assessment, and should be ready for what I will list as a three-week trial commencing in midJune 2017.

47 At this stage, that is a provisional listing only, allocated on the basis that the parties must faithfully comply with a strict timetable in terms of preparation beforehand. I expect and there should be high level (ie, silk to silk) ongoing conferral as this timetable progresses in its implementation. Any significant noncompliances, particularly by Mineralogy, will likely prove fatal to it enjoying those midJune trial dates. The matter needs to be ready and entered for trial in accordance with this court's practice directions by 18 May 2017 (save for steps 15 17 on the timetable which is annexure A to these reasons). Mineralogy also seeks orders for a court supervised mediation to occur in the period between now and the trial. I will make the standard mediation orders in due course. However, they will need to run contemporaneously with the preparations of the parties for a trial starting in midJune 2017.

48 Overall, I assess the position to be that it is essential that there be a final first instance determination of the RCB issues as soon as is fairly and feasibly possible. Mineralogy has indicated through senior counsel that it can be ready for such a trial in midJune 2017 and my assessment is that the defendants will essentially need only to attend to rendering small scale consequential amendments to their defence and counterclaim, the finalising their lay evidence and the finalising their expert evidence across a period before the trial of still close to four and a half months.

49 I will, of course, closely monitor the ongoing interlocutory progress of the action towards that hearing date. I will also order that in lieu of the exchange of lay witness statements (in chief) that the parties' lay evidence be exchanged on the basis of affidavits (with relevant documents attached) sworn on the basis of a final trial hearing (ie, absent inadmissible hearsay evidence). There would then be an electronic trial book to be used at the trial.

Is Mineralogy ready, willing and able to perform its obligations under the MRSLAs at this time?

50 In short, I currently assess this related question in the affirmative. The following factors bear upon me as important to ultimately reaching that conclusion, namely:

(a) The acknowledgement and looming withdrawal of all assertions of termination by Minerology of the MRSLAs, to meet the concerns I expressed in my 13 December 2016 reasons about the inconsistency of that stance by Mineralogy. Amendment will address that issue.

(b) Mr Palmer, in affidavits sworn for the purposes of this application, has affirmed to the effect that Mineralogy is ready, willing and able to meet its obligations under the MRSLAs (see par 15 in the Palmer affidavit of 21 December 2016 and par 45 of the Palmer affidavit of 16 January 2017).

(c) The heavy truncation in the scope of Mineralogy's pleaded case under the excision amendments which are to be made, delivering a removal of diverting issues that might arguably be said (as the defendants have) to be contrary to accepting an ongoing performance of the MRSLAs (and thereby generating mined and processed product and thereby generating the entitlement to RCB upon product for the purpose of cl 8.2, on Mineralogy's case) is another positive. For example, withdrawal of a suggestion and plea that the failure to meet payments of RCB (assuming on Mineralogy's case that it was entitled to them) resulted in an unlawful occupation of the lease areas or unlawful mining of ore by the CITIC parties is a distraction. If it is accepted that the MRSLAs are fully alive and continuing in their mutual performance obligations upon all parties, then any issues as to less serious breaches of contractual agreements are lower tier issues sounding only in breach damages - assuming some damage might be independently identified in the face of an existing entitlement to receive either an RCB payment or the payment of a reasonable amount in lieu of RCB, if that is the position.

(d) The undertakings and assurances which have been provided in passing correspondence from Mineralogy to date are another positive factor for me.

It is very apparent that not all of the ongoing MRSLA performance concerns of the defendants have been met by Mineralogy's responses to the CITIC parties post 14 December 2016. In particular, I make mention of matters identified under par 122 and par 123 of the written submissions of the defendants of 17 January 2017. During the course of argument on 20 January, I indicated a prima facie concern as regards the ready, willing and able threshold by Mineralogy about the issues identified under pars 122(c), (d), (e) and (f) of these submissions. However, during argument Mr Bradley indicated Mineralogy's position in respect of issues (e) and (f) as regards the access condition and as regards communications with the State concerning a force majeure notice suspending Mineralogy's information provisions obligations (or at least some of them) under the State agreement. Much correspondence in those respects is identified under footnotes to those submissions of the CITIC parties which detail numerous exchanges between the parties. In the end, however, as Mr Bradley submitted, a number of these issues are either not fully before me or not fully developed sufficiently to provide the proper basis for a ruling. In any event, if they raise genuine issues about Mineralogy's position as regards the performance of the MRSLAs, then application under the liberty to apply provision would be the recourse expected to be taken by the CITIC parties as regards the implementation and performance of future payment orders under the mandatory interlocutory injunctions which are sought as regards RCB derived payment either to Mineralogy or into court dependent upon Mineralogy remaining ready, willing and able to perform its MRSLA obligations. However, the assessment about that (interlocutory as it is) is mine only. The CITIC parties do not hold a veto entitlement as regards this threshold.

51 I need to render some further points in relation to this issue in response to some specific submissions put to me by senior counsel for the CITIC parties. One submission made, in effect, is that the position of Mineralogy as regards its amenability to perform its MRSLA obligations should not be taken merely at the say-so of Mr Palmer and that actions, in effect, speak louder than words. I accept that submission. However, the position deposed to by Mr Palmer on behalf of Mineralogy is still one of a number of factors to be weighed towards the meeting of this threshold.

52 Next, Mr Scerri submitted that the assessment had to be conducted in an environment broader than simply the MRSLAs alone, by reference to the implementation of the entire Sino project as a whole. However, the feasibility of me making such an assessment would present considerable difficulties for the court even if I could accept the broad submission.

53 Essentially, in reaching my assessment as to this threshold, I have had regard to the MRSLAs and the enjoyment of rights thereunder by Sino and Korean as the paramount consideration. Clearly, conduct by Mineralogy which might be assessed as a repudiatory breach of its obligations under the MRSLAs would be concerning. But I do accept Mr Scerri's submission that my assessment goes wider, to encompass conduct which might not be of that magnitude as regards Minerology say not doing all in its power to provide Sino and Korean with the benefits they are objectively entitled to expect from the MRSLAs. Having said that, I repeat that the overall assessment is mine and not that of the CITIC parties.

54 The court is not in a position to conduct a Royal Commission in relation to every daily performance grievance which the CITIC parties might articulate about Mineralogy's conduct in the context of a vast and complex project. Sensible commercial parties are expected to act reasonably and rationally in their ongoing mutual conduct. Here, as I have previously mentioned, they are governed by an express mutual obligation of good faith made applicable under the MRSLAs.

55 One particular submission of the CITIC parties under par 122(a) of its written submissions concerned an asserted breach of cl 15.1(c) of the MRSLAs, seen in under Mineralogy's letter of 23 December 2016, by it refusing to assist the CITIC parties to obtain approval of critical project proposals from the State. This is expanded upon at footnote 173, by reference to exchanged communications from CITIC Pacific Mining Management Pty Ltd of 9 December 2016 and Mineralogy's response of 23 December 2016 - which is POD25 to Mr O'Donahoo's 17 January 2017 affidavit. However, I do not assess what is said in the 23 December 2016 letter from Mineralogy as indicating more than that the parties presently hold some differing views about how some operational things are to be done within existing approved areas. Differences in views commonly occur between commercial parties and projects of this magnitude and need to be resolved sensibly. I am not prepared to have this court drawn into a collateral side issue of this nature under an umbrella of assessing whether or not, on an interlocutory basis, Mineralogy is indeed ready, willing and able to perform its obligations under the MRSLAs towards the CITIC parties. On my assessment, it has satisfactorily met that threshold at this time.

56 That assessment, of course, bears upon the last live issue concerning the mandatory interlocutory injunctive payment orders that were foreshadowed in my 13 December 2016 reasons under [227] and [230], for the period up to 30 June 2016 and also to the $US6 per tonne payment sought on an ongoing basis which are identified as being sought by Mineralogy and assessed by me as potentially appropriate to be paid into court under [235] of my reasons. The defendants oppose those orders, indicating explicitly to me by senior counsel that if made they will be appealed.

57 First, I deal with the $US59,603,625 total amount which I addressed at [227] and [230] of the reasons - with half ie, $US29,801,812.50 to be paid to Mineralogy and the same amount to be paid into court, in line with the philosophy of the prior orders I made on 14 December 2016 concerning the amount identified in [218], for the period to the end of September 2014.

58 Upon the excisional amendments to Mineralogy's current statement of claim by the excisions as identified and upon the basis of an undertaking as to damages by Mineralogy, the amount of $US29,801,812.50 should in my view be made to Mineralogy by Sino and Korean by 4.00 pm WST on 28 February 2017. (Note Mineralogy's undertaking as to damages which has been provided will need to be slightly corrected to reflect the temporal terms of this order.) Nothing has intervened to change what I said about the appropriateness of such an order post 13 December 2016.

59 As regards a payment of $US6 per dry metric tonne of iron ore concentrate shipped in the previous quarter, it is my assessment that, as per [232] and [235] of my reasons, that an amount so assessed in respect of the quarter ended September 2016 should be paid into court by 4.00 pm WST on 31 March 2017. A $US6 per dry metric tonne amount in respect of the quarter ended 31 December 2016 should also be paid into court, also on 31 March 2017.

60 After that point, an amount assessed by reference to $US6 per dry metric tonne per quarter should be paid into court on a quarterly basis, one quarter in arrears.

61 Hence, an amount to be payable in respect of the quarter ended March 2017 should be paid into court by no later than 30 June 2017, mutatis mutandis per quarter thereafter. Clearly, this time line has been framed with a view to my final (first instance) trial resolution of issues concerning RCB as early as is reasonably feasible after a midJune 2017 commenced trial.

62 It is necessary to render some further observations concerning two further matters as regards the $US6 per dry metric tonne amount being paid into court. First, the defendants by written submissions of 17 January 2017 contend under pars 125 - 126 that there is an error in par 235 of the December 2016 reasons concerning a '40%' discount to which I referred on the pricing calculations of Mr Brierley to date, and which I referred to as being conservative in its conception, as Mineralogy suggested. The $US6 per dry metric tonne payment is an issue which was touched upon under the written submissions of 22 July 2016 by Mineralogy for the October 2016 mandatory interlocutory injunction hearing. At par 75 of those submissions Mineralogy said:

That amounts to (on average) a little over US$10 per dry metric tonne of product. However, going forward, the Plaintiff through the orders proposed has suggested a figure of US$6 per dry metric tonne of product be adopted in respect of each relevant quarter. The Plaintiff has thus applied a 40% discount to the average to minimise any prospect of Mineralogy being overpaid.

63 The defendants' outline of written submissions for the October application of 28 September 2016 engaged with the $US6 per dry metric tonne issue under pars 105 - 110 of those written submissions, noting at par 109:

Plainly the figure is sensitive to the period over which the average is derived.

64 They further noted that Mr Birkett's evidence was that the average value of RCB under his table 12 for the period then assessed was $US7.97 per tonne. Clearly, using a rounded number of $US8 per tonne, the amount of $US6 per tonne, is a 25% discount and not a 40% discount. Essentially, the averaging calculation depends upon when the calculation is made. The $US6 per dry metric tonne is not a 40% discount calculated for the period concluding under Mr Birkett's table 12. Nevertheless, the $US6 figure still remains, on my assessment, a conservative one. It remains appropriate particularly for circumstances which envisage a final determination of RCB issues at a trial to be commenced in midJune 2017.

65 The second issue that I need to address is the submission of the CITIC parties under which they asked to secure an adjournment of the 20 January 2017 application under Mr O'Donahoo's affidavit of 13 January 2017. This was by reference to Mr O'Donahoo's instructions concerning the CITIC parties' concerns expressed under pars 15 through 19 of his affidavit as to so-called 'serious implications' from this order. I have already said, it was apparent that the basis for an adjournment of the whole of the 20 January 2017 daylong fixed special appointment in its entirety and the CITIC parties non-compliance with order 2 of the directions for the exchange of submissions by 4.00 pm WST on 13 January 2017 was inadequate. That was pointed out under the communication (I set out earlier) refusing the adjournment through my associate at my instigation on Monday, 16 January 2017. The demonstrably nebulous nature of socalled 'serious implications' referred to by Mr O'Donahoo, on a secondhand hearsay basis and without anymore elaboration by Mr O'Donahoo than that, was embarrassing in its inadequacy, as is apparent. Nevertheless, argument for an adjournment as regards the $US6 per dry metric tonne orders, seemed to be pressed before me by senior counsel on 20 January 2017 seeking that further evidence from the defendants about so-called 'serious implications' of such an order be allowed, as this was relevant to the balance of convenience concerning the making of such an order. But as I responded, the balance of convenience associated with such orders was assessed by me within the overall context of my 13 December 2016 reasons. I declined the requested opportunity to permit the filing of further material of the nature indicated by reference to opening up again the issue of the balance of convenience towards the making of orders for the $US6 per tonne payment into court. They remain appropriate and will be made.

66 The suggestion of socalled 'serious implications' arising out of the making of such an order presents in circumstances where the third defendant, as parent and guarantor corporation of Sino and Korean, holds cash assets on its balance sheet of in excess of $100 billion. That request presents to me as curious in the circumstances.

67 I did, however, also point out to senior counsel that the orders which I envisaged as regards the $US6 per tonne payment under [235] were predicated upon the basis that the orders be made 'with liberty to apply to vary those arrangements'. Such an application under that liberty would, of course, need to be made in accord with orthodox principles applicable to varying the terms of an interlocutory injunction once made, ie, essentially upon considerations of altered circumstances. That door, as I indicated to senior counsel at the time, remains accessible to the defendants if properly approached. There will then be an order for liberty to apply in respect of the orders which will issue in the terms which I have identified above.

68 Appended to these reasons as annexure A are my orders programming an expedited trial, which will issue in harmony with the publication of these reasons to the parties. In due course, I expect the plaintiff to recraft the skeletal time lines into more orthodox directions reflecting the usual orders for trial in the CMC List.

69 One other residual matter is that during the course of argument on Friday, 20 January 2017, objections were taken to numerous paragraphs within the affidavits of Mr Palmer which were relied upon by the plaintiff. In due course, a consolidated document was handed to the court indicating concessions made by Mineralogy to the objections raised against various paragraphs within Mr Palmer's affidavits. At the end, it is unnecessary for me to resolve these objections since I have only had regard to uncontroversial paragraphs within Mr Palmer's affidavits. I should say, however, that most of the objections raised against his evidence upon this application were correctly taken. The key evidence in context, however, from Mr Palmer is the undertaking he gives concerning the readiness, willingness and ability of Mineralogy to perform its obligations under the MRSLAs on an ongoing basis, which undertaking I have noted and which has borne (not exclusively) upon my overall assessment of that threshold being met presently, in granting the equitable relief as sought by Mineralogy.

70 I will also issue the standard mediation orders as requested.

Plaintiff files and serves its Fifth Further Amended Statement of Claim by leave excising pleas other than pars 1 - 45 and pars 133 and 134 and pars 1, 5, 6 and pars 8 to 10 of its existing prayer for relief as regards Royalty Component B.

The CITIC Parties file and serve their Defence to the Fifth Further Amended Statement of Claim and Sixth Amended Counterclaim.

Plaintiff files and serves any Reply as well as its Defence to Counterclaim.

The CITIC Parties file and serve any Reply to Mineralogy's Defence to Counterclaim (if thought fit).

The State files and serves any Defence to the Counterclaim against it by the CITIC Parties (if required).

Defendants deliver a first cut list of categories of documents which they seek from the Plaintiff.

Defendants deliver a request for any further categories of documents which they seek from the Plaintiff arising out of the closing of the pleadings.

The parties are to confer if necessary and through counsel concerning any disputation over categories of discovery, although conferral about that is expected to be ongoing as requests are issued.

The plaintiff is to provide discovery by category to the defendants in respect of agreed or accepted categories in answer to the first and second tranche of requests made by the defendants. There should be a list of documents provided, framed by reference to each category, which is reasonably specific. Contemporaneously the plaintiff is to provide an electronic copy of all documents discovered by it in electronic format to the defendants, effectively thereby meeting its obligation to allow the defendants inspection of the discovered documents at that time, ie, by thumb drive or some other acceptable electronic means.

The plaintiff is to file and serve its lay witness evidence in the form of sworn affidavits in admissible final form from its non-expert witnesses with the documents referred to by such witnesses appended or identified in usual fashion to the exchanged affidavit.

The defendants are to provide to the plaintiff their lay witness evidence by sworn affidavits with appended or referred documents.

NOTE: There will be no reply affidavits as between lay witnesses. Witnesses will be cross-examined on their affidavits at trial if required and any reexamination following crossexamination will be by orthodox principles viva voce.

The parties are to mutually exchange the expert evidence of their trial experts by filing and serving that material.

The experts mutually exchange any expert evidence in reply by reference to reports earlier exchanged.

Conference between experts seeking to settle upon agreed matters and identify in writing fundamental issues in dispute as between experts in the same fields of expertise. Lawyers excluded from expert conferral conferences.

Expert conferral outcomes memorandum settled and served (noting that the issues either agreed upon or identified as fundamentally in disagreement is a document likely to be tendered at the trial and, further, that the memorandum produced should be generated as between the experts rather than by the lawyers).

Trial documents, sourced chronologies (exchanged and agreed or disagreed upon and electronic trial book to be filed.

Trial to commence for 15 hearing days in respect of issues raised by: (a) pars 1 - 45, 133 and 134 and pars 1, 5, 6 and 8 to 10 of the final further amended statement of claim of Mineralogy; and (b) pars A to F of the prayer for relief of the (current) defendants' fifth further amended counterclaim.

*As regards mediation, the parties may pursue mediation separately in this time period in liaison with the case manager as regards either a registrar or judge mediator, but on the basis that any court supervised mediation does not interfere with the timetabling process of the trial.

At a glance

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Judgment (130 paragraphs)

Legislation Cited (1)

Cases Cited (2)