MINERALOGY PTY LTD -v- SINO IRON PTY LTD [No 17] [2018] WASC 8 (12 January 2018)

Supreme Court of WA|2018-01-12|Before: Martin J

(These reasons were delivered extemporaneously on 18 December 2017 and have been edited from the transcript.)

1 In consequence of the reasons for decision which I published in this matter to the parties on 24 November 2017 and then consequent upon a further directions hearing held on 30 November, I have now received further affidavit materials as identified by respective senior counsel this morning. I also hold successive exchanges of further written submissions by the parties of 11 December and then of 14 December 2017. The written submissions deal with issues concerning a proposed consolidation of two actions, terms of final orders, costs and some other ancillary matters.

2 I deal first with the application made post the trial hearing by Mineralogy against all the same defendants as in primary action CIV 1808 of 2013, to consolidate that original action with Mineralogy's subsequent action, CIV 3024 of 2017, issued on 28 November 2017.

3 Mineralogy's consolidation application has been the subject of a considerable amount of materials exchanged between the parties, by reference to both local and New South Wales case authority addressing the court's powers to order a consolidation of actions.

4 I have now considered all points put in opposition against consolidation as found within the written submissions of the CITIC defendants. Effectively, it is said that my substantive reasons for decision in Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16] [2017] WASC 340 (Mineralogy [No 16]) proceeded upon the basis of an application of the Jurisdiction of Courts (Crossvesting) Act 1987 national regime of laws applicable across Australia that New South Wales procedural laws applied at trial. On that basis, this court, through an exercise of part jurisdiction emanating from New South Wales, could apply New South Wales procedural laws at trial. Accordingly, a constraining issue of procedural principle (the Eshelby principle), which confines a party in Western Australia to only obtaining relief at a trial for a cause of action which has fully vested at the time of the issue of the proceedings, could be ameliorated in the interests of justice to meet the prevailing circumstances of this litigation. In my substantive reasons I had noted that the Eshelby principle has been reformed by legislation in New South Wales, in Victoria and in Queensland, but not yet in Western Australia.

5 My reasons in Mineralogy [No 16], as a matter of obiter, (as the defendants correctly point out) did also suggest that, in this State, it had been a historical practice to deal with Eshelby problem scenarios by an issue of a second writ at about the time of the trial and then to consolidate the fresh action with the earlier action. I have witnessed that approach over the past four decades in this State, particularly for ongoing unpaid rent claim situations where a writ claiming the then unpaid rent is first issued but then, say, six months or more elapses and more unpaid rent becomes outstanding, whilst the lease remains in force.

6 By the time of a trial of the action six months on, even more rent has then accrued as due. The rent falling due in the interval to trial becomes the subject of the monetary claim under a further writ. In that second action there is a truncation of pleadings and discovery. A consolidation of the second action with the former action, effectively allows all the unpaid rent claimed up to trial as between the same parties under the same lease to be dealt with as a matter of procedural convenience at the one trial.

7 A like consolidation remedial path is effectively what Mineralogy is now advocating before any judgment issues. Hence, its application is for consolidation as regards a second action, CIV 3024 of 2017, with the original action, CIV 1808 of 2013, which has been heard at trial and where I published my reasons and the parties have subsequently exchanged their amended pleadings.

8 The defendants oppose orders by way of a consolidation of the two actions now brought by Mineralogy. The parties are the same in both actions. Most importantly, the issues in relation to a royalty component B (RCB) liquidated obligation of the CITIC defendants to make ongoing royalty payments have been fully canvassed in my published reasons - on their merits and over a period to the quarter ending on 31 March 2017.

9 The Eshelby principle issue and this is all dealt with in my primary reasons effectively only matured rather late at the trial hearing, after a period of reflection by senior counsel on some observations I rendered at the trial concerning the most recent reasons of the Court of Appeal.

10 I mentioned those observations to counsel at the start of the trial in June. But only at the end of the trial did the parties fully focus by way of written and verbal submissions upon the Eshelby principle issue and upon some potential ramifications arising as a result in the trial. That was something of a developing situation. No criticism of anyone is intended about how that all unfolded. Other issues of greater complexity in this trial were such that, quite understandably, the main focus was on the paramountcy of the merits and demerits of those major trial issues -significantly as to the correct interpretation of clauses in the MRSLAs and upon royalty component B amounts as claimed by Mineralogy. Side issues arising from a potential application of the Eshelby principle by a Western Australian court had emerged incidentally as the trial progressed.

11 In what is a matter essentially of proper case management, it seems to me that I do hold sufficient power, both under the Rules of the Supreme Court of Western Australia in relation to CIV 3024 of 2017, as well as via the procedural rules of the State of New South Wales, to the extent that I can look at and apply those laws in CIV 1808 of 2013, to presently permit a consolidation of Mineralogy's two actions if that is in the interests of justice and if that course is appropriate as a matter of discretion.

12 For present circumstances, it does seem to me that for many years my predecessor case managers and then myself in CIV 1808 of 2013, (along with senior counsel) have all proceeded on a basis that a trial would fully dispose of the full merits of all underlying actions concerning RCB over the periods from the December 2013 quarter up to the end of the March 2017 quarter.

13 The parties' respective experts, particularly Mr Birkett and Mr Brierley for Mineralogy, prepared and exchanged their expert reports dealing with RCB issues across that period.

14 Substantial written material and oral material was exchanged between the parties concerning the merits and demerits of those liquidated RCB claims made over that period by Mineralogy.

15 The problem, if there is one through the Eshelby principle, is only a lawyer's fine point. But any problem is capable of being procedurally ameliorated even in Western Australia, to the extent the Eshelby principle is not reformed in this State as it has been in other States.

16 As a matter of justice and sensible case management, it seems to me that it is fully appropriate for consolidation orders to issue as sought now by Mineralogy. There is no identifiable forensic prejudice whatsoever to the CITIC defendants by the consolidation orders being issued. It is true, as the defendants point out, that the plaintiff appears, by this process, to be seeking to sure up a long term position. So be it. I would be surprised if it did not in all the circumstances try and utilise whatever legitimate procedural case management mechanisms towards achieving an overall merits resolution of issues - to accommodate addressing the true merits of the underlying issues at this trial and achieving a final resolution, rather than seeing the litigation go off sideways on a technical point. That result is not in the interests of justice as far as I am concerned.

17 Accordingly, I will issue the orders for the consolidation of both of Mineralogy's actions.

18 I move to address the terms of the orders for judgment. The central residual issue in dispute between the parties in terms of the rival minutes of orders which have now been exchanged and circulated has been distilled even further through senior counsel's arguments this morning. That issue is whether or not a proviso as sought by the CITIC defendants should be added to the terms of the liquidated monetary judgments to issue against the CITIC defendants.

19 The defendants seek that the monetary judgment amounts against them be qualified, on a basis that the orders be expressed to be judgments that will not have effect before 15 January 2018.

20 An order in those terms, under the Civil Judgments Enforcement Act 2004 (WA), could issue under s 11(1) of the terms of that Act in div 2. Such an order would effectively suspend the whole effect of the judgment.

21 As a matter of principle, I must bear in mind the rather unique history of these actions, a publication of my substantive reasons to the parties on 24 November 2017, the degree of opportunity afforded to the parties to digest those reasons, and the directions hearing convened on 30 November to consider how the terms of my reasons should be implemented. Residual issues arising as a result have now all been thoroughly canvassed and considered. Accordingly, I consider that it is not appropriate today to invoke div 2 of the Civil Judgments Enforcement Act to order that monetary judgments that will issue shortly against the CITIC defendants not have effect at a time other than today.

22 More significant, however, is a distinct question as to whether the defendants' obligations to pay their respective amounts, in respect of the judgment that will shortly issue for Mineralogy, should be the subject of a suspension order issued under div 3 s 15 of the Civil Judgments Enforcement Act. In particular, I must direct my attention to whether there are the circumstances established as required for the purposes of s 15(3). That provision permits a suspension order only if there are 'special circumstances' that can justify that course.

23 Here, I have afforded Mineralogy as regards CITIC Ltd, after my substantive reasons for decision, the opportunity to seek leave to amend its pleadings following the trial. That was in order to fix and complete pleas - on what was otherwise an incompletely pleaded guarantee based cause of action against the third defendant. Again, my substantive reasons canvassed all this.

24 As regards amounts due to Mineralogy for RCB by the primary obligor defendants, that is, by Sino Iron and Korean Steel, amounts of RCB that accrued each quarter for that RCB royalty are explicitly stated by each of the MRSLAs to be payable to Mineralogy on the 14th day of the next quarter. That is clear. Those amounts fell due for payment in respect of MRSLA obligations at that time. However, as regards CITIC Ltd, as the third defendant, the position is different as a guarantor - that is exposed under the Fortescue Coordination Deed the service of a proper series of demands was required.

25 I dealt with all this as regards guarantor obligations requiring demands to establish CITIC Ltd's liability as a guarantor in my reasons for decision in Mineralogy [No 16]. It was apparent at 24 November 2017 that more was needed to be done by Mineralogy in order to properly plead out and articulate the cause of action which Mineralogy was undoubtedly seeking to advance upon its statement of claim against the parent company, CITIC Ltd. A grant of leave to amend to correct these inadequacies was sought by Mineralogy on 30 November 2017. After hearing counsel and evaluating the state of the evidence, I thought it appropriate to grant leave to amend for Mineralogy to plead out its demands upon CITIC Ltd. That led to an amendment of Mineralogy's pleadings to explicitly plead out the demands which had as a matter of fact been proven at the trial to have issued shortly before and during June 2017 and just prior to the commencement of the trial, as against the third defendant.

26 I also gave leave for the defendants to amend their defences in light of those further amendments by Mineralogy to deal with its pleading of the demands on the third defendant. An amended defence duly followed from the defendants. Materials exchanged between the parties after all these further amendments to the pleadings followed the directions hearing of 30 November 2017. They largely dealt with the exposure position of the third defendant, CITIC Ltd, as guarantor. The end position as seen in the CITIC defendants' written materials of 11 December 2017 was frank: see par 12.

On 8 December 2017, the defendants filed their Defence to the Sixth Further Amended Statement of Claim. The defence admits service of the demands. The defendants raise other issues in response to the claim against CITIC, but those are issues which the Court has already determined against the defendants in the reasons for judgment.

27 So, there have been some late and significant post trial developments as regards the third defendant. The third defendant, by frankly admitting service of demands by Mineralogy under the guarantee, took a mature approach as reflected in par 12 as regards issues that arose under its amended defence. Acknowledging that issues have been dealt with by the reasons, CITIC Ltd has effectively facilitated the court to be in a position today to deal with the guarantee claim against it as the third defendant. Nothing more was submitted by the defendants in defence upon the amended pleadings.

28 There can be judgment for Mineralogy in amounts that I will articulate below against the first and second defendants. And now, there should also be judgment for the RCB amounts unpaid against CITIC Ltd plus a s 32 Supreme Court Act 1935 (WA) interest amount I have identified as well.

29 The residually controversial question, however, is whether, by div 3 s 15 of the Civil Judgments Enforcement Act, there has been an identification by the defendants to my satisfaction of some 'special circumstances' to support a suspension of the payment obligations, in terms of their obligation otherwise rendering an immediate payment upon the judgment amounts issuing.

30 I indicate that I am satisfied in this rather unique post trial scenario that there are special circumstances shown sufficient to justify a suspension of the defendants' obligations to immediately meet those liquidated judgment amounts - until 15 January 2018. The judgment orders that I am about to pronounce are otherwise effective immediately for all relevant purposes.

31 I indicate that I am now satisfied, given atypical post trial amended pleading developments which effectively afforded an indulgence to Mineralogy by way of leave to augment its pleaded position as against the third defendant, by redressing incomplete circumstances which might otherwise have caused this matter to drag on well into the New Year and beyond.

32 Bearing in mind also the time of year, the large monetary amounts at issue, that the money at issue to be paid has to come from overseas, and the communicated inevitability of an appeal by whoever was to lose, the circumstances as a whole are unique. There is no real need for all parties to be thrown into spasms of frantic activity at this time of the year given what is inevitably to follow. The circumstances are special and I will in such circumstances suspend the defendants' obligations to meet payment to Mineralogy for a period as against all defendants - until 15 January 2018. Of course, simple interest at 6% per annum will run on those amounts in the interim, so prejudice to Mineralogy by a non-receipt until then, if any, is truncated.

33 Consequently, then, I now articulate the judgment for Mineralogy in the following terms, and with the usual prefaces.

34 There will be judgment for the plaintiff, that is, for Mineralogy Pty Ltd, against the first defendant, Sino Iron Pty Ltd, in the amount of US$82,409,227.91 that amount being inclusive of interest in the amount of US$7,702,492.91 up to today, which interest is awarded pursuant to s 32 of the Supreme Court Act.

35 Likewise, there will be judgment entered for Mineralogy in like terms and in the same amounts against the second defendant, that is, as against Korean Steel Pty Ltd, and for the same US dollar component for interest to this day.

36 Further, judgment will also issue for Mineralogy, on the amended pleadings, against the third defendant, that is, against CITIC Ltd, in the amount of US$153,859,032.00, which includes an amount of interest awarded as a matter of discretion, pursuant to s 32 of the Supreme Court Act, in the amount of US$4,445,562.00.

37 Judgment is now issued and entered in those amounts in favour of Mineralogy as against the respective CITIC defendants and which are made payable not later than at 15 January 2018.

Civil Judgments Enforcement Act 2004(WA)

Supreme Court Act 1935(WA)

Courts (Crossvesting) Act 1987

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