Supreme Court of WA|2014-02-12|Before: Edelman J

MINERALOGY PTY LTD -v- SINO IRON PTY LTD [No 3] [2013] WASC 434 (12 February 2014)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : MINERALOGY PTY LTD -v- SINO IRON PTY LTD [No 3] [2013] WASC 434

Practice and procedure - Plaintiff's application for urgent listing of trials in nine working days' time - Application brought two days after major amendment to pleading altering the manner in which plaintiff's case had proceeded for eight months - Whether application genuinely urgent

1 EDELMAN J: (In circumstances in which transcription of oral proceedings this morning was unavailable, these reasons delivered orally this morning are published below.)

2 The action in which this application is brought was commenced by the plaintiff, Mineralogy, in New South Wales by a writ of summons filed on 18 March 2013. By the commercial list statement filed with the writ, Mineralogy alleged that Mining Right and Site Lease Agreements (MRSLAs) between (1) Mineralogy and Sino Iron, and (2) Mineralogy and Korean Steel, were valid and that the Royalty Component B under those agreements was to be calculated according to cl 8.2 of the MRSLAs.[1] Mineralogy's statement of claim was amended on 3 June 2013. The amendments maintained the allegations.[2] The allegations were still maintained in the most recent version of Mineralogy's statement of claim, filed on 14 August 2013.[3] The allegations were formally continued, sometimes in very strong terms, until two days ago, although Mineralogy asserts that the defendants (the CITIC parties) were aware of Mineralogy's proposed amendments from 17 November 2013.

3 Based on its change of pleading two days ago, Mineralogy now says that two of its multibillion dollar actions should go to trial in around nine days' time.

4 Counsel for Mineralogy says that the trial of what is now a primary issue in two of its actions can be heard in a single day. Mineralogy says that this day should be 18 December 2013 subject to Court availability. Mineralogy proposes a timetable which, to be frank, is absurd. It provides the defendants with one working day to agree to a trial bundle, two days for responsive evidence and one day for responsive submissions. It is necessary to set out some of the background to this application by Mineralogy in order to explain why I reject Mineralogy's claim that this matter is of such urgency as to require such extraordinary directions.

5 On 18 April 2013, the defendants applied for this matter to be transferred to the courts of this State. Mineralogy opposed the transfer on the basis that the royalty dispute required urgent resolution.[4] The matter was transferred from New South Wales on 30 April 2013 and admitted to my case management list on 23 May 2013.

6 On 29 August 2013, an application for an interlocutory injunction was brought by Sino Iron and Korean Steel for reasons which included that Mineralogy claimed that the defendants had no prima facie defence.[5] The application by Sino Iron and Korean Steel was granted. Mineralogy's resistance to that application delayed the progression of this matter.

7 On 18 September 2013, Mineralogy sent a letter to the Court requesting that the matter be brought before a Judge or the Master on an urgent basis for orders that the defendants provide discovery of certain documents. The application was heard on 24 September 2013. I adjourned the application in circumstances in which there was insufficient information as to whether the discovery orders sought by Mineralogy could be made, and in which it appeared that the parties had not engaged in proper conferral.[6] It was difficult to understand why the application was so urgent when Mineralogy had raised the issue on 4 July 2013 with the defendants but had only conferred either in person or by telephone for the first time on 16 September 2013. Mineralogy has not since pressed the application; it appears that proper conferral may have resolved the issue between the parties.

8 At a directions hearing in my Commercial and Managed Cases list on 6 November 2013, Mineralogy brought yet another allegedly urgent application. Counsel for Mineralogy said that Mineralogy needed to have an urgent hearing in order to decide whether it could have time extended in order to bring an application to strike out all or part of the defendants' defence. In a surprising submission, counsel said that this was a forensic decision taken in order to expedite the ultimate trial.[7] Mineralogy's assumption was apparently that this matter would move faster if it were put on hold for months pending a hearing of both an application to extend time to bring a strike out application and a strike out application. If Mineralogy were not successful in these applications, this time would be wholly wasted. Even if Mineralogy were wholly successful in its strike out, it might not dispose of the action but might, at best, save only several weeks of trial.[8] But the proceedings would have been delayed by months, potentially even years, if there were one or more further appeals. The strike out application was said to be premised upon an allegation that it was an abuse of process for the defendants to plead a matter which was said to be inconsistent with facts contained in accounts published in Hong Kong.[9] All these points were ventilated at a directions hearing. But Mineralogy did not abandon its application to extend time to bring a strike out application.

9 On 25 November 2013 Mineralogy indicated that its application for an urgent hearing of its extension application would be abandoned.[10] It was formally abandoned this morning.

10 On 2 December 2013, that is two days ago, Mineralogy amended its reply and defence to counterclaim. For the first time, Mineralogy admitted that Royalty Component B was not capable of calculation. This admission was of a matter which Mineralogy, at the interlocutory injunction hearing, had initially appeared to argue did not amount to a prima facie claim.

11 Mineralogy now seeks another urgent hearing. This time it wants an urgent hearing of a central issue arising from its newly amended reply and defence to counterclaim. It says that the issue is whether the effect of Royalty Component B being unable to be calculated means that the whole of the multi-billion dollar MRSLAs were frustrated. Mineralogy says that the hearing should, subject to the availability of the Court, be held on 18 December 2013.

12 Mineralogy also seeks an urgent hearing, on the same day, of the issues in a separate matter, CIV 3012 of 2012. That separate action between the CITIC parties and Mineralogy concerns a separate project option agreement. In that matter, Mineralogy withdrew its defence on 27 October 2013. A minute of proposed re-amended defence was filed yesterday, on 3 December 2013.

13 Neither this matter nor the separate action concerning the project option agreement will be listed for hearing on 18 December 2013. This is for eight reasons, any one of which would by itself be sufficient to refuse this application.

14 First, the professed urgency which counsel for Mineralogy asserts is entirely artificial. The issue has only arisen as a result of Mineralogy's own amendment which abandons a central part of the claim that Mineralogy has pursued for eight months.

15 Secondly, in light of the background to this application, Mineralogy's assertions of urgency, unsupported by any affidavit evidence, ring hollow.

16 Thirdly, I seriously doubt that the issues in both cases, or even in one of them, can be heard within one day.

17 Fourthly, it would be neither fair nor just for this Court to permit Mineralogy to make such a radical amendment to its reply after many months and yet deprive the defendants of any more than around nine working days to prepare their entire response to the multibillion dollar case.

18 Fifthly, for a case in which billions of dollars are at stake, and where Mineralogy's professed urgency occurs against the background of delays caused by its own conduct in this matter, it borders on the absurd to suggest that the parties should agree trial documents within one working day, prepare affidavit evidence of nonexpert witnesses within four working days, prepare responsive evidence within two further working days, prepare submissions based on that evidence within one further working day and responsive submissions within another further working day.

19 Sixthly, the constant shifts and changes in Mineralogy's case suggest a possibility, and I put it no higher than that, that the case might evolve further. Indeed, with the changes to Mineralogy's case there is every likelihood that the case for the CITIC parties will evolve.

20 Seventhly, to list a hearing of this matter on 18 December 2013 as Mineralogy seeks would cause prejudice to other matters in my list which have a greater claim to speedy resolution and where the cases have been conducted efficiently.

21 Eighthly, this application is, in any event, wholly premature. The parties have not even agreed on the issue to be decided.

22 It is a pity that Mineralogy has brought this application in this way. Mineralogy's application is not redolent of the reasonable and cooperative approach to the efficient resolution of disputes that is expected of the legal representatives of parties in commercial cases. This application has delayed the progress of this matter further. I will now hear from the parties concerning alternative orders which should be made for the fair and efficient progression of this matter.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : MINERALOGY PTY LTD -v- SINO IRON PTY LTD [No 3] [2013] WASC 434 (S)

Practice and procedure - Fixing of costs - Whether appropriate to fix costs

Legal Practitioners (Supreme Court) (Contentious Business) Determination 2012 (WA) items 10(a) and 11(a)

Costs of applications to be taxed and paid forthwith if not agreed

(This judgment was delivered orally at the hearing on 12 February 2014 and has been edited for grammar and syntax.)

1 EDELMAN J: On 4 December 2013, I held a directions hearing in this matter. The orders sought by Mineralogy at that directions hearing were set out in a minute dated 2 December 2013. They included

(1) an interlocutory injunction restraining the Citic Parties (the defendants) from exporting Magnetite Ore under the MRSLAs; and

(2) an urgent hearing of issues including whether the MRSLAs had been terminated by frustration, whether there is an implied term to negotiate to replace Royalty Component B, whether that implied term has been breached and whether the Citic Parties had renounced the MRSLAs.

2 Although the interlocutory injunction was not brought as a chamber summons, was not supported by any submissions or affidavit evidence, and was simply tacked on to directions sought, the interlocutory injunction application would have had dramatic effects on the Citic Parties if it were granted. It would have effectively stopped the export of materials under a project which employs 2500 to 2800 people and on which the Citic Parties have spent approximately $7 billion. Understandably, the Citic Parties were represented by senior counsel and junior counsel. The potential consequences of both applications were such that it was entirely reasonable for the Citic Parties to be represented by both senior and junior counsel.

3 For whatever reason, and without notice to the Citic Parties, the interlocutory injunction application was not pressed.

4 The application for an urgent trial of legal issues was dismissed for reasons I gave which are published as Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 3) [2013] WASC 434.

5 I indicated at the directions hearing that I intended to fix costs. The purpose of fixing costs by the judge who hears the application is to save time and expense for the Court and the taxing officer. Practice Direction 4.7.3 provides that as a general rule in interlocutory proceedings costs will be fixed and ordered to be paid forthwith or by a particular date.

6 The relevant Scale items upon which the Citic Parties rely are item 11(a) (originating summons) with a maximum of $33,110 for 50 hours, and item 10(a) (proceedings in chambers other than originating summons) with a maximum of $10,560.[11]

7 The Citic Parties subsequently filed short submissions seeking fixed costs of $55,536.80 (at rates above Scale) or fixed costs of $11,866.80 at Scale rates but using the Scale rate for senior counsel. Although these amounts are substantial in the context of a directions hearing, and the presence of senior and junior counsel in a directions hearing is unusual, it is important to bear in mind the extraordinary nature of the applications by Mineralogy.

8 Perhaps surprisingly, Mineralogy did not respond to this application by accepting that costs should be fixed and making submissions that they should be fixed at a lower amount. The reason for surprise is that the broad brush fixing of costs can sometimes result in a fixed costs order which is less than that which would be the result of the usual careful taxation. This could have been to Mineralogy's advantage. Furthermore, one might have expected that with Mineralogy's professed desire to move this litigation to trial as rapidly as possible, it would not have desired the delay which might be occasioned by a taxation of costs forthwith.

9 Nevertheless, instead of receiving the submissions from the Citic Parties and then conferring with the Citic Parties about the further information which Mineralogy might need to make submissions concerning a fixed costs order, Mineralogy responded with six pages of submissions concerning why a fixed costs order should not be made. In summary, Mineralogy said that:

(1) the Citic Parties had not provided sufficient information for even a broad brush calculation of costs;

(2) the Citic Parties had not established any basis for the award of costs under item 11(a) or that the maximum amount under item 11(a) should be awarded;

(3) the Citic Parties had not established any basis upon which the maximum under item 10(a) should be awarded; and

(4) the size of the costs claimed makes the claim more amenable to taxation.

To these matters, I would add that difficulty is caused by the potentially large range into which the fixed costs would fall.

10 For a number of reasons, although I raised the issue of fixing costs I now accept Mineralogy's submissions that it would be inappropriate to fix the costs. One reason is the substantial sums, and range, for the costs involved in the applications of this exceptional nature. Another reason is that the exceptional circumstances of these applications might also require awards of separate, apportioned, costs awards for each application.

11 I therefore accept, upon reflection, that a careful taxation of the substantial costs claimed with more information about the costs incurred is more appropriate than a taxation on a broad brush approach.[12]

12 This result is unfortunate. The parties will now be put to the further expense and delay caused by a taxation. It is possible that this further expense and delay could have been avoided by in person conferral, including identification by Mineralogy in the conferral process of each of the matters which Mineralogy contended would inhibit the fixing of costs, and response accordingly by the Citic Parties.

13 I should record that nothing in these reasons should be taken as accepting the submission by Mineralogy that item 11(a) is inapplicable because Mineralogy brought its application for an interlocutory injunction informally. Acceptance of that proposition would mean that Mineralogy could rely upon its own breach of formal rules to put itself outside a costs regime, despite having put the Citic Parties to the preparation of a response to orders which Mineralogy sought and which would have had extraordinary effect on the Citic Parties.

(1) Order 3 of my orders on 22 January 2014 be vacated and in its place order that:

(a) The plaintiff (Mineralogy) pay the defendants' costs of:

(i) the plaintiff's (Mineralogy's) application for an urgent trial; and

(ii) the plaintiff's (Mineralogy's) application for an interlocutory injunction,

which costs should be agreed, or taxed and paid forthwith.[13]

(2) Other than in relation to (1), the costs of the directions hearing on 4 December 2013 be in the cause and fixed in the sum of $396.

15 Mineralogy did not oppose a further order as follows.

(3) There be no order as to costs of the application for fixing of costs.

16 Order (3) is appropriate in circumstances in which (i) the application was made following my initiative that costs be fixed; (ii) my initiative was based in part upon a desire to expedite these proceedings in circumstances in which Mineralogy has constantly professed a desire for expedition; and (iii) the submissions in relation to costs will be relevant to the exercise of taxation of costs before the taxing officer.

17 Mineralogy also, properly, did not oppose a further order sought by counsel for the Citic Parties as follows.

(4) The costs in order (1) be taxed as if the applications by the plaintiff (Mineralogy) for an interlocutory injunction and urgent hearing of issues had been made formally.

[1] Commercial List Statement dated 18 March 2013 [21] - [31].

[2] Amended Statement of Claim dated 3 June 2013 [6] - [17].

[3] Further Amended Statement of Claim dated 14 August 2013 [6] - [17].

[4] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2013] NSWSC 466 [14] (Stevenson J).

[5] Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 2) [2013] WASC 375 [3].

[10] Email to the Court from Michael John Dunham dated 25 November 2013.

[11] Legal Practitioners (Supreme Court) (Contentious Business) Determination 2012 (WA) items 10(a) and 11(a).

[12] See also Norilya Minerals Pty Ltd v Easterday [2009] WASC 191 (S) [14] (Le Miere J).

[13] See also Frigger v Kitay (in his capacity as liquidator of Computer Accounting and Tax Pty Ltd) (No 3) [2014] WASC 24 [68] (Allanson J).

MINERALOGY PTY LTD -v- SINO IRON PTY LTD [No 3] [2013] WASC 434 (4 December 2013)

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MINERALOGY PTY LTD -v- SINO IRON PTY LTD [No 3] [2013] WASC 434 (12 February 2014)