MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) -v- MINING STANDARDS INTERNATIONAL PTY LTD [2020] WASC 4 (22 January 2020)

(i) the provision of finance to the defendant to acquire MMB, a company incorporated in Brazil; or

(ii) the satisfaction of the finance condition in clause 2.2 of the ASA.

(b) any communications passing between employees and/or officers of Trafigura (including documents recording the content of such communications) prior to 30 November 2017 relating to:

(i) the provision of finance to the defendant to acquire MMB, a company incorporated in Brazil; or

(ii) the satisfaction of the finance condition in clause 2.2 of the ASA.

(c) any documents (such as working notes (handwritten or otherwise), extracts or file notes) prepared by employees and/or officers of Trafigura prior to 30 November 2017 relating to:

(i) the provision of finance to the defendant to acquire MMB, a company incorporated in Brazil; or

(ii) the satisfaction of the finance condition in clause 2.2 of the ASA, and

that Mr Economou be examined orally on the Relevant Matters and the produced documents.

1. The draft letter also requested that Trafigura be summonsed to attend:[3]

(a) to produce all documents held by Trafigura described in the Relevant Matters by Mr Economou or the Proper Officer of Trafigura; and

(b) by Mr Economou to be examined orally on the Relevant Matters and the produced documents in the presence of the agents of the Plaintiffs and Defendant or such of them as shall, on due notice given, attend the examination.

1. On 28 October 2015, the third and fourth plaintiffs were appointed as receivers and managers of the first and second plaintiffs.
2. On 1 November 2017, the defendant and first and second plaintiffs entered into an asset sale agreement (ASA) to acquire certain loans and quotas in the capital of Mirabela Mineração do Brasil Ltda (MMB) (Mirabela Assets).[4]
3. The ASA included, as a condition precedent, a requirement that the defendant execute binding finance agreements for an amount equal to the consideration under the ASA (Finance Condition), namely USD50 million.[5] If this condition precedent was not satisfied 14 days after the date of the exchange of signed copies of the ASA, either party was entitled to terminate the ASA.[6]
4. As at 15 November 2017, the defendant had not satisfied the Finance Condition.[7] The first and second plaintiffs allege that they agreed with the defendant that the date for the satisfaction of the Finance Condition would be extended to 22 November 2017.[8] The defendant denies that there was an agreement to this effect or that the date for satisfaction of the Finance Condition was 22 November 2017.[9] It is not in dispute that the Finance Condition was not satisfied by 22 November 2017 or at all.[10]
5. On 22 November 2017, the plaintiffs terminated the ASA[11] and on 27 November 2017, sold the Mirabela Assets to a third party.[12]
6. Since that time, the parties have been in dispute as to whether the ASA has been validly terminated.
7. Prior to termination of the ASA, the defendant had sought to obtain finance from Trafigura to enable it to satisfy the Finance Condition. From the evidence before me, I accept that Mr Economou was involved in considering the application by the defendant on behalf of Trafigura.[13]
8. On 20 September 2019, the plaintiffs' solicitors wrote to Trafigura requesting the provision of relevant documents and information, including internal correspondence and decisions made in respect of the defendant's proposal to obtain finance.[14] This letter specifically stated that 'we consider a subpoena to be the most appropriate manner to seek this information' and requested that Tragifura confirm whether they agreed. On 4 October 2019, Trafigura responded to this request.[15] Trafigura refused to provide the documents sought on the basis that they were subject to confidentiality obligations.
9. On 20 November 2019, the plaintiffs' solicitors sent a further letter to Mr Economou and to Trafigura.[16] The letter was sent to Trafigura at its address in Singapore, and was copied to addresses of Trafigura in both London and Geneva. The letter set out the understanding of the plaintiffs' solicitors that Mr Economou's ordinary country of residence was 'Geneva' (sic) and that the relevant Trafigura office for the transaction was Singapore. The plaintiffs' solicitors asked whether Mr Economou was willing to travel to Australia or whether the preference was to comply 'with a court process in Singapore (or even Geneva or London).' This correspondence did not provide any further details as to the evidence and relevant documents that were sought by the plaintiffs.
10. Mr Economou on behalf of Trafigura responded on 3 December 2019 to inform the plaintiffs' solicitors that they were unable to assist without compulsion of law.[17]

1. These proceedings were commenced by writ of summons on 8 May 2019. The statement of claim was filed on 4 June 2019, the defence on 3 July 2019 and the reply on 9 August 2019.
2. On 9 December 2019, the plaintiffs filed an amended writ of summons and amended statement of claim. On 13 December 2019, prior to the filing of the amended defence, the plaintiffs filed an amended reply. The defendant filed an amended defence on 19 December 2019.
3. It is clear from the pleadings that much of the factual summary set out above is not in dispute between the parties. Rather, the dispute between the parties concerns whether the plaintiffs validly terminated the ASA.
4. The defendant asserts that the ASA has not been validly terminated by the plaintiffs on a number of grounds. First, the plaintiffs purported to terminate the ASA prior to the date by which the Finance Condition was required to be satisfied.[18] Second, the parties had not entered into an agreement requiring the Finance Condition to be satisfied by 22 November 2017.[19] Third, the plaintiffs had agreed not to terminate the ASA without giving the defendant adequate prior notice,[20] which it failed to do. For this reason, the defendant contends that the plaintiffs were estopped from issuing the notice of termination.[21] Fourth, the plaintiffs breached their obligations under cl 2.6(c) of the ASA by providing information to the ultimate third party purchaser and soliciting an offer for the Mirabela Assets.[22] By reason of their alleged breach of the ASA, the defendants plead that the plaintiffs were not entitled to terminate the ASA. Finally, it is pleaded that the plaintiffs failed to comply with their obligations under cl 2.2 of the ASA[23] and, as a consequence, were not entitled to terminate the ASA.
5. In addition to these matters, the original defence filed by the defendant pleaded that the first and second plaintiffs had hindered it from satisfying the Finance Condition.[24] This contention has been since deleted.[25]

1. Section 110(1)(c) of the Evidence Act provides that:

In any civil or criminal proceedings before a superior court, the court may, in its discretion and where it appears in the interests of justice to do so, on the application of a party to the proceeding, make, in relation to a person outside the State, an order -

...

(c) for the issue of a request to the judicial authorities of a place outside the State to take, or cause to be taken, the evidence of the person.

1. Section 110(2) of the Evidence Act sets out the factors that the court is required to take into account in determining whether it is in the interests of justice to make an order under s 110(1)(c). These include:

(a) whether the person is willing or able to come to Western Australia to give evidence in the proceeding;

(b) whether the person will be able to give evidence material to any issue to be tried in the proceeding;

(c) whether, having regard to the interests of justice to the proceeding, justice will be better served by granting or refusing the order.

1. Order 38A of the Rules of the Supreme Court 1971 (WA) (RSC) specifies how an application under s 110 of the Evidence Act is to be made.
2. Order 38A r 3 of the RSC provides that where an application is made in relation to civil proceedings, it must be made by summons and supported by affidavit. The affidavit in support of an application must:[26]

(a) address the matters referred to in section 110(2) of the [Evidence] Act; and

(b) exhibit all such documents in the proceedings as are necessary to inform the Court of the questions at issue between the parties.

1. Pursuant to RSC O 38A r 3(4), a draft of the letter of request to be issued by the court must be annexed to an affidavit.
2. In considering whether to issue the letter of request, it is important to keep in mind the principles that govern such a request. As was stated by Lindley LJ in Ehrmann v Ehrmann:[27]

[I]ssuing a commission to take evidence abroad, or letters of request to a foreign Government to allow evidence to be taken, is a very serious matter - it involves great expense and delay, and ought never to be had recourse to unless it is really wanted for the purposes of the trial. The point to be looked to is whether the evidence which it is desired to obtain abroad is really necessary for the purposes of justice. It is not enough to say that possibly it may be of some use on some collateral matter - that it may be useful for the purpose of corroborating a witness, or something of that kind; it must have a closer bearing on the issue.

1. In Novotny v Todd,[28] Anderson and McLure JJ considered the limits of a request under s 110(2) of the Evidence Act. McLure J stated that the matters to which the court is directed to have regard by the word 'shall' in this section are not exclusive but are in addition to other considerations that the court may take into account.[29]

Disposition of application Whether proposed letter of request is within power

1. It is not a permissible use of the power in s 110 of the Evidence Act to order that a letter of request be issued to require discovery of documents against a third party.[30] However, a letter of request which, in effect, is a combination of a subpoena to give evidence and a subpoena for the production of documents can be issued under s 110(2) of the Evidence Act.[31]
2. The formulation in s 110 of the Evidence Act is wide enough to enable the court to order that a letter of request be issued that requests a person to give evidence and to produce documents relevant to the subject matter of the proposed evidence. However, the power to authorise orders for the production of documents is ancillary to and dependent on an order being made under s 110(1)(c) of the Evidence Act for a person to give evidence.
3. In Novotny v Todd, McClure J held that:[32]

In my view, testamentary evidence relating solely to securing the admission of relevant documentary evidence is evidence material to an issue to be tried in the proceedings for the purposes of s 110(2)(b) of the Evidence Act. Further, it matters not that the testamentary evidence alone does not render the document admissible. It is sufficient if the evidence facilitates or is part of a necessary evidential foundation which enlivens the court's discretion to admit documents at trial, which documents are themselves material to the issue in the proceedings.

1. If the sole purpose of the testamentary evidence is to facilitate the admission of documentary evidence, there must be evidence before the court which establishes the existence or probable existence of a particular document or class of documents and that the documents are, or are likely to be, material to an issue in the proceedings. However, if the primary objective purpose and effect of the application as a whole is to obtain production of documents for the purpose of identifying which of these documents the respondent may wish to tender, this is outside the permissible scope of s 110 of the Evidence Act.[33]
2. In this case, there is sufficient evidence of the existence of communications between Trafigura and Mr Milbourne, a director of the defendant. It is apparent from these communications that:

(a) prior to entry into the ASA, Trafigura had expressed strong interest for the financing of the proposed purchase by the defendant of the Mirabela Assets up to USD50 million. This letter stated that 'no further internal approvals would be required to proceed with the financing';[34]

(b) after entry into the ASA and prior to its termination, the defendant was in regular communication with Trafigura about the financing of the defendant's proposed purchase of the Mirabela Assets.[35]

1. The plaintiff submits that it is not clear from the documents discovered by the defendant why Trafigura did not enter into a binding finance agreement with the defendant. They contend that the question as to why the Finance Condition was not fulfilled by 15 or 22 November 2019 is a material issue in the proceedings.
2. For the reasons set out below, I consider that the questions of why the defendant had not entered into a binding finance agreement with Trafigura prior to 22 November 2019 and whether the plaintiffs' conduct was a factor in this, are issues in the proceedings.
3. On this basis, I accept that there is sufficient evidence of the existence and materiality of some of the documents set out in the draft letter of request. However, on an objective reading of the draft letter of request, it is my view that the primary purpose and effect of the application as a whole is to obtain production of documents from Trafigura for the purpose of ascertaining whether any of the documents produced by Trafigura (including its internal documents) are useful in the proceedings and not to adduce the requested documents into evidence. This is for the following reasons.
4. First, the draft letter of request seeks production of all internal Trafigura communications relevant to both the provision of finance by Trafigura to the defendant and the satisfaction of the Finance Condition. The wording of the draft request is extremely broad and is consistent with a subpoena to produce documents or a request for third party discovery. Second, the proposed examination of Mr Economou is limited to the 'Relevant Matters'. This is defined in par 6 of the draft request as the documents sought by the plaintiffs.[36] Third, Mr Economou normally resides in Geneva. If the primary purpose of the application was to obtain oral evidence from Mr Economou, the request would be directed to the appropriate court in Switzerland. Fourth, the correspondence from the plaintiffs' solicitors to Trafigura makes plain that the plaintiffs wish to obtain documents from Trafigura and not the oral evidence of Mr Economou. The plaintiffs' correspondence itself acknowledged that a subpoena was the most appropriate way to seek this information.[37]
5. As a consequence, I find that the request is outside the permissible scope of s 110 of the Evidence Act.
6. This conclusion is sufficient for me to dismiss the plaintiffs' application. However, if I am wrong in this regard, I turn to consider whether, if the request was within the power of the Evidence Act, I would grant the plaintiffs' application.

Whether Mr Economou is willing to come to Australia

1. On the evidence before me, I accept that Mr Economou is not prepared to come to Western Australia to give evidence in the proceedings or to produce the documents sought by the plaintiffs in these proceedings.[38]

Whether evidence is material to any issue in the proceedings

1. The evidence the plaintiffs seek from Trafigura is said to be material to the issue of whether any alleged failure by the plaintiffs to provide reasonable assistance to the defendants caused or materially contributed to the non‑fulfilment of the Finance Condition and hindered the defendant from satisfying the Finance Condition.[39]
2. At the time this affidavit was affirmed, the defence included a specific pleading that the plaintiffs hindered the defendant from satisfying the Finance Condition. These paragraphs have since been deleted. However, the amended defence still contains a pleading that the termination of the agreement was invalid and of no effect because of the plaintiffs' failure to provide reasonable assistance to the defendants.[40] As a consequence, the plaintiffs submit that the question as to whether their conduct caused or contributed to the non‑fulfilment of the Finance Condition remains in issue.
3. In support of this submission, counsel for the plaintiff referred me to the decision of Rolfe J in National Power Australia LLC v Energy Australia.[41] In that case, there was a dispute about the proper construction of a termination clause in a power purchase and hedge agreement. Specifically, the dispute concerned whether an alleged failure to provide reasonable assistance precluded the giving of a notice of termination or whether it was necessary for the party resisting termination to establish that the failure to provide reasonable assistance caused or materially contributed to the non‑fulfilment of any conditions.
4. In that case, Rolfe J held that on its proper construction:[42]

[T]he clause requiring the giving of reasonable assistance, even in relation to endeavours to fulfil a condition, should be construed as requiring that the failure to provide it has to be causally related to or has to materially contribute to the non-fulfilment of the contractual requirement, in the sense that but for the failure to provide reasonable assistance the condition would have been fulfilled, the onus being on the plaintiff to establish this.

1. It is not appropriate on an interlocutory application that I express any view as to whether I consider that the clause in the ASA would be construed in a similar manner. For the purposes of this application, it is sufficient that I consider it is arguable that it is an issue in the proceedings whether 'but for' the plaintiffs' alleged failure to provide reasonable assistance, all conditions precedent to the ASA would have been fulfilled.
2. At the hearing before me, counsel for the defendant conceded that whether the conduct of the plaintiffs caused or contributed to the non-fulfilment of the Finance Condition was likely to be an issue in the proceedings. However, the defendant submitted that the evidence sought by the plaintiffs in the letter of request was only possibly relevant to one of the issues in the proceedings and accordingly, was not sufficiently material. The defendant submitted that even if the plaintiffs' submission was accepted, the onus of establishing whether the plaintiffs' conduct contributed to the non-fulfilment of the Finance Condition was on the defendant. If the defendant did not adduce evidence on this, it would not discharge this onus. In this context, I was referred to an undertaking that had been provided by the defendant that it would not, at the trial, 'call any evidence from any officer or employee of Trafigura to prove the cause of or reason for the ...' failure to execute a binding finance agreement.[43]
3. In considering whether the evidence sought in the draft letter of request is 'material' to the issues in the proceeding, the question is whether, on the evidence before me, it is probable that Mr Economou or other employees of Trafigura can give evidence that will establish matters that are relevant and material to the plaintiffs' case.[44]
4. As noted above, the question as to whether the conduct of the plaintiffs was a causative or contributory factor in the failure of the defendant to enter into a binding finance agreement with Trafigura is likely to be an issue in the proceedings. On all of the evidence before me, I consider that Mr Economou or other employees of Trafigura can give evidence on this issue. It is not an answer to say that the matter is only one of several issues raised in the proceedings; it is sufficient that it is an issue raised in the proceedings.
5. For these reasons, it is my view that the evidence from Trafigura would assist the plaintiff in establishing matters that are relevant and material to its case.

Whether it is in the interests of justice to grant the order

1. I accept that the issue of the letter of request will involve both parties incurring substantial costs and delay the resolution of the proceedings.
2. Counsel for the plaintiffs referred me to correspondence that the plaintiffs have received from the defendant which threatens the commencement of separate proceedings and submitted that, in considering whether it is in the interests of justice to grant the order, I should take into account the 'context of the broader dispute between the parties'.[45] In my view, for the following reasons, I cannot have regard to this in considering an application under s 110 of the Evidence Act.
3. First, s 110 of the Evidence Act requires that the application be made in a proceeding. On its natural and ordinary meaning, this restricts the relevant matters to the particular proceeding in which the application is made. Second, in considering the matters in s 110(2) of the Evidence Act, the court is required to consider whether the proposed evidence is material 'to any issue to be tried in the proceeding'. This requires the court to consider what the issues are in the proceeding as at the date of the application as opposed to the issues between the parties more generally whether in the proceedings or in separate proceedings. Third, in considering the interests of justice, s 110(2) similarly confines this consideration 'to the proceeding'. On its natural and ordinary meaning, this restricts consideration of the interests of justice to the particular proceedings in which the application is made. Fourth, this approach is consistent with the substantive obligation of the parties that any documents or evidence obtained in these proceedings can only be used for the purpose of these proceedings, unless leave of the court has been obtained.[46]
4. In considering whether it is in the interests of justice to issue a letter of request, there are compelling discretionary factors in favour of issuing a letter of request. This is because the due and proper administration of justice can only be achieved by accessing testamentary and documentary evidence which is not in Australia. As was noted by McClure J in Novotny v Todd:[47]

The globalisation of commerce has consequences for dispute resolution which have to be taken into account in assessing the interests of justice.

1. The defendant did not file any evidence in opposition to the application. The defendant submits that there will be significant legal costs associated with the issue of the letters of request, including the costs of legal representation in Singapore. While I accept there will be additional legal costs associated with the retention of solicitors in Singapore, without any evidence of the quantum of these likely costs, I am not satisfied that the incurring of these costs alone would be sufficient to consider that it was not in the interests of justice to grant the order.
2. The defendant also submitted that the issue of any letter of request would delay the progress of the matter. While I accept that if a letter of request was to be issued, it would cause a delay in the proceedings, I do not consider that this is a factor that would weigh against the granting of the order. In my view, the due and proper administration of justice requires parties to be given a reasonable opportunity to access testamentary and documentary evidence which is relevant to the issues in the proceedings. This application has been made at a relatively early stage of proceedings and trial dates have not yet been fixed.
3. For these reasons, if the letter of request had been within power, which I do not consider it is, I would have exercised my discretion in favour of the letter of request being issued.

1. For the reasons set out above, I consider that the proposed letter of request is outside the scope of the power in s 110 of the Evidence Act. For this reason, I would dismiss the plaintiffs' chambers summons.

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

[1] Affidavit of Patrick Tze-Ken Wong affirmed 12 December 2019, 'PTW‑25'; Affidavit of Patrick Tze-Ken Wong affirmed 20 December 2019, 'PTW‑39'; Affidavit of Patrick Tze-Ken Wong affirmed 23 December 2019, 'PTW‑42'.

[2] Affidavit of Patrick Tze-Ken Wong affirmed 23 December 2019, 'PTW‑42' [6].

[3] Affidavit of Patrick Tze-Ken Wong affirmed 23 December 2019, 'PTW‑42' [9].

[5] Affidavit of Patrick Tze-Ken Wong affirmed 12 December 2019, 'PTW-4', ASA, cl 2.1(f).

[6] Affidavit of Patrick Tze-Ken Wong affirmed 12 December 2019, 'PTW-4', ASA, cl 2.5(a).

[7] Amended statement of claim [12]; Amended defence [12].

[10] Amended statement of claim [15]; Amended defence [15].

[11] Amended statement of claim [16].

[12] Amended statement of claim [23].

[13] Affidavit of Patrick Tze-Ken Wong affirmed 12 December 2019, 'PTW-7', 'PTW-8', 'PTW-13', 'PTW-14', 'PTW-16' - 'PTW-18', 'PTW-21', 'PTW-23', 'PTW-24'.

[14] Affidavit of Patrick Tze-Ken Wong affirmed 12 December 2019, 'PTW-9'.

[15] Affidavit of Patrick Tze-Ken Wong affirmed 12 December 2019, 'PTW-10'.

[16] Affidavit of Patrick Tze-Ken Wong affirmed 12 December 2019, 'PTW-11'.

[17] Affidavit of Patrick Tze-Ken Wong affirmed 12 December 2019, 'PTW-12'.

[20] Amended defence [14(b)] - [14(c)].

[24] Defence filed 3 July 2019 [12(b)], [15(c)].

[27] Ehrmann v Ehrmann [1896] 2 Ch 611, 614 - 615.

[28] Novotny v Todd [2002] WASCA 79.

[30] Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (1987) 74 ALR 232, 236; Novotny v Todd [43].

[34] Affidavit of Patrick Tze-Ken Wong affirmed 12 December 2019, 'PTW8'.

[35] See for example, Affidavit of Patrick Tze-Ken Wong affirmed 12 December 2019 'PTW‑7'; 'PTW‑14'; Affidavit of Patrick Tze-Ken Wong affirmed 19 December 2019, 'PTW‑34'.

[36] Affidavit of Patrick Tze-Ken Wong affirmed 23 December 2019, 'PTW-42'.

[37] Affidavit of Patrick Tze-Ken Wong affirmed 12 December 2019, 'PTW-9' [16].

[38] Affidavit of Patrick Tze-Ken Wong affirmed 12 December 2019, 'PTW-10', 'PTW-12'.

[39] Affidavit of Patrick Tze-Ken Wong affirmed 12 December 2019 [22] - [25].

[41] National Power Australia LLC v Energy Australia (Unreported, NSWSC, 24 July 1998).

[42] National Power Australia LLC v Energy Australia 112.

[43] Letter from Russells to Clayton Utz dated 23 December 2019.

[44] Hardie Rubber Co Pty Ltd v General Tire & Rubber Co [1973] HCA 66; (1973) 129 CLR 521.

[45] Plaintiffs' submissions filed 12 December 2019 [47].

[46] Hearne v Street [2008] HCA 36; (2008) 248 ALR 609 [96] (Hayne, Heydon & Crennan JJ).