PILBARA IRON ORE PTY LTD -v- AMMON [2018] WASC 258 | Case summary

PILBARA IRON ORE PTY LTD -v- AMMON [2018] WASC 258 | Case summary | Zoe

[4]

Save for the final matter, concerning a reserve statement (pleaded at [12(iv)]), I agree with the Warden that the Westernport criteria were satisfied in relation to the implied term pleaded at [12] of the Amended Plaint, having regard to the principles I outlined at [172] - [191] above.
As can be seen, those matters which I am satisfied meet the Westernport criteria are, broadly, the need for accuracy, independence and reliability of the 'completed feasibility study'.
In relation to 'accuracy',[340] accepting, as I have, that one of the purposes of the feasibility study was to allow Ammon to decide whether to withdraw or contribute to Joint Venture Expenditure and seek to raise project finance pursuant to cl 4.7 of the Agreement ([352] above), it goes without saying that that purpose could not be met unless the feasibility study met a certain minimum threshold of accuracy. Otherwise, the purposes of the Agreement would be defeated.
The degree of accuracy required by the implied term ('accurate enough to enable [Ammon] to seek to raise project finance pursuant to cl 4.7 of the Agreement') is, in my view, obvious and clearly expressed. It reflects my conclusions about the significance of Ammon being required to raise finance pursuant to cl 4.7 in the event he elected to contribute to Joint Venture Expenditure, and the integral role consideration of that matter was likely to play in Ammon's election.[341] It does not require that the feasibility study be such that it would enable Ammon to obtain project finance. The conclusion in an accurate study may well be such that project finance could not ultimately be obtained; potential financiers might, for example, consider that the risk associated with the project was unacceptable. Nevertheless, it was necessary that the degree of accuracy of the study be sufficient to enable those risks to be properly assessed.
Similarly, in my view, the requirement for such a degree of accuracy was reasonable and equitable. It did no more than require that the feasibility study serve the purposes for which it was required. Indeed, in my view, it would be unreasonable and inequitable were the Agreement to operate in such a way that the appellant could, in effect, deprive Ammon from a meaningful election by preparing a feasibility study that could not enable Ammon to determine whether to seek to raise project finance because of a lack of sufficient accuracy.
Even if one assumes that it would only be in the event of a positive conclusion about the feasibility of mining that Ammon would have any prospect of raising finance, it was reasonable and equitable that the degree of accuracy of the feasibility study be compatible with that eventuality. It could not have been intended by reasonable parties to the Agreement that the feasibility study could be completed by the party which was to earn its Joint Venture Interest on the assumption that the conclusion would (or may) be negative and that a lesser degree of accuracy would suffice.
In relation to the requirement for 'independence',[342] given that the feasibility study was to be for the benefit of both Participants and that self-interest should be regarded as the guiding force for both Participants (see [36] above), it was essential that the study be independent of each of them. Only in that way could each of the Participants be in a position to exercise their contractual rights effectively. In that regard, the Agreement would be inequitable and lack business efficacy, if the appellant could produce a feasibility study that was biased or lacked independence. While the whole of the scheme under clauses 4.6 and 4.7 is relevant in coming to that conclusion, it is particularly relevant that Ammon would be required to first offer his interest to the appellant for the then net present value calculated by reference to the feasibility study, albeit on terms to be agreed, if he elected to withdraw from the Joint Venture. Again, this aspect of the implied term is obvious and capable of clear expression.
Thirdly, in relation to 'reliability',[343] it is notable that even the appellant, on its construction of the Agreement, accepted that the feasibility study must be 'reasonably reliable' for the purposes for which it was prepared. While the appellant disavowed that this involved the implication of a term, it is clear the appellant accepted that 'reliability', in some form, was an obvious and necessary requirement of the feasibility study contemplated by the Agreement.
The only real issue, therefore, was as to the form of expression of that requirement of 'reliability'. As I have already found, the appellant's alternative construction did not pay sufficient attention to the purposes of the feasibility study, as revealed by the Agreement, and was too vague to enable an evaluation to be made adequately of whether a feasibility study met all of the purposes for which it was to be completed. The implied term as formulated in [12(iii)] of the Amended Plaint has greater clarity of expression and meets the requirement of reasonableness. The requirement that any information or data provided by a Participant not be inaccurate serves to emphasise that reliability depends on accuracy. The requirement that the information or data not be incomplete serves to emphasise that one could not have confidence in the reliability of the study if data or information is lacking which may affect the conclusions to be drawn, not only by the author of the study, but by a Participant who would be relying on the study to make decisions about their further participation in the Joint Venture. Further, the requirement for completeness as an aspect of reliability is consonant with the requirement that the appellant complete a feasibility study in order to earn its interest.
In relation to the first three requirements of the implied term, I am satisfied, in all the circumstances, that reasonable parties to the Agreement, at the time it was entered into, would have accepted the obviousness and reasonableness of the term to give practical coherence to the Agreement, in particular the scheme in clauses 4.6 and 4.7, and make it workable. The implied term does not visit any unfairness on the appellant, in light of the benefit it stood to gain by completing a feasibility study.
As I noted earlier, the appellant argued that a reasonable businessperson would not expend more money on a feasibility study if it became apparent at some point that mining was not commercially viable. The argument appears to draw upon the comments in Electricity Generation Corporation v Woodside Energy Ltd[344] that an implied term must not make commercial nonsense or work a commercial inconvenience. In my opinion, the implied term in this case (in the first three respects) does neither of those things. It was not a 'commercial inconvenience' (in the relevant sense) that the expenditure required to complete a feasibility study that met the conditions of the implied term may be greater than the appellant might have considered necessary to satisfy itself (solely for its own purposes) that mining was not economically viable. As a reasonable party to the Agreement, the appellant can be presumed to have taken into account the potential additional expenditure in order for a feasibility study to be capable of properly informing Ammon's election under cl 4.6.
Finally, the requirements of the implied term, in the first three respects, do not contradict any express term of the Agreement.
In relation to the final requirement of the implied term, that the feasibility study include 'any reserve statement required etc.',[345] I am not satisfied that the implied term - in that respect - was obvious and 'goes without saying'. In my view, the Warden erred in so finding.
It is to be noted that the formulation of this aspect of the implied term does not create an unqualified requirement for the inclusion of a reserve statement. It refers to any reserve statement required for a particular purpose. Arguably, it reflects an intention that there could be circumstances where, as a matter of fact, such a statement would not be required for the purpose of seeking to raise project finance (although the evidence in the substantive hearing would suggest otherwise).
However, as the appellant submitted, the notion of a 'reserve statement' as a feature that may be required in a feasibility study relied, at least in part, on the notion of an 'ore reserve statement' under the 2004 JORC Code. As the Code was not in existence when the Agreement commenced, it can hardly be supposed that the parties would have considered it obvious.
In this regard the Warden concluded that it is 'commercially ridiculous' to suggest that parties would not have taken into account changing obligations in law or in commercial practice when preparing the feasibility study.[346] That may well be so. Indeed, it may be that, depending upon the commercial and regulatory environment, in order to meet the other aspects of the implied term a feasibility study might be required to include a 'reserve statement'.
Whether that might be the position in a particular case, however, does not have the consequence that it was a term of the Agreement that, for the appellant to have 'completed a feasibility study', such a study must include a 'reserve statement', even if the requirement is read in the qualified way I have indicated in [444] above.
Accordingly, insofar, as the Warden held that the implied term required that the feasibility study include a 'reserve statement',[347] I would uphold Ground 2.
Otherwise, Ground 2 fails with the consequence that the term properly to be implied in the Agreement was as follows:

[12]

Similarly, in the Substantive Decision his Honour recognised the pivotal role of a completed feasibility study in the calculation of the net present value of Ammon's Joint Venture Interest for the purpose of cl 4.6 in the event he elected to withdraw from the Agreement. In that sense, the Warden clearly did not regard the calculation of the net present value as totally irrelevant to issues raised in the substantive hearing.
In my opinion, read in context, his Honour's reasons on 21 March 2013 were concerned with confining the appellant's case, in accordance with the Amended Plaint, in respect of the alleged failures (referred to as breaches) of the SRK Report to comply with the conditions of the implied term, which had to be met before it could be said the appellant had completed a feasibility study. As Ammon maintained then and on appeal, if the appellant did not complete a feasibility study that complied with the implied term, then no occasion arose for Ammon to make an election under cl 4.6, and the outcome and net present value stipulated in any purported feasibility study were irrelevant for Ammon's purposes.
Although Ammon had deleted from his pleadings the original formulation of the implied term, which placed emphasis on the accuracy and independence of the estimate of the net present value of the tenement in any feasibility study, which were said to be necessary to enable him to make his election, the calculation of the net present value and the capacity of the contents of a feasibility study to properly inform his election under cl 4.6 remained relevant considerations in his case under [19] of the Amended Plaint. That is because the conditions specified in the implied term (in [12] of the Amended Plaint) were alleged to be what a feasibility study would need to satisfy 'to be a "completed feasibility study" for the purposes of the Agreement, including those at paragraph 11'. Under [11], one of those purposes was to inform Ammon's election, which was elaborated by reference to the two choices under cl 4.6 and cl 4.7 of the Agreement. One of those choices was to withdraw and first offer to transfer his interest to the appellant for the then net present value of that interest calculated by reference to the feasibility study. The effect of the pleadings in [19] of the Amended Plaint was that the alleged 'breaches' resulted in the SRK Report not being a 'completed feasibility study' for the purpose, inter alia, of allowing Ammon to decide whether to withdraw and offer his interest to the appellant in the manner specified.
The potential significance of calculating the net present value of Ammon's interest, as a factor informing his election under cl 4.6, was one of the matters underpinning the implication of the terms in [12] of the Amended Plaint in the first place.

[14]

The scope of the pleadings is said by the appellant to be relevant to the next preliminary matter in respect of Grounds 5 to 8. That is a submission that, having determined questions of law in the Preliminary Issues Decision, the Warden then determined further questions of law as to the meaning of 'feasibility study' and 'project finance' for the purposes of the implied term and cl 4.7 of the Agreement and 'made findings of fact on the basis of those further constructions'.[350] The appellant submits that the construction of 'feasibility study' was not pleaded and was not raised in argument, and the construction of 'project finance' was not pleaded and advanced for the first time in Ammon's closing submissions.
In relation to 'feasibility study', the appellant claims that the Warden found (as a question of law) that the phrase meant 'a feasibility study, not a scoping study or pre-feasibility study, which identified what the project will be with input information accuracy of +/- 10% to +/-15%'.[351]
The appellant submits that, in making the determinations of law and factual findings attributed to him in this argument, the Warden failed to afford the appellant procedural fairness, resulting in an injustice and requiring the setting aside of his decision. There is no specific ground to that effect. The argument concerning procedural fairness must fail. However, as the argument attributing further legal determinations to the Warden appears to inform particular aspects of Grounds 5 to 8, I will consider the merits.
First, I have dealt with the manner in which the Warden considered 'project finance' and the meaning to be attributed to that phrase when dealing with Ground 2(b)(ii) and (iii). The Warden did not determine any further question of law in relation to that phrase, and the appellant's argument in that regard must fail. Further, to the extent that an understanding of 'project finance' was relevant to consideration of the evidence of Messrs Lawrence and Amos, the appellant's counsel in the substantive hearing obtained clear answers from those witnesses as to their understanding.
Secondly, the appellant's argument that the Warden arrived at a legal meaning of 'feasibility study' for the purposes of the Agreement is misconceived. The passages referred to by the appellant (at [300] and [304] of the Substantive Decision), do not support the proposition that the Warden was attributing legal meaning to the phrase. Rather, he identified, as factual matters, what was necessary for the appellant to have complied with the implied term.
The only determinations of questions of law that affected the question whether the appellant had completed a feasibility study in accordance with the Agreement were made by the Warden in the Preliminary Issues Decision. The first determination was in respect of the purposes to be served by any feasibility study completed by the appellant; the second was the implication of the term as to the minimum requirements such a study had to satisfy to be a 'completed feasibility study' (more correctly, for the appellant to have completed a feasibility study in accordance with the Agreement).
Once the Warden had determined the purposes of a feasibility study under the Agreement and that a term was to be implied in accordance with [12] of the Amended Plaint, the factual question that remained to be determined was whether the study contained in the SRK Report satisfied the requirements of the implied term. Insofar as the first requirement was concerned, [14] of the Amended Plaint pleaded factual matters that informed that determination. Ammon sought to prove the factual matters by calling expert evidence. One of those matters was that, in order to raise project finance, Ammon required a completed feasibility study that was accurate to at least +/-10% to +/-15%. Given that a feasibility study completed by the appellant under the Agreement was to serve the purpose, among others, of enabling Ammon to seek to raise project finance, it followed that, to satisfy the implied term, the feasibility study in fact would need to have that degree of accuracy.
Plainly, it would be wrong to suggest that the appellant was not alert to the fact that Ammon's case involved a claim that the feasibility study would need to have that degree of accuracy, or that the appellant was not given the opportunity to deal with that claim. The distinction drawn between a feasibility study and other (earlier) types of study arose in that context. The deficiencies pleaded in [19] of the Amended Plaint in respect of accuracy included references to those aspects of the SRK Report (or incorporated studies by other entities) that used descriptions such as 'Scoping Study', 'Pre-Feasibility Study' and 'Screening Level Estimate'. Again, it was plain that Ammon was relying on those descriptions as evidence that, as a matter fact, the SRK Report was not at a level of accuracy of a feasibility study that would be capable of informing Ammon's election.
In my opinion, there is no merit in the appellant's submission that the Warden engaged in a process of construction in drawing a distinction between a feasibility study and other forms of study, and in finding that for the appellant to have completed a feasibility study, it needed to be at a level of accuracy of +/- 10% to +/-15%.
As I noted earlier in these reasons, the parties proceeded in the Warden's Court on the agreed understanding that 'feasibility study' meant a study of the technical feasibility and economic viability of mining the tenement. In the appeal, the appellant submitted that the words 'feasibility study' ought to have been given their ordinary meaning (referring to dictionary meanings) in the absence of a definition in the Agreement or expert evidence about the terminology in the Preliminary Issues Hearing. However, reference to the dictionary definitions of the individual words does not assist, given the specialised context in which the phrase was used. The definition of 'study' relied on by the appellant from The Macquarie Dictionary (Second Edition, 1991) included 'a thorough examination and analysis of a particular subject'. The degree of thoroughness required in any particular case would obviously depend on the circumstances. 'Feasibility', in the same dictionary, was defined to mean 'capable of being done, effected or accomplished'. It does not encapsulate the aspect of economic viability which the parties agreed a feasibility study must address.
Ultimately, the Warden's reasons do not reveal that his use of the phrase 'feasibility study' was inconsistent with the manner in which it had been used by both parties. In stating that what was required was a feasibility study, rather than a pre-feasibility study or scoping study, his Honour was highlighting the inadequacy of the levels of accuracy associated with the lesser forms of study, in light of the expert evidence.

[34]

This particular assumes the correctness of the conclusion reached in the SRK Report. As with particular 5(e), it begs the question of whether the SRK Report satisfied the requirements of the implied term.
The appellant relies on the evidence of Messrs Lawrence and Amos that a financier would not seriously consider financing a project if it was not commercially viable.[355] It submits that the effect of that evidence is that Ammon would not be able to raise finance because the SRK Report concluded that mining was not economically viable, not because the inputs were not accurate to +/- 10% - +/- 15%. The submission ignores the evidence of the experts that the SRK Report was deficient in terms of accuracy, reliability and independence, so that it would not be considered by a financier, irrespective of the conclusion.
The question was not whether Ammon could obtain finance, but whether the SRK Report met the requirements of the implied term to enable him to make his election under cl 4.6 of the Agreement. The completion of a feasibility study was the appellant's responsibility. Although the task was performed by a consultant, the responsibility for ensuring that the accuracy of the study was sufficient to enable Ammon to seek to raise project finance remained with the appellant. If, as the evidence of Messrs Lawrence and Amos established, a financier would require a proponent for project finance to produce a feasibility study at a level of accuracy of between +/- 10% and +/- 15%, then it was necessary for the data in the study to be at that level of accuracy, at least in respect of most of the significant categories and the overall content.[356] Otherwise, in the event of a positive conclusion as to the feasibility of developing and mining the tenement, Ammon would not be able to make an application for finance that would be seriously considered. It was not for the appellant to assume what the conclusion would be. To suggest otherwise would be inconsistent with the requirement of independence which followed from the distinct (and potentially adverse) financial interests of the parties.
The particular provides no basis for concluding that the Warden erred in his findings.

[44]

The appellant submits that the correct question on the terms pleaded in [19B] of the Amended Plaint was whether the SRK Report was not independent, in that information provided by, or on behalf of the appellant for the purpose of producing the report was not independently verified.
Again, the distinction is difficult to discern. The reference to 'verification' in the implied term was obviously concerned with the accuracy or reliability of information. Findings by the Warden that information was accepted uncritically and was not verified for accuracy or reliability must be understood in that context and simply reflects that, on the face of it, the SRK Report did not reveal any critical assessment of the accuracy or reliability of the specific items of information referred to in [19B] of the Amended Plaint.
That said, I accept that Ammon's reliance on the proposition in [19B(iii)] (confirmed by SRK's Scope document) that SRK did not 'critically review' the reports of third party contractors was inapt, as it did not reflect the language of the implied term. In order for any such lack of review to be relevant, it had to be connected specifically to a lack of verification of data provided by the appellant.
I would also accept that the Warden's reference to the need to ensure there was 'no reasonable apprehension of bias', which terminology he appears to have adopted from the Lawrence Report, introduced a consideration that was not necessary for the purposes of the second requirement of the implied term, and was apt to be a distraction. However, I am satisfied that it was referred to as a rationale for the need for verification of information emanating from the appellant, or provided on behalf of the appellant, not as a substitute for what the Warden had to find. That is plain, it seems to me, from the passages quoted at [296] above. His Honour was conscious of the need for Ammon to establish an absence of independent verification of particular items of information, and that was the finding he made, relying on the evidence of Messrs Lawrence and Amo[358] He said:358

[51]

It was precisely the accuracy and completeness of the supplied data which had to be independently verified under the second requirement of the implied term. The disclaimer was an admission that such independent verification had not occurred. Self-evidently, given that SRK did not accept responsibility for any omissions or errors in the supplied information, its comparison of key supplied data with expected values was not verification. In context, the reference to exercising all due care in reviewing supplied data appears to relate to the process of comparison with expected values, the integration of data into analyses and the extrapolation of conclusions from the data in that way.
The appellant submitted that there were 'other respects in which it was clear on the face of the report and its annexures that the authors had exercised independent judgment before accepting information provided to them by the appellant, related companies or third parties'. That may be so, but again it does not address the right question. The implied term required independent verification of information, not the exercise of independent judgment before accepting such information. From the perspective of the other Participant in the Joint Venture, whose interests were not aligned with the appellant, and whose rights and choices would be affected by the information in the feasibility study, confidence in the accuracy and reliability of the information provided by the other Participant and used by the author of the SRK Report depended on independent verification, not simply the exercise of judgment by the author as to whether information should be accepted.
In any event, even if it was evident that independent verification had occurred in respect of some information, that would not suffice. Any failure to meet the requirement of the implied term would mean that the appellant had not completed a feasibility study on the tenement.
For these reasons, the appellant has not established error under this particular.

[53]

This particular contends, in effect, that the Warden erred by applying the independence requirement of the implied term to information that came from parties that were independent of the appellant, and whose data and reports ought to have been found to be independently verified by those parties. The appellant submitted that information and data that was obtained by the appellant, or a related party, from an independent, third party consultant, and passed on to another consultant (SRK) who had responsibility for the preparation of a feasibility study, was not in any relevant sense 'information provided by a Participant' requiring independent verification pursuant to the implied term. In that sense, the fact that CML managed the flow of information was irrelevant
Further, the appellant submitted that, to comply with the implied term, it was only necessary that relevant information from the appellant be independently verified. The implied term did not require that the independent verification be done by the author of the feasibility study. The author could have relied on a third party (i.e. independent of the appellant) to verify the information.
In my opinion, each of those general propositions is correct. However, if any third party (i.e. independent of the appellant) relied on information provided by the appellant, then, unless the third party's report demonstrated that the data had been independently verified by that party, it would fall on SRK, which was assigned responsibility to conduct the feasibility study, to ensure the data provided by the appellant was independently verified.
Insofar as Ammon's case relied on a lack of verification by SRK of data in the reports of independent contractors, without the limitation I have identified in the preceding paragraph, I agree with the appellant's submission that the reliance was misplaced and could not provide a basis for finding that the feasibility study did not comply with the independence requirement.
Paragraph [19B(iii)] of the Amended Plaint relied on the fact that SRK acknowledged it did not critically review the WP, DRAP, HWE and Coffey reports. As I noted earlier, the language does not reflect the wording of the implied term. To the extent that the Warden's findings reflect an unqualified acceptance of Ammon's submissions, including reliance on [19B(iii)] without identifying a specific failure to independently verify information that had been provided by the appellant (or its owners) to the contractors, I accept the findings are erroneous.
However, it was only necessary for Ammon to establish that there was non-compliance with the implied term in one respect or more. It is not to the point that most of the information in the SRK Report came from independent parties. The evidence of Mr Lawrence accepted by the Warden, and confirmed by the contents of the SRK Report, was that significant data relied on by SRK came directly from the appellant or its owners.
While I have accepted that the Warden did err in accepting Ammon's submission based on [19B(iii)] of the Amended Plaint, in my opinion that has not resulted in the Warden's final decision being wrong, because it was open to his Honour to find the allegations of non-compliance in [19B(i)] proved, as he did.

[55]

The appellant contends that sections of the Lawrence Report and the Amos Report were inadmissible or of no probative value because the opinions expressed in those sections were 'based on unproven facts or otherwise there were no findings of fact that supported the opinions', or they were argumentative. The appellant listed the sections of the reports that were challenged in Schedule B of its written outline of submissions.
Objections were made to sections of the experts' reports at the trial, and, on my analysis of the events that unfolded on 19 and 21 March 2013[361] and the redactions that appear in those reports in the appeal book,[362] all of those parts to which objection was taken were redacted from the reports. As for the balance, the approach that was taken by counsel for the appellant at trial was that the material was admissible 'only for the purpose of seeking to prove a breach of paragraph 19 [of the Amended Plaint][363] according to its limited terms'.[364] That qualification was invoked because some of the statements and opinions that were admissible were interwoven with statements and opinions about matters that the Warden ultimately accepted were no longer part of the allegations relied on in the Amended Plaint. It was necessary, therefore, for the Warden to confine the use he made of that material. No objection was taken to the admissibility of contents of the reports that addressed the issues in [19B] of the Amended Plaint. However, in closing submissions, it was submitted on behalf of the appellant that a number of large sections of the experts' reports were inadmissible or should be given no weight on the bases now relied on in the appeal.[365]
The appellant's submission is that the Warden erred in law in accepting the experts' opinions, because he did not make findings to the effect that the assumptions of fact upon which those opinions were based were correct. The appellant submits that, therefore, the opinions expressed by Messrs Lawrence and Amos were not admissible. The submission is without merit.
In my opinion, on a fair reading of their reports,[366] the experts did not make assumptions about the absence of independent verification of particular items of information to which they referred. They relied on statements made by SRK in SRK's Scope document and in the transmittal letter, and on the absence of any evidence in the SRK Report that such verification had taken place. That was in circumstances in which the SRK Report was the only evidence of what had occurred in the feasibility study.
I have examined the objections set out in Schedule B of the appellant's written outline of submissions ('the appellant's Schedule B') and I am of the opinion that (ignoring the content concerning a reserve statement) the appellant's objections are not established.
I would accept that some of the language used by Mr Lawrence has an argumentative flavour (for instance expressing surprise at certain approaches by SRK, and describing forecasts as 'pessimistic'). However, when one has regard to the context in which the passages identified in the appellant's Schedule B appear, what the appellant has characterised as argument is usually the expression of an opinion based on (a) industry practice, in respect of which the witness has demonstrated expertise, and (b) factual matters the witness identified in his report. On a number of occasions the text reveals that a passage that is alleged to be argumentative is simply a statement of fact as to what is missing from the SRK Report, or an expert opinion as to what is required in a feasibility study.[367]
Most of the appellant's assertions that Mr Lawrence relied on unproven assumptions refer to passages in which he is either (a) doing no more than quoting what SRK stated in SRK's Scope document or the transmittal letter, or (b) stating that he has seen no evidence of SRK attempting to critically verify assumptions behind core inputs.[368]
The appellant contended that the instances in which Mr Lawrence said SRK had 'uncritically' accepted or relied on particular information involved both assumption and argument. It is tolerably clear, in my opinion, that the expression was used to describe information that SRK had relied on, in respect of which there was no evidence in the SRK Report that it sought to independently verify the information.
In my opinion, the evidence of Mr Lawrence and Mr Amos was admissible and it was open for the Warden to rely upon it in reaching his conclusions in respect of the lack of independent verification of some of the important information incorporated into the SRK Report. The appellant has not established error.

[59]

There is nothing in that paragraph to suggest his Honour relied on any process of reasoning based on Jones v Dunkel. The appellant refers to the Warden's acceptance of 'the submission of the Plaintiff', but the use of the singular suggests that, in this context, his Honour was referring only to the proposition that followed. Otherwise, the statement is too vague to found an argument that his Honour relied on Jones v Dunkel. At [326] of the Substantive Decision, the Warden referred to Ammon's closing submissions, but then said he accepted Ammon's closing submission in regard to the independence issue. The observations I have made about [325] of the Substantive Decision apply equally in respect of [326].
If I am wrong in that regard, it is apparent that Ammon's argument was confined to dealing with aspects of the appellant's defence which contended that the absence of express references in the SRK Report to steps taken to verify information did not mean that such assessments were not undertaken, particularly in light of the evidence of Mr Lawrence that one would expect the author of a feasibility study to undertake a critical assessment of the information provided. A similar argument was put by the appellant in the appeal.
It must be said, first, that Mr Lawrence's acknowledgment that he would expect the author of a feasibility study to critically assess the information provided to the author by other parties, including the party which has commissioned the feasibility study, provides no basis for drawing a positive inference that such an assessment occurred in the present case, particularly in light of the statements made by SRK in the SRK's Scope document, the transmittal letter and the SRK Report at page xxx,[372] and the evidence given by Mr Lawrence that there was an absence of evidence of material attempts by SRK to critically verify assumptions behind the core inputs to its conclusions.[373]
In such circumstances, if there was evidence that SRK had independently verified the information about which Mr Lawrence had said there was no evidence of such verification, when, in his opinion, it was required, the appellant might have been expected to adduce that evidence. The responsibility for completing the feasibility study fell upon the appellant, if it wished to earn a Joint Venture Interest. It commissioned SRK to conduct the feasibility study on its behalf. It is not to the point, as the appellant submitted, that the author, Mr Murray, was available to both parties to call to give evidence. The witness was not in a category of the kind referred to in Payne v Parker[374] (referred to by the appellant) in respect of whom the availability of the witness to both parties would negate the application of the rule in Jones v Dunkel.
The trial in the Warden's Court had been conducted on the basis that the contents of the SRK Report and the transmittal letter would be the only evidence of the information relied upon and the activities and analyses undertaken by SRK in conducting the feasibility study. That was what Ammon relied on. If the appellant intended to rely on a proposition about those matters that went beyond the contents of the SRK Report, the natural expectation would have been for the appellant to call the witness who could speak to such matters.[375] It would have been open to the Warden, in my opinion, to infer that Mr Murray's evidence would not assist the appellant's case. At the very least, it was open to the Warden to conclude that, in the absence of evidence from the author of the report, the appellant's submission was speculative.
In the event, all one can conclude from the Warden's reasons is that he accepted the analysis of the SRK Report in the evidence of Mr Lawrence and in Ammon's submissions, and rejected the inference for which the appellant contended. It was open to him to do so.

[65]

However, the question in the substantive hearing was not whether it was appropriate for SRK to rely on financial parameters provided by the appellant. The question was whether the parameters had been independently verified, in accordance with the implied term, which had been found to be necessary because the feasibility study was to inform decisions by both Joint Venture Participants, not just those of the appellant.
There are a number of difficulties with the appellant's submissions in respect of this particular. First, in light of the way in which the trial proceeded, and the confinement of the evidence about the SRK Report and what SRK had done to the contents of the SRK Report and accompanying communications, it is unhelpful to submit that SRK fulfilled the requirement for independent verification implicitly. The appellant did not identify any acceptable process of reasoning that would enable an inference to be drawn in that regard. The evidence of the expert witnesses referred to at [548] above did not provide an adequate basis for such reasoning. In my opinion, the appellant's submission invites speculation.
Secondly, the appellant appears to equate evaluation of information with independent verification. That correlation is as inappropriate as Ammon's use of 'critically review' in [19B(iii)] of the Amended Plaint.
Thirdly, the fact that financiers would use their own project model and financial parameters did not detract from the requirement under the implied term for independent verification of information provided by or on behalf of the appellant, or the rigour with which such verification should be conducted. It is consistent with the expert evidence that a financier would have regard to the information in a feasibility study before deciding whether to consider the proposal further and utilise its own financial inputs and parameters. Moreover, it was Ammon's consideration of the prospects of obtaining project finance, in making his election under cl 4.6 of the Agreement, that mattered. The independent verification of information that had come from the appellant would be relevant to the reliance he could place on the feasibility study.
Fourthly, the Warden was entitled to rely on the expert evidence of Mr Lawrence to identify, as a result of detailed analysis of the SRK Report, items of information provided by the appellant or its owners, and used in the SRK Report, in respect of which there was no evidence of independent verification. While it was ultimately a question for the Warden to decide, it was open to him to rely on the opinions of Mr Lawrence.
The appellant's submissions in the appeal addressed the particulars of [19B] of the Amended plaint, rather than being confined to the Warden's reasons. That is understandable, given the approach taken by the Warden in his findings, which was to accept (with brief reasons) the evidence and submissions presented by Ammon, which he had outlined earlier and which included the particulars in [19B].
As to the three specific matters set out in [19B(i)] of the Amended Plaint, the appellant submitted that:

[69]

The opinions I expressed earlier in respect of (a) the appellant's submission that SRK implicitly engaged in independent verification of information, and (b) the appellant's submission which correlated 'evaluation' (detailed or otherwise) with independent verification, apply equally in respect of the submissions outlined in the preceding paragraph. References to information being 'reviewed' and 'detailed consideration' of topics fall into the same category. Those reviews and considerations were largely analysis on the assumption of the correctness of the data that had been provided.
Further, it does not follow from the fact that SRK said it was responsible for mining optimisation that it independently verified information provided by or on behalf of the appellant, in the absence of any statement to that effect, and in the face of SRK's statement in the transmittal letter that it had not independently undertaken 'any first principal costing studies or independent benchmarking studies to verify the information supplied'. The appellant submitted that the disclaimer did not give rise to an inference that the 'express or implicit independent assessment' of those parameters by SRK was not carried out. Again this misses the point that it was not an 'assessment' that was required, but independent verification, and it is notable that SRK used precisely that language in the transmittal letter. No doubt it informed Ammon's formulation of the relevant requirement of the implied term. However, as the implication of the term has been found to be correct, error is not established under Ground 6 by seeking to reformulate the requirement.
As for the iron ore price forecasts, the evidence of Mr Lawrence, outlined at [260] above, indicated that more was required in terms of verification than simply relying on the fact that the figures had emanated from a leading industry[377]recaster.377 As for the appellant's submission concerning SRK's adoption of the conservative approach to escalation, the effect of Mr Lawrence's evidence was that SRK did not reveal explicitly, in a manner that could be scrutinised, its reasoning for adopting the data provided by FMG, in the face of FMG's use of a higher figure in presentations to shareholders and potential investors.
The appellant further submitted that the SRK Report and communications relied upon by Ammon in [19B] of the Amended Plaint, did not support the conclusions for which he contended. I have considered each of the matters set out in the appellant's Schedule A in support of that submission. In my opinion, the construction of the various statements made by SRK, on which Ammon relied, was the natural and obvious meaning.
One of the particulars on which Ammon relied in [19B] of the Amended Plaint, was the statement in SRK's Scope report that SRK was not asked to report a reserve statement. That particular is still relevant, notwithstanding my decision rejecting that aspect of the implied term that dealt with a reserve statement, because it could be a matter relevant to the reliability of the feasibility study. However, I agree with the appellant's submission that the statement in SRK's Scope document did not equate with an instruction that SRK was not to include a reserve statement. In any event, it does not demonstrate a failure to independently verify information provided by the appellant, and is therefore not a basis for finding non-compliance with the independence requirement of the implied term. It is not clear that the Warden relied on this aspect of [19B], as there is no specific reference to the absence of an ore reserve statement in his findings concerning independence. However, he did outline Ammon's arguments in support of [19B(ii)]. I will assume for the purposes of dealing with this issue that the Warden relied on Ammon's submissions in respect of that particular. In doing so, I accept that he erred.
Finally, I note that most of the specific challenges to the particulars of [19B] of the Amended Plaint were not put to Mr Lawrence or Mr Amos in cross-examination. Rather, the appellant's counsel sought to obtain support for a number of positive propositions of the kind outlined in [548] above (but not limited to those). The appellant's case at first instance, as on the appeal, was that the court should reject Ammon's case on the contents of the SRK Report and the relevant communications, all of which spoke for themselves.
There was evidence, both in the contents of the SRK Report and the transmittal letter, and in the reports of Mr Lawrence and Mr Amos, that supported a finding that the SRK Report did not meet the independence requirement of the implied term.

[75]

As with Grounds 5 and 6, the appellant contends that the Warden misdirected himself as to the relevant issue he was required to determine in relation to the alleged non-compliance with the reliability requirement of the implied term.
Before dealing with the appellant's arguments, it is appropriate to note the scope of the reliability requirement alleged by Ammon at trial. Ammon's case was that all of the information or data utilised by SRK, other than the information or data contained in the specific studies conducted by SRK, was provided by the appellant, through CML, which managed the flow of information for the feasibility study.
The appellant contends that the Warden asked himself the incorrect question, because he 'found that the SRK Report was incomplete and (or) inaccurate and, as a consequence, did not meet the requirement of a feasibility study pleaded in [12(3)] of the [Amended Plaint]'.[378] The appellant submits that a feasibility study is not unreliable merely because it has some inaccuracies or some incompleteness about it. That is uncontroversial. However, the appellant's argument is unsound, because it misstates the Warden's findings.
In the passages of the Substantive Decision referred to by the appellant in support of this particular,[379] the Warden made it clear that what he found was that the SRK Report was not reliable because it was incomplete and/or inaccurate in specific respects, all of which were significant, according to the evidence of Messrs Lawrence and Amos, which the Warden accepted.
The appellant's argument is also unsound in postulating the 'critical question' which it submits the Warden was required to ask himself, namely 'whether any inaccuracy or incompleteness in input data affects the reasonableness or reliability of the conclusions reached in the study', or, put another way, 'whether the conclusions of the SRK Report were unreliable because information or data provided by [the appellant] for the purpose of producing the report was inaccurate or incomplete in the respects pleaded in [19C]'.
The appellant submits that input data may be 'quite inaccurate and incomplete' without affecting the validity of the conclusion reached in a report. There was no evidence at trial (including in the SRK Report) to support such a proposition. The SRK Report transmittal letter did state that the completion of further studies 'may impact the financial model to varying degrees - minimal, moderate or significant', and identified the likely impact of further studies in six areas.[380] It did not make a statement of the kind asserted by the appellant in its submissions.
In any event, the appellant's argument suffers from the same problem I identified at [488] above in respect of Ground 5, and the same analysis applies. The conclusion reached in the SRK Report was irrelevant if the report did not satisfy the requirements of the implied term, as the appellant would not have completed a feasibility study. Further, the appellant's formulation of the question adopts the language of its proposed construction of the Agreement, which I have rejected.
The manner in which the reliability of the SRK Report was alleged to have been most significantly affected was in the incompleteness of information, in that the report identified numerous in-depth studies that remained to be completed. The implied proposition in the appellant's submission, that Ammon was required to establish that the completion of the further studies would have affected the reasonableness or reliability of the conclusion of the feasibility study, would defeat a significant purpose of the feasibility study, which was to inform Ammon's election under cl 4.6. What he had agreed to was to transfer 80% of his interest in the tenement to the appellant if it completed a feasibility study. Only if the study was completed would the conclusion be relevant to informing Ammon's election.
The ultimate question the Warden was required to determine was whether the appellant had failed to complete a feasibility study. The manner in which he approached the determination of the reliability issue was consistent with the wording of the implied term and with determining the ultimate question.
The appellant has not established that the Warden misdirected himself as to the relevant issue.

[77]

This particular challenges the correctness of the matters pleaded in [19C] of the Amended Plaint in support of the allegation that the SRK Report did not comply with the reliability requirement of the implied term.
Ammon is correct in submitting that, on appeal, the question is the correctness of findings made at first instance, not the correctness of the successful party's pleadings. However, on close analysis of the evidence of Messrs Lawrence and Amos (including their reports), upon which the Warden relied, the areas they described as lacking accuracy and being incomplete, for the purposes of the reliability requirement of the implied term, correlated with the matters identified in [19C]. It is appropriate, therefore, to consider the appellant's argument in respect of those matters.
The appellant submits that the matters referred to in [19C(i)] and [19C(vi)][383] of the Amended Plaint were not matters that involved any inaccuracy or incompleteness of information and data. In relation to the matters referred to in [19C(ii)] to [19C(v)], the appellant submits that the references do not correctly state the terms and effect of the SRK Report, and that the correct text and context is set out in the appellant's Schedule A.
As appears from Annexure C below, the matter pleaded at [19C(i)] of the Amended Plaint concerned SRK's estimate in the SRK Report of the ore resource in the tenement, which was based on work done by Twomey and Chen for a report dated February 2006, which was provided to SRK by the appellant. The SRK Report estimated 23.6 Mt of ore based on a 55% Fe cut-off. Ammon alleged that SRK's estimate did not take into account any 'subsequent work which, according to the appellant's application to renew the Tenement licence (made in December 2007) had delineated "a resource of 44.8 Mt based on a 55.2% Fe cut off"'. The effect of [19C(i)] was that the information provided by the appellant to SRK was inaccurate or incomplete, because it did not contain the information about the larger resource on which it was relying in applying to renew the tenement licence. The expert evidence was that the difference could be significant to the outcome of a feasibility study and the ability of someone to raise finance.[384] Mr Amos said in his report that he 'would advise any holder of a 20% joint venture interest to request the provision of a comprehensive study which includes all known resources as will significantly positively affect their chances of gaining project finance'.[385]
The appellant submits that the figure used in the renewal application 'involved an obvious transposition error, not erroneous input data'. It submits that the transposition error is reflected in the table at p 18 of the SRK Report, and that the renewal application confused Fe% content with Fe% cut-off grade. On examining that table, it is not apparent that it is a transposition error, as there is no precise correlation of figures between the two entries (for 23.6 and 44.8 respectively) that would account for the use of 55.2% (although it is correct that the latter was in the Fe% column, not the Fe% cut-off column). There was no evidence led to support the proposition that it was a transposition error. In any event, that was a matter agitated before the Warden. He did not make a specific finding about that matter, but it would have been open to him to find that the information provided to SRK by the appellant about the ore resource was, at least, incomplete.
I accept the appellant's submission that Ammon misstated the effect of the information in the renewal statement, by suggesting there had been 'subsequent work' which had delineated a larger resource. There was no evidence of work subsequent to that of Twomey and Chen. However, the real point of Ammon's argument was that SRK had not been provided with information about the ore resource figure represented to the Department at the time of the renewal application.
There was further evidence in the Lawrence Report that CML had considered the 2006 45 Mt resource estimate as adequate for use to justify a proposed merger with another entity in August 2007, and had reported the 44.8 Mt figure in its Quarterly Activity Report for the Quarter ended 31 March 2006.[386]
The item referred to at [19C(vi)] of the Amended Plaint was the inclusion of the 2.5% royalty payment in the operational cost estimates provided to SRK by the appellant. That payment could only become an operational cost if Ammon elected to contribute to Joint Venture Expenditure but was unable to raise project finance, in which case the royalty would be paid to him. Mr Amos, who dealt with the issue in his report, considered the inclusion of the figure to be incorrect, as Ammon had not made his election.[387] He said that, all other factors remaining the same, the inclusion of the cost 'should reduce the NPV'.
The appellant submitted that the inclusion of the figure was not an inaccuracy or incompleteness in data; rather it was an assumption made about a cost. It submitted that it represented the inclusion of a potential cost over which the Participants, acting together, had no control, and that it was appropriate for the study to address all potential costs of the Participants taken together.
In my opinion, it was open to the Warden to reject that argument and to accept the evidence of Mr Amos. If the appellant wished to address a 'worst case scenario', as it submitted was appropriate, it could have done so separately from the feasibility study that was to inform Ammon's election and potentially be used to seek project finance. It was not logical to include a cost that depended on his continuing in the Joint Venture, when the cost could well affect the net present value in a manner that would dissuade Ammon from continuing.
As for the matters in [19C(ii)] to [19C(v)] of the Amended plaint, I am not persuaded that the pleadings misstated the terms and effect of the SRK Report. The pleadings identified areas in respect of which SRK stated that significant 'feasibility work' remained to be done. The corollary was that the information about those physical and technical parameters was incomplete for the purposes of completing a feasibility study. That was particularly so, in the opinion of Messrs Lawrence and Amos, in relation to matters where assumptions or results had not been confirmed by field work.
The appellant submitted that SRK made no unqualified recommendations about further work. It submitted that, in each instance, the authors drew attention to additional work, review or study that could be undertaken if there was to be further feasibility work. However, SRK did not use that phrasing and, in fact, recommended the undertaking of a number of the in-depth studies it described. Further, on a reasonable interpretation of the content of the SRK Report, there appears to have been an expectation that at least some of the work would be undertaken.
In any event, the question is not whether it was recommended to undertake the further work, but whether the completion of the further studies was necessary in order that it could be said that the information provided by the appellant in respect of significant aspects of the feasibility study was 'not incomplete', in the language of the implied term.
I am mindful that Mr Amos made the point in his report that a number of the further studies were necessary to increase the level of confidence in the results or parameters, as 'there remain higher levels of risk for potential project financiers from unconfirmed data and their subsequent interpretation.'[388] Potentially, results which will garner greater confidence and present reduced levels of risk in relying on the data, may at the same time reveal or confirm a lack of commercial viability of a project. However, where the conclusion as to commercial viability may depend on changeable financial parameters, rather than technical feasibility, the evidence of Mr Amos and Mr Lawrence was clear that significantly more work was required to arrive at information that was accurate and complete so as to provide an appropriate level of confidence in the study.
On appeal, the appellant has the burden of persuading the court that it was not open to the Warden to rely on the contents of the SRK Report in the manner in which Ammon had contended under [19C] of the Amended Plaint, supported by the evidence of Messrs Lawrence and Amos. I am not so persuaded.

[81]

This particular contends that, for the reasons set out in Ground 5, the evidence of Messrs Lawrence and Amos, which the Warden accepted, was irrelevant 'to the extent that they expressed opinions to the effect that the SRK Report was unreliable because further studies would be required in order for the feasibility study to be sufficiently accurate to obtain finance for the development and mining of the tenement'. It is not clear which reasons set out in Ground 5 are said to be relevant. However, the argument relates to the evidence given by both experts about the sufficiency of particular information in the SRK Report to enable Ammon to pursue project finance in accordance with cl 4.7 of the Agreement. That information related to technical areas that required further in-depth studies to be conducted.
The merit of this argument depends, in my opinion, on the validity of the appellant's argument under particular 7(a) concerning the correct question to be determined. The appellant contends that the reliability requirement was concerned ultimately with the reliability of the conclusions of a feasibility study, not the sufficiency of the information (particularly in terms of 'completeness') for the purposes of applying for project finance. I reject the appellant's argument for the same reasons I gave in respect of particular 7(a). Further, the language of [12] of the Amended Plaint related each of the requirements of the implied term to the purposes of the Agreement. The Warden correctly found that those purposes included allowing Ammon to decide whether to contribute to Joint Venture Expenditure and seek to raise project finance. Therefore, the prospect of Ammon seeking to raise project finance was a relevant consideration in determining what was necessary for information or data provided by the appellant to be accurate and complete, if it was to be included in the feasibility study. It follows that the evidence of Messrs Lawrence and Amos, to the extent that it addressed that issue, was relevant.
Otherwise, the expert evidence was relevant in identifying the deficiencies in the information contained in the SRK Report and to explain the significance of the deficiencies. There was no challenge to the expertise of Mr Lawrence or Mr Amos for the purposes of expressing opinions about those matters.
The appellant has failed to establish error under this particular.

[96]

Other than the paragraph numbering, the above construction is identical to that pleaded in Ground 2(b)(i) of this appeal. That construction (which I have rejected) was clearly proffered as an alternative to, and a basis for rejecting, the implied term found by the Warden.
Further, [10A] of the proposed Amended Response pleaded new factual matters that the appellant contended illuminated the construction of the Agreement. Such factual matters would have required expert evidence to be adduced to establish them. As Ammon submitted, so would the definition of 'project finance' proposed in [11(d)]. The approach evinced in those proposed amendments was inconsistent with the decision made by the appellant to adopt the course of a Preliminary Issues Hearing to determine issues of construction on the basis of the terms of the Agreement alone.
The appellant argued that the Preliminary Issues Decision did not dispose of all questions of construction. Whether or not that is so, the issues of construction raised by the proposed amendments clearly were within the scope of the Preliminary Issues Hearing, going to what was required of a feasibility study before it could be said the appellant had completed such a study for the purposes of the Agreement. That was at the core of Ammon's case in the Warden's Court.
Accordingly, it was open to the Warden to conclude that the proposed Amended Response raised issues determined by the Preliminary Issues Decision and that leave should be refused to that extent. In my view, he was correct to do so.
The particulars in Ground 10(f), (g) and (h) maintain that there was no evidentiary basis for the Warden to find that Ammon would be required to adduce additional evidence, that the trial would be adjourned or that Ammon would be prejudiced. There were, however, no express findings to that effect by the Warden in relation to the application for leave to amend (albeit he made reference to those matters in relation to the application to adduce further expert evidence, raised in Ground 11). Ammon submits that these particulars ignore the finding by the Warden that those parts of the amendment that were refused amounted to an attempt to revisit the Preliminary Issues Decision.
I accept Ammon's submissions in that regard. In my view, in light of the course that the proceedings before the Warden had taken (including the determination of the preliminary issues), it was open to the Warden to exercise his discretion to refuse leave to amend in relation to matters touching on the Preliminary Issues Decision. The Warden made no error in exercising his discretion in that manner.
Ground 10 therefore must fail.
I would add that, even if the Warden was in error in refusing the amendments, it would not result in any miscarriage of justice requiring the matter to be reheard by the Warden. As I have set out above, the appellant raised each of the matters of construction that it had sought to raise before the Warden in this Court in Grounds 1 and 2 of its appeal. I have concluded that it is expedient and in the interests of justice to consider and decide those issues, albeit that I have rejected the appellant's contentions in that regard.
Accordingly, in my view, the success of Ground 10 could have made no difference to the outcome of this matter in any event.

[98]

Ground 11 challenges the Warden's decision refusing the appellant leave to adduce expert evidence from Messrs Walker and Davies. That decision was also made on 1 March 2013, less than three weeks prior to the substantive hearing. I have set out the Warden's reasons for refusing leave above at [226].
As with Ground 10, this ground challenges an exercise of discretion and, accordingly, the principles set out at [614] above apply.
In relation to Ground 11, however, a number of additional matters concerning the procedural history are relevant.
First, it will be recalled that the substantive hearing before the Warden was originally listed to be heard on 5 December 2011, and it was only as a result of the proposal put to the Warden by the parties that the Warden should determine the preliminary issues separately that the substantive hearing did not proceed at that time.
Nevertheless, prior to the original listing of the substantive hearing, the parties had already obtained, and exchanged, a number of expert reports. In fact, the issue of expert evidence had been a live one since December 2009, when the parties were first granted leave to adduce expert evidence. The requirement for leave arose from the application of s 16(1)(r)(iii) of the Magistrates Court (Civil Proceedings) Act 2004 (WA), by virtue of s 134(6) of the Mining Act.[393]
The appellant filed an expert report of Dr Rudenno on 16 December 2010, although his evidence was not ultimately relied upon. Ammon filed a report of Mr Lawrence on 4 July 2011 and a report of Mr Amos on 11 November 2011. During that time, the parties filed a number of further expert reports and responsive expert reports from Dr Rudenno and Messrs Lawrence and Amos. The parties had, and utilised, multiple opportunities to file objections to each other's expert reports.
Accordingly, the expert evidence to be called by the parties had been identified and ventilated prior to the original hearing date of 5 December 2011. Clearly, the appellant had every opportunity, and used every opportunity, to respond to the expert evidence to be relied upon by Ammon.
Secondly, no further expert reports were served by Ammon following the Preliminary Issues Hearing or prior to the date fixed for the resumption of the substantive hearing, on 18 March 2013. Accordingly, it could not be said that any new expert evidence had arisen since the Preliminary Issues Hearing that required responsive expert evidence.
The prospect of a further expert report being provided was first raised before the Warden on 19 October 2012. That report, from Mr Walker, was not provided until 15 January 2013. It included a report from Mr Davies, also of that date. The letter of instruction from the appellant's legal advisers, requesting the report, was dated 20 December 2012.[394]
The expert reports of Messrs Walker and Davies[395] were substantial in length and dealt with a number of issues: Mr Walker's report consisted of 121 paragraphs and Mr Davies' report, which dealt specifically with iron ore pricing, was 11 pages. The reports went beyond responding to the contents of the Lawrence Report and the Amos Report.
In a number of respects, the reports of Messrs Walker and Davies consisted of analysis that purported to provide independent verification of the data in the SRK Report. To that extent they tend to reinforce Ammon's argument that the SRK Report lacked independent verification of certain data. Of course, independent verification was required as part of the feasibility study, not as material provided as part of litigation years later.
The report of Mr Davies included an examination of Fe grade on another tenement. He purported to express an opinion about the quality of the ore on the Mindy Mindy tenement compared with ore on other tenements, concluding that Robe River products were a more appropriate benchmark for determining the price of the ore on the tenement. This was not information contained in the SRK Report.
Overall, the approach of the reports of Messrs Walker and Davies was to address the reasonableness of the conclusions in the SRK Report and whether they were likely to change if further studies were done. It was an approach that resonates with the appellant's approach on appeal to formulating the questions the Warden was required to determine. I have found that approach to be incorrect.
It was open to the Warden to conclude that the nature of the case for which Ammon would have to prepare, if leave were granted to the appellant to adduce the evidence of Messrs Walker and Davies, would be different to the case it had prepared for and had been prepared to present in December 2011.
Insofar as the reports of Messrs Walker and Davies were said to be responsive to the expert reports already filed, as I have said, that was not the result of any new expert evidence having been filed by Ammon. All of that evidence had been filed before the Preliminary Issues Hearing.
In those circumstances, and in light of the later date set for the substantive hearing, the timing of the service of the expert reports from Messrs Walker and Davies called for some explanation and justification by the appellant. In that regard, the following passage from the plurality in Aon is apposite:[396]

[100]

These principles were applied, in relation to late applications to adduce further expert evidence in AttorneyGeneral of Botswana v Aussie Diamond Products Pty Ltd [No 2][397] and in Moore v Landsdale Pty Ltd.[398] In the latter case, Kenneth Martin J refused leave to rely upon new expert reports, filed otherwise than in accordance with trial directions, over six months before the scheduled trial dates.
There was no explanation, on the record, for the delay by the appellant in seeking to adduce the further expert evidence. Certainly, there was no explanation proffered in the appellant's submissions before this Court.
The appellant, rather, relies upon the interests of justice generally and what it says was the lack of evidence as to the prejudice suffered by Ammon.
In this context, as it did before the Warden, the appellant specifically relies upon the Court of Appeal's decision in Swindale v Babic [No 2],[399] in support of the proposition that 'where one party gives another party reasonable notice of the evidence upon which it intends to rely and there is no specific prejudice the other party will suffer if the evidence is admitted, there is no reason to refuse to allow a party to rely on that evidence'.[400]
Of course Swindale v Babic [No 2] was decided prior to Aon and expressly relied upon The State of Queensland v JL Holdings Pty Ltd,[401] the authority of which was significantly affected by Aon.[402] In any event, I do not read Swindale v Babic [No 2] as authority for the proposition in the terms in which the appellant states it. In particular, it does not support the proposition that it was for Ammon to lead evidence as to 'specific prejudice' suffered by the late service of the expert evidence. The reference to 'specific prejudice' by Newnes JA in that case,[403] was simply a reference to the absence of such a finding in the particular circumstances of that case.
The appellant contended that the Warden erred in finding that the use of the reports of Messrs Walker and Davies 'hinged' on the grant of leave to the appellant 'in other issues raised by [the appellant]', which included its application to amend its response.[404] The appellant submitted that the significance of that finding to the Warden's decision is apparent from his remark that Ammon should not be put to the time and expense of preparing a reply to the new expert reports when their use by [the appellant] is not assured'.[405]
The appellant has acknowledged that the reports of Messrs Walker and Davies were to be relied on in support of the 'positive case' it sought to make under its Amended Response, for which leave ultimately was granted. The appellant required leave to plead that case. As a general proposition, therefore, the Warden's remarks were correct, and he did not err by taking into account an irrelevant consideration or a wrong factual matter, even if aspects of the reports were responsive to the reports of Messrs Lawrence and Amos.
In any event, it is clear, in my opinion, that his Honour placed particular emphasis on the fact that reasonable notice had not been given, that the reports came at a very late stage and against a history of the parties agreeing to a particular procedure for expediency, and that Ammon would need to prepare for a different case. His Honour expressed those views 'notwithstanding the other matters that have been dealt with in this decision', which suggests that the need for leave in respect of the other issues was not determinative.[406]
In my opinion, the Warden was entitled to infer from the procedural history relating to the exchange of expert evidence, the nature and extent of the proposed expert evidence, and the proximity to the hearing, that Ammon would not have a reasonable opportunity to respond to the evidence. It was open to the Warden to make that finding and, in his discretion, to refuse to allow the evidence to be led. The Warden made no error in exercising his discretion in that regard. Nor was the refusal unreasonable or plainly unjust.
Accordingly, Ground 11 must fail.

[109]

the appellant was to provide the respondent, at the respondent's request, with a copy of any feasibility study: cll 4.5, 4.6;
the appellant, at the respondent's request, was to do all things reasonably necessary to make available to the respondent the information and calculations used and undertaken for any feasibility study, or such a term was implied by law: cl 4.6;
upon the appellant earning its 80% Joint Venture Interest, the appellant was to notify the respondent of that in writing and the respondent was to have 90 days to elect, by notice in writing, whether he wished to contribute to Joint Venture Expenditure in accordance with his 20% Joint Venture Interest or withdraw from the Agreement and the Joint Venture: cl 4.6;
after the appellant ceased to be the sole contributor to Joint Venture Expenditure, the appellant, as Manager (as defined in the Agreement), was to prepare and propose, and the Operating Committee (as defined in the Agreement) was to consider and if it so determined approve programmes and budgets relating to Joint Venture Operations, such approval to be by majority vote with each party having one vote for each whole percentage point of the party's Joint Venture Interest: cll 6.1, 6.4, 7.1, 7.3, 7.4 and 7.6;
a decision to undertake development and mining operations on any part of the Tenements required the unanimous approval of the parties: cl 7.6(a);
if the respondent elected to contribute to the in accordance with cl 4.6 (and if the parties unanimously approved the undertaking of a development and mining operation on any part of the Tenements and the Operating Committee by majority vote approved a programme and budget for that purpose), he had 12 months from the date the appellant notified him of earning its 80% Joint Venture Interest within which to raise finance for the carrying out of a project for the development and mining of the Tenements (project finance): cll 4.7(a), 6,7;
if the respondent was unsuccessful in raising project finance within 12 months or at his election, the respondent's 20% Joint Venture Interest was to convert into a 2.5% gross value FOB production royalty in respect of all production of iron ore by the appellant from the Tenements and the respondent was to be deemed to have withdrawn from the Agreement and to have transferred his interest in the Tenements to the appellant at no cost: cl 4.7(d);
the purposes of the feasibility study were:
1. to assist the respondent to make an election under cl 4.6 of the Agreement;
2. to evaluate for the benefit of both parties, and at a level of detail commensurate with the commitment of funds required by the Minimum Earning Expenditure obligation, whether or not mining the Tenements appeared to be commercially viable; and
3. to consider and identify, if the feasibility study concluded that mining of the Tenements appeared commercially viable, what further measures were necessary to advance the potential commercial development and mining of the Tenements.

[154]

(i) SRK's estimate that there is 23.6 Mt (million tonnes) of ore available in the Tenement was based on a 55% Fe cut off, and is predicated on SRK's review of work by Twomey and Chen for a report, dated February 2006, which was provided to SRK by the First Defendant, (SRK Report at 19) and SRK's estimate does not take into account any subsequent work which, according to the First Defendant's application to renew the Tenement licence (made in December 2007) had delineated "a resource of 44.8Mt based on a 55.2% Fe cut off";

(ii) SRK's conclusions concerning hydro-geological conditions in the Tenement are based on data from a study conducted in 2004 for FMG in an area of the east Pilbara that did not include the Tenement, and which data has not been substantiated by any field investigations in the Tenement (SRK Report at 68 and 71); SRK recommends "further feasibility work" (SRK Report at 75) at an additional cost of $287,000, for drilling and labour (SRK Report at 7 ), to address "the issue of collecting field data" for the Tenement (SRK Report at 73);

(iii) SRK's geotechnical analysis is based on old drill records and core photos (SRK Report at 76) from earlier scoping and pre-feasibility work (SRK Scope, in Appendix 26 at 1) and has not been confirmed by additional field work (SRK Report at 76), thus "further feasibility work is recommended" (SRK Report at 83) at an additional cost of "approximately $100,000 for consultants plus [un-estimated] drilling costs for approximately 16 holes", (SRK Report at 76);

(iv) SRK's mining study is based on previous scoping and pre-feasibility work (SRK Scope, Appendix 26, at 1) a 2006 mineral resource review completed by CML which was constrained by a 45% Fe grade shell (SRK report at 86) and did not include the dilution data that was collected (SRK Report at 97);

(v) SFK's mining study excludes two areas of the ore body due to limited drill hole support (SRK Report at 96); and indicates that more detailed feasibility studies are needed in the following areas:

Legislation Cited (2)

Court (Civil Proceedings) Act 2004

Title Act 1993

Cases Cited (40)

The primary duty of the Court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. The whole agreement has to be considered, since the meaning of any one part of it may be revealed by other parts. If the words used are unambiguous, the Court must give effect to them. The Court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. However, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust: see Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99 at 109 per Gibbs J.

A contract should be construed practically so as to give effect to its prescribed commercial purpose, because the law seeks to uphold commercial contractual obligations and the expectations that derive from them: Pan Foods Co Importers & Distributors Pty Ltd v Australia and New Zealand Banking Group Ltd [2000] HCA 20; (2000) 170 ALR 579 [24] per Kirby J. The Court should not adopt a narrow or pedantic approach to construction, particularly in the case of commercial arrangements: Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429 at 437 per Barwick CJ.

Although the necessity for the term to be implied must appear from and in the express terms of a contract, not from extrinsic circumstances, those circumstances may aid in ascertaining the meaning of the express terms and in identifying the matters to which they relate. The meaning and operation of the express terms, thus established, are the sole foundation for implying a term which the parties have not expressed. The relationship between the construction of express terms and the implication of a term is stated by Jordan CJ with his accustomed lucidity in Heimann v Commonwealth [1938] NSWStRp 47; (1938) 38 SR (NSW) 691 at 695:

'In order to justify the importation into a contract of an implied term which is not to be found in the express language of the contract when properly construed, and is not annexed by some recognised usage, or by statute or otherwise, it is essential that the express terms of the contract should be such that it is clearly necessary to imply the term in order to make the contract operative according to the intention of the parties as indicated by the express terms. It is not sufficient that it would be reasonable to imply the term: Bell v Lever Bros Ltd [1931] UKHL 2; [1932] AC 161 at 226. It must be clearly necessary. And the test of whether it is clearly necessary is whether the express terms of the contract are such that both parties, treating them as reasonable men - and they cannot be heard to say that they are not - must clearly have intended the term, or, if they have not adverted to it, would certainly have included it, if the contingency involving the term had suggested itself to their minds ...'

The cases which, in recent times, have countenanced a reference to extrinsic facts are cases where the reference is made in order to understand the meaning and operation of the express terms of a contract; no case in this Court has approved an examination of extrinsic facts in order to find in them a promise to be implied.

It is not correct, in my opinion, for the 1st Respondent to contend it was not necessary for it to give consideration to any amendment to its Response or the need for further evidence until the Preliminary Issues had been determined. The Plaintiff refers to the case of Dunstan v Simmie & Co Pty Ltd [1978] VicRp 62; [1978] VR 669 in which the Full Court of the Victorian Court of Appeal pointed out at 671:

(1973) 129 CLR 99

(2005) 221 CLR 522

(1996) 186 CLR 71

(2004) 219 CLR 165

(1986) 160 CLR 226

(1992) 26 NSWLR 234

(1905) 2 CLR 470

(1981) 57 FLR 18

(1983) 68 FLR 1

(2002) 240 CLR 45

(1923) 32 CLR 159

(1950) 81 CLR 418

(1936) 55 CLR 499

(1997) 189 CLR 146

(2000) 206 CLR 161

(2000) 48 NSWLR 498

(1959) 101 CLR 298

(2009) 239 CLR 175

(2000) 170 ALR 579

(1968) 118 CLR 429

(1977) 180 CLR 266

(2004) 218 CLR 451

(2014) 251 CLR 640

(1982) 149 CLR 347

(2014) 253 CLR 169

(1988) 164 CLR 539

(1995) 185 CLR 410

(1928) 41 CLR 316

(2002) 54 NSWLR 503

(1999) 2 Qd R 172

(1991) 11 WAR 435

(1982) 65 FLR 41

(1974) 132 CLR 1

(1986) 162 CLR 1

(2003) 129 FCR 168

(1991) 25 NSWLR 541

PILBARA IRON ORE PTY LTD -v- AMMON [2018] WASC 258 (24 August 2018)

At a glance

Court

Decision date

Before

Source

Judgment (465 paragraphs)

Legislation Cited (2)

Cases Cited (40)