PILBARA IRON ORE PTY LTD -v- AMMON [2020] WASCA 92 (11 June 2020) - WASCA 2020 case summary — Zoe

WAWASCA

PILBARA IRON ORE PTY LTD -v- AMMON [2020] WASCA 92 (11 June 2020)

[2020] WASCA 92

Court of Appeal (WA)|2020-06-11|Before: Buss P

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Source facts

Court

Court of Appeal (WA)

Decision date

2020-06-11

Before

Buss P

Source

Original judgment source is linked above.

Judgment (229 paragraphs)

[1]

This is an appeal from the decision of Fiannaca J in Pilbara Iron Ore Pty Ltd v Ammon[1] (primary decision). The primary decision concerned an appeal from decisions of the Mining Warden in relation to the proper construction and application of a Joint Venture Agreement dated 3 September 2002 (JVA) between the appellant (Pilbara) and the first respondent (Ammon). The Warden had granted declarations, sought by Ammon, to the effect that Pilbara was deemed to have withdrawn from the joint venture, and that a transfer lodged by Pilbara transferring an 80% interest in the joint venture to itself was invalid and unenforceable. The primary judge dismissed Pilbara's appeal and Pilbara now appeals against that decision.

[2]

Ammon was an applicant for, and subsequently the holder of, an Exploration Licence granted in 2003. In general terms, the JVA provided that Pilbara was to indemnify Ammon for his past expenditure associated with the Exploration Licence, and carry the cost of certain future exploration expenditure for a period, and that if it completed a feasibility study by a specified time, it would earn an 80% interest in the joint venture. Ammon could thereupon elect whether to contribute to the financing of the joint venture and remain in the joint venture with respect to his 20% interest, or withdraw from the joint venture. If Pilbara did not complete a feasibility study by the specified time, it would be deemed to have withdrawn from the joint venture.

[10]

Although Ammon compendiously described the four terms referred to in [5] above as an 'Implied Term', it is convenient, and does no injustice to Ammon's case, to treat them as separate, albeit related, implied terms. In what follows, the terms referred to in subpars (i) - (iv) of [5] above will be referred to respectively as the 'First Implied Term (Accuracy)', the 'Second Implied Term (Independence)', the 'Third Implied Term (Reliability)' and the 'Fourth Implied Term (JORC Code Or[7] Reserve Statement)'.7
The Further Amended Plaint also contained a plea at par 14, albeit in terms unrelated to par 12 and not expressed as a matter of construction or implication, that '[i]n order to seek to raise project finance pursuant to cl 4.7 of the [JVA], [Ammon] required a completed feasibility study that:[8] (1) was accurate to at least ±10 ‑ 15%, and (2) included a reserve statement'. The Further Amended Plaint also contained a 'breach' plea in par 19. The 'breach' plea in par 19 was confined to a breach of the four implied terms alleged in par 12 of the Further Amended Plaint. Paragraph 19 of the Further Amended Plaint alleged that 'in breach of the [four implied terms in par 12 of the Further Amended Plaint] the SRK Report was not accurate, independent, reliable or complete as required by the [four alleged implied terms]'.[9]
After the 'Preliminary Issues Decision' was delivered, the factual contest in the Warden's Court, as noted earlier, was whether the SRK Report complied with the four implied terms as found by the Warden. In that regard, the Warden in the Substantive Decision treated the factual contest as requiring a determination of Ammon's 'breach' plea in par 19 of the Further Amended Plaint.[10] Ammon relied on the expert evidence of Mr Lawrence, a geologist and a fellow of the Australasian Institute of Mining and Metallurgy, and Mr Amos, a consultant holding a science degree with honours in geology and a fellow of the Australasian Institute of Mining and Metallurgy and of the Financial Services Institute of Australia, who also taught project finance and corporate finance for various institutions.[11]
It will be necessary to consider in more detail later the expert evidence led by Ammon in the Wardens Court. At this stage it is sufficient to note that Ammon's instructions to the experts, Mr Lawrence and Mr Amos, preceded his Further Amended Plaint of 6 December 2011 and, consequently, the expert reports did not advert to the four implied terms in par 12 of the Further Amended Plaint.[12]
The Warden referred to or summarised key aspects of Ammon's expert evidence as follows:
1. There are three types of 'techno-financial' studies known in the mining industry:

[20]

In essence, for a feasibility study to be capable of informing Ammon's election under cl 4.6, having regard to the commercial context of the [JVA], there had to be minimum requirements it must satisfy in terms of its nature, content and quality.

Although cl 4.6 provided that [Pilbara] notify Ammon that it had earned its Joint Venture Interest (upon that occurring), that requirement cannot be construed as conferring on [Pilbara] an unconstrained right to determine, for the purposes of the [JVA], whether it had completed a feasibility study. If that were so, it could decide to stop the feasibility study at any time and declare it had completed the study. I have rejected that proposition. It is not what a reasonable businessperson would have understood from the language of the [JVA], having regard to the purpose and object of the [JVA] and the surrounding circumstances known to the parties, including the fact that Ammon was ceding an 80% interest in the tenement on completion of a feasibility study. In particular, such a construction would not be consistent with the purpose of informing Ammon's election under cl 4.6.

[Pilbara] acknowledged that, under the [JVA], Ammon, who had the tenement and could not afford to undertake a feasibility study to determine whether it had commercial worth, agreed to transfer part of his interest to [Pilbara], which had funds, if it completed a feasibility study. That was the whole point of the Joint Venture. Of course, the part he agreed to transfer was the vast majority of his interest. It was not consistent with the bargain struck with [Pilbara] that Ammon should have to undertake further work to determine the commercial worth of the tenement if the information in the feasibility study was deficient for the purposes of informing his election.

... The question of whether a feasibility study undertaken by [Pilbara] was adequate to inform those considerations had to be determined objectively. That required the identification of objective criteria, constituting minimum requirements. The [JVA] could not work effectively, in a commercial sense, without the identification of such criteria.

On a proper construction of the [JVA], and in the absence of a definition of 'feasibility study', it is not obvious that the parties made provision for the minimum requirements that had to be met before it could be said that [Pilbara] had completed a feasibility study on the tenement. Nor is it obvious that the terms of the [JVA] represented the totality of what the parties were willing to agree on the subject.

[Pilbara] referred to the provisions of cl 6.5(d) (concerning the manner in which the Manager was to perform its functions) and to cl 19.2 (concerning the parties' obligation to do all that was reasonably necessary to give effect to the terms of the [JVA]) as provisions from which inferences could be drawn about what was required of a feasibility study. ... Each of those clauses supports the need to identify objective criteria by which it could be determined whether [Pilbara] had completed a feasibility study that would serve the purposes of such a study under the [JVA]. However, I do not accept that the objective criteria necessary to give effect to the terms of the [JVA] can be inferred from the wording of those clauses, without more.

[Pilbara's] obligation under cl 19.2 to do all such things as may be reasonably necessary to give effect to the terms of the [JVA] underpinned the need for any feasibility study completed by it to enable Ammon to make his election and seek to raise finance in accordance with the terms of clauses 4.6 and 4.7. In that way, cl 19.2 is part of the factual matrix that informs (a) the need to imply a term as to what was necessary for a feasibility study to serve that purpose and (b) the contents of any such term, by reference to the need to give effect to the terms of the [JVA]. However, the terms of cl 19.2 did not identify what was necessary from a feasibility study to give effect to the terms of the [JVA].

This is not a case where an express term of the contract, formulated in different terms to the asserted implied term, covers the same field or subject matter as the asserted implied term. The express terms of the [JVA] dealt with the requirement that [Pilbara] complete a feasibility study in order to earn a Joint Venture Interest; they did not deal with how it was to be determined whether that eventuality had occurred.

... [T]he parties appear to have failed to direct their minds to the identification of criteria for that purpose and failed to make provision for it. Had they directed their minds to it, one can presume they would have agreed that a term identifying objective criteria, constituting minimum requirements, should be included in the [JVA], as the completion of a feasibility study was pivotal to the determination of the rights of both [Pilbara] and Ammon under the [JVA]. As discussed ... their commercial interests were not necessarily congruous. That underscores the need to identify criteria by which it could be determined that [Pilbara] had met the condition for earning its Joint Venture Interest.

[59]

Pilbara emphasised the italicised portion of the primary decision at [45] (referred to in [17] above), and made the following submissions on the express terms of the JVA, on its proper construction:
1. The term 'feasibility study' is not defined, and there is no reference in the JVA to it being a 'bankable' or 'definitive' feasibility study. Further, Pilbara did not expressly warrant (although the JVA contained warranties by Ammon) that the feasibility study would have any particular quality. That is in the context of the JVA being a formal and detailed written agreement, evidently drafted with the benefit of legal advice.[39]
2. The JVA did not specify a minimum expenditure for, or the requisite time to be spent in, preparing the feasibility study.[40]
3. By virtue of cl 12.1 of the JVA, Ammon could not provide the feasibility study to a potential financier without Pilbara's agreement.[41]
4. There is no definition of 'project finance' in the JVA.[42]
5. Clause 7 of the JVA deals with the 'undertaking of a development and mining operation on any part of the Tenements', and '[t]hus the quantum of any "project finance" would not be known until ... after' (1) the convening of the Operating Committee, and (2) the unanimous agreement of the Participants on the Operating Committee for the undertaking of a development and mining operation.[43]
6. The JVA imposed a relatively short time after the completion of the feasibility study for Ammon to make his election as to whether or not to continue to participate. Further, the JVA required the rapid formation of an Operating Committee after the conclusion of the Earning Period. The JVA did not 'contemplate the operations of the joint venture being held up whilst the detail of the feasibility study was picked apart by experts with ensuing litigation, as has occurred in the present case as a result of arguments over the existence of implied terms and whether or not the feasibility study complied with those implied terms'.[44]
7. In addition to the cost of the feasibility study, Pilbara was required to pay $250,000 by way of an indemnity for Ammon's past expenditure, $5,000 per month up to the Grant Date, a minimum of $1 million expenditure in the first 30 months after the Grant Date and to provide indemnities to Ammon in the Free Carry Period.[45]
8. Clause 23 of the JVA provided for the prospect of a 'formal joint venture agreement' to be negotiated in good faith, and the presence of this provision suggests that any concerns over the nature and scope of the feasibility study and questions of project finance were matters that lent themselves to further negotiations.[46]
9. There was no evidence or findings to the effect that the words 'feasibility study' had an industry usage in the mining industry that was different from their ordinary English meaning, or that the term should be regarded as a term of art.[47]
10. Having regard to the finding at [45] of the primary decision (see [17] above), the JVA accordingly contemplated and required 'no more and no less than a study into the feasibility of mining the tenement', and this meaning was conveyed by the language of the JVA. Nothing further was required to [48] implied.48 In that regard, Pilbara submitted that it was to carry the 'lion's share of the investment and ... had the option of pulling out [and] therefore [Pilbara] had an obvious interest in ensuring that the study was thorough and m[49]ningful'.49
11. A feasibility study in its ordinary meaning could indicate that the mining of a deposit on EL 47 was not technically or economically feasible. Accordingly, Pilbara could earn an 80% Joint Venture Interest by providing a feasibility study which revealed no commercially minable reserves.[50]
12. In oral submissions, the content and criteria of 'a feasibility study' within the meaning of cl 4.2, cl 4.4 and cl 4.5 was explained by senior counsel for Pilbara as follows:[51]

[63]

Pilbara also contended in supplementary submissions that a construction of the JVA along the lines referred to in [64] above has no merit, in that:
1. The term 'feasibility study' in the JVA has an ordinary English meaning which ought not be confined, and that the contractual context, for the reasons advanced by Pilbara in its original submissions, favours a wider rather than a narrower meaning of that term.[53]
2. It suffers from the same vagueness and disputability as the implied terms. Each of the elements of such a construction is contestable and it would introduce 'nebulous standards that no reasonable commercial parties could have intended'.[54]
3. There are no 'minimum criteria' of the type posited that are generally applicable - each case would depend on the lender's risk at the time, the nature of the resource identified, the security offered, the economic conditions at the time, the nature of the commercial opportunity and other matters dependent on the state of affairs at the time when the financing falls for consideration.[55]
4. It is inconsistent with the terms of the JVA, in that any specific project would require determination by the Operating Committee, which is only formed after the Earning Period has ended, and thus after the feasibility study has been completed. This means that if such a construction were correct, 'whether or not a document constituted a "feasibility study" could not be known at the time the document was created because the extent of "project finance" required for development and mining of the tenement would not at that stage be known. The earn-in provisions would thus completely misfire'.[56]
5. Such a construction 'would raise a troubling doctrinal question' in that, Pilbara asked, 'how is it that terms can be "read in" to a contract by a purported process of construction, rather than implication in fact, to achieve a result that implication in fact fails to achieve?' Pilbara again referred to the BP Refinery criteria, and also to the principles referred to in [[88 There was no dispute as to the general nature of the feasibility study. It was a question of what the feasibility study had to do in the context of the [JVA].

[64]

Ammon effectively contended, by way of an overarching submission, that the three implied terms accepted by the judge flowed from the purposes of the JVA as pleaded by Ammon and accepted by the Warden and primary judge (see [6] above). Ammon referred to this as the 'Construction Issue' and distinguished it from the implication of the terms, to which it referred as the 'Implied Term Issue'. Ammon contended that, while Pilbara attacked the 'Construction Issue' in the appeal before the primary judge, it has not done so in this appeal. Ammon submitted that, as a consequence, the footings for the implied terms remain undisturbed and the appeal[68]ust fail.68
In this connection, Ammon also submitted that Pilbara, having taken a different approach before the Warden, had accepted before the primary judge that one of the purposes of any feasibility study was to assist Ammon to make an election under cl 4.6. Ammon submitted that Pilbara should be confined to the case it ran on appeal below.[69]
Ammon further submitted that, prior to considering the question of any implied terms, the court must first construe the express terms.[70] Reference was made to Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd.[71]
Ammon submitted that, for present purposes, attention should not be confined to the meaning of 'feasibility study', but rather the meaning of 'completed a feasibility study' in cl 4.5 and related provisions.[72]
Ammon submitted that it was necessarily in the interests of both parties that each be able to use such a study as the basis for making commercial decisions regarding their respective positions, and to identify when Pilbara had earned an 80% interest.[73]
Ammon submitted, in effect, that on the proper construction of the JVA, the provisions concerning the completion of a feasibility study arise in a context where the parties evidently contemplated that (1) the exploration phase of the Joint Venture had been completed, and (2) the development and mining of the tenement was under consideration. Ammon submitted that the nature and quality of the 'feasibility study' referred to in cl 4.5 and related provisions of the JVA was to be understood in that context.[74]
In this context, Ammon emphasised that Pilbara always had the option of ceasing work on a feasibility study and surrendering its right to earn an 80% interest.[75]
Ammon submitted that the provisions of the JVA concerning the completion of a feasibility study were also to be understood in the context of cl 4.7 and the opportunity given to Ammon to obtain 'project finance'. Ammon submitted, in effect, that it was implicit in cl 4.7 (read in the context of the JVA as a whole) that the parties objectively contemplated that financiers to a mining operation would have particular standards as to the information required for financing purposes.[76]
Ammon effectively submitted that, absent the objective criteria supplied by the implied terms, Pilbara would be in a position to own an 80% interest 'irrespective of accuracy, reliability, independence or completeness', and in that regard, referred to the primary judge's observations at [370] of the primary decision (see [18[77]] above).77
Ammon submitted, in effect, that the judge correctly stated and applied the relevant legal principles.[78] In particular, Ammon submitted that '[a]t the heart of the decisions [by the judge and the Warden] was the proposition adopted by the High Court in Byrne ..., ie, implying the term must be necessary for the "reasonable or effective operation of [the contract] in the circumstances of the case"'.[79]
Ammon also submitted, with reference to the evidence, that:
1. The unchallenged evidence of Mr Lawrence and Mr Amos 'established the parameters required to "raise project finance" [for the purposes of] cl 4.7(a)'.[80]
2. It was in the interests of both parties to have a completed feasibility study containing the implied terms. The expert evidence identified the levels of accuracy, reliability and independence suitable for that purpose.[81]
3. It was unchallenged that Ammon could not afford to produce a feasibility study, and that a feasibility study lay at the heart of the bargain under which Pilbara could earn an 80% interest in the tenement. It was for Ammon to raise project finance and the nature of such project finance must necessarily have been a matter for Ammon informed by the completed feasibility study. Given that the nature of a completed feasibility study was unknown when the JVA was entered into, Ammon's ability to raise project finance pursuant to cl 4.7 was 'necessarily predicated on the content of a completed feasibility study. The ... unchallenged expert evidence established the levels of accuracy required to do so'.[82]
More generally, Ammon contended that the primary judge's conclusions were correct for the reasons he gave, including those set out in [[18 > (a) On a proper construction of the express terms of the Joint Venture Agreement (Agreement) the requirement that [Pilbara] 'complete a feasibility study' (clause 4) required completion of a feasibility study which in its nature, scope and analysis met the minimum criteria that financiers to the mining industry would ordinarily require before considering a proposal to finance the development and mining of EL 47/1140.

(b) The unchallenged expert evidence of [Ammon], being the expert evidence of [Mr Lawrence and Mr Amos] was that the SRK Report provided by [Pilbara] to [Ammon] in January 2008 for the purposes of the Agreement did not meet the minimum criteria of a feasibility study that financiers to the mining industry would ordinarily require before considering a proposal to finance the development and mining of EL 47/1140.

[69]

In support of his application to rely on the proposed Notice of Contention and to further amend the plaint in the Warden's Court, Ammon refers to the merits of the construction and also submits, in effect, that:
1. If necessary, an amendment can be made to a pleading to support an amendment to the grounds of appeal and, as a general rule, the respondent in an appeal is entitled to support a judgment by any argument not presented below, so long as it does not depend on an issue of fact not litigated below, is open on the pleadings and is otherwise consistent with the way the case has been conducted.[118]
2. 'If there is merit the Court will not shut a party out because of delay',[119] and there is merit in the construction advanced in the proposed Notice of Contention.
3. Pilbara expressly declined to lead any evidence before the Warden relating to breach of the implied terms pleaded in par 12 of the Further Amended Plaint, and the implied terms were merely an aspect of the proper construction of the JVA. It made that decision when dealing with the agreed preliminary issues.[120]
4. Pilbara has not identified what evidence it may have led had Ammon run his case in accordance with the construction referred to in the proposed Notice of Contention, and it is to be inferred that Pilbara would not have led any evidence had the case been fought in the manner contemplated by the proposed Notice of Contention.[121]
5. The construction in the proposed Notice of Contention 'moves from the Warden's answer to the first of the preliminary legal issues', when he found that the JVA should be construed as pleaded by Ammon at par 11 of the Further Amended Plaint. This finding has not been challenged in this appeal, although it was unsuccessfully challenged before the primary judge.[122]
6. Pilbara has conceded in the appeal that a purpose of the JVA was to assist Ammon to make his election. This concession supports the construction advanced in the proposed Notice of Contention.[123]
7. The primary judge noted at [285] of the primary decision that there was no challenge to Ammon's expert evidence concerning the expected levels of accuracy of a feasibility study that is to be used to apply for project finance, or the evidence about the different types of 'techno‑financial' studies. This is a 'complete answer' to Pilbara's submissions that there would need to be a retrial as to whether the SRK Report accorded with the meaning of 'feasibility study' on the proper construction of the JVA referred to in the proposed Notice of Contention.[124]
8. It is significant that the primary judge dismissed grounds 10, 11 and 12 of Pilbara's appeal to the court below. Grounds 10, 11 and 12 challenged the Warden's orders of 1 March 2013 dismissing Pilbara's applications of 14 February 2013 to amend its response to the Further Amended Plaint and to adduce the expert evidence of Mr Walker.[125] In that regard, Ammon submits that there is 'no basis upon which [Pilbara] can now seek to adduce further expert evidence. [Pilbara] appealed against the Warden's decision not to allow it to adduce the evidence of [Mr Walker and Mr Davies] ... That [ground] was dismissed ... and there is no challenge to that disposition in this Court. There is no application in this appeal to amend the Grounds of Appeal'. Further, and in any event, at the hearing before the Warden on 23 November 2012, prior to Pilbara's interlocutory applications, counsel for Pilbara advised the Warden that, in respect of the proposed expert evidence, it would merely be responsive to the reports that had been prepared by Mr Lawrence.[126]

[93]

The Warden's reference to, or summary of, key aspects of the expert evidence has been set out in [11] above. The Warden's findings are summarised at [12] above. At least from this distance, it is not clear, with respect, to what extent Ammon's expert evidence purported to restate and reflect the instructions given as to the implied term [see [154] above) in the Minute of Proposed Amended Plaint (as allowed on 11 July 2011), or even purported to state the experts' own views of the meaning of 'feasibility study' in the JVA.
It is nevertheless plain that by the hearing of the substantive issues in March 2013 (1) Ammon's case of 'breach' of contract centred upon the four implied terms in par 12 of the Further Amended Plaint as found in the Preliminary Issues Decision, (2) there was no plea of an implied (or express) term to the effect that the phrase 'completed a feasibility study' in the JVA required the provision of a 'bankable' feasibility study with a degree of accuracy of ±10% ‑ ±15%,[157] and (3) moreover, there was no plea that the JVA had the construction referred to in the proposed Notice of Contention.
The only material construction issues dealt with by the primary judge in the appeal below were those litigated in the Warden's Court - the existence or otherwise of the four implied terms alleged in par 12 of the Further Amended Plaint. The plea in par 11 of the Further Amended Plaint was no more than a contextual plea, said to support the four implied terms pleaded in par 12. There was not alleged to be, nor could there be, a 'breach' of the matters pleaded in par 11 of the Further Amended Plaint.
The primary judge was not asked to uphold the Warden's orders on the bases that (1) the express terms of the JVA, on their proper construction, had the meaning referred to in the proposed Notice of Contention, and (2) on that construction, the SRK Report was not a feasibility study within the meaning of the JVA. Nor could his Honour have done so when such a case was not run at trial, and there was no notice of contention in the appeal to the primary judge to the effect that the Warden's orders could be supported on any alternative basis.
An appellate court has power to allow an amendment to a pleading if the case sought to be made on appeal by the party applying to amend is not materially different from the case that was litigated at the trial. See Bell v Lever Brothers Ltd;[158] Teoh v Minister for Immigration and Ethnic Affairs;[159] Pringle v Everingham;[160] Fitzpatrick v Job t/as Jobs Engineering.[161]
The proper construction of the JVA was always an integral part of Pilbara's case on appeal, and any consideration of the alleged implied terms should necessarily have been undertaken by the primary judge and has necessarily been undertaken by this court with regard to the true construction of the JVA's express terms. Although the construction of the JVA favoured by this court was not advanced by the Pilbara in its appellant's case or by Ammon in his respondent's answer, this court was entitled to reach its own conclusion as to the true construction of the JVA, subject to the requirements of procedural fairness.[162] Any suggestion that evidence might have been led that was relevant to the construction question ought not be accepted: before the Mining Warden then senior counsel for Pilbara expressly proposed that the constructional questions be determined as a preliminary issue on the terms of the JVA and without the necessity for any evidence to be adduced (see [137] above). Nevertheless, in order for Ammon positively to contend that the appeal should be dismissed, and that the judge's (and the Warden's) orders should not be disturbed, on the basis of the construction advanced in the proposed Notice of Contention, Ammon would need to show that (1) had he run such a case at trial, it could not possibly have been met by evidence from Pilbara, (2) even then, that it would in the interests of justice for Ammon to raise the point now by way of the proposed Notice of Contention and (3) this court should exercise its power to allow an amendment to the Further Amen[163] Plaint.163
Whilst it is true that Ammon's expert evidence referred to the need for a 'bankable' feasibility study with a degree of accuracy of ±10% ‑ ±15%, as noted in [158] ‑ [159] above, that evidence was not led in the context of any pleaded case that there were implied (or express) terms of the JVA to that effect. Moreover, the evidence was not led for the purpose of addressing, and did not in terms address, the critical issue of fact in relation to breach raised by the construction advanced in the proposed Notice of Contention - the question of the minimum criteria that financiers to the mining industry would ordinarily require before considering a proposal to finance the development and mining of EL 47. Ammon's expert evidence was not directed to that question of fact because the issue had not been pleaded by Ammon. Pilbara led no expert evidence at all and, indeed (like Ammon), was precluded from calling any expert evidence other than in relation to the 'breach' of the implied terms pleaded in par 12 of the Further Amended Plaint as found in the Preliminary Issues Decision. Any connection between the expert evidence led by Ammon and the issue of fact in relation to breach raised by the construction advanced in the proposed Notice of Contention is effectively coincidental.
It is at least possible, and, indeed, likely, that Pilbara would have called evidence on that question of fact had it been raised in the proceedings before the Warden. The question of fact is more precise and narrower in compass and, objectively, capable of crisper resolution than the various questions of fact that might be seen to arise on the more diffuse, and uncertain, implied terms alleged in par 12 of the Further Amended Plaint.
Turning to the particular submissions of Ammon referred to in [124] above:
1. The short point is that the 'breach' of contract case contemplated by the proposed Notice of Contention raises an issue of fact not litigated below, is not open on the pleadings without an amendment, and is different to the implied term case pleaded below.
2. At this point in the analysis, Ammon would not be shut out from relying on the proposed Notice of Contention because of delay, but because it would be unjust to uphold the primary decision (and the Warden's decision) on a matter not litigated.
3. Whilst the point of the trial of the preliminary issues was that no evidence (including evidence by Pilbara) would be led on the question of 'breach' of the alleged implied terms if they were not found to exist, there is no reason to suppose that had Ammon run a case based on the proper construction of the JVA contemplated in the proposed Notice of Contention, Pilbara would not have adduced evidence in the event that such a construction were upheld.
4. It is to be inferred that the evidence Pilbara would likely lead would be as to the relatively confined question of fact raised by the proposed construction.
5. Pilbara was entitled to join issue with Ammon and to run its case at the trial (including to decide what evidence to call or not to call) on the basis of Ammon's pleading.
6. The proposed construction does not 'move' from the Warden's answer to the first of the preliminary questions. It arises from a consideration of the JVA as a whole.
7. The concession referred to by Ammon cannot be taken as an admission by Pilbara of the construction proposed in the proposed Notice of Contention.
8. The absence of challenge to Ammon's expert evidence when the case was fought on the alleged implied terms cannot be treated as an admission by Pilbara that if the case had been run by Ammon differently, it would have accepted the evidence without demur on that different case.
9. Grounds 10, 11 and 12 of Pilbara's appeal to the primary judge concerned, only, the rejection of its application to adduce evidence in the context of Ammon's implied term case. The applications were not made in the face of the construction sought to be advanced by Ammon in the proposed Notice of Contention, and the dismissal of those grounds of appeal is not relevant to the question presently under consideration.
In these circumstances, Ammon cannot rely on the proposed Notice of Contention to, in effect, retain a judgment inconsistent with the way in which he ran his case at trial. Further, in the circumstances, this court should not exercise its power to allow Ammon to amend his Further Amended Plaint. Ammon's application filed 14 May 2020 should be dismissed.
That leaves for resolution the question of final orders in this appeal. Pilbara's position is encapsulated in the submissions referred to in [130.4] above.
The orders sought by Pilbara in the appeal include orders to the effect that:[164]
1. The primary judge's orders be set aside, and the Warden's orders of 19 September 2014 be set aside.
2. Judgment in the Warden's Court be entered in favour of Pilbara on terms including that:

[98]

Ammon pay Pilbara's costs of this appeal and the costs of the appeal to the primary judge.
Accordingly, the orders wanted included the relief that Pilbara had sought in its counterclaim before the Mining Warden (see [149] above). At the appeal hearing senior counsel for Pilbara retreated somewhat from that position. He said that an order that Ammon's claim in the Warden's Court be dismissed would dispose of [165] issues.165 This was put on the basis that an issue estoppel would arise which would make the declaration unnecessary as this court would have concluded that (1) there were no implied terms as alleged by Ammon, and (2) a feasibility study was[166]livered.166
The question, ultimately, is how best the interests of justice are served in the context of the point now reached in this litigation - litigation which, it must be accepted, for a combination of reasons, reflects adversely on the efficient administration of justice.
The identification of the preliminary issues before the Warden was misconceived and the determination by the Warden that the JVA contained the alleged implied terms was erroneous. The Warden failed to recognise that any consideration of the alleged implied terms must necessarily be undertaken with regard to the true construction of the JVA's express terms, as a whole.
If the Warden had approached the issues raised by the Further Amended Plaint on that basis, it should have been apparent to the Warden, and the Warden should have held, that on the proper construction of the express terms of the JVA (as opposed to the implication of terms in fact to give business efficacy to the contract), the phrase 'complete a feasibility study' (and cognate expressions) requires a feasibility study for the Joint Venture which, in its nature, scope and analysis, would meet the minimum criteria that financiers to the mining industry would ordinarily require before considering a proposal to finance the development and mining of EL 47.
If the Warden had arrived at that conclusion he would have held that Ammon's case, based on the alleged implied terms, was flawed.
If the Warden had arrived at that conclusion and decided that Ammon's case, based on the alleged implied terms, was flawed, then, when the Warden delivered judgment and published his reasons, Ammon could have and no doubt would have sought to amend the Further Amended Plaint in the manner it has sought to do in its application to this court. In those circumstances, it would have been necessary for the Warden to consider whether it was in the interests of justice, no final orders having been made in the proceedings and given that property rights were involved, for Ammon to be released from the concession made by his senior counsel on 6 December 2011 before the Warden to the effect that if Ammon lost on the preliminary issue in relation to the existence of the implied terms, then that would be the end of Ammon's case. Pilbara would no doubt have opposed the proposed amendment.
The interests of justice favour this court endeavouring to restore the parties to the position they would have been in had the Warden approached the issues raised by the Further Amended Plaint on the correct basis (that is, on the basis that any consideration of the alleged implied terms must necessarily be undertaken with regard to the true construction of the JVA's express terms, as a whole) and arrived at the correct decision.
That conclusion is confirmed by the situation that will otherwise prevail should this court simply allow the appeal and follow Pilbara's invitation to make substitutive orders that see the dismissal of Ammon's claim in the Warden's Court. Contrary to Pilbara's expectation, no binding issue estoppel will arise that disposes of all issues in Pilbara's favour with a consequence that Pilbara will have established its entitlement to an 80% Joint Venture Interest within the meaning of and pursuant to the terms of the JVA. This court is not in a position to conclude, and has not concluded, that the SRK Report constituted a completed feasibility study within the meaning and for the purpose of cl 4.5 of the JVA as construed in these reasons. In the absence of a commercial resolution it is inevitable that Pilbara will need to press its counterclaim before the Mining Warden should it wish to establish the interest it claims. Recognising that this is so, it is in the interests of justice that all parties be restored to the position that would have ensued had the Warden approached the issues raised by the Further Amended Plaint on the correct basis and arrived at the correct decision.
The course of the litigation between these parties has been inordinately complicated and lengthy. Any retrial of this matter would be, more than is usually the case, 'a most deplorable result'.[167] It must be recognised, however, that the delays have, in large part, arisen systemically from the decision of both parties to seek and obtain a trial of preliminary issues, unnecessary skirmishes in this court,[168] and (regrettably) judicial delays at every level in the litigation. Further, the merits of the declaration sought by Pilbara have not been established by the proceedings in the Warden's Court, and have not been established by Pilbara's success in this appeal. A declaration is purely hypothetical if not made on facts as found or agreed.[169] Further, a declaration purporting to state the legal entitlements of a party must state the law correctly.[170] The statements made by senior counsel for Ammon referred to by Pilbara in [127] ‑ [128] above do not overcome this difficulty.
In the circumstances, the most appropriate course is to set aside the orders of the primary judge and the declaratory orders of the Warden dated 19 September 2014 (referred to in [13] above). Beyond that, the proceedings in the Warden's Court will need to be dealt with by another Mining Warden. If Ammon applies to amend the plaint as foreshadowed, no doubt the arguments now advanced by Pilbara might be brought to bear upon such an application. However, even if an amendment were disallowed, and Pilbara sought to have the proceedings dismissed, Pilbara would still need appropriate orders in terms of its counterclaim if it wished to obtain a declaration of its alleged entitlement and an order (presumably pursuant to cl 19.2 [171]the JVA)171 for the delivery up of an executed transfer in registrable form.

PILBARA IRON ORE PTY LTD -v- AMMON [2020] WASCA 92 (11 June 2020)

At a glance

Court

Decision date

Before

Source

Judgment (229 paragraphs)

The trial of the preliminary issues and sequelae

The trial of the substantive issues - March 2013

Legislation Cited (1)

Cases Cited (38)