FEDERAL COURT OF AUSTRALIA

Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 2) [2015] FCA 429

THE COURT ORDERS THAT:

1.    The application is allowed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

Introduction and summary

1    The trial of this matter commences on 2 June 2015. It concerns a dispute about the control, possession, and ownership of port terminal facilities at the Port of Cape Preston. The respondents (the CITIC parties) are currently controlling and operating the Port terminal. They describe the litigation as being “of critical importance for one of the largest infrastructure projects ever undertaken in Australian mining history”. They say that the overall project cost has been $12 billion. It was common ground on this application that if Mineralogy is successful at trial then the $12 billion project will come to a halt. The CITIC parties estimate their cost of the litigation, which has involved discovery of around 50,000 documents, at around $6 million.

2    This application is by the CITIC parties for the Court to conduct an inspection (historically described as a “view”) of the Port and associated mine infrastructure. The inspection will take one day including travel time. The cost will be around $24,000. The time and cost involved in the inspection pales into insignificance when compared with the cost of the litigation and the importance of the issues to the parties. The CITIC parties also submit that a physical inspection is capable of assisting the Court’s understanding of the Port, the operation of the related facilities at the Project and the interconnectedness of those operations. My impression from the materials currently before me is that an inspection will assist, and possibly greatly assist, in my understanding of the photograph and documentary exhibits. Contrary to the submission by senior counsel for Mineralogy, there is little or no danger that an inspection might result in undue waste of time. I also consider that there is little danger of confusion arising from material alterations to the site. Rather, on the material before me it currently appears that an inspection will assist me to understand the dispute between the parties about the status of the construction of various facilities.

3    Mineralogy resists the application. In a 60 page affidavit (including annexures) affirmed by Mineralogy’s solicitor, he says that: (i) as a judge in the Supreme Court of Western Australia, I have been involved in four separate proceedings involving the Project, (ii) if evidence is to be given on-site during the view, it would disrupt the trial program, would be without notice and could cause prejudice to Mineralogy; and (iii) the issues raised by the CITIC parties in their defence do not need a view of the facilities.

4    As to (i), this is irrelevant. Mineralogy did not explain how it would be appropriate for me to rely upon any material led in any of the other proceedings. It would not be appropriate. In any event, I have never seen the physical site of the Port either in previous proceedings or otherwise. As to (ii), the proposed inspection does not require any evidence to be given without notice. It would be inappropriate for evidence to be led. Counsel will be able to make submissions at the view based upon the evidence (including expert evidence) already filed. Any issues that arise can be flagged during submissions at the inspection and addressed in cross-examination in the courtroom. As to (iii), I consider that the inspection will assist me to understand the questions being raised, and to follow the evidence and apply it. An inspection should be held.

Reasons why an inspection should be ordered

5    A description of an inspection given by Heydon J is “visits outside the courtroom to inspect some place or some thing which cannot conveniently be brought to court”: Evans v The Queen [2007] HCA 59; (2007) 235 CLR 521, 575 [196].

6    Rule 14.03 of the Federal Court Rules 2011 (Cth) provides for a general power for a party to apply to the Court to have the Court inspect any place, process or other thing that relates to a matter in question. Like the common law power that preceded this rule, it is a question of discretion: R v Delon (1992) 29 NSWLR 29, 34 (Priestley JA).

7    The discretion to order an inspection is governed by s 53 of the Evidence Act 1995 (Cth). Section 53(1) provides that, on application, a judge may order that a “demonstration, experiment or inspection be held”. There are qualifications to the exercise of the discretion to order an inspection which include the following:

(2)    A judge is not to make an order unless he or she is satisfied that:

(a)    the parties will be given a reasonable opportunity to be present; and

(b)    the judge and, if there is a jury, the jury will be present.

(3)    Without limiting the matters that the judge may take into account in deciding whether to make an order, the judge is to take into account the following:

(a)    whether the parties will be present;

(b)    whether the demonstration, experiment or inspection will, in the court's opinion, assist the court in resolving issues of fact or understanding the evidence;

(c)    the danger that the demonstration, experiment or inspection might be unfairly prejudicial, might be misleading or confusing or might cause or result in undue waste of time;

(d)    in the case of a demonstration--the extent to which the demonstration will properly reproduce the conduct or event to be demonstrated;

(e)    in the case of an inspection--the extent to which the place or thing to be inspected has materially altered.

8    As to s 53(2) and s 53(3)(a), the parties all have an opportunity to be present. The parties will also be represented by numerous counsel and solicitors.

9    Four other points should be made in relation to s 53(3)(b), s 53(3)(c), and s 53(3)(e) as well as the matters of proportionality that inform the exercise of my discretion.

10    First, conducting an inspection will have no effect on existing orders and no real possibility of surprise to either party. Initially, the CITIC parties proposed an inspection in which two of CITIC’s witnesses would be present and available for the limited purpose of pointing out relevant features at the site. Mineralogy’s opposition to this evidence being given at the inspection was that it would alter the manner in which evidence is given and potentially catch Mineralogy by surprise by any new evidence given. I accept that any new evidence from the witnesses, without notice, would have real potential for surprise. The issues raised by an application for an inspection are, therefore, very different from those raised by an application for a demonstration or an experiment. As for an inspection, “the rule is that a view is for the purpose of enabling the [Court] to understand the questions that are being raised, to follow the evidence and to apply it, but not to put the result of the view in place of evidence”: Scott v The President, Councillors and Ratepayers of the Shire of Numurkah [1954] HCA 14; (1954) 91 CLR 300, 313 (Dixon CJ, Webb, Kitto, Taylor JJ) quoting Lord Alverstone CJ in London General Omnibus Company Ltd v Lavell [1900] 1 Ch 135, 139. In London General Omnibus the Lord Chief Justice emphasised what ought to be plain: the view or inspection is not the evidence.

11    It is possible that in an appropriate case orders could be made for both (i) an inspection, and (ii) evidence to be given at the site of the inspection. But, in this case, orders have already been made by Barker J (on 1 April 2015) fixing the dates by which the witness statements and, in the case of experts, reports and affidavits must be filed. Mineralogy served its evidence on dates up to 20 April 2015. The CITIC parties were due to serve their evidence by the conclusion of business yesterday. Senior counsel for the CITIC parties said that all the evidence has been served save for one affidavit which will be served and filed today. Mineralogy’s purely responsive statements, affidavits or reports are required to be served by 13 May 2015. I do not consider that there is sufficient basis to depart from that timetable.

12    Another reason why I would not make orders in this case for evidence to be given at the site of the inspection is that counsel for both parties should be capable of making any point by way of submissions at the site of the inspection to assist with my understanding of the evidence. Prior to the inspection, the parties should exchange summaries of the submissions that they propose to make at the site. The submissions can refer to the proposed evidence in chief that has been filed. In the event that any dispute arises concerning the description or function of any of the physical structures referred to in submissions during the inspection then that dispute can be addressed in cross-examination of any of the witnesses by reference to photographs.

13    In written submissions last night and oral submissions this morning, the CITIC parties eschewed even the limited evidence and the narrow role that they had initially contemplated for the two witnesses at the inspection. They said that their counsel could make submissions pointing out relevant features during the inspection by reference to the maps that will be in evidence (and that will be provided in a convenient form for the participants on the view). They undertook to provide a summary of those submissions in advance and A5 booklets of the evidence that is proposed to be relied upon in submissions at the inspection. It would be appropriate for Mineralogy to do the same.

14    Secondly, on my preliminary, and necessarily limited, assessment of the trial materials, I consider that an inspection will assist my understanding of the photograph and documentary exhibits.

15    Mineralogy says that it is not possible this morning either for it, or the Court, to assess the nature and extent of any relevant disputes of fact and whether any assistance will be gained from an inspection. This is because the evidence from the CITIC parties was only served late yesterday as required by the Court’s orders. However, the purpose of an inspection is not to resolve disputed issues of fact. It is to assist in understanding the evidence.

16    There is evidence of photographs and diagrams of the site, exhibited to the affidavit of Mr Byrne filed by Mineralogy. The photographs and diagrams provide strong reasons in favour of an inspection. It is difficult to appreciate fully from them the perspective of the matters and things photographed. It is hard to understand from them the dimensions of scale. It is confusing to try to extrapolate from them what the CITIC parties describe as “the overall dimensions and interconnectedness of the CITIC Terminal and the Project which includes the mining operations and the processing plant, all connected with each other by a sophisticated series of conveyors and pipelines and with very limited stockpile buffers”. It may be that, as senior counsel for Mineralogy submitted, the consequences of termination of the control and possession of the CITIC parties is not in dispute. But an appreciation of those consequences will still be assisted by an inspection of the Port. The relevance of the consequences on the CITIC parties’ pleading is the plea by the CITIC parties for relief against forfeiture of its possession based on the allegation of disproportionate consequences of termination.

17    Apart from what I consider to be the likely benefits generally to an appreciation of the overall evidence, there are likely to be benefits in assessing particular aspects of the evidence. The CITIC parties point to two particular examples of relevant benefits.

18    One example of a particular benefit is the dispute between Mineralogy and the CITIC parties about whether there is any spare capacity of the barge loader. The CITIC parties explain that the barge loader is used to convey magnetite concentrate on to barges which are then tugged to offshore anchorages to be loaded on to Ocean Going Vessels using transhipment barges. Mineralogy says that the barge loader has spare capacity and relies on mathematical calculations based on a written environmental approval. Mineralogy says that the barge loader is operating only at 5 million tonnes per annum out of a capacity of 70 million tonnes per annum. The CITIC parties say that these calculations take no account of the practical realities of operating a barge loader. Whether or not this is correct, there is likely to be a considerable advantage to me if I have the opportunity of seeing a barge loader in situation rather than merely hearing abstract evidence about alleged practical realities based on photographs. The photographs and the evidence will be more readily understood by a three dimensional inspection.

19    A second example of a particular benefit to which the CITIC parties point is the dispute between the parties as to whether the CITIC parties have constructed three of 28 particular facilities: (i) a CCTV System; (ii) Site Offices used for Port Communications and Scheduling; and (iii) roads running along the Causeway on either side of the Causeway Conveyor, the access road to the MOF Wharf, the access road to the Service Wharf and the road along the Breakwater. Although no oral submissions were made about this particular benefit, an inspection could again permit an increased perspective of any photographic evidence or description of these facilities.

20    Thirdly, there is little danger of confusion arising from material alterations to the site. Senior counsel for Mineralogy did not suggest that this could occur. The development of the site has obviously progressed over time and any inspection can only provide an immediate picture of the site as it currently exists. But it will also provide a perspective with which to understand the process by which the site has developed and altered.

21    Fourthly, as I explained in the introduction to these reasons, there are issues of proportionality involved in this application. The inspection is estimated to cost around $24,000. There would also be additional legal costs associated with a day of trial time if that day were lost, but I consider that there are likely to be some commensurate savings in time when hearing the lay evidence and the expert evidence. Compared with the $24,000 cost, this litigation is of great significance to all parties, concerning the continuity of a multi-billion dollar project, and involving over 50,000 documents discovered, and a litigation cost running into millions of dollars.

22    Taken in perspective, there is no danger that an inspection might result in undue waste of time.

Conclusion

23    An inspection will be conducted early in the trial. Counsel for each party can make submissions during the inspection, including by reference to the tendered evidence. An outline of the proposed oral submissions should be exchanged in advance of the inspection.

24    As for the costs of the inspection, on one view those costs should be borne by the CITIC parties. The CITIC parties are the only parties who wish to have the inspection undertaken. Ultimately, however, I consider that both parties will benefit from the inspection. It will enhance the process and efficiency of the litigation. On the material currently before me I consider that the inspection will provide me with a visual picture which will provide a greater appreciation of the evidence and a better visual picture of the underlying physical substratum of the dispute. It is appropriate that as the moving party the CITIC parties pay the upfront costs of the inspection but those costs should be costs in the cause.

25    I will now hear from the parties about programming orders or orders to give effect to these reasons.

Associate:    

Dated:    8 May 2015