FEDERAL COURT OF AUSTRALIA

Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 3) [2015] FCA 542

THE COURT ORDERS THAT:

1.    The Attorney General for the State of Western Australia be granted leave to intervene in the proceedings to make written and oral submissions on matters of law arising from the terms of the agreement to which it is a party.

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

REASONS FOR JUDGMENT

Introduction

1    On 7 May 2015, the Attorney General for Western Australia applied for leave to intervene in these proceedings. That application was adjourned to today, the first day of the trial. The Attorney’s application for leave to intervene is limited to making submissions concerning the construction of contractual provisions of a State Agreement to which the parties include the State of Western Australia, Mineralogy, Sino Iron (as it is now named), and Korean Steel. The State Agreement is Schedule 1 to the Iron Ore Processing (Mineralogy Pty Ltd) Agreement Act 2002 (WA). The State Agreement was entered into on 5 December 2001. It is one of a number of agreements which the respondents to this action, the CITIC parties, say are interconnected.

2    Mineralogy opposes the intervention. Although Mineralogy has filed 99 pages of opening submissions, it says in response to this intervention application that its case can be “stated simply”. That simple statement of its case is that Mineralogy granted the CITIC parties the right to mine magnetite ore in the Pilbara on terms that (i) the CITIC parties would build a port at Cape Preston and (ii) that the port would be controlled by Mineralogy. Mineralogy asserts that its right to control the port derives from the terms of Facilities Deeds between it and the respondents, which later became the CITIC parties. Mineralogy says that the port was to be used by CITIC and potentially other parties to ship magnetite ore overseas. The CITIC parties built the port and have commenced the mining and export of magnetite ore. Mineralogy says that the CITIC parties have breached the Facilities Deeds by excluding Mineralogy from the facilities at the port. Mineralogy seeks relief including an order that the CITIC parties vacate part of the port area.

3    In its opening submissions, Mineralogy accepts that central to the defence of the CITIC parties is questions of construction and implication arising from the terms of the State Agreement. This is certainly a matter pleaded by the CITIC parties in para 14 of their Defence. However, the construction of the State Agreement is not limited to matters raised by the CITIC parties. Relief which Mineralogy seeks includes a declaration concerning construction of agreements, which include the State Agreement. But Mineralogy says that the State, which is a party to the State Agreement, has no “direct interest” in the proceedings. Mineralogy says that the State should not be given leave to intervene. As I explain below, that submission must be rejected. Leave to intervene will be granted.

Mineralogy’s curious opposition to the intervention application

4    Mineralogy’s opposition to the intervention of the Attorney General is curious for three reasons.

5    First, there is, at the very least, a tension between (i) Mineralogy’s submission that the “central” defence of the CITIC parties involves construction of the State Agreement (an issue upon which Mineralogy focuses numerous pages of its opening written submissions) and (ii) Mineralogy’s submission that the State, a central party to the State Agreement, does not have a sufficient interest to intervene in the proceedings.

6    Second, Mineralogy’s opposition is curious because an issue raised against Mineralogy is that it is not entitled to the injunctive or declaratory relief that it seeks because the State of Western Australia is not a party to these proceedings. Mineralogy’s response to this submission has not been to join the State of Western Australia as a party. Instead, Mineralogy has opposed even the limited intervention sought by the Attorney General that, on one view, might have gone some way to meeting this argument.

7    Mineralogy submits that the Attorney General should not be given leave to intervene and further submits that this Court should exercise its discretion to grant an injunction or declaratory relief despite the absence of the State as a party and despite any opportunity for the State to make submissions. This is because the CITIC parties have not specifically pleaded any third party bar to this relief. Even on the assumption (which has not been argued) that the interests of third parties is a matter that should be pleaded in a defence, it is unclear why this point cannot now be raised for the purposes of this application. Mineralogy cannot assert that it is unaware of the interests of the State in relation to questions of construction of the State Agreement. Not only does Mineralogy focus parts of its submissions upon the case of the CITIC parties concerning construction and implication in the State Agreement but Mineralogy itself pleads as material facts the entry into, and terms of, the State Agreement in paras 8, 10 of its Statement of Claim. Mineralogy also sets out, over four pages of an annexure to its reply, various provisions of the State Agreement.

8    Third, it is possible that if the Attorney General were not given leave to intervene then any orders ultimately made in Mineralogy’s favour might be set aside on appeal for a failure to afford natural justice to the State of Western Australia. With the amount of time and effort that this litigation has consumed, this could hardly be a consequence desired by Mineralogy. An arguable example of this scenario might be if Mineralogy’s submission were accepted that it has power to terminate the Facilities Deeds even if that means that the continuous operation of the Sino Iron Project is interrupted. However, the State of Western Australia maintains that the State Agreement would be breached if this Court determined that the Facilities Deeds had been terminated and Sino Iron lost its right to possession. To deprive the State of the opportunity even to make that submission before making such an order might amount to a denial of natural justice.

The test for intervention in rule 9.12 of the Federal Court Rules 2011 (Cth)

9    Rule 9.12 of the Federal Court Rules is concerned with applications for intervention. It provides as follows:

Interveners

(1)    A person may apply to the Court for leave to intervene in a proceeding with such rights, privileges and liabilities (including liabilities for costs) as may be determined by the Court.

(2)    The Court may have regard to:

(a)    whether the intervener's contribution will be useful and different from the contribution of the parties to the proceeding; and

(b)    whether the intervention might unreasonably interfere with the ability of the parties to conduct the proceeding as the parties wish; and

(c)    any other matter that the Court considers relevant.

(3)    When giving leave, the Court may specify the form of assistance to be given by the intervener and the manner of participation of the intervener, including:

(a)    the matters that the intervener may raise; and

(b)    whether the intervener's submissions are to be oral, in writing, or both.

10    Rule 9.12 is not expressed in the older language of requiring a person to be a “necessary or proper party” before that person would be joined to the action. That older rule was the origin of the “direct interest” test discussed below.

11    In Roadshow Films Pty Ltd v iiNet Limited [2011] HCA 54; (2011) 248 CLR 37, 38 [2] – [4], a joint judgment of the High Court reiterated remarks of Brennan CJ in Levy v Victoria [1997] HCA 31; (1997) 189 CLR 579, 600-605, and explained as follows:

A non-party whose interests would be directly affected by a decision in the proceeding, that is one who would be bound by the decision, is entitled to intervene to protect the interest likely to be affected. A non-party whose legal interest, for example, in other pending litigation is likely to be affected substantially by the outcome of the proceedings in this Court will satisfy a precondition for leave to intervene. Intervention will not ordinarily be supported by an indirect or contingent affection of legal interests following from the extra-curial operation of the principles enunciated in the decision of the Court or their effect upon future litigation.

Where a person having the necessary legal interest can show that the parties to the particular proceedings may not present fully the submissions on a particular issue, being submissions which the Court should have to assist it to reach a correct determination, the Court may exercise its jurisdiction by granting leave to intervene, albeit subject to such limitations and conditions as to costs as between all parties as it sees fit to impose.

The grant of leave for a person to be heard as an amicus curiae is not dependent upon the same conditions in relation to legal interest as the grant of leave to intervene. The Court will need to be satisfied, however, that it will be significantly assisted by the submissions of the amicus and that any costs to the parties or any delay consequent on agreeing to hear the amicus is not disproportionate to the expected assistance.

12    This passage from the High Court has also been applied in the context of the Federal Court Rules: Congoo v State of Queensland [2013] FCA 1113 [20] (Logan J); Hua Wang Bank v Commissioner of Taxation [2013] FCAFC 28 [51] (Logan, Jagot and Robertson JJ).

13    In Roadshow Films the High Court can be understood to be saying that the requirement of “direct interest” will establish an entitlement to intervene, but if there is no direct interest then leave to intervene may be granted if the non-party’s legal interest is “likely to be affected substantially by the outcome of the proceedings”. However, an indirect interest, following from the extra-curial operation of a decision or its effect on future litigation is not sufficient.

14    Consistent with this is the discussion of Brennan CJ in the decision followed by the High Court in Roadshow Films. In Levy v Victoria [1997] HCA 31; (1997) 189 CLR 579, 603, Brennan CJ explained the reasons why “an indirect affection of legal interests enlivens no absolute right to intervene” before explaining the circumstances in which “the necessary legal interest” might permit a discretionary grant of leave to intervene.

15    I do not accept Mineralogy’s submission that leave to intervene will only be granted where a party’s interests are directly affected. Nevertheless, it is clear that the less direct the interest of the non-party, the more unlikely it will be that intervention will be allowed. See also Comcare v Martinez [2013] FCA 160 [14] (Robertson J).

The State Agreement

16    The CITIC parties plead that the State Agreement provides that:

(1)    the provisions of this Agreement shall take effect notwithstanding the provisions of the Subsidiary agreements;

(2)    the Subsidiary agreements are defined to include the Facilities Deeds; and

(3)    the Facilities Deeds are subject to the State Agreement.

17    The Attorney General proposes to focus part of his submissions on cl 7(6) of the State Agreement which provides that:

In respect of each proposal hereunder the Project Proponents in relation thereto shall subject to and in accordance with the EPA Act and any approvals and licences required under that Act implement the approved proposals in respect of the Project in accordance with the terms thereof and subject to marketing arrangements and reasonable maintenance and operational shutdown requirements the Project Proponents shall ensure continuous operation of the Project.

18    The Attorney General’s proposed submissions include a submission that cl 7(6) requires the Proponents (including Mineralogy) to (i) “continuously operate” the Project; and (ii) comply with the terms of the approval, including how the Project is to be undertaken. The Attorney General submits that if Mineralogy is correct in its construction of the Facilities Deeds then both Mineralogy and the Co-proponents will be in direct and irremediable breach of their obligations under the State Agreement.

The State of Western Australia has a sufficient interest in the proceedings

19    The existence of a power to grant leave to intervene even where a person has no “direct interest” means that decisions on intervention do not need to turn upon nice questions of whether a “direct interest” exists. The meaning of a direct interest is commonly traced to the decision of Lord Diplock in Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52, 55. In the context of considering whether a person should be joined as a party, Lord Diplock spoke of the rule of English civil procedure concerning the joinder of necessary or proper parties and said that “[a] better way of expressing the test is: will his rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action?” This test has been said to involve “matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected”: News Ltd v Australian Rugby Football League Ltd [1996] FCA 870; (1996) 64 FCR 410, 525 (the Court).

20    It is not necessary for this application to decide whether the State of Western Australia is “directly affected” by these proceedings. It is, however, noteworthy that in both Pegang and News Ltd, persons were found to have a direct interest even though they were not parties to the contracts which were the subject of the litigation. Their interests were directly affected because the court’s decision would directly affect their rights; in Pegang under a licence to enter land and win minerals and in News Ltd the employees’ freedom to choose the employer for whom they would work.

21    It suffices to say that I am satisfied that the State of Western Australia has a sufficient interest in the subject matter of these proceedings for leave to be granted for the Attorney General to intervene. The construction of the State Agreement will be an important part of this trial. Indeed, one ground of relief sought by Mineralogy, ground 2, seeks a declaration that Mineralogy “has an entitlement to possession and control of the Port and an entitlement to possession, control and ownership of the Facilities thereon within the Circled Area in accordance with the terms of the Project Agreements”. The Project Agreements include the State Agreement. As a party to the State Agreement, the State of Western Australia has a strong interest in that question of construction. Ms Young cogently described two ways in which questions of construction will affect the State’s rights. These include (i) how the State Agreement will allow approved proposals to be implemented or changed and (ii) the consequences of breach of the State Agreement.

22    The consequences of the construction adopted in these proceedings may have a significant practical effect on the rights of the State of Western Australia under the State Agreement. Indeed, in previous proceedings in the Supreme Court of Western Australia, the Attorney General has been given leave to make submissions where the claim concerned the proper construction or operation of the State Agreement: Mineralogy Pty Ltd v The Honourable Warden K Tavener [2014] WASC 420 [26] (Allanson J).

23    I also take into account that on my preliminary assessment of the written submissions, the submissions of the Attorney General will not be merely repetitive of the submissions of the CITIC parties or Mineralogy. This is unsurprising. The interests of the State of Western Australia and the interests of the CITIC parties do not coincide precisely. Even in relation to matters of legal authorities it is likely that the submissions of the Attorney General will be useful. For instance, in the section of Mineralogy’s written submissions concerning interpretation and implication of terms, Mineralogy relies primarily on authorities from English courts and the Privy Council. The submissions of the Attorney General focus upon authorities of Australian courts and, in particular, the High Court of Australia.

24    I am also content to proceed for the purposes of this application on the assumption that Mineralogy’s submission is correct and an effect on the State’s rights might only occur if an event, namely the cessation of operations at the port, occurs due to the termination of the Facilities Deeds. Even on this assumption, the construction of the State Agreement in light of the Facilities Deeds might have a real and substantial effect on the rights of the State, even if the State’s rights upon cessation of the Project are also arguably a breach of cl 7(6) of the State Agreement.

25    Finally, the submissions of the Attorney General will not interfere with the trial timetable and will not affect the ability of the parties to conduct the proceedings as they wish.

Conclusion

26    The Attorney General for the State of Western Australia has leave, to the extent that it is required, to intervene in these proceedings to make written and oral submissions concerning the construction of contracts to which it is a party and the effect of that construction on other contracts. The limited nature of this intervention naturally reflects the late intervention of the State in these proceedings and the need to preserve the trial timetable. By this grant of leave, I say nothing about the issue of whether Mineralogy’s claim for declaratory or injunctive relief is barred due to the inability of the State to lead any evidence or cross-examine any witnesses. Finally, neither Mineralogy nor the Attorney General relied upon or made reference to rule 9.05(1)(a) or rule 9.05(1)(b)(ii) of the Federal Court Rules. It is not necessary to consider those sub-rules.

Associate:    

Dated:    2 June 2015