Chameleon Mining NL v Murchison Metals Ltd [2009] FCA 137 (5 February 2009)

Last Updated: 24 February 2009

FEDERAL COURT OF AUSTRALIA

Chameleon Mining NL v Murchison Metals Ltd [2009] FCA 137

PRACTICE AND PROCEDURE – application for leave to file expert evidence – filing of expert evidence would have effect of vacating trial date – delay by plaintiff in seeking to adduce expert evidence – no explanation by plaintiff of reasons for delay – prejudice to defendants – some losses cannot be compensated by costs order – application for leave denied

Black & Decker (Australasia) Pty Ltd v GMCA Pty Ltd [2007] FCA 1623 followed
Ingot & Ors v Macquarie & Ors [2004] NSWSC 1219 referred to
Micallef v ICI Operations Pty Ltd & Anor [2001] NSWCA 274 referred to
Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 referred to

CHAMELEON MINING NL v MURCHISON METALS LTD ACN 078 257 799, PHILLIP FELICE GRIMALDI, GREGORY BENNETT BARNES, CROSSLANDS RESOURCES LTD ACN 061 262 397 and PINNACLE NOMINEES PTY LTD ACN 008 928 443
NSD 2355 of 2007

JACOBSON J
5 FEBRUARY 2009
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2355 of 2007

BETWEEN:

CHAMELEON MINING NL Plaintiff

AND:	MURCHISON METALS LTD ACN 078 257 799 First Defendant PHILLIP FELICE GRIMALDI Second Defendant GREGORY BENNETT BARNES Third Defendant CROSSLANDS RESOURCES LTD ACN 061 262 397 Fourth Defendant PINNACLE NOMINEES PTY LTD ACN 008 928 443 Fifth Defendant

JUDGE:	JACOBSON J
DATE OF ORDER:	5 FEBRUARY 2009
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The application to adduce further evidence is dismissed.
2. The plaintiff pay the costs of today’s application.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2355 of 2007

BETWEEN:

CHAMELEON MINING NL Plaintiff

AND:	MURCHISON METALS LTD ACN 078 257 799 First Defendant PHILLIP FELICE GRIMALDI Second Defendant GREGORY BENNETT BARNES Third Defendant CROSSLANDS RESOURCES LTD ACN 061 262 397 Fourth Defendant PINNACLE NOMINEES PTY LTD ACN 008 928 443 Fifth Defendant

JUDGE:	JACOBSON J
DATE:	5 FEBRUARY 2009
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. The plaintiff sought leave to file three categories of expert evidence, but in the course of argument this afternoon, has modified the claim as set out below. The defendants oppose leave being granted.
2. These proceedings were commenced on 29 November 2007 and the Statement of Claim which was prepared was obviously prepared with meticulous and comprehensive thoroughness. It covers approximately 100 pages. I do not need to set out the substance of the claim.
3. The plaintiff was initially represented by Messrs Atanaskovic Hartnell, solicitors, but on 5 November 2008, the plaintiff withdrew instructions from that firm and instructed Messrs Piper Alderman. There was some delay in Piper Alderman obtaining the plaintiff’s file from the former solicitors and the file was not obtained until 5 January 2009. Nothing which I am about to say should suggest that there is any criticism whatsoever of Messrs Piper Alderman or indeed of Atanaskovic Hartnell in the conduct of these proceedings.
4. The matter was listed for hearing on a provisional basis for 30 March 2009. It was listed late last year, on 27 November 2008.
5. The application to adduce the expert evidence was supported by an affidavit of Ms A. K. Banton, who is a partner in the firm of Piper Alderman. The three categories of evidence which the plaintiff wishes to adduce may be briefly summarised as follows. First, valuation evidence in relation to the Cadetta tenements. I will return to this issue shortly. Second, tracing evidence relating to the use of funds which were allegedly obtained improperly by the first defendant, Murchison Metals Limited, through the Cadetta contract or Cadetta arrangement. Third, evidence in support of the claim for damages or an account of profits.
6. Mr Withers, who appears for the plaintiff, abandoned the application to seek expert evidence on the tracing issue. He seeks to accommodate the third category of documents by making what might be called an informal application to split the trial so that the issue of damages and an account of profits would be deferred, pending the court’s consideration of the issue of liability.
7. The valuation evidence which is sought in relation to what has been called the “Cadetta deal” is set out in [81] of the Statement of Claim:

81. At the time of the Cadetta Deal:
(a) the value of the Cadetta shares was completely disproportionate to the value of the Chameleon shares and the Chameleon Options offered by Chameleon in exchange for those Cadetta shares under Chameleon’s Bidder’s Statement for Cadetta as pleaded in paragraph 78 above, and at all events the value of the Cadetta tenements in May 2004 was no more than approximately $274,000;
(b) in the alternative, if Cadetta was not the owner of the Cadetta tenements in May 2004, the Cadetta shares which Chameleon offered to purchase under Chameleon’s Bidder’s Statement for Cadetta were worthless.

8. It can be seen from this paragraph that the claim in relation to the Cadetta tenements is put on two separate bases. Firstly, that the Cadetta tenements were worthless and secondly, in the alternative, that the Cadetta tenements were worth no more than approximately $274,000. The valuation evidence which is sought to be adduced relates only to the alternative basis upon which the claim is made.
9. In considering the application to adduce evidence on this topic, it is relevant to bear in mind that this is not a case in which there is failure to comply with an existing timetable. What the plaintiff seeks is an indulgence. Nevertheless, the indulgence will have the effect of vacating the hearing date. It is therefore relevant to balance the prejudice which the applicant alleges against the prejudice to the respondents to the proceedings.
10. As McDougall J said in Ingot & Ors v Macquarie & Ors [2004] NSWSC 1219 at [21], the principles stated by Heydon J in Micallef v ICI Operations Pty Ltd & Anor [2001] NSWCA 274 at [63] and [64] need to be taken into account. What Heydon J there said is that justice is the paramount consideration in determining such an application, and this may not necessarily result in complete justice to the party who is in default. Heydon J also pointed out that the ultimate obligation of the court is to strive to attain justice between the parties.
11. The plaintiff’s application relies substantially on the principles stated by the High Court in Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146. However, in Black & Decker (Australasia) Pty Ltd v GMCA Pty Ltd [2007] FCA 1623, Finkelstein J observed at [2] that:

[P]arties do incur losses resulting from delay that can never be compensated by a costs order.

12. His Honour also made the following pertinent observations at [4] and [5]:

It is time that this approach is revisited, especially when the case involves significant commercial litigation. One of the primary objects of a commercial court is to bring the litigants’ dispute on for trial as soon as can reasonably and fairly be done. If, in some instances, the preparation of the case is not perfect so be it. A case that is reasonably well prepared is just as likely to be decided correctly as a perfectly prepared case.

I am of the firm view that parties should not be treated as leniently as they have been in the past. Commercial parties expect this approach from the courts and their expectation should be met. A useful rule to adopt is to allow an extension only if the failure to meet the existing timetable is the result of excusable non-compliance. In deciding whether there is excusable non-compliance the court should take into account, among other factors: (a) the direct and indirect prejudice to the opposing party; (b) the impact of the delay on the proceedings; (c) the reasons for the delay; (d) good faith or lack of good faith on the part of the party seeking to be excused; and (e) the effect of putting off a trial both on other litigants and generally on the court’s ability to efficiently manage its cases.

13. It seems to me that, applying those principles, I ought to refuse to grant leave for two principal reasons. First, this case was commenced by statement of claim filed nearly 15 months ago. The allegations made in [81] have been known to all the parties ever since then. Particulars were sought by the second defendant in March 2008 and the plaintiff responded by stating that “this is a matter of evidence”. Notwithstanding this, no evidence was filed on the question of valuation by the former solicitors before their retainer was withdrawn in November 2008. No explanation has been given for why there was a failure to adduce evidence on this question.
14. It seems to me that I am entitled to infer that a decision must have been taken by the former solicitors that expert evidence was not to be called on that issue, particularly in light of the fact that it is an alternative to the primary claim made in [81].
15. It may be that the new solicitors have taken a different view but, in the absence of any explanation as to why evidence was not adduced in the 12-month period from November 2007 to November 2008, I do not see that it would be a proper exercise of my discretion to grant the application.
16. The second reason is that this is a commercial cause in which serious allegations are made by a publicly-listed company against the first defendant, which is also a publicly-listed company and against the other parties to the proceedings. The effect of any further delay in the hearing of this matter will be of severe prejudice to the first defendant because it is unable to deal with the tenements which are the subject of the proceedings until the matter has been determined. That cannot be allowed to continue for any longer and it is imperative that the matter be heard at the earliest possible date.
17. That was why I set the matter down for hearing on 30 March 2008. Moreover, the serious allegations that are made against the other defendants are also matters which must be taken into account in weighing the competing prejudices.
18. It is true that, as has been conceded by the defendants, valuation evidence would be relevant. Nonetheless, I am entitled to infer that there would be other means available to the applicant of dealing with the issue of valuation without now seeking to obtain a valuation in 2009 to deal with what is said to be the value of the properties in 2004.
19. There are a number of other matters raised in written submissions which go to the preparation for the hearing. The most significant is a request for leave to issue subpoenas. However, no draft schedules to the subpoenas were supplied and the issuing of subpoenas is subject to the leave of the court. I would not grant leave to the applicants generally to issue subpoenas. If schedules are supplied on short notice I will deal with that application in chambers.
20. There was no formal application to split the trial. In the absence of such an order, the trial is to proceed on the basis that both liability and quantum are to be determined.
21. I will order the plaintiff to pay the costs of today’s application.
    

I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

Associate:

Dated: 5 February 2009

Counsel for the Plaintiff:	C H Withers
Counsel for the First and Fourth Defendants:	S Penglis
Counsel for the Second Defendant:	P R Whitford SC
Counsel for the Third and Fifth Defendants:	H Stowe

Date of Hearing:	5 February 2009
Date of Judgment:	5 February 2009