Sempra Metals & Concentrates Corp v Tritton Resources Ltd [2006] NSWSC 1209

New South Wales Supreme Court

CITATION : Sempra Metals & Concentrates Corp v Tritton Resources Ltd [2006] NSWSC 1209 This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S) : 9, 10 & 13 November 2006

JUDGMENT DATE : 13 November 2006

JURISDICTION : Equity

JUDGMENT OF : Hamilton J

DECISION : Interlocutory injunction granted.

CATCHWORDS : EQUITY [338] – Equitable remedies – Injunctions – Interlocutory injunctions – Balance of convenience – Adequacy of damages – Whether damages, if awarded, are likely to be paid.

GE Capital Asset Services & Trading Asia Pacific Pty Ltd v Rocks Excavations & Plant Hire Pty Ltd [2003] NSWSC 99 CASES CITED : Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 Schering Pty Ltd v Forrest Pharmaceutical Co Pty Ltd [1982] 1 NSWLR 286 Meagher, Gummow and Lehane, Equity Doctrines and Remedies, 4th ed [21-210], [21-375]

Sempra Metals & Concentrates Corp (P) PARTIES : Tritton Resources Limited (D1) Carrington Facilities Pty Ltd (D2) Straits Resources Limited (D3)

FILE NUMBER(S) : SC 5482/06

A J L Bannon SC & A S McGrath (P) COUNSEL : R M Smith SC & J C Giles (D1 & 3) N J Beaumont (D2)

Henry Davis York (P) SOLICITORS : Corrs Chambers Westgarth (D1 & 3) Gadens Lawyers (D2)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HAMILTON J

MONDAY, 13 NOVEMBER 2006

5482/06 Sempra Metals & Concentrates Corp v Tritton Resources Limited & anor JUDGMENT - On application for interlocutory injunction 1 HIS HONOUR: This is an application for an interlocutory injunction to restrain the first defendant from selling or disposing of copper concentrate and copper ore otherwise than to the plaintiff. 2 The plaintiff is an international metals dealer. The first defendant conducts a copper mine near Nyngan in the State of New South Wales. The second defendant conducts a warehouse at Newcastle. The third defendant is the holding company of the first defendant as the result of a takeover. 3 The contract that is central to this matter is in its present form called the Second Amended and Restated Copper Concentrate Offtake Agreement between the first defendant and the plaintiff entered into on 12 December 2005 ("the agreement"). However, the agreement replaced in substantially similar terms an earlier agreement or agreements that went back as far as 2002. 4 Under clause 4.1 of the agreement, the first defendant must deliver and the plaintiff must accept 100 per cent of the concentrate produced at the Nyngan mine. It is to be noted that there is under the agreement no obligation on the first defendant to produce copper concentrate and there is no mention of copper ore. 5 The following matters are important background to the present conflict between the parties. At the time the agreement was entered into in December 2005, the copper price in London was about 70 cents a pound. It is now in the vicinity of $3.40 a pound. There is and at all material times has been a concentrator at or near the mine and the produce of the mine has to date been delivered to the plaintiff in the form of concentrate rather than ore. The concentrate is railed from Nyngan to Newcastle and stored to await shipment in the warehouse conducted by the second defendant. 6 The plaintiff relies on two separate bases for the interlocutory injunctive relief which it claims. The first is the breach of an implied negative stipulation in the agreement not to deliver concentrate from the mine to anyone other than the plaintiff. It also alleges that there is an implied negative stipulation not to deliver copper ore from the mine to anybody else. 7 Secondly, in relation to about 5,600 tons of ore actually in the warehouse at Newcastle, the plaintiff also relies on an arrangement whereby, upon the making of substantial prepayments in respect of that concentrate, title in that concentrate has already passed to the plaintiff. The plaintiff claims in respect of that concentrate, as well as an injunction to restrain breach of the negative stipulation in the agreement, an injunction to restrain conversion of its property. 8 In relation to the first of those claims, the first defendant alleges that any negative stipulation in the agreement is no longer operative because the agreement has been frustrated. It has filed in these proceedings a cross claim for a declaration of frustration. It may be noted that it is a term of the agreement that it is governed by the law of England and Wales, so that it is according to that law that the question of frustration will fall to be determined. 9 In relation to the second basis of claim, the first defendant concedes that title in 5600 tons of concentrate did pass from the first defendant to the plaintiff, but says that this concentrate has already been shipped away from Newcastle in MV Predator and is not the concentrate which is currently in the warehouse, in which it says title has not passed to the plaintiff. 10 The process to be engaged in in determining applications for interlocutory injunctive relief is, as the parties concur, that set out by McClelland J in Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 535 - 536. "As I see it, the position is as follows. Where a plaintiff's entitlement to ultimate relief is uncertain, the Court, in deciding to grant or refuse an interlocutory injunction, must consider what course is best calculated to achieve justice between the parties in the circumstances of the particular case, pending the resolution of the uncertainty, bearing in mind the consequences to the defendant of the grant of an injunction in support of relief to which the plaintiff may ultimately be held not to be entitled, and the consequences to the plaintiff of the refusal of an injunction in support of relief to which the plaintiff may ultimately be held to be entitled: see, eg, Appleton Papers Inc v Tomasetti Paper Pty Ltd [1983] 3 NSWLR 208 at 216; A v Hayden (No 1) (1984) 59 ALJR 1 at 4-5; 56 ALR 73 at 79. Where the uncertainty depends in whole or in part on a contested question of fact it is not appropriate for the Court to decide that question on the interlocutory application. Where the uncertainty depends in whole or in part on a contested question of law, it may or may not be appropriate for the Court to decide that question on the interlocutory application, depending on circumstances, eg, whether the question is novel or difficult, or is susceptible of resolution on the present state of the evidence, or whether the urgency of the matter renders it impracticable to give proper consideration to the question: see, eg, A v Hayden (No 1) (at 4; 78); Cohen v Peko-Wallsend (1986) 61 ALJR 57 at 59; 68 ALR 394 at 397. If the Court does decide the question of law the uncertainty is to that extent removed.