The recent judgment of the Supreme Court of Western Australia (Tottle J) in Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 8] [2015] WASC 473, which was delivered on 7 December 2015, has gained media attention due to the plaintiff company’s association with Clive Palmer MP (the Honourable Member for Fairfax and Palmer United Party federal leader), as well as the impact of the decision upon the community of Townsville.

It also serves as a timely reminder of the principles relating to interlocutory injunctions.


Mineralogy is a company founded and owned by Clive Palmer MP. It is engaged in the exploration and development of mineral resources and in particular iron ore. The application brought by Mineralogy in the present case was described as “a further episode of interlocutory disputation in protracted litigation between the participants in what is known as the Sino Iron Project (the Project) located in the Pilbara region of Western Australia”.

The primary relief sought by Mineralogy in the application was mandatory interlocutory injunction compelling the first to the third defendants (known as the “the CITIC parties”) to make immediate payment of US$48 million to Mineralogy or, in the alternative, an injunction which would have the effect of suspending operations on the Project.

The relevant clause in the agreements between Mineralogy and the various CITIC parties relied upon by Mineralogy to support the application for an injunction was:

“6.3 Commencement of production

(a) Unless prevented from doing so by an act, matter or thing outside of [the CITIC parties’] control, by the doing of, or failing to do, an act by Mineralogy under this Agreement or otherwise, or a failure to obtain all Government Approvals necessary for it to do so (provided it has used its best endeavours to obtain such approvals in a timely manner) [the CITIC parties] must produce no less than 6,000,000 (six million) tonnes of Product no later than 7 years from the date of this Agreement.

(b) If [the CITIC parties] fails to comply with paragraph (a) then it must … pay to Mineralogy an amount equivalent to the Mineralogy Royalty payable on the amount of Magnetite Ore required to produce 6,000,000 (six million) tonnes of iron ore concentrate.”

Mineralogy relied upon expert evidence from a qualified mining engineer and a chartered accountant to establish that it is owed an amount of US$48 million pursuant to clause 6.3(b).


The principles governing the determination of interlocutory injunctions are well established.  As re-stated by Tottle J, those principles include:

  • The two main inquiries are whether the plaintiff had made out a prima facie case [or ‘serious question to be tried’] and whether the balance of convenience [or ‘balancing of the risks of injustice’] favours the grant of the injunction.
  • The grant of an injunction involves balancing the injustice which might be suffered by the defendant if the injunction is granted and the plaintiff later fails at trial, against the injustice which might be suffered by the plaintiff if the injunction is not granted and the plaintiff later succeeds at trial.
  • The strength of the plaintiff's case and the balance of convenience are to be considered together. As the apparent strength of the plaintiff's case diminishes, the balance of convenience moves against the making of an order.

In addition, the court observed that when determining where the balance of convenience lies the court may take into account the rights or interests of third parties that may be affected and, where appropriate, 'detriment that might be caused to third persons or to the public generally if an injunction were refused'.


As is not uncommon in interlocutory injunction cases, the CITIC parties conceded that there was a serious question to be tried as to their liability to make royalty payments under clause 6.3 (although no concession was made in relation to the quantum of such claim). Accordingly the issue in dispute on this application was whether the balance of convenience (or balancing of the risks of injustice) favoured the grant of injunctive relief.

Mineralogy claimed that damages were not an adequate remedy because of the harm that it and five other entities or groups would suffer if the injunction was refused.

Mineralogy contended that it would be harm in various ways including:

  1. the failure to grant the mandatory injunction in the sum of US$48 million will detrimentally affect its ability to pay legal costs associated with this action and five other actions (which legal costs were estimated to be $10.75 million over the next 12 months). Accordingly, it said that its right to pursue those legal proceedings was prejudiced.
  2. A refusal to grant the injunction sought will jeopardise the jobs of 14 of its staff.

In relation to the alleged detriment that will be caused to Mineralogy if the injunction was refused, the evidence was that Mineralogy had met with executives of 'the big four Australian banks' in September and October 2015 and was told that its assets in the form of mineral deposits (valued at A$78 million at 30 June 2015) would not be adequate security for borrowings.  However, the court noted that there was no of evidence as to the possibility of Mineralogy raising funds or financing its obligations by alternate means such as “assets sales; equity finance; farm outs or joint venture arrangements”. In the circumstances, the court was  “left with the impression that Mineralogy has overstated its inability to fund its activities”.

Amongst the third parties which Mineralogy claimed would suffer if the injunction was not granted was Queensland Nickel Pty Ltd (QN) together with the people of Townsville. QN operates a nickel refinery near Townsville, Queensland and was said to be the town's largest private employer. QN has, in the past, relied on Mineralogy for loans when required.  Mineralogy claimed that the price of nickel has dropped substantially in recent times, as a consequence of which QN is experiencing a liquidity crisis. Mineralogy further claimed that QN urgently requires a cash injection of $28 million to avoid the closure of its refinery, job losses for up to 767 employees and to avoid being placed into administration.

In relation to the alleged detriment that will be caused to QN and the community of Townsville generally if the injunction was refused, the court observed:

  • No evidence had been given about attempts to source finance other than from major retail banks or to rationalize QN’s operations otherwise than by closing the refinery and terminating the employment of its entire workforce.
  • No evidence had been given of QN discussing with an appropriately qualified insolvency practitioner the wisdom of taking the extraordinary step of terminating the employment of all employees of QN before putting the company into administration. The court expected that such a decision “would be made in conjunction with the prospective administrator”.
  • In the circumstances, the court was prepared to accept “that there is a risk that QN may be placed into administration, but … (not) that the dire consequences outlined … will flow from QN being placed into administration”.

Ultimately the court concluded that the injunction should not be granted for the main reason “there is no basis in principle upon which a court can order that a payment be made to a plaintiff in respect of a claim for damages before the claim is determined”. In addition, the court considered that the potential harm relied upon by Mineralogy did not tip the balance of convenience/injustice in its favour.


  • Obtaining a mandatory injunction which in effect compels payment of damages in advance of a trial will be a very substantial, if not an impossible obstacle. Such was the nature of the relief sought by Mineralogy in the present case, which the court characterised as “highly unusual”.
  • Where an applicant for an injunction claims:
  1. that an award of damages at the conclusion of the trial will not be an adequate remedy because dire consequences may flow to the applicant and to third parties if injunctive relief is not granted; or 
  2. that the applicant has pursued and exhausted all alternate means of raising funds or financing its obligations,

a court will consider very carefully the cogency of such claims and the evidence in support.

[Postscript: on 15 January 2016, QN confirmed that it will lay off 237 workers and on 18 January 2016, the company went into voluntary administration.]