Dagi v Broken Hill Proprietary Company Limited; Gagarimabu v Broken Hill Proprietary Company Limited [2000] VSC 486

Dagi v Broken Hill Proprietary Company Limited; Gagarimabu v Broken Hill Proprietary Company Limited [2000] VSC 486 - VSC 2000 case summary — Zoe

[5]

In June of 1996 the defendants, the plaintiffs and others entered into an agreement for the purpose of settling those proceedings and resolving the issues between the parties. The plaintiff Gagarimabu claims that the agreement was made between him and group members on the one hand and the defendants, and certain other persons named in the agreement on the other. The agreement is claimed to be conditional upon the execution of terms of settlement which were themselves in writing and executed on 7th June 1996. The statement of claim in the group proceeding claims that the action is brought by Gagarimabu for himself but also as representing certain parties to the agreement made with BHP and O.T.M.L. in June 1996, the names of whom are set out in seven schedules to the statement of claim. It did not seem to be much in dispute in the matter before me that most of the signatories to the agreement were clan leaders in Western Papua New Guinea and the execution by whom of the relevant documents in June 1996 appears to have been viewed as binding members of the clan and the clan leaders. This occasions no surprise, as one might have expected that the defendants when settling the proceeding would be seeking to bind all the persons living on or about the rivers, on which much of their subsistence depended, to the agreement which was then made to settle the proceeding. Claims made both in the previous proceeding and this proceeding are to the effect that the second defendant had conducted mining operations at the Ok Tedi copper mine since May 1984 and that since 1987 BHP had managed and controlled the mining operations of the second defendant. BHP owns 52 per cent of the shares in the second defendant. The plaintiff in the group proceeding claims that under the terms of the agreement the defendants and others including the plaintiff were obliged to make public announcements of the resolution of the issues in approved form and that BHP publicly announced its commitment to reduce the environmental impact of the mine project on the land and the lives of the people in the development area. It is claimed that the parties confirmed support for an independent inquiry into tailings' disposal announced by the Papua New Guinea Government earlier and that BHP would implement any technical and economically feasible tailings' retention scheme recommended by an independent inquiry. It is claimed that by the agreement the first and second defendants committed themselves to implementing the obligations dealt with by them in the public statements and alleges that, notwithstanding the availability of an economically and technical feasible tailings' option (the tailings' pipeline and storage system), the defendants have failed to commit to that implementation which has never come about. Reliance was also placed on alleged admissions by the first defendant about the environmental impact, and on a number of documents.

[19]

It is true that the definition in the Terms of "released claim" must be considered in the context of the application which I now address. That does draw in formidable issues as to construction, in this uncommon context. It is also true that, as a commencing point at any rate, the inclination of the mind is to favour that the right and left hands cannot simultaneously act against each other to common purpose. Submissions concerning this are more potent in relation to arguments concerning damages for breach. In support of these submissions, Mr Burnside referred to the decision of Goldberg, J. in Workout Gym Pty. Ltd. v. Crackerjack Investments Pty. Ltd.[2]. His Honour's reproduction of the applicable principles in this type case is beyond criticism but given the circumstances there prevailing (rectification) I am not much aided by his decision, having regard to the factual matrix here. As I have already indicated, the defence argument is that this debate must be left to the trial. Mr Archibald Q.C. for the first defendant submitted that the adduction of evidence might make the point of paragraph 20 of his client's defence good. That is, on the basis of well-known, and authoritative principles (which I decline to refer to in specie, so fundamental as they are that they hardly admit of reiteration), namely that the contention must be reasonably arguable, not hopeless. He simply put it that the issue of what was the extent of any enforceable obligation against his client under the release, or the terms, is a matter for another day, in particular, the conclusion as to whether the obligation of his client precedes other issues of contrary obligation. This is another way of saying that the ambit and the meaning of the release clauses are critical to the issue. It was thus put that the impact of evidence bearing upon the subject matter and the presumed obligations on either side was vital, and inevitable. The release clause could not be looked at either separately, only in conjunction with the other parties' obligations and in complete context. This context, he argued, included the definition of "release". He also put it that the settlement involved many matters, including arguably damages for the future, after the date of the release.

[28]

Mr Archibald argued that the statement of claim pleaded a breach by the defendants of an obligation owed to all of the claimants, that is, jointly. He submitted it was not a joint and several obligation, putting it that his client had only one set of obligations, owed to all. He pointed to the fact that the claimants all claimed damage to their land. Thus, when a breach is said to consist of a failure to observe obligations that are jointly owed to the other parties, all those who are affected must join in to enforce the breach. He said this was all the more so when specific performance was claimed as relief. If any party declined to join, that party had to be joined as a defendant. In this context, he put it that the precise location of the land upon which the plaintiff proposed the pipelines and tailings' disposal or storage system be constructed was not specified, but before specific performance and/or a mandatory injunction could be ordered by the Court, all requisite governmental and other regulatory approvals, and the consent of the owners of the land on which the facility is to be constructed, would have to be sought and obtained by the plaintiff. He suggested (and Mr Scerri did so also) that some of the persons or clan members upon whose land the plaintiffs proposed "tailings' pipeline and storage system or equivalent waste management option" would be or might be within the class of potential group members. Thus some members of the class of potential group members would include persons whose land would not be the subject of such works and some might be. Before relief by way of specific performance and/or a mandatory injunction was claimed, all group members whose land was potentially subject to the construction works were necessary parties, to be bound by any judgment given by the Court. Thus they should not be permitted to opt out. This argument in part looked ahead to the next stage, although in terms of the matters I should now address as to whether the proceeding should be permitted to proceed as a group proceeding, it is a matter that can fall for consideration.

[40]

He put it that the alternative to a representative action is a large number of individual actions, all seeking to enforce the same agreements and the same circumstances. He argued that having regard to the terms of the agreement it would necessarily be part any of the orders by way of specific performance that any requirement to construct a tailings' treatment system would itself be subject to the conditions of the agreement, that is, that the option was economically or technically feasible. Thus he argued that the rights of affected landowners would not be adversely affected because the relief by way of the agreement was subject to their rights. He claimed that no proposal that might have an effect on the land of some of the members of the group could go ahead, without their approval being given, not because of the group proceeding but because of the obligations assumed under the agreement. He accepted that there were real complexities with respect to the nature of relief but that would have to be dealt with by way of evidence. He also submitted that if it emerged that there was a sub-group within the group represented by the plaintiff, the Court had power under Rule 18A to order separate representation for that sub-group if the Court thought that was required. Alternatively any order for specific performance could be fashioned so as to uphold any necessary protection. He argued that the Court here and the courts in New Guinea would be capable of fashioning appropriate relief by way of specific performance and that the affidavits showed that there is a regime in Papua New Guinea which allowed Australian judgments to be registered. He submitted there is no reason to believe on the present material that the Court in Papua New Guinea will refuse to support and enforce a judgment of this Court, if it was satisfied that the orders were obtained in a properly conducted hearing. Mr Burnside referred to the lease compensation agreement mitigation scheme, referred to in the second defendant's defence[7], as an example that the defendants can obtain agreement from traditional landowners on parts of the river construction works related to tailings' agreement. In effect, he was saying that they themselves gave a prevision of the way in which specific performance might be achieved. He argued that the management of specific performance (that is the tailings' treatment option) is a matter for evidence at the trial so that if the Court thought that the requirements of cl.5(2)(b) had already been satisfied, obstacles would be cleared from the path of performance of the obligations. He submitted it could not reasonably be a barrier to the use of Order 18A to concentrate on identifying potential difficulties at this stage. Even if that were so, similar difficulties would be sought to be identified if a representative proceeding under s.35 of the Supreme Court Act were pursued (as Mr Archibald has suggested) or if every party to the agreement was individually named as a plaintiff.

[41]

He argued that Order 9 Rule 3 should be read in conjunction with Order 18A and should be regarded as having been satisfied where the group includes people who would in an alternative context be regarded as necessary parties. This really was an argument that inclusion in the group made them plaintiffs for the purpose of satisfying the requirements of Order 9 Rule 3. Thus, he said, even if all contracting parties had to be part of the action, the use of the Order 18A procedure satisfied that requirement. He also said that in any event Order 27 conferred sufficient powers to fashion the appropriate order. That would achieve the purposes of Order 9 Rule 3, which was passed long before Order 18A. He relied upon Order 18A, Rule 3(2)(b)(i) which provides that a group proceeding may be commenced, whether or not the proceeding is concerned with separate contracts, to reinforce his argument that the group may be concerned with the same contract. Thus he was resorting essentially to the terms of the agreement to rebut the suggestion that the obligations were joint and not joint and several. In effect Mr Burnside submitted that alarmist submissions had been made. The group here was easily identified, namely, they were the parties to the agreement identifiable through the clan leaders who executed it. Thus he submitted that the matters specified in Order 18A(3) were all satisfied, namely there were seven or more people with claims against the same person arising out of the same similar or related circumstances and giving rise to a common question of fact. Thus he characterised the defendants' argument as seeking to persuade the Court to terminate it as a representative proceeding, even though it was properly constituted as a representative proceeding. He also accused the defendants of inherently contradictory submissions in that the suggestion that impossibility of notification to every member of the group for the purpose of opt out would mean it would be impossible to establish a representative action under the Supreme Court provisions because the same persons cannot be contacted to consent to join in.

[55]

I next deal with the principal submissions made. The submissions made by the defendants were that I should exercise the discretionary power conferred by Order 18A(13) on the Court to terminate this proceeding as a group proceeding at this point of time, because it was impossible for all of the necessary parties to be joined in a group proceeding, alternatively that it could even at this point be perceived that there would be potential group members with conflicting interests, requiring separate representation. As I have already indicated, these arguments are founded on Rule 9.03 of this Court's Rules to have joined in a proceeding all parties jointly entitled to the relief sought. It was also argued that it should not be satisfied that any orders made will be enforced by the Court of Papua New Guinea. However, in my opinion, it is too early in the proceeding to know the answer to the difficulties that are readily envisaged by the defendants. In the first place, orders for specific performance of the key agreements and/or mandatory injunctions to compel the performance are not the only forms of the relief sought. Damages for non-performance are alternatively claimed. As damages are claimed, I would not be prepared to exercise my discretion to order the proceeding not to continue as a group proceeding because of the difficulties contended for by the defendants. I am of the opinion that the claim for damages is not burdened with the problems identified in submissions, and I reject the application on that basis. In those circumstances, it would be premature to strike out the claims for specific performance and injunction. It may well transpire that all of the necessary parties, on this proposition, are part of the group. In any event, the Court has power to order separate representation of any sub-group, if the Court is of the view that that is required in the whole of the circumstances. The existence of the necessity to examine the circumstances possibly arising of the sub-group does not lead to the conclusion that the group proceeding cannot continue. I have not overlooked the matters raised by the defendants in this respect, particularly with regard to those landowners whose rights might be affected by the remedial tailings' options (if the tailings are put on land) or those who have objections on other legitimate grounds. Thus, as is known by all, Order 18A procedures involve the giving notice of opt-out rights so that those who do not wish to be included may decline to do so. The giving of such notices, if it occurs, will provide information to the Court. At this point of time, it is particularly important to keep in mind the rights of all parties to the proceeding, including group members. As I have referred to earlier in these reasons, the phenomenon of class actions and group proceedings involves considerable modification of commonplace legal rights to enable the bringing of a collective proceeding, so long as it conforms to the requirements. I do not overlook here that the key threshold requirements have been met in this case. The group can be identified with more clarity than in many cases. Notwithstanding the issue of other possibly affected occupiers or owners of land, the claims being made by the plaintiff (and the group members represented) are not difficult to comprehend. It appears that there is a substantial common issue of fact. The criterion to this may often be elusive and will likely depend in most cases on the facts and circumstances pleaded in each case. I also note that no argument was addressed to the contrary before me to suggest that there was no common issue, the principal thrust of the defence contentions being as I have described. There are clearly further matters to be considered which will, in my judgment, best be addressed at the next stage. In my view, the Rule was intended to confer on the Court very wide powers to do or refrain from doing whatever is appropriate and necessary in the interest of achieving justice in a representative proceeding of this kind. This is not a case in which the pleadings failed to posit an arguable case and no defendant has put the case in that way. The defences clearly raise considerable and important issues that impact upon the claimed obligations but those are matters for another day. On an application for discontinuance at this point, the Court should not be quick to conclude that the problems identified, if they be such, are likely to be fatal to the group proceeding. It is not necessary at this point of time in the proceeding to show that litigation of the common issue would be likely to resolve wholly or to a significant degree, the claims of all group members. See Wong v. Silkfield Pty. Ltd.[19] overruling the contrary view of the Federal Court of Australia.

At a glance

Court

Decision date

Before

Source

Judgment (80 paragraphs)