The statement of claim
16 The applicant was for a time the managing director of a company known as Burrup Fertilisers Pty Ltd (BFPL). There is a dispute as to the period or periods that this was the case. BFPL is now known as Yara Pilbara Fertilisers Pty Ltd. However, I will continue to use its former name as that is how it is identified in the pleadings. The respondent is a United States corporation. The applicant alleges that the respondent carried on business in Australia by its subsidiary Apache Energy.
17 It is convenient to set out the following paragraphs from the statement of claim:
5. On or about 18 December 2000, Australian subsidiaries of the respondent and others (the Sellers) and Oswal Projects Limited (Oswal Projects) executed a memorandum of understanding (the MOU) in which the parties recorded their intentions with respect to the conclusion of an agreement (the Agreement) for the sale by the Sellers and the purchase by Oswal Projects of natural gas for an ammonia plant which Oswal Projects, or its assignee, proposed to construct and operate on the Burrup Peninsular in the north west of Western Australia.
Particulars
(a) The MOU was in writing.
(b) The Sellers were Apache Northwest Pty Ltd, Apache Harriet Pty Ltd, Apache Lowendal Pty Ltd, Apache Miladin Pty Ltd, Apache Nasmah Pty Ltd, Tap (Harriet) Pty Ltd and Kufpec Australia Pty Ltd.
(c) The MOU was executed by the applicant, on behalf of Oswal Projects, and by James K Bass, of Apache Energy, on behalf of the Sellers.
6. The MOU provided, inter alia, that:
6.1 the term for the supply and purchase of gas under the Agreement would be for 25 years from 1 October 2004;
6.2 the maximum quantity of gas the Sellers would be obliged to supply over the 25 year supply period was 552 petajoules;
6.3 at any time, the Sellers would have sufficient uncommitted proven reserves available to Oswal Projects for the lesser of 20 years and the remaining term of the 25 year supply period;
6.4 the Sellers reserved the right to deliver gas from any source, including, but not limited to, Production Licences No. TL/1, 5, 6 and 8, other Production Licences derived from Exploration Permits TP/8, WA-192, EP 307, EP 358 or other permit areas in which all or any of the Sellers had an interest or other sources of gas as contracted by the Sellers from time to time.
7. On or about 21 February 2001, the respondent represented to the applicant that:
7.1 the Apache Sellers had adequate reserve of gas to supply the proposed ammonia plant in Western Australia with gas for 25 years, at a fixed price, from a gas field in Western Australia, referred to as the Harriet Joint Venture (HJV);
7.2 the Apache Sellers would supply gas to the proposed ammonia plant in Western Australia at the fixed price provided for in the MOU even after the end of the supply period of 25 years; and
7.3 the Apache Sellers would supply gas from other sources at the same price as they provided gas from the Harriet Joint Venture gas field, if the Harriet Joint Venture gas field reserves proved to be inadequate.
(The representations pleaded at 7.1 to 7.3 above are collectively referred to herein as the Representations)
Particulars
(a) The Representations were made orally.
(b) The Representations were made in Houston.
(c) The Representations were made on behalf of the respondent by John Crum, George Stephen Farris and Neil McHarrie.
(d) At the same time as the Representations were made, John Crum, on behalf of the respondent, informed the applicant that:
(i) the respondent had approved of the terms of the MOU; and
(ii) the respondent had approved of its Australian subsidiaries entering into the MOU.
18 The applicant alleges that he relied on these representations and was thereby induced to pay approximately $478 million to companies involved in the construction of BFPL's ammonia plant located on the Burrup Peninsula in Western Australia as well as making payments to BFPL and third parties, including alleged payments under the alleged "Cost Overruns Agreement".
19 The representations are alleged to be with respect to future matters as to which it is alleged that the respondent did not have reasonable grounds for making them, alternatively that they were misleading or deceptive as follows:
10. Alternatively to 9 above, to the extent that the Court finds that the Representations were not representations with respect to future matters, the Representations were misleading or deceptive, or likely to mislead or deceive, in that:
10.1 in relation to 7.1 above, neither the Apache Sellers nor the Sellers had, as at 21 February 2001, adequate reserves of gas to supply the proposed ammonia plant in Western Australia with gas for 25 years from the Harriet Joint Venture gas field;
10.2 in relation to 7.2 above, the Apache Sellers did not, as at 21 February 2001, intend to supply gas to the proposed ammonia plant in Western Australia, at the price fixed in the MOU, even after the end of the supply period of 25 years, irrespective of the cost or price of such gas at that time; and
10.3 in relation to 7.3 above, the Apache Sellers did not intend, at 21 February 2001, to supply gas for 25 years, as provided for in the MOU, from sources, other than the Harriet Joint Venture gas field, at the same price as they provided gas from the Harriet Joint Venture gas field, if the Harriet Joint Venture gas field reserves proved to be inadequate, irrespective of the cost or price of such gas at that time.
20 The applicant then pleaded at [11] that the future matters did not come about:
11. The future matters the subject of the Representations did not come about in that:
11.1 in relation to 7.1 above, on or about 23 November 2006, the Apache Sellers informed BFPL that they did not have adequate reserves of gas to supply BFPL's ammonia plant in Western Australia with gas from the Harriet Joint Venture gas field for the balance of the supply period under the agreement entered into pursuant to the MOU (the GSA);
11.2 in relation to 7.2 above, on or about 23 November 2006, the Apache Sellers informed BFPL that they did not intend to supply gas to BFPL's ammonia plant in Western Australia at the price fixed in the GSA even for the balance of the supply period under the GSA;
11.3 in relation to 7.3 above, on or about 23 November 2006, the Apache Sellers informed BFPL that the Harriet Joint Venture gas field reserves were not adequate to supply gas to BFPL for the balance of the supply period under the GSA; and
11.4 in relation to 7.3 above, on or about 23 November 2006, the Apache Sellers informed BFPL that, although the Harriet Joint Venture gas field reserves were not adequate to supply gas to BFPL for the balance of the supply period under the GSA, they would not supply gas for that period from sources, other than the Harriet Joint Venture gas field, at the same price as provided for in the GSA.
21 The pleading against the respondent as to representations of future matters is in the barest of terms. It provides no particulars as to why it is alleged that the respondent did not have reasonable grounds for making them. There is merely expressed reliance on s 51A of the Trade Practices Act 1974 (Cth). The applicant, as I have set out, does allege that the matters represented did not eventuate but upon analysis of the documents relied upon by the applicant to support these pleas what is pleaded does not relate directly to those representations. I will return to this later.
22 There has been a division of opinion as to just how it is that s 51A operates. It appears to be accepted that there is at least a shift of the evidential burden to the respondent rather than an absolute reversal of the burden of proof, by deeming a corporation which makes such representations not to have had reasonable grounds for making them unless the corporation adduces some evidence to the contrary: McGrath v Australian Naturalcare Products Pty Ltd (2008) 165 FCR 230. That view has been followed by a significant number of judges of this Court: see eg Fubilan Catering Services Limited v Compass Group (Australia) Pty Ltd [2007] FCA 1205. Other judges of the Court have taken the view that the representor can only avoid the deeming provision by establishing on the usual balance of probabilities that there were reasonable grounds for making the representation: see eg Lewarne v Momentum Productions Pty Ltd [2007] FCA 1136.
23 To the extent that s 51A has application, and there is some dispute as to this, it seems that the respondent proposes to acquit its evidentiary obligation, upon whichever basis is the correct one, by adducing evidence of detailed reserve reports both in-house and from consultants. Upon the issue of whether the respondent had reasonable grounds the documents to which I have referred are directly relevant to that issue but the underlying data are not. This is not a case where the applicant pleaded reliance on those reports and alleges they were in particular respects misleading or deceptive. Absent any positive allegation by the applicant, which withstands scrutiny, that what was represented, by reference to objective facts, did not occur or eventuate, the demand for such additional documents amounts to no more than a fishing expedition.
24 As to the alternative that, as a matter of fact, such reserves did not exist as at 21 February 2001, the burden lies on the applicant to prove this allegation. No facts are pleaded to support the bald allegation. In my opinion, there is no obligation upon the respondent to discover underlying data for its reserve reports to meet that unparticularised assertion.
25 That the future matters did not come about is pleaded, as against the respondent directly, at para [11] of the statement of claim (SOC) set out above. This pleading is a reference to a force majeure notice (the Notice) provided by Apache Northwest Pty Ltd, the Harriet Joint Venture (HJV) operator, to BFPL, not to the applicant, dated 23 November 2006. The references to "Apache" in the Notice are to Apache Northwest. Paragraphs 7-12 of the Notice are in the following terms:
7. Apache notifies Burrup that due to adverse developments at a number of exploration and development wells in the Harriet Joint Venture permits or production licences which were beyond the reasonable control of Apache and which could not have been reasonably anticipated and prevented by Apache acting as a Reasonable and Prudent Operator (Force Majeure Events), including:
• the failure of exploration wells resulting in a failure to add Proven Reserves including:
• wells targeting gas prospects: Ginger- I, Dawn-1, Highgrove-1, Little Sandy-1, Selene-1, Denver-1, Errol-1, Dylan-1 and Marley-1; and
• other wells that had some prospect of encountering gas: South Plato-1; Gibson-1; West Cycad-1; Greater Victoria-1; Karangi- 1; Kew-1; and Simpson-1.
• the failure of development wells and/or failure of reserves predominantly in the Linda, Wonnich and Rose fields resulting in total write-down of approximately 210PJ of Proven Reserves net of reserve additions.
(a) the uncommitted Proven Reserves of the Harriet Joint Venture, including the share of those Reserves to which Apache is entitled:
(i) were at the Commencement Date below those required by clause 5 of the GSPA (First Force Majeure); and/or
(ii) have, since the Commencement Date, fallen below and/or further below those required by clause 5.2 of the GSPA (Second Force Majeure); and
(b) due to the Force Majeure Events, under clause 14.1 of the GSPA Apache anticipates being unable to sell or deliver all of its Percentage Interest of Gas under the GSPA such that the fundamental purpose of the GSPA is unlikely to be implemented for an extended period commencing sometime between January 2007 and August 2009 (depending on the success or otherwise of the Harriet Joint Venture's development drilling programme) (Third Force Majeure).
More precise details will be provided after a detailed assessment has been completed.
8. If the Force Majeure Events result in Apache being unable to meet its Supply Obligation during the Supply Period Apache intends, if necessary, to again claim Force Majeure pursuant to clause 13 of the GSPA in relation to its Supply Obligation (Fourth Force Majeure).
9. The likely duration of the Second Force Majeure is currently uncertain but will cease if the Harriet Joint Venture's further exploration and development programmes produce results that cause a reassessment to the effect that uncommitted Proven Reserves are above those required by clause 5.2.
10. The likely duration of the Third Force Majeure is currently uncertain but will cease if further Proven Reserves are discovered and/or brought into production such that Apache is able to sell or deliver all of its Percentage Interest of Gas under the GSPA and thereby perform its Supply Obligation.
11. If it is claimed, the likely duration of the Fourth Force Majeure will be stated in the relevant notice.
12. Apache will keep Burrup informed as to those matters.
26 This Notice does not, on its face, support the allegations in SOC [11]. The Notice, as its title and content make clear, is directed to matters constituting adverse developments in a number of exploration and development wells in the HJV permits or production licences and which were beyond the reasonable control of the operator of the HJV and which could not have been reasonably anticipated and prevented by it acting as a reasonable and prudent operator.
27 The Notice does not support the plea in the SOC that the future matters pleaded did not come about. The allegations as to future matters were not to the effect that no force majeure events would occur which might interrupt supply.
28 Moreover, the Notice does not state any more than that, as a result of these several events, Apache Northwest "anticipates" not being able to sell or deliver all of its "Percentage Interest of Gas" under the gas sale and purchase agreement (GSPA).
29 However, the Notice proceeds at para 8 to deal with what will be the situation if, in fact, Apache Northwest is unable to meet such supply commitments.
30 It is not alleged that supplies were in fact interrupted. Indeed, senior counsel for the respondent stated that such had not occurred. Counsel for the applicant did not contend otherwise nor disavow what had been said as to this on behalf of the respondent.
31 This same analysis holds good in respect to the pleading against Apache Energy that the representations as allegedly made did not come about (SOC [20]). Again reliance in the pleading is placed, without specifying the document, upon a notice of force majeure in similar vein.
32 Additional allegations of misrepresentations are made against Apache Energy, although it is not a party, and the respondent is alleged to have been involved in the alleged contravening conduct.
33 The allegations are similar to those involving the respondent. They include that Apache Energy represented that the "Apache Sellers" would supply gas from other sources than the HJV gas field should supply from the latter not suffice to satisfy the Apache Sellers' obligations under the GSPA.
34 It also pleaded that Apache Energy represented that the HJV would not enter into contracts to sell either proven or probable reserves from the HJV gas field which, in any way, jeopardised the security of the supply of gas under the GSPA.
35 As to these allegations the applicant pleads similar allegations as to what occurred on or about 23 November 2006 as is the case of the respondent.
36 It adds that the HJV entered into contracts to sell proven and probable reserves from the HJV gas field which jeopardised the security of the supply of gas under the GSPA. No particulars of these whatsoever were provided.
37 There is also a plea concerning an alleged representation that Apache Energy would use all reasonable endeavours to procure that the arrangements with the East Spar Joint Venture amongst others would continue. It is pleaded that Apache Energy did not do this.