Ok Tedi Fly River Development Foundation Ltd v Ok Tedi Mining Ltd

• Jurisdiction: Singapore
• Court: High Court (Singapore)
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 30 September 2021
• Docket Number: Suit No 628 of 2020 (Summons No 3880 of 2020)

Ok Tedi Fly River Development Foundation Ltd and others

and

Ok Tedi Mining Ltd and others

[2021] SGHC 205

Vinodh Coomaraswamy J

Suit No 628 of 2020 (Summons No 3880 of 2020)

General Division of the High Court

Civil Procedure — Pleadings — Striking out — Defendant seeking to strike out entirety of plaintiffs' claims — Whether threshold for striking out reached — Order 18 r 9 Rules of Court (2014 Rev Ed)

Equity — Fiduciary relationships — When arising — Company holding shares in entity running mine in Papua New Guinea — Mine causing environmental damage that adversely affected certain communities in Western Province of Papua New Guinea — Company not in contractual relationship with “Affected Communities” — Whether company holding shares owed ad hoc fiduciary duties to members of Affected Communities

Restitution — Unjust enrichment — Interceptive subtraction — Company receiving shares and distributions from shares — Plaintiffs having no legal or beneficial interest in shares or distributions from shares received by company — Whether enrichment received by company was meant for plaintiffs — Whether property would certainly have arrived to plaintiffs

Restitution — Unjust enrichment — Unjust factors — Exploitation of weakness — Poor and unsophisticated affected communities — Whether mental or circumstantial weakness was unsustainable on pleadings

Restitution — Unjust enrichment — Unjust factors — Failure of basis — Whether plaintiffs could seek restitution of property other than that conferred on defendant as benefit

Restitution — Unjust enrichment — Unjust factors — Ignorance — Whether ignorance included situations of lack of consent and vitiated consent

Tort — Conspiracy — Elements of lawful means conspiracy — Company accused of conspiring with its director — Whether director liable for conspiring with company

Tort — Conspiracy — Elements of unlawful means conspiracy — Whether unlawful means conspiracy established against defendants

Trusts — Constructive trusts — Requirements for imposition of remedial constructive trust — Whether remedial constructive trust was remedy and/or right — Whether conscience of recipient of property was affected while recipient continued to retain property

Held, granting the application:

Fiduciary duty claim

(1) Under the framework in Her Majesty The Queen in Right of Alberta v Elder Advocates of Alberta Society[2011] 2 SCR 261, for an ad hoc fiduciary duty to arise, the claimant had to show: (a) an undertaking by the alleged fiduciary to act in the best interests of the alleged beneficiary or beneficiaries; (b) a defined person or class of persons vulnerable to a fiduciary's control (the beneficiary or beneficiaries); and (c) a legal or substantial practical interest of the beneficiary or beneficiaries that stood to be adversely affected by the alleged fiduciary's exercise of discretion or control: at [67] and [68].

(2) The plea of breach of fiduciary duty was plainly and obviously unsustainable because the first and third elements in the framework were not met: at [68].

No undertaking to members of the Affected Communities

(3) In respect of the first element, PNGSDP gave no undertaking whatsoever – voluntary or otherwise, express or implied, in respect of the Shares and Distributions or otherwise – to the members of the Affected Communities at any time, whether when it entered into the Master Agreement or otherwise. The only undertakings which PNGSDP gave in respect of the Shares and Distributions were those which were set out in the suite of written contracts it entered into following its incorporation. And it gave them only to the counterparties to those contracts. None of the members of the Affected Communities was a party to any of the suite of written contracts PNGSDP entered into: at [73] and [74].

(4) It would also be plainly and obviously unsustainable to suggest that PNGSDP gave a non-contractual undertaking to members of the Affected Communities to hold the Shares and to apply Distributions towards the Objects for the sole purpose of ameliorating the environmental damage caused by the Mine. Any such undertaking would be wholly inconsistent with both the express contractual obligations which PNGSDP undertook and the express discretionary powers which PNGSDP acquired under the suite of written contracts it entered into: at [75].

(5) With regard to PNGSDP's express contractual obligations, in the Program Rules and Master Agreement, it undertook a cascading and comprehensive set of express contractual obligations as to how it was to apply Distributions, the Long Term Fund and investment income earned on the Long Term Fund both before and after Mine Closure. This contractual framework excluded any possibility of PNGSDP owing a single-minded duty of loyalty to the members of the Affected Communities in respect of the Shares, Distributions or the Long Term Fund. In addition, the Security Arrangements subordinated the interests of the members of the Affected Communities even further in the application of Distributions and the Long Term Fund: at [77], [80] and [81].

(6) The written contracts also gave PNGSDP the unqualified contractual discretion to undertake sustainable development projects for the exclusive benefit of persons other than members of the Affected Communities. This discretion excluded any possibility of PNGSDP owing a single-minded duty of loyalty to the members of the Affected Communities in respect of the Shares, Distributions or the Long Term Fund: at [83].

(7) PNGSDP's contractual power to amend the Program Rules without the consent of the members of the Affected Communities further contradicted an undertaking of responsibility to act in their best interests: at [85] and [86].

(8) Superimposing an ad hoc fiduciary duty upon PNGSDP's obligations, discretions and powers under the carefully constructed suite of contracts which PNGSDP entered into would undermine the entire framework of the law of obligations: at [102].

No legal or substantial practical interest(s) at stake

(9) There was no way in which PNGSDP could ever adversely affect the legal right of the members of the Affected Communities to sue OTML or others. PNGSDP came into existence after the members of the Affected Communities had given up that entitlement: at [90].

(10) In so far as the plaintiffs alleged that PNGSDP could affect the practical interests of the members of the Affected Communities by distributing or withholding funds for sustainable development projects that were for their benefit, this did not suffice. Withholding a benefit did not amount to affecting a substantial practical interest for the purposes of determining if an ad hoc fiduciary duty arose. At common law, a person had no obligation to confer a benefit on another unless the benefit was bargained for as part of a contract or arose under an institutional trust: at [92].

(11) PNGSDP also did not threaten a substantial practical interest by failing to perform its duty under the Program Rules to administer assets for the benefit of the members of the Affected Communities. This presupposed the fiduciary duty sought to be proved. PNGSDP's duties under the Program Rules were contractual duties owed only to PNGSDP's members for the time being and the four entities for whose benefit it gave its express contractual undertaking in cl 3.2 of the Master Agreement to comply with the Program Rules: at [93].

Remedial constructive trust claim

(12) Even if Singapore law recognised the RCT, it was a remedy and not a right. An RCT might be granted as a remedy only if a plaintiff was able to establish a right arising from a cause of action recognised in Singapore law: at [109] and [110].

(13) Even as a remedy, an RCT would be imposed only if the conscience of the recipient of the property was affected while the recipient continued to retain the property. The plaintiffs relied on the same factors to seek an RCT against PNGSDP as they did to claim that PNGSDP owed an ad hoc fiduciary duty to the members of the Affected Communities. As no ad hoc fiduciary duty was owed, PNGSDP's conscience was not affected in a manner so as to give rise to an RCT or to warrant extinguishing PNGSDP's property rights in the Long Term Fund in favour of the first plaintiff: at [111].

Conspiracy claims

Conspiracy A

(14) Conspiracy A was factually unsustainable. The plea that PNGSDP and Sir Mekere acted with the predominant intention to injure the members of the Affected Communities was bereft of particulars and of any evidential basis. There was no implied term in the Program Rules to the effect that if PNGSDP was deprived of Distributions while the Mine continued to operate, mine closure had occurred and PNGSDP had to administer the Mine Closure Plan. The concept of “Mine Closure” was defined differently in the Program Rules: at [116], [118] and [120].

(15) Conspiracy A was also legally unsustainable. The principle in Said v Butt[1920] 3 KB 497 (“Said v Butt”) prevented Sir Mekere from being held liable as a conspirator with PNGSDP, at least while he was a director of PNGSDP. A director was ordinarily immune from liability in tort for authorising or procuring his company's breach of contract in his capacity as a director, unless he acted in breach of his personal duties to the company: at [122] and [123].

(16) The allegation that the exception to the principle in Said v Butt applied because Sir Mekere breached his fiduciary duty to PNGSDP by causing it to act with the predominant purpose of injuring the members of the Affected Communities was bereft of all particulars and any evidential basis. It was insufficient for a plaintiff to make bare allegations in its statement of claim that a director-defendant acted outside the scope of his authority. Even assuming that Sir Mekere acted with the predominant purpose of injuring the members of the Affected Communities, this does not necessarily entail that he...