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

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 12 April 2022
• Docket Number: Suit No 628 of 2020 (Summons No 1478 of 2021)
• Court: High Court (Singapore)

Ok Tedi Fly River Development Foundation Ltd and others

and

Ok Tedi Mining Ltd and others

[2022] SGHC 83

Vinodh Coomaraswamy J

Suit No 628 of 2020 (Summons No 1478 of 2021)

General Division of the High Court

Civil Procedure — Pleadings — Striking out

Equity — Fiduciary relationships — When arising — Commercial setting — Company operating mine in Papua New Guinea — Mine causing environmental damage which adversely affected certain communities in Western Province of Papua New Guinea — Whether company operating mine owed ad hoc fiduciary duties to members of affected communities

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 there was combination between alleged conspirators — Whether conspirators intending to injure plaintiffs — Whether there were unlawful acts needed to sustain allegation of unlawful means conspiracy

Held, granting the application in part:

Deceit claim

(1) The plaintiff's claim against OTML in deceit was not struck out. The affidavit evidence raised questions of fact and of mixed fact and law which ought to be resolved at trial: at [4].

Fiduciary duty claim

(2) Under the framework in Her Majesty The Queen in Right of Alberta v Elder Advocates of Alberta Society[2011] 2 SCR 261 (“Alberta”), one person (“F”) became an ad hoc fiduciary for another person (B) if: (a) F gave an undertaking of responsibility, express or implied, to act in B's best interests; (b) B was vulnerable to F in the sense that F had a discretionary power over B or over the class to which B belonged; and (c) F's power may affect B's legal interests or his substantial practical interests: at [84].

No undertaking to members of the Affected Communities

(3) It was obviously unsustainable that OTML gave any undertaking of responsibility to the members of the Affected Communities as required by the first element of the Alberta framework: at [89].

(4) First, a voluntary undertaking of responsibility was completely at odds with OTML's status as a commercial entity and the adversarial nature of the Consultation Programme. OTML was brought into existence and had always carried on its business for profit and to generate returns for its shareholders on their capital through its operation of the Mine. It did not carry on its business at any time for altruistic purposes. OTML therefore initiated the Consultation Programme in pursuit of its own commercial interests and would not have entered into the CMCAs if the CMCA regions wanted it to continue to operate the Mine on terms which OTML considered uncommercial: at [91], [92] and [94].

(5) It was not easy for F to become an ad hoc fiduciary for B in a commercial setting. The threshold was especially high in a commercial setting, where the parties dealt at arm's length and chose to govern their legal relationship by contract. It would take exceptional circumstances to find that OTML voluntarily undertook responsibility to members of the Affected Communities in the course of or by reason of the Consultation Programme. There were no exceptional circumstances in this case: at [87] and [95].

(6) Second, a voluntary undertaking of responsibility was completely at odds with the existence and the terms of the CMCAs which OTML entered into. The intention of OTML, its shareholders and the CMCA regions in entering into the CMCAs was that the CMCAs would completely document and govern the relationship between OTML and the CMCA regions. The very existence of the CMCAs negated the necessary voluntary undertaking of responsibility and confined the plaintiffs' remedies to contract: at [96] and [97].

(7) Third, a voluntary undertaking of responsibility was completely at odds with the suite of contracts which OTML entered into when BHP Minerals transferred the Shares to PNGSDP in 2002. These included the Master Agreement and the agreements underlying the Security Arrangements. Under these agreements, OTML participated in PNGSDP encumbering the Shares and Distributions in favour of the Security Trustee for the ultimate benefit of BHP Group and the State: at [98].

(8) In any event, a voluntary undertaking of responsibility was wholly inconsistent with the plaintiffs' case that OTML made the Share Offload Representations fraudulently. An intention on OTML's part to perpetrate a fraud on the members of the Affected Communities could not, as a matter of logic, coexist with the necessary voluntary undertaking of responsibility to them: at [100] and [101].

No power to affect legal or substantial practical interest

(9) OTML had no power to affect the legal or practical interests of the members of the Affected Communities in respect of the Shares: at [107].

(10) First, OTML never owned the Shares nor had any legal right or power to determine whether BHP Minerals should transfer the Shares or Distributions for the benefit of the members of the Affected Communities: at [108].

(11) Second, it did not follow from BHP Minerals' right to appoint senior officers of OTML that OTML therefore somehow had the power to control BHP Minerals (including its decision to transfer the Shares to PNGSDP and the terms of the transfer). Even if it were the plaintiffs' case that BHP Minerals and OTML were a single economic entity such that the BHP Minerals' power to control the Shares could somehow be attributed to OTML, this case was nowhere pleaded: at [109], [111] and [112].

No vulnerability to OTML

(12) The plaintiffs were not vulnerable to OTML in ensuring that the Share Offload Representations were carried out. OTML had no such discretionary power over the Shares: at [114].

(13) The submission that the livelihood of the members of Affected Communities as subsistence farmers was vulnerable to the damage caused to the land by the operation of the Mine was not pleaded: at [116].

No breach of duty

(14) Even if OTML was an ad hoc fiduciary, any argument that there was a breach of fiduciary duties was obviously unsustainable: at [117].

(15) The Share Offload Representations amounted to a promise that the Shares would become the property of the members of the Affected Communities in equity without encumbrance and that Distributions would be applied exclusively for the benefit of the members of the Affected Communities: at [118].

(16) OTML never owned or controlled the Shares and never received Distributions or controlled how they could be spent. The promissory content of the Share Offload Representations related to matters which were not in any way within OTML's control: at [119] and [120].

Unlawful means conspiracy claims

(17) To establish an unlawful means conspiracy, it must be proved that (a) the conspirators combined to do certain acts; (b) the conspirators intended to cause damage or injury to the plaintiff(s); (c) the acts were unlawful; (d) the acts were performed in furtherance of the combination; and (e) the plaintiff(s) suffered loss as a result of the conspiracy: at [126].

Conspiracy B

(18) As the plaintiffs' claim against PNGSDP as a conspirator in Conspiracy B was struck out in Ok Tedi Fly River Development Foundation Ltd v Ok Tedi Mining Ltd[2021] SGHC 205, Conspiracy B was analysed on the basis that PNGSDP was found not to be a conspirator: at [128].

(19) The alleged combination in Conspiracy B was predicated on Sir Mekere and the State knowing of the Share Offload Representations. But the allegation that either Sir Mekere or the State had this knowledge was pure speculation: at [140].

(20) The plaintiffs' pleaded case on Conspiracy B failed to identify the specific individuals in OTML who entered into the combination. For a corporate entity to be fixed with the requisite intention or state of mind, it was necessary to pinpoint some human actor with that state of mind and to determine whether that state of mind also counted as the company's. Referring to unidentified teams making the alleged Share Offload Representations on behalf of OTML did not suffice: at [130].

(21) The plaintiffs' case that Sir Mekere or the State were in any way involved in or aware of OTML's decision to make the Share Offload Representations to the members of the Affected Communities was utterly bereft of any evidence. It did not follow from the State's involvement in the Consultation Programme that Sir Mekere and the State knew that OTML had decided to do so or that it had in fact done so: at [133] and [136].

(22) Although the State had an interest in whether the Mine should continue or close, it was a wholly speculative leap to move from that to assert that the State was involved in the Consultation Programme to the extent of being kept abreast of the representations that OTML had decided to make or did make to the members of the Affected Communities on the ground in the course of the Consultation Programme: at [137].

(23) Further still, if the State had indeed been involved in the compensation arrangements OTML was going to make for the Affected Communities, it was pure speculation to suggest that OTML told the State about both the CMCAs and the Share Offload Representations either while the Consultation Programme was ongoing or when OTML reported to the State at the conclusion of the Consultation Programme. The Shares did not form part of the compensation under the CMCAs payable by OTML to the Affected Communities for environmental damage. The Share Offload Representations and the CMCAs were two distinct forms of compensation from two distinct sources and for two distinct purposes: at [138].

(24) In addition, the plaintiffs' plea that the alleged conspirators had any intention to injure the members of the Affected Communities was wholly speculative and obviously unsustainable: at [141].

(25) Taking the plaintiffs' case at its highest, their case was that Sir Mekere and the State came to know about...