FEDERAL COURT OF AUSTRALIA

Sanda v PTTEP Australasia (Ashmore Cartier) Pty Ltd (No 2) [2017] FCA 644

ORDERS

THE COURT ORDERS THAT:

1.    The parties bring in agreed orders or, if not agreed, their proposed orders, giving effect to these reasons, and providing for the giving of discovery, by 4.00 pm on 16 June 2017.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

YATES J:

Introduction

1    There are two matters presently before the Court that require resolution. The first relates to the adequacy, as a matter of pleading, of paragraphs 93 to 96 and 111 of the applicant’s amended statement of claim dated 2 November 2016 (the statement of claim). The respondent seeks an order that these paragraphs be struck out on one or more of the grounds specified in r 16.21 of the Federal Court Rules 2011 (Cth) (FCR). Alternatively, the respondent seeks an order pursuant to r 16.45 FCR that certain particulars be provided. The particulars are the “usual particulars” and the “usual calculations” as defined in the respondent’s interlocutory application dated 7 April 2017.

2    The second matter concerns a dispute about the scope of discovery. The dispute is limited. To a large extent, its resolution depends on the outcome of the pleading dispute to which I have referred.

Background

3    The proceeding is a representative proceeding brought under Pt IVA of the Federal Court of Australia Act 1976 (Cth).

4    The applicant, Mr Sanda, is a seaweed farmer in Indonesia. He lives in the village of Oenggaut on Rote Island.

5    The respondent, PTTEP Australasia (Ashmore Cartier) Pty Ltd, operates the Montara oil field, which is located approximately 250 km northwest of Western Australia, approximately 700 km from Darwin.

6    In early 2009, the respondent set about suspending an oil well, referred to as the H1 Well, in the Montara field. There were certain failures in this process which led, in August 2009, to an uncontrolled release of hydrocarbons from the well which, the applicant says, remained unabated for more than 10 weeks (the Montara oil spill). The applicant says that the Montara oil spill was observed over an area of approximately 90,000 square kilometres. In response, the Australian Maritime Safety Authority (AMSA) used 184,000 litres of chemical dispersants to dissipate the hydrocarbons on the surface of the water into the water column.

7    The applicant alleges that the hydrocarbons from the Montara oil spill reached certain identified areas within Indonesia, including the southern coastal area of Rote Island where he lives and carries on his occupation as a seaweed farmer. He alleges that the hydrocarbons “affected the ecology of the sea water” in those and other areas and that the hydrocarbons and/or dispersants used had the effect of killing or destroying seaweed, and causing a drop in the production of seaweed, cultivated by him and the Group Members (as defined in the statement of claim).

8    It is convenient, at this point, to set out paragraphs 93 to 96 of the statement of claim, which plead these allegations:

93.     Following the Montara Oil Spill, hydrocarbons from the spill reached the coastal area of West Timor Island and the southern coastal area of Rote Island.

Particulars

Further and better particulars will be provided following the service of expert evidence.

94.     Hydrocarbons from the Montara Oil Spill reached coastal areas in Nusa Tenggara Timor, including:

(a)     the Regency of Kupang;

(b)     Kupang Municipality;

(c)    the Regency of Rote Ndao;

(d)     the Regency of Sabu Raijua District; and

(e)     the Regency of Timor Tengah Selatan.

Particulars

Further and better particulars will be provided following the service of expert evidence.

95.     Hydrocarbons from the Montara Oil Spill affected the ecology of the seawater in coastal areas in Nusa Tenggara Timor, including:

(a)     the Regency of Kupang;

(b)    Kupang Municipality;

(c)     the Regency of Rote Ndao;

(d)     the Regency of East Sumba District;

(e)     the Regency of Sabu Raijua District; and

(f)    the Regency of Timor Tengah Selatan.

Particulars

Further and better particulars will be provided following the service of expert evidence.

96.     The hydrocarbons from the Montara Oil Spill and/or dispersants used in response to the Montara Oil Spill:

(a)     had the effect of killing or destroying seaweed cultivated by the Applicants and Group Members in the areas pleaded in subparagraphs (a) to (e) of paragraph 95 above; and

(b)     caused a drop in the production of seaweed by the Applicant and Group Members in the period subsequent to the Montara Oil Spill.

Particulars

Further and better particulars will be provided in respect of the Applicant following the service of expert evidence.

Further and better particulars will be provided in respect of Group Members following the determination of the common questions in this proceeding.

9    The applicant pleads the respondent’s duty of care in two ways: firstly, as a risk of harm to property; secondly, as a risk of harm to businesses. Thus, paragraph 97 of the statement of claim alleges:

97.     At all material times:

(a)     there was a risk that a failure by PTTEPAA to properly operate the H1 Well at the Montara Oil Field or suspend the operation of the H1 Well at the Montara Oil Field would result in the uncontrolled release of hydrocarbons from that well and consequent damage to the marine ecosystem in the areas identified in paragraph 94 above, including in respect of seaweed in that area (Risk of Harm to Property); and

(b)     there was a risk that a failure by PTTEPAA to properly operate the H1 Well at the Montara Oil Field or suspend the operation of the H1 Well at the Montara Oil Field would result in the uncontrolled release of hydrocarbons from that well and would consequently impede or disrupt the commercial activities of businesses or enterprises located in the areas identified in paragraph 94 above that relied on the marine ecosystem, including those business and enterprises that were engaged in the farming of seaweed (Risk of Harm to Businesses).

10    It will be noted that these duties are pleaded with respect to the areas identified in paragraph 94 of the statement of claim. However, paragraph 96(a) refers to damage to seaweed cultivated in the areas pleaded in paragraphs 95(a) to (e). These are not the same areas. Paragraph 94 includes the Regency of Timor Tengah Selatan but not the Regency of East Sumba District. Paragraphs 95(a) to (e) include the Regency of East Sumba District but not the Regency of Timor Tengah Selatan.

11    Paragraph 111 of the statement of claim pleads that the applicant and Group Members suffered loss or damage by reason of the Montara oil spill. The particulars subjoined to paragraph 111 identify the loss or damage as attributable to the hydrocarbons that were released.

The strike out application

Preliminary matters

12    The respondent filed written submissions which raised a number of asserted deficiencies in the pleading of paragraphs 93 to 96 and paragraph 111 of the statement of claim. However, as presented, the respondent’s argument focused on four matters. Senior counsel for the respondent, Mr Sheahan QC, confirmed that I should confine my attention to those matters.

13    Two of the matters can be dealt with immediately because they were met with sensible concessions by the applicant.

14    The first relates to paragraph 111. The respondent submitted that paragraph 111 is a bare statement of loss and damage and that it should be told what the applicant’s loss is. The applicant accepted that these particulars should be provided.

15    The second matter relates to the inclusion of the Regency of East Sumba District in paragraph 95(d) of the statement of claim. It is not necessary for me to detail the argument the respondent advanced. The applicant is prepared to delete this subparagraph.

16    I now turn to the remaining matters in dispute.

The pleading of geographic areas

17    The first concerns the pleading of the areas in paragraphs 94 and 95. The respondent says that, in a letter dated 22 March 2017, the applicant’s solicitors confined the case to two areas, the Regency of Kupang (including Kupang Municipality) and the Regency of Rote Ndao, and certain villages in those areas (the relevant areas and villages). The respondent complains that, despite this confinement, the applicant persists in pleading other areas as being affected, namely the Regency of Sabu Raijua District and the Regency of Timor Tengah Selatan and, inferentially, other geographical areas that are presaged by the use of the word “including” in those paragraphs. The respondent submits that, as this proceeding concerns a closed class, the Group Members and the area of their seaweed farming activities must be known with relative precision.

18    The applicant seeks to meet this complaint in two ways. First, he argues that, although the case is currently confined by particulars to the relevant areas and villages, it is possible that the class of Group Members might be expanded to include other seaweed farmers in other areas. As I understand the argument, it entails the possibility that the class could be expanded to include not only seaweed farmers in, say, the Regency of Sabu Raijua District and the Regency of Timor Tengah Selatan, as currently pleaded in paragraphs 94(d) and (e), but other coastal areas in Nusa Tenggara Timor.

19    Secondly, the applicant submits that the current pleading of paragraphs 94 and 95 of the statement of claim lays the ground for the contention that if, say, hydrocarbons reached contiguous regions (meaning areas and villages other than the relevant areas and villages, but geographically proximate thereto) then that fact is highly relevant to whether the hydrocarbons also reached the relevant areas and villages.

20    I do not accept these arguments.

21    First, if, in the future, there are proper grounds for expanding the class of Group Members to include seaweed farmers operating in other areas and villages, then leave to amend can be sought at that time.

22    Secondly, I do not think that it follows that if, say, hydrocarbons reached contiguous areas, then they must also have reached the relevant areas and villages. How the applicant chooses to prove his case with respect to the relevant areas and villages is, of course, a matter for him. If it involves reasoning of the kind advanced on this application, then no doubt that reasoning will be supported by an appropriate substratum of fact and, perhaps, expert opinion. But I do not see how the applicant’s proof of relevant facts will be curtailed by requiring precision in his pleading so as to accord with the currently particularised case. The pleading of material allegations of fact should not be confused with the evidence by which the material facts are to be proved: r 16.02(1)(d) FCR.

23    There are two related matters to which I should refer. The first is the disconformity I have noted at [10] above. Paragraph 96(a) is pleaded with reference to the areas identified in paragraphs 95(a) to (e), whereas paragraphs 97 and 99(c), dealing with the respondent’s alleged duties of care, are pleaded with reference to the areas identified in paragraph 94. As I have said, the areas in paragraph 94 on the one hand, and the areas identified in paragraphs 95(a) to (e) on the other, are different. The applicant’s agreement to delete paragraph 95(d) to remove reference to the Regency of East Sumba District will only partially remove the disconformity.

24    Further, unlike paragraph 96(a), paragraph 96(b) is not, in terms, limited to the areas pleaded in paragraphs 95(a) to (e). It is unclear whether the pleader’s intention is to confine paragraph 96(b) to correspond to the areas referred to in paragraph 96(a). This emphasises the need for precision in the pleading of the areas and villages the subject of the applicant’s and Group Members’ claims.

25    Paragraphs 94 and 95 should be brought into line with the particulars that have been provided, so that they are confined to the relevant areas and villages.

The pleading of causation

26    The second matter remaining in dispute concerns the question of causation. This has two aspects.

27    First, paragraphs 93 to 95 of the statement of claim refer to hydrocarbons reaching the coastal areas identified in those paragraphs. Also, paragraph 97 of the statement of claim pleads the respondent’s duties of care by reference to the resultant uncontrolled release of hydrocarbons from the Montaro oil field causing damage to the marine ecosystems in the areas identified in paragraph 94 and impeding or disrupting the commercial activities of businesses or enterprises located in those areas that rely on those ecosystems. Similarly, as I have already noted, paragraph 111 of the statement of claim pleads that the applicant’s and Group Members’ loss or damage was caused by or is attributable to the release of hydrocarbons.

28    However, paragraph 96 of the statement of claim pleads that it was (a) hydrocarbons from the Montara oil spill or (b) dispersants used in response to the Montara oil spill or (c) a combination of hydrocarbons and dispersants, that had the effect of killing or destroying seaweed and of causing a drop in seaweed production.

29    The respondent argues that this aspect of the pleading exhibits the vices referred to in r 16.21 FCR because it obscures the case that the respondent must meet. In this connection, it is not said that the dispersants reached the areas referred to in paragraphs 93 to 95 of the statement of claim or, more particularly, the relevant areas and villages; nor is it said, in any event, that the respondent had any duty of care with respect to the use of dispersants. Yet, the action of dispersants is intruded into the pleading of paragraph 96.

30    Secondly, in relation to paragraph 96(b) of the statement of claim, the respondent complains that the applicant has not sufficiently pleaded a chain of causation which explains the alleged resultant loss in seaweed production. The respondent says that, although it comprehends the applicant’s case that hydrocarbons had the effect of killing or destroying seaweed (as pleaded in paragraph 96(a)), the alleged cause of the loss in production referred to in paragraph 96(b) is not exposed, and the respondent does not know the case it has to meet in that regard.

31    The respondent expanded upon this difficulty by arguing that seaweed had only been grown in the identified locations for a short period of time with no established track record that would set a base level of production that takes into account different seasons and different conditions. The respondent submits that, in these circumstances, the applicant’s case, apparently based on a continuing drop in production, is far from one that speaks for itself. The respondent submits that the applicant must know the causal mechanism he relies on, otherwise this limb – which looms as a major aspect of the damages case – should not have been pleaded. Put tersely, the respondent says that the applicant either has a causal theory, in which event the respondent should be told that theory, or he has no causal theory, in which event the allegation in paragraph 96(b) should be struck out.

32    In response to these matters, the applicant referred to the following passage in a letter dated 3 May 2017 from his solicitors to the respondent’s solicitors:

The applicant’s case on causation is that oil from the Montara Oil Spill and/or dispersants applied to that oil, acting either alone or together, caused the seaweed farmed by group members at the time of the oil spill to deteriorate, disintegrate, fall off the ropes and wash away, or otherwise be unsuitable for harvest and sale. Further, oil from the Montara Oil Spill and/or dispersants applied to that oil, acting either alone or together, caused a drop in the production of seaweed by group members in the period subsequent to the Montara Oil Spill. The mechanisms or injury paths by which:

a)     the oil and/or dispersants had a direct toxicological impact on the seaweed, in terms of both acute destruction and a reduction in resilience to external stressors;

b)    the oil and/or dispersants affected organisms and gases within the seawater in which the seaweed was grown such that the seaweed could not thrive or survive as it had been; and

c)    the oil and/or dispersants had the effect of exacerbating the effect of any pre-existing or potential disease;

are clearly matters for scientific and expert evidence.

33    The applicant submits that it is not incumbent on him to plead causation with the level of scientific and technical detail that the respondent seems to contend for. The applicant also drew attention to Lehane J’s observations in Bright v Femcare Ltd (2000) 175 ALR 50; [2000] FCA 742 at [61] to the effect that a pleading will ordinarily only inform a respondent of the case it is required to meet at a relatively high level of abstraction and that subsequent interlocutory processes, particularly the filing and service of statements or affidavits, will inform the respondent of the case to be made and ensure that there is no ambush at trial.

34    The applicant’s response does not, with respect, engage with the two issues raised by the respondent.

35    As to the respondent’s first complaint, the applicant accepted that the respondent was not responsible for the application of dispersants. As I have noted above, AMSA implemented the operations to use dispersants in response to the Montara oil spill. In oral submissions, the applicant contended that it was a reasonably foreseeable consequence of the respondent’s negligent operation of the H1 Well that “someone else would come along and use a dispersant” that was toxic, to help break up the oil so that it would be transported from the surface of the water to “the underwater area”. However, this case theory is not pleaded. Once again, the risk of harm to property and the risk of harm to businesses referred to in paragraphs 97(a) and (b) respectively, are pleaded with respect to the release of hydrocarbons alone. Further, these are the only risks which are said to have been reasonably foreseeable to the respondent.

36    As to the second matter, the applicant’s response does not expose the causal connection between the Montara oil spill and the alleged drop in production of seaweed which, in terms of paragraph 96(b) of the statement of claim, appears to be continuing. I accept the respondent’s submission that the applicant must know his case theory on causation, otherwise it is difficult to see how, justifiably, the allegation in paragraph 96(b) of the statement of claim could have been made in the first place.

37    For example, why did the presence of hydrocarbons in the relevant areas and villages result in a drop in production of seaweed (putting to one side the allegation in paragraph 96(a) that seaweed was killed or destroyed)? What is the alleged drop in production, and how has that loss been identified and quantified? Why is that loss continuing? It is not necessary for the applicant to plead every detail that might be expected to be found, in due course, in his expert evidence. But the applicant must plead material allegations of fact (r 16.02(d) FCR) and he must provide necessary particulars (r 16.41 FCR). Questions of the general nature I have indicated can be answered informatively without descending to the detail of the applicant’s proposed expert evidence. True it is that the respondent will be better informed of the applicant’s case when that evidence is filed and served. But that prospect is not an answer to the respondent’s complaint. In Femcare, Lehane J was not suggesting that the requirement for a properly pleaded statement of claim should be jettisoned in favour of the respondent receiving, in due course, the evidence that the applicant proposes to adduce. The respondent is entitled to insist upon the applicant pleading his case with an appropriate level of particularity so that the respondent knows now the case it must meet and so that the applicant will be confined, accordingly, to that case.

Conclusion

38    Paragraphs 94 to 96 of the statement of claim will be struck out. However, I will grant leave to the applicant to replead them in light of these reasons. Further, the applicant is to provide particulars of his loss and damage. In this connection, the respondent seeks the “usual calculations”, meaning particulars of the amount claimed and how that amount has been calculated, quantified, derived or obtained (including relevant calculations). In light of the fact that the applicant alleges loss consisting of the loss of seaweed cultivated by him and a drop in his production of seaweed, I can see no reason why those particulars should not be provided now.

Discovery

39    On 8 March 2017, the Court made orders that the parties exchange categories of documents for discovery. Agreement has been reached on the categories of documents that should be discovered by the applicant at this stage. However, there is a dispute between the parties as to the scope of the discovery that should be given by the respondent at this stage in respect of two categories of documents, namely categories 6 and 9:

6.    All documents which evidence, record or relate to the extent, impact or observation or possible extent, impact or observation of the Montara Oil Spill including relating to the extent, impact or observation of the spill on any of the following matters in the period 21 August to 15 December 2009:

a)    Oil or oil and dispersant mix on or below the ocean’s surface;

b)    Water quality including water sampling;

c)    ecology and flora;

d)    marine fauna;

e)    Indonesian waters and shoreline;

f)    Timor-Leste waters and shoreline;

g)     Australian waters and waters and shoreline;

…

9.    All documents which evidence, record or relate to the extent, impact or observation or possible extent, impact or observation of the Montara Oil Spill including relating to the extent, impact or observation of the spill on any of the following matters in the 3 year period after the Montara Oil Spill (November 2009 to November 2012):

    (a)    Oil or oil and dispersant mix on or below the ocean’s surface;

    (b)    Water quality including water sampling;

(c)    ecology and flora;

(d)    marine fauna;

(e)    Indonesian waters and shoreline;

(f)    Timor-Leste waters and shoreline;

(g)    Australian waters and waters and shoreline;

…

40    The respondent submits that the geographic areas listed in subparagraphs (e) to (g) of each case bear no sufficient relationship to the geographic areas in dispute in this proceeding. I agree.

41    The applicant seeks to justify the geographic scope of these categories on the basis of his understanding that the respondent has carried out “massive environmental studies … in the aftermath of [the Montara oil spill]”, albeit not in the geographic areas where the applicant’s and Group Members’ seaweed farming activities took place. The applicant said that, notwithstanding that these studies were carried out in other geographic areas, they are highly relevant. The applicant did not elaborate on why this is so.

42    The relevant inquiry in this case is the impact of the Montara oil spill on the applicant’s and Group Members’ seaweed farming activities. I am not persuaded that the impact of the Montara oil spill on other geographic areas is of such relevance that it would justify an order that discovery be given in the terms of categories 6 and 9.

43    There is an additional matter arising in relation to category 9, namely the specification of the time period November 2009 to November 2012. The applicant accepts that this period is arbitrary and that other, similarly arbitrary time periods could have been selected. Nevertheless, he argues that it is a reasonable assumption that much, if not all, of the damage alleged is likely to have taken place within that three year period.

44    There is no material before me which really assists in coming to a view as to the relevant period. Even so, I am satisfied that a three year period is not unreasonable. The respondent, itself, did not suggest an alternative period, and certainly some period should be specified.

45    There is a further matter to which I should refer. The respondent referred to the inclusion, in categories 6 and 9, of documents relating to the impact of dispersants. It submits that, in the absence of a properly formulated pleading alleging liability on its part for the impact of dispersants, these categories should be limited to the impact of oil (hydrocarbons). I note, however, that categories 6 and 9 refer to the impact of oil or the mixture of oil and dispersants, not the impact of dispersants alone. I am not persuaded, therefore, that the category requires the confinement that the respondent seeks.

46    In light of these conclusions, the parties should now be able to agree on the scope of categories 6 and 9.

47    The remaining matter in respect of discovery concerns whether the respondent should be required to file an affidavit from a responsible officer deposing to the source, location and types of documents held by it.

48    The applicant seeks such an affidavit on the basis that it would assist him to refine his final list of categories of documents to be discovered by the respondent. He referred to paragraph 7.8 of Practice Note GPN-CA which says that parties to a class action should consider the utility of requiring affidavits deposing to where relevant documents are stored, what types of documents exist, and in what form documents are held.

49    The respondent resists giving such an affidavit on the basis that it is unnecessary and inappropriate in circumstances where the parties have been able to achieve substantial agreement on the categories of documents to be discovered.

50    I do not think that the respondent’s answer deals with the applicant’s submission, which is that such an affidavit would assist him in formulating additional categories of documents for discovery. That said, I am not satisfied that the applicant has established a basis for the affidavit he seeks. It is not enough, in my view, that it might be thought that such an affidavit would be a good idea or that such an affidavit could be readily given, if required (neither proposition having been accepted by the respondent in any event). Real utility must be shown. Put another way, if the giving of such an affidavit is opposed (as here), the party seeking such an affidavit must demonstrate why, consistently with r 20.11 FCR, such an affidavit will facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible. That has not been done.

Disposition

51    The parties are to bring in agreed orders or, if not agreed, their proposed orders, giving effect to these reasons, and providing for the giving of discovery, by 4.00 pm on 16 June 2017. These orders are to include an order that the applicant pay the respondent’s costs of the interlocutory application dated 7 April 2017 and of the hearing on all matters argued on 29 May 2017.

Associate:

Dated:    9 June 2017