Nawar v Newcrest Mining Ltd

Case [2022] FCA 424

FEDERAL COURT OF AUSTRALIA

Nawar v Newcrest Mining Ltd [2022] FCA 424

File number: NSD 1128 of 2021
Judgment of: CHEESEMAN J
Date of judgment: 22 April 2022
Catchwords:

PRACTICE AND PROCEDURE – application for summary dismissal pursuant to s 31A(2) of the Federal Court of Australia Act 1976 (Cth) or r 26.01(1) of the Federal Court Rules 2011 (Cth) – where plaintiff is a former shareholder of the defendant, Newcrest Mining Ltd, who seeks to recover loss and damage he claims to have suffered as a result of a drop in the Newcrest share price – where plaintiff alleges Newcrest engaged in misleading and deceptive conduct in breach of ss 180(1), 180(2)(c) and 1041H(1) of the Corporations Act 2001 (Cth) – where plaintiff alleges two former directors of Newcrest breached their duties under ss 182(1)(b), 183(1)(b), 184(1)(a), 184(2)(b) and 230 of the Corporations Act 2001 (Cth) – where plaintiff alleges, in the alternative, that the conduct of Newcrest was oppressive against him such as to give rise to relief under s 233 of the Corporations Act 2001 (Cth) – where the plaintiff is self-represented – whether the plaintiff has any reasonable prospects of successfully prosecuting his claims – Held: proceedings summarily dismissed.

PRACTICE AND PROCEDURE – Newcrest seeks relief, in the alternative, that the amended statement of claim be struck out in its entirety under rr 16.21(1)(c), (d) and (e) of the Federal Court Rules 2011 (Cth) – whether the pleading is evasive or ambiguous – whether the pleading is likely to cause prejudice, embarrassment or delay in the proceeding - whether the pleading discloses a reasonable cause of action - Held: If the proceedings were not summarily dismissed, the Court would strike out the amended statement of claim in its entirety and would not grant leave to re-plead.

Legislation:

Corporations Act 2001 (Cth), ss 180(1), 180(2)(c), 182(1)(b), 183(1)(b), 184(1)(a), 184(2)(b), 230, 232, 233, 1041H(1), 1041I(2)

Federal Court of Australia Act 1976 (Cth), s 31A(2)

Federal Court Rules 2011 (Cth), rr 16.21(1), 26.01(1)

Cases cited:

Ananda Marga Pracaraka Samgha Ltd v Tomas (No 6) [2013] FCA 284

Catto v Hampton Australia Ltd (in liq) (No 3) [2004] SASC 242; 89 SASR 234

Crawley v Short [2009] NSWCA 410; 262 ALR 654

Devon v Thirteenth Kaysan Pty Ltd [2016] FCA 357

Dey v Victorian Railway Commissioners [1949] HCA 1; 78 CLR 62

Donaldson v Natural Springs Australia Ltd [2015] FCA 498

General Steel Industries Inc v Commissioner for Railways(NSW) [1964] HCA 69; 112 CLR 125

Guglielman v Trescowthick [2004] FCA 236; ATPR 41-995

Hylepin Pty Ltd v Doshay Pty Ltd [2020] FCA 1370

Lukaszewicz v Polish Club Ltd [2019] NSWSC 446; 370 ALR 698

McGuirk v the University of New South Wales [2009] NSWSC 1424

Mulhern v Bank of Queensland [2015] FCA 44

Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] 1 Ch 204

Quail v Gibson [2021] FCA 1115

RBC Investor Services Australia Nominees Pty Ltd v Brickworks Ltd

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AGLC
Nawar v Newcrest Mining Ltd [2022] FCA 424
Case
[2022] FCA 424
Decision Date

CaseChat Overview and Summary

In Nawar v Newcrest Mining Ltd, the plaintiff, Mr Nawar, a former shareholder of Newcrest Mining Ltd, sought to recover loss and damage he claimed to have suffered as a result of a drop in the Newcrest share price. He alleged that Newcrest engaged in misleading and deceptive conduct in breach of sections 180(1), 180(2)(c) and 1041H(1) of the Corporations Act 2001 (Cth) and that two former directors of Newcrest breached their duties under sections 182(1)(b), 183(1)(b), 184(1)(a), 184(2)(b) and 230 of the Corporations Act 2001 (Cth). Alternatively, he claimed that the conduct of Newcrest was oppressive against him such as to give rise to relief under section 233 of the Corporations Act 2001 (Cth).

The court was required to decide whether the plaintiff had any reasonable prospects of successfully prosecuting his claims, and whether the pleading was evasive or ambiguous, likely to cause prejudice, embarrassment or delay in the proceeding, or did not disclose a reasonable cause of action. The court also had to consider whether to grant leave to re-plead if the amended statement of claim was struck out in its entirety.

The court held that the plaintiff did not have any reasonable prospects of successfully prosecuting his claims. The majority of the allegations pleaded in the amended statement of claim were alleged breaches by two former Newcrest directors of the duties owed by them as directors to Newcrest. The duties set out in sections 180 to 183 of the Act, are, by their terms, owed by directors and officers to the company. The plaintiff, as a shareholder, did not have standing to sue Newcrest in respect of the alleged conduct which he asserted to constitute a breach of duty by the former directors. He had not identified a valid claim by which he as a shareholder could obtain the relief he seeks against Newcrest in respect of his personal claims for loss and damage on the facts he alleges to comprise a breach of duty by the former directors. The court also held that if the proceedings were not summarily dismissed, the Court would strike out the amended statement of claim in its entirety and would not grant leave to re-plead as it would be futile.

The court ordered that the proceedings be summarily dismissed, the name of the defendant on the Court record be corrected from "Newcrest Mining" to "Newcrest Mining Ltd", and that the plaintiff pay the defendant’s costs of the defendant’s interlocutory application filed on 2 March 2022.

Orders

Orders of the court

1. The name of the defendant on the Court record be corrected from “Newcrest Mining” to “Newcrest Mining Ltd”.

2. The proceedings be summarily dismissed.

3. The plaintiff pay the defendant’s costs of the defendant’s interlocutory application filed on 2 March 2022.

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

Background

Background to the litigation

A strike out order is ordinarily accompanied by an order granting leave to re-plead, however, such leave ought not be given where it would be futile. Relevant to the utility of affording a party an opportunity to re-plead, is the process of amendment that has already occurred: Fuller v Toms [2012] FCA 27; 247 FCR 440 at 457 [87]. BACKGROUNDAttempts to articulate the claim Before outlining the allegations Mr Nawar makes against Newcrest, it is necessary to set out the procedural history, including in the period before the present proceedings were accepted for filing in this Court. This procedural history is relevant to the issue of whether there is utility in granting leave to re-plead if the strike out application is successful, in whole or in part. Prior to commencing the current proceedings, in and around May 2017, Mr Nawar prepared a document summarising his complaints about events involving Newcrest in the period from 2010 to 2014. He refers to this document as his testimony. He says that he sent the document to the registries of the High Court, the Federal Court and the Supreme Court, amongst others. He also sent it to Slater & Gordon, the solicitors for the lead applicant in the class action proceedings against Newcrest, which are described at [33] below. In October 2018, Mr Nawar received correspondence from this Court advising that he file an application before any steps could be taken. A communication from the Registry on 27 July 2020 encouraged Mr Nawar to seek legal advice. Thereafter in the period from 29 November 2019 to 21 October 2021 Mr Nawar submitted four successive documents styled as statements of claim. These documents were rejected by the Registry on the basis that they did not conform with the Rules. Ultimately, Mr Nawar commenced these proceedings in late October 2021 and served the originating process and statement of claim on Newcrest in November 2021. In his originating application, Mr Nawar relied on s 232 of the Act to claim an “oppression remedy”, which I understand to be a claim for relief under s 233 of the Act:On the facts stated in Statement of claim, I claim that:1 -The Australian gold miner Newcrest Mining(NCM) is responsible for the loss which I incurred as a shareholder in the company due to the negligence in managing the company affairs by the mentioned below former directors in breach of the corporation Act(2001)(Cth) section 232-oppression remedy.The negligent two former directors are:])Mr/Gregory Robinson, the former managing director and CEO of NCM2)Mr/Don Mercer, the former chairman of Newcrest mining.As a result of the negligence of the two former directors, the position of NCM became untenable with huge losses, a sharp drop in the company share price, and a stoppage of dividend payments.-Fearing that NCM may collapse, I sold my share in the company at a fraction of the price I paid for it, and as a result, I lost most of my superannuation money which I used to make a living.(As written, formatting corrected)

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The issue on the strike out application is to assess the form in which the claim is advanced in the current iteration of the pleadings. If the form is deficient on one of the bases identified in r 16.21(1) such that it should be struck out in whole or in part, then it is next necessary to consider whether leave to re-plead should be granted. The grant of leave to re-plead turns on whether, notwithstanding deficiencies in the pleading, there is utility in allowing Mr Nawar an opportunity to re-plead. When it comes to assessing whether there is utility in giving leave to re-plead it is relevant to consider whether Mr Nawar has a reasonable cause of action which may be articulated in a further attempt at pleading. Mr Nawar’s previous attempts to articulate his claims are relevant in this regard.CONCLUSION IN SUMMARY FORM For the reasons that follow, the proceedings are summarily dismissed. Had it been necessary to determine the alternative claim for relief, I would have ordered that the proceedings be struck out without leave to re-plead.LEGAL PRINCIPLESSummary dismissal Section 31A(2) of the FCA Act provides: (2)The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:(a)the first party is defending the proceeding or that part of the proceeding; and(b)the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.(3)For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:(a) hopeless; or(b) bound to fail;for it to have no reasonable prospect of success.(4)This section does not limit any powers that the Court has apart from this section.… Rule 26.01(1) of the Rules relevantly provides:(1)A party may apply to the Court for an order that judgment be given against another party because:(a)the applicant has no reasonable prospect of successfully prosecuting the proceeding or part of the proceeding; or(b)the proceeding is frivolous or vexatious; or(c)no reasonable cause of action is disclosed; or(d)the proceeding is an abuse of the process of the Court; or(e)the respondent has no reasonable prospect of successfully defending the proceeding or part of the proceeding. The applicable principles were recently summarised by Abraham J in Quail v Gibson [2021] FCA 1115 at [7] - [11]: [7]The power to dismiss an action summarily is not to be exercised lightly: Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118 (Spencer) at [60] and see [24], although it does not require that the proceedings to be seen as “frivolous”, “untenable” or “groundless”: Spencer at [24], [53]-[60]. The critical question is whether the moving party has persuaded the court that the opposing party has no reasonable prospect of success: Polar Aviation Pty Ltd v Civil Aviation Safety Authority (No 4) [2011] FCA 1126; (2011) 203 FCR 293 at [17].[8]The meaning of reasonable prospect of success in this provision was considered in Spencer with the plurality, Hayne, Crennan, Kiefel and Bell JJ observing at [59]-[60]:[59]In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like "clearly", "manifestly" or "obviously") as "frivolous", "untenable", "groundless" or "faulty". But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word "reasonable", in the phrase "no reasonable prospect", be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a "frivolous", "untenable", "groundless" or "faulty" claim.[60]Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is "no reasonable prospect" of success…[9]The inquiry required under s 31A is “not an enquiry directed to whether a certain and concluded determination could be made that the proceeding would necessarily fail”: Spencer at [52].[10]The assessment of whether a proceeding has no reasonable prospects of success necessitates the making of value judgments in the absence of a full and complete factual matrix and argument, with the result that the provision vests a discretion in the Court: Kowalski v MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117; (2009) 178 FCR 401 at [28]. [11]Rule 26.01 provides for circumstances in which a party can make an application to the Court for summary judgment which relevantly includes where the applicant has no reasonable prospects of successfully prosecuting the proceeding: r 26.01(a); where proceedings are vexatious or an abuse of process: r 26.01(b); and where no reasonable cause of action is disclosed: r 26.01(c).

Ratio Decidendi

Legal Principle Established

Newcrest relies on orders made in the Newcrest Class Action as a bar to Mr Nawar making a claim against it in respect of, or relating to, the subject matter of the Newcrest Class Action. CONSIDERATION I note at the outset that Mr Nawar tendered evidence and made submissions in opposition to Newcrest’s application. I am mindful of the difficulties faced by unrepresented litigants and have taken this into account in considering Mr Nawar’s submissions and in exercising the discretion on the present application. Summary DismissalClaims based on alleged mismanagement and breach of duty by former directors of Newcrest It is convenient to deal with the first two categories of Mr Nawar’s allegations against Newcrest together. As noted above, these categories concern the alleged mismanagement of the company and breaches of directors’ duties. Mr Nawar points to three matters to support the allegations of mismanagement and breach of duty. First, Mr Nawar alleges that Mr Mercer and Mr Robinson failed to properly manage Newcrest’s affairs. The alleged management failures appear to concern a failure by Mr Mercer and Mr Robinson to “correctly assess the various risks involved in dealings with the tax office, landlords and leases contracts of [Newcrest’s] mines and watchdog authorities ASIC and ASX”. Mr Nawar contends that these alleged management failures constituted a breach by Newcrest of ss 180(1) and 181 of the Act. Secondly, Mr Nawar alleges that Mr Mercer and Mr Robinson’s approval of Newcrest’s purchase of the Lihir mine in November 2010, without conducting proper investigations, amounted to a breach by Newcrest of ss 180(2)(c) and 184(1)(a) of the Act. Thirdly, Mr Nawar contends that a public statement by Mr Robinson on 8 February 2013 to the effect that “it would be hard for the gold miners if the price of gold dropped under US$1,400 per ounce” was a breach of ss 182(1)(b), 183(1)(b), 184(1)(a), 184(2)(b) and 230 of the Act because the statement caused detriment to the company. Mr Nawar contends that the statement was (a) “unsolicited and outside the written material”; (b) “distributed to the shareholders”; (c) made during a “difficult period for Newcrest”, and (d) “untrue as in the whole history of gold trading until the day of the statement, the price of gold was under $1400 per ounce and only above this value for about two years around the year 2011”. In essence Mr Nawar asserts that these alleged contraventions caused Newcrest’s share price to fall and that he suffered loss as a shareholder because he was forced to sell his shares at a fraction of their price. Has Mr Nawar identified a valid claim? In respect of the claims based on mismanagement and breach of directors’ duties, I am satisfied that Mr Nawar has not identified a valid claim against Newcrest for the reasons that follow. The majority of the allegations pleaded in the ASOC are alleged breaches by two former Newcrest directors of the duties owed by them as directors to Newcrest. The duties set out in ss 180 to 183 of the Act, are, by their terms, owed by directors and officers to the company. The duties are not duties owed by the company to shareholders. Newcrest submits, and I accept, that it is not open to Mr Nawar, as a shareholder, to sue Newcrest in respect of the alleged conduct which he asserts to constitute a breach of duty by the former directors. Mr Nawar does not have standing to do so in his personal capacity. He has not identified a valid claim by which he as a shareholder could obtain the relief he seeks against Newcrest in respect of his personal claims for loss and damage on the facts he alleges to comprise a breach of duty by the former directors. If not, does he have any reasonable prospects of doing so