NuCoal Resources Limited v Independent Commission Against Corruption

[2014] NSWSC 1199

Supreme Court

New South Wales

Medium Neutral Citation:

NuCoal Resources Limited v Independent Commission Against Corruption [2014] NSWSC 1199

Hearing dates:

27/08/2014

Decision date:

27 August 2014

Jurisdiction:

Common Law

Before:

Campbell J

Decision:

(1)The defendant's application for summary dismissal is refused.

(2)Order that the defendant pay the plaintiff's costs of the application.

(3)I fix the matter for directions before the Common Law case management Registrar on Wednesday 3rd September at 9am.

(4)Liberty to apply within the next 24 hours to my Chambers for the fixing of any agreed timetable for further interlocutory steps.

Catchwords:

PROCEDURE - civil - application for summary dismissal - whether report of ICAC amenable to judicial review - whether utility in declaratory relief

Legislation Cited:

Mining Act 1992 (NSW), s 380A

Cases Cited:

Agar v Hyde [2000] HCA 41; 201 CLR 552;
Ainsworth v Criminal Justice Commission (1992) 175 CLR 564;
Duncan & ors v ICAC [2014] NSWSC 1018
Plaintiff M61/2010E v Commonwealth of Australia [2010] HCA 41; 243 CLR 319

Category:

Interlocutory applications

Parties:

NuCoal Resources Limited (Plaintiff)
Independent Commission Against Corruption (First Defendant)
The State of New South Wales (Second Defendant)

Representation:

Counsel: NJ Williams SC together with
J Kay-Hoyle (Plaintiff)
JS Emmett (Defendant)
Solicitors: Quinn Emanuel (Plaintiff)
Crown Solicitor's Office (Defendant)

File Number(s):

2014/78434

ex tempore judgment

1. I am deciding the defendant's application for summary dismissal. The proceedings brought by the plaintiff are for the judicial review of findings and recommendations made by the Independent Commission Against Corruption in a report of December 2013 addressing outstanding questions arising out of its investigations codenamed Operations Jasper and Acacia.

1. Given the importance of the litigation to the parties, and in particular the desirability of judicial review proceedings advancing with some efficiency, I think it better to give a decision now rather than to reserve and take time for further consideration. I apologise to the parties if the reasons I now express are considered not to do justice to the very careful and persuasive arguments advanced on both sides of the record.

1. The factual substratum underlying this dispute concerns a coal mining exploration licence at Doyle's Creek. That licence was the subject of the Commission's investigation, public inquiry and report known as Operation Acacia.

1. The December 2013 report answered certain questions posed by both Houses of Parliament arising out of its earlier investigations and, along the way, I think it is now accepted by the Commission, made findings concerning, to use a neutral word, the plaintiff's acquisition of shares in Doyle's Creek Mining Pty Limited and accordingly control of its exploration licence.

1. Those findings informed a recommendation the Commission made to the Parliament in answering the questions posed. That recommendation is set out, in substance, at page 15 and 16 of the December report. The recommendation adopts a view expressed by counsel who had been briefed to advise the Commission in relation to the questions posed by Parliament in the following terms:

The slate should be wiped clean by revoking or expunging all instruments that have been granted under the Mining Act in respect of the Doyles Creek area (to the extent that it is necessary to do so) and by not granting further instruments in respect of the pending applications.

Should it be considered appropriate, fresh consideration could be given to an allocation and [the plaintiff] could be a participant in that process. The Commission expressed no view as to whether or not that should occur." (my emphasis)

1. Based upon its acceptance of that view, the Commission, at page 20, recommended that the government consider enacting legislation to expunge, inter alia, the exploration licence for Doyle's Creek. It left for the consideration of the government whether such expungement should be accompanied by a power to compensate any innocent person affected by it.

1. As I have said, this matter comes before me by way of an application for summary dismissal. The plaintiff seeks judicial review of those recommendations and contends for relief by way of declaration that the findings of fact made "against" it were not made in accordance with law and that recommendation itself, likewise, was not made in accordance with law. I understand the phrase "not in accordance with law" to be an assertion of either error on the face of the record, or perhaps, more pertinently, jurisdictional error.

1. It is well, at the outset, to remind myself as counsel have reminded me, of the limited nature of the inquiry I am asked to conduct. The limitations have been discussed too many times to recite. However, it seems to me appropriate to refer to the plurality judgment in the High Court of Australia in Agar v Hyde [2000] HCA 41; 201 CLR 552 at 575, [57] their Honours stated:

It is, of course, well accepted that a court whose jurisdiction is regularly invoked in respect of a local defendant (most often by service of process on that defendant within the geographic limitations of the court's jurisdiction) should not decide the issues raised in those proceedings in a summary way except in the clearest of cases. Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.

1. It is clear from that statement of principle, and from the other leading authorities, that it is not for me to consider or decide whether the plaintiff's case is weak, indifferent or strong. It is only for me to decide whether I have that high degree of certainty that the plaintiff's case will fail if it goes to hearing in the ordinary way.

1. At the heart of the defendant's argument is the decision of McDougall J in Duncan & ors v ICAC [2014] NSWSC 1018 at [236] to [241] inclusive. The careful argument of Mr Emmett of counsel is that the claim of the corporate plaintiffs in that case is indistinguishable from NuCoal's claim in this case, so much so that the conclusions expressed by McDougall J at [237], [238] and [241] will necessarily govern the outcome of this case should it proceed to trial. I set out why his Honour said that the corporate plaintiffs claims must fail:

The first reason is that there is no decision or finding that is amenable to review. What the third report states are recommendations, based on the findings in the first report that are referred to and summarised in the third report. To the extent that the findings in the first report stand, the factual basis for the Commission's recommendations was available.

The relevant views expressed by the Commission in the third report are expressed in terms of "recommendations", and that is exactly what they are. It was for the Government to consider those recommendations, and, as it saw fit, to act upon them or to reject them.

In those circumstances, there is not in my view any decision that is susceptible of review.

...

The third reason is that in my view, even if the corporate plaintiffs had made out a basis for the grant of declaratory relief, that relief would lack utility. The grant of the declarations sought would not undo the legislative response to the first report. Any reputational damage that they have suffered follows, in my view, not from the recommendations in the third report but, rather, from the relevant findings contained in the first report.

1. I interpolate that the reference to "the third report" is the reference to the December 2013 report, the subject of the argument before me.

1. Mr Emmett accepts some factual differences. He accepts that such findings as were made about NuCoal's conduct are made in the "third report". He argues, however, that those findings are not legally capable of inflicting reputational damage. He maintains that McDougall J's third reason is equally apposite. The Commission did not deprive the plaintiff of anything. The expungement of the licence was achieved by legislation and this Court has no jurisdiction to inquire into or set aside that legislation. Parliament's reasons for passing the Act are non-justiciable.

1. Mr Williams, of Senior Counsel who appears for the plaintiff with Mr Kay Hoyle, argues that the relevant passage relied upon from McDougall J's decision represents what are effectively findings of fact; certainly not statements of principle. He points out that, were it otherwise, his Honour's dictum would be contrary to Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-2 per the plurality, and at 585 per Brennan J. At page 581 the plurality stated:

It does not follow that, because mandamus and certiorari are inapplicable, the appellants must leave this court without remedy. The law with respect to procedural fairness has developed in spite of the technical aspects of the prerogative writs. Moreover, had the appellants had advance notice of the Commission's intention to report adversely, its failure to observe the requirements of procedural fairness would have entitled them to relief by way of prohibition23 preventing it from reporting adversely without first giving them an opportunity to answer the matters put against them and to put submissions as to findings or recommendations that might be made. Instead, the report has been made and delivered in accordance with s 2.18 of the Act. And, although it had no legal effect or consequence, it had the practical effect of blackening the appellants' reputations. Prima facie, at least, these matters suggest that the appellants are entitled to declaratory relief of the kind granted in Chief Constable of North Wales Police v Evans.

(Citation omitted)

1. Brennan J's judgment was to similar effect. See also Plaintiff M61/2010E v Commonwealth of Australia [2010] HCA 41; 243 CLR 319 at pages 358 to 360.

1. I accept that it should not be supposed that McDougall J overlooked those statements of principle. Moreover, the decision in Duncan concerning the corporate plaintiffs is materially different inasmuch as only the third report, that of December 2013, was impugned but the relevant findings which affected those plaintiffs were made in the first report.

1. In my judgment, this point too supports the conclusion that what his Honour said about recommendations was a factual consideration rather than a statement of principle. That being so, it would be contrary to principle for me to treat myself as bound by those observations for the purpose of determining this application.

1. Moreover, I think there is force in the submissions of the plaintiff that at least, arguably, this case is different from Duncan because the grant of declaratory relief has possible utility in this case. It remains true that the grant of declarations if the plaintiff is ultimately successful would not undo the legislative response to the Commission's first report, as McDougall J put it. Nor would it undo the legislative response to the December 2013 report in this case. However, unlike that case, any reputational damage that the plaintiff may have suffered follows from the relevant findings contained in the December 2013 report.

1. I, with respect, reject Mr Emmett's argument that McDougall J's finding at [241] demonstrates that allowing the proceedings to progress to trial would be futile.

1. I turn then to the argument that the findings actually made cannot possibly be seen as affecting NuCoal's reputation. I think it appropriate to record that in the course of argument Mr Williams outlined that evidence at any hearing that occurs will establish that NuCoal paid $94 million for the acquisition of Doyle's Creek Mining Pty Limited, that is to say, for the acquisition of its licence, and expended a further sum of $30 million for further exploration, research and development in relation to its exploitation.

1. Without going through all of the findings of fact which are set out at pages 16 to 17 of the report and which were carefully addressed before me by counsel, I accept the argument of the plaintiff that the findings made are at least capable of adversely affecting the reputation of a commercial entity for probity and prudence in its commercial dealings.

1. By way of example only, finding (i) at page 17 is in the following terms:

Those (further funds) have been expended with eyes wide open to the uncertainties, risks and possibilities.

1. Although the Commission did not find that NuCoal was guilty of corrupt conduct, it did find that it was not in the position of a bona fide purchaser without notice. It seems to me that whether this impacts on its "innocence" or otherwise, ultimately must be a question to be decided at a hearing when all of the materials, which both parties wish to put before the Court, have been received in evidence. But I could well understand that an argument, whether it is ultimately accepted or not, that the findings that the company acted as it did in knowledge of the risk, referred to as a "sovereign risk" at times in argument, that the licence could be cancelled because of the taint of corruption surrounding its grant, could well affect, in the market place, its reputation for sound commercial judgment, for fair dealing and for prudence in its management systems and procedures.

1. I emphasise, I regard these matters as matters that need to be determined after a full hearing. I do not regard them as matters that can only be decided one way, that is, one way favourable to the defendant. That, of course, makes them triable issues which need to be determined at a hearing even if the evidence largely or even wholly consists of documentary evidence including review of the transcript and arguments before the commission in the light of the findings it actually made. It seems to me that the grounds advanced in the summons and in the detailed written submissions that the plaintiff has already filed in accordance with the timetable raise arguable issues for determination at the appropriate time.

1. I reiterate that I make no comment about the likelihood of success of the plaintiff's claim except to say that applying the decision in Agar I do not enjoy a high degree of certainty that if the proceedings were to go to trial in the ordinary way, it must fail.

1. I should return briefly to the utility of the proceedings. Naturally, as a declaration of right is a discretionary remedy, utility will be a significant issue for any trial judge for the reasons stated by the plurality in Ainsworth at page 582. Again, I am not satisfied that the defendant has demonstrated that there is no utility in the case proceeding. It seems to me, with respect, that each of the matters advanced by Mr Williams and Mr Kay Hoyle, at [22] to [24] of their submissions in relation to this application, is capable of persuading a judge in due course that there is utility in granting the remedy sought if otherwise satisfied as to error of law on the face of the record or jurisdictional error. Those three matters are direct reputational injury, the potential impact on future applications for mining licences having regard to the provisions of s 380A of the Mining Act 1992 (NSW) (I interpolate I accept Mr Emmett's argument that those questions may well be interrelated), and if it is successful, any claim the plaintiff might have for an ex gratia payment in lieu of compensation, might be enhanced. It seems to me that although it was Parliament's decision, and not the Commission's, to cancel the licence, the recommendation made by the Commission, in the sense discussed in Ainsworth, potentially gives rise to a remedy in this Court.

1. For these reasons, I make the following orders:

(1)   The defendant's application for summary dismissal is refused.

1. Mr Emmett argues that the issue of utility should have been addressed in the plaintiff's written argument in-chief filed some time ago and for that reason an appropriate order is a departure from the general rule to order that the costs should be costs in the cause.

1. Mr Williams argues on the other hand that had the timetable not been departed from and had the defendant filed its submissions in-chief, issue would have been joined on the utility issue by reference to the question of representational damage.

1. It seems to me that, with respect, the defendant has failed on all grounds and that the utility question was a question that was likely to be the subject of evidence at a trial. More significantly, in the efficient and commendable way in which both parties have presented their arguments, it is very difficult for me to separate out or apportion costs consequences by reference to the separate issues argued.

1. Accordingly, I think it appropriate to apply the general rule.

(2)   Order that the defendant pay the plaintiff's costs of the application.

(3)   I fix the matter for directions before the Common Law Case Management Registrar on Wednesday 3 September at 9am.

(4)   Liberty to apply within the next 24 hours to my Chambers for the fixing of any agreed timetable for further interlocutory steps.

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Decision last updated: 29 August 2014