Opal Packaging Australia Pty Ltd v Orora Ltd (Ruling)
[2024] VSC 81
•4 March 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2023 02183
| OPAL PACKAGING AUSTRALIA PTY LTD (ACN 636 682 883) | Plaintiff |
| v | |
| ORORA LTD (ACN 004 275 165) (and others according to the attached Schedule) | Defendants |
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JUDGE: | Waller J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 2 February 2024 |
DATE OF RULING: | 4 March 2024 |
CASE MAY BE CITED AS: | Opal Packaging Australia Pty Ltd v Orora Ltd (Ruling) |
MEDIUM NEUTRAL CITATION: | [2024] VSC 81 |
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PRACTICE AND PROCEDURE — Plaintiff’s application that proceeding be adjourned or stayed until further order or alternatively that a trial of separate questions be ordered — Defendants’ application that different separate questions be ordered— General principles regarding applications for the trial of a separate question — Plaintiff’s application that proceeding be adjourned granted— Defendants’ application refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | R Lancaster SC D Hume | Herbert Smith Freehills |
| For the Defendants | HNG Austin KC JA Findlay | Baker McKenzie |
HIS HONOUR:
A.INTRODUCTION
In October 2019 Opal Packaging Australia Pty Ltd (‘Opal’)[1] entered into a Share and Asset Purchase Agreement (as amended) (‘Amended SAPA’) with Orora Limited and Orora Packaging Australia Pty Ltd (together ‘Orora’)[2] under which Opal acquired assets and a business from Orora. The assets included properties in New South Wales (‘the Botany site’) and Tasmania (‘the Mowbray site’).
[1]Opal Packaging Australia Pty Ltd is the Plaintiff and Defendant by Counterclaim.
[2]Orora Limited and Orora Packaging Australia Pty Ltd are the Defendants and Plaintiffs by Counterclaim.
Under the Amended SAPA, Orora agreed to indemnify Opal in respect of any reasonable costs incurred by Opal to remediate any pre-existing contamination where such contamination was required by a government agency to be remediated under a formal notice (‘Environmental Indemnity’).[3]
[3]Clause 2.1 of Schedule 13 of the Amended SAPA. See paragraph 14 below.
Although environmental assessments have identified contamination at the Botany site (‘Botany Contamination’) and the Mowbray site (‘Mowbray Contamination’), no government agency has issued a formal notice requiring the contamination at either site to be remediated and no costs have been incurred remediating contamination under a formal notice.
Before commencing this proceeding, Opal sought to reach agreement with Orora that it need not commence legal proceedings on claims which had not yet arisen on the basis that no cause of action arose until the Environmental Indemnity was triggered by the issuing of a formal notice to remediate and the incurring of costs pursuant to such notice.
No agreement being reached, Opal commenced this proceeding on 23 May 2023. By its statement of claim Opal sought, by way of interlocutory relief, an order that the proceeding be stayed with liberty to relist on seven days’ notice, alternatively an order for a separate question or questions to be determined on terms to be formulated.
On 16 August 2023 Opal filed a summons seeking an order that:
(a) the proceeding be adjourned to a date to be fixed, but not less than six months from the date of the order;
(b) alternatively, that the proceeding be stayed until further order;
(c) alternatively, that separate questions (in terms set out) be tried before any trial of the proceeding.
In response, on 7 September 2023, Orora filed a summons seeking an order that separate questions (in different terms) be tried before any trial of the proceeding.
For the reasons set out below:
(a) I do not consider it is appropriate to order that separate questions in the terms proposed by Opal or by Orora be tried before any trial of the proceeding; and
(b) I will order that the proceeding be adjourned until 4 September 2024 or further order.
B.FACTUAL BACKGROUND[4]
[4]The facts set out below are drawn predominantly from the Statement of Agreed Facts filed on 14 September 2023.
Share and Asset Purchase Agreement
On or around 10 October 2019, the parties entered into a Share and Asset Purchase Agreement (‘SAPA’).
The SAPA provided for the purchase by Opal of a fibre packaging, paper, recycling, cartons and bags business, and associated assets from Orora.
The parties agreed to amend the SAPA on 13 March 2020, 8 April 2020, and twice on 29 April 2020.
‘Completion’ within the meaning of the Amended SAPA occurred on 30 April 2020.
The assets transferred to Opal by Orora pursuant to the Amended SAPA included:
(a) the site known as 1891 Botany Road, Matraville NSW (‘the Botany site’);[5] and
(b) the site known as 14–28 Remount Road, Mowbray TAS (‘the Mowbray site’).
[5]Referred to also as the Botany Paper Mill Site.
Clause 2.1 of Schedule 13 of the Amended SAPA provides:
The Vendors indemnify the Purchaser in respect of any:
(a)reasonable costs incurred by the Purchaser (or any Purchaser Group Member) to remediate any Pre-Existing Contamination where such contamination is required by a Government Agency to be remediated under a formal notice issued to either the Vendors or the Purchaser (or their respective Related Bodies Corporate) and whether such notice is issued before or after Completion; and
(b)fines, fees or penalties imposed or levied by any Government Agency in respect of a failure by a Vendor Group Entity to comply with a formal notice issued by a Government Agency prior to Completion,
Clause 19.3 of the Amended SAPA provides:
The Purchaser may not make or bring, and the Vendors are not liable to the Purchaser for any Uninsured Environmental Claim or Claim arising in respect of the Environmental Indemnity:
(a)if the amount of the Claim is less than $500,000; and
(b)in the case of a Claim, other than a Waste-to-Energy Claim or a Claim relating to Pre-Existing Contamination covered under paragraph (a) of the definition of Pre-Existing Contamination, unless and until the aggregate amount of all Single Claims exceeds $2,500,000,
and where clause 19.3(b) applies, the Vendors will only be liable for the excess over $2,500,000.
Clause 19.5(b) of the Amended SAPA provides:
The Purchaser may not make or bring, and no Vendor is liable to the Purchaser for:
…
any Claim in respect of the Environmental Indemnity (except for a Waste-to-Energy Project Claim) unless the Claim has been notified to the Vendors in accordance with clause 19.7 within six years after the Completion Date; …
Clause 19.15(f) of the Amended SAPA provides:
The Purchaser may not make or bring, and no Vendor is liable to the Purchaser for, any Claim arising from a breach of Warranty, or in respect of the Tax Indemnity or the Environmental Indemnity:
…
(f)contingent liability: to the extent that the Claim is based on a contingent liability, unless and until the liability becomes an actual liability and is due and payable (although, for the avoidance of doubt, nothing in this clause 19.15(f) restricts the Purchaser from making or bringing a Claim); …
Clause 19.6 of the Amended SAPA provides:
The Purchaser may not make or bring, and no Vendor is liable to the Purchaser for, any Claim under or in connection with this Agreement, if the Claim has not been agreed, compromised or settled and legal proceedings in respect of any Claim notified to the Vendors in accordance with clause 19.7 have not been commenced against a Vendor by being properly issued and validly served on the relevant Vendor:
(a)in the case of Tax Claims, within 24 months of giving notice; or
(b)in all other cases, within 12 months of giving the notice.
Clause 19.7 of the Amended SAPA, headed ‘Notice of Claims’, provides:
If the Purchaser becomes aware of any matter that gives or may give rise to a Claim under or in connection with this Agreement:
(a)the Purchaser must give notice of the Claim to the Vendors no later than 20 Business Days after it becomes aware of the matter;
(b)the notice must contain:
(i)relevant details of the matter;
(ii)if it is alleged that the matter constitutes a breach of this Agreement, the basis for that allegation; and
(iii)if reasonably practicable, an estimate of the amount of the loss or damage, if any, arising out of the matter; and
(c)the Purchaser must provide any information, documentation and materials in relation to the Claim the Vendors reasonably request to the Vendors and must procure that, following a written request from the Vendors, the Vendors and their Representatives are provided with reasonable and prompt access to the officers, employees, contractors, consultants and books and records of, and the premises owned or occupied by, the Purchaser and its Related Bodies Corporate for the purpose of evaluating and considering the Claim.
‘Claim’ is defined in cl 1.1 of the Amended SAPA as follows:
Claim means any claim, cost (including legal costs on a solicitor and client basis), damages, debt, expense, Tax, Liability, loss, obligation, allegation, suit, action, demand, cause of action, proceeding or judgment of any kind however calculated or caused, whether direct or indirect, consequential, incidental or economic.
Clause 25.1 of the Amended SAPA provides:
All notices must be:
(a)in legible writing and in English;
(b)addressed to the recipient at the address or email address set out below or to any other address or email address as that party may notify to the other party:
to OL:
Address: 109 Burwood Road, Hawthorn, Victoria, 3122 Attention: Company Secretary
Email: [email protected]
to OPAPL:
Address: 109 Burwood Road, Hawthorn, Victoria, 3122 Attention: Company Secretary
Email: [email protected]
to the Purchaser:
Address: 307 Ferntree Gully Road, Mount Waverley, Victoria, 3149 Attention: Katrina Bobeff, Company Secretary
Email: [email protected]
to the Purchaser’s Guarantor:
Address: 307 Ferntree Gully Road, Mount Waverley, Victoria, 3149 Attention: Katrina Bobeff, Company Secretary
Email: [email protected]
On or around 19 November 2019, Opal and Orora jointly engaged GHD Pty Ltd (‘GHD’), a suitably qualified independent technical expert consultant experienced in matters of contamination.
Contamination at the Mowbray Site
On or around 27 April 2020, GHD produced a Phase 1 Report for the Mowbray Site (‘Mowbray Phase 1 Report’). The Mowbray Phase 1 Report was received by Opal on or around 28 April 2020. It concluded that the Mowbray Site was considered to have contamination issues that are likely to trigger the need for a Regulatory Notice.
On or around 4 February 2021, GHD sent a draft Phase 2 Report for the Mowbray Site to the parties (‘Mowbray Phase 2 Draft Report’). It concluded that, in the event that contamination is confirmed through further investigation or if further investigation is not conducted in a timely manner, the likelihood rating was ‘likely’ for receiving a Regulatory Notice.
On or around 19 April 2022, GHD sent a Phase 2 Report for the Mowbray Site to the parties (‘Mowbray Phase 2 Report’). It concluded that, in the event that contamination is confirmed through further investigation or if further investigation is not conducted in a timely manner, the likelihood rating was ‘possible’ for receiving a Regulatory Notice. It further stated that where a Regulatory Notice is issued it is typically in the form of an Investigation Notice (to assist the Environment Protection Authority to determine the extent of environmental harm and appropriate management options) and where further investigation warrants clean up to ensure people and the environment are protected from harm caused by the contamination, a subsequent Remediation Notice can be issued.
On or around 17 May 2022, GHD wrote to the parties and stated that, amongst other things, the Mowbray Phase 2 Report was considered final.
No changes were made to the Mowbray Phase 2 Report after 19 April 2022.
On 15 June 2022, Opal sent an email to the Tasmanian Environment Protection Authority (‘Tasmanian EPA’) notifying it of contamination at the Mowbray Site.
On 4 August 2022, the Tasmanian EPA sent a letter to Opal containing questions relating to the identified contamination at the Mowbray Site.
On 2 September 2022, Opal sent a letter to the Tasmanian EPA in response to the Tasmanian EPA’s letter of 4 August 2022.
On 21 December 2022, Opal sent an email to the Tasmanian EPA, which provided an update on additional investigations being carried out by Ramboll Australia Pty Ltd at the Mowbray Site.
Contamination at the Botany Site
On or around 6 October 2020, GHD produced an initial report for the Botany Site (‘Botany Initial Report’). The report identified 15 environmental risk issues for the site that could trigger the need for regulatory action and remedial works. Five of the issues were considered to have a ‘possible’ likelihood of triggering a Regulatory Notice.. The remaining issues were stated to be ‘unlikely’ or ‘very unlikely’ to trigger a Regulatory Notice. The report recommended further investigation.
On or around 29 January 2021, GHD produced a draft Phase 2 Report for the Botany Site (‘Botany Draft Phase 2 Report’). The report provided a ‘revised regulatory notice trigger likelihood rating’ in respect of the 15 environmental risk issues identified in the Botany Initial Report. It stated that two of the environmental risk issues were considered ‘likely’ to trigger a Regulatory Notice and four of the environmental risk issues had a ‘possible’ likelihood of triggering a Regulatory Notice. The remaining issues were stated to be ‘unlikely’ or ‘very unlikely’ to trigger a Regulatory Notice.
On or around 19 April 2022, GHD sent a Phase 2 Report for the Botany Site dated 24 February 2022 to the parties (‘Botany Phase 2 Report’). In respect of the 15 environmental risk issues identified in the Botany Initial Report, it stated that six of the environmental risk issues had a ‘possible’ likelihood of triggering a Regulatory Notice. The remaining issues were stated to be ‘unlikely’ or ‘very unlikely’ to trigger a Regulatory Notice.
On or around 17 May 2022, GHD wrote to the parties and stated that, among other things, the Botany Phase 2 Report was considered final.
No changes were made to the Botany Phase 2 Report after 19 April 2022.
On 15 May 2023, Opal notified the NSW Environment Protection Authority of contamination at the Botany Site.
Correspondence between the Parties’ Solicitors
On 11 August 2022, the solicitors for Opal (‘HSF’) sent a letter to the solicitors for Orora (‘Bakers’) (‘11 August 2022 Letter’). The letter stated that Opal had become aware of contamination at the Mowbray Site and the Botany Site, but that Opal’s view was that a requirement to notify under cl 19.7 of the SAPA had not yet arisen. However, against the possibility that Orora took a different view, the letter sought to:
(a) set out the matters of which Opal would give notice to Orora under cl 19.7 if it were required to do so at that time, with the letter purporting to satisfy the requirements of cl 19.7 if it were applicable; and
(b) confirm that Orora agreed with Opal’s position that the notification requirement under cl 19.7 had not yet arisen; or, in the alternative, that Orora would waive any requirement that might arise under cl 19.6 upon Opal to issue and serve legal proceedings in respect of the identified contamination within 12 months of the letter.
On 23 August 2022, Bakers sent a letter to HSF (‘23 August 2022 Letter’). It stated that Orora did not believe it was necessary and therefore did not intend to respond, at that time, to the 11 August 2022 Letter and that Orora continued to reserve all of their rights at law including, but not limited to, their rights under the SAPA.
On 14 April 2023, HSF sent a letter to Bakers (‘14 April 2023 Letter’). The letter’s stated purpose was to seek to reach a genuine agreement with Orora on the relevant matters set out in the 11 August 2022 Letter without recourse to legal proceedings. It reiterated the same requests.
On 26 April 2023, Bakers sent a letter to HSF (‘26 April 2023 Letter’). Orora repeated their position as stated in the 23 August 2022 Letter.
C.PLEADINGS
On 23 May 2023, Opal issued this proceeding and on 24 May 2023 served its Writ and Statement of Claim on Orora. An Amended Writ and Amended Statement of Claim were filed on 3 July 2023.
In substance Opal alleges that on the proper construction of the Amended SAPA, Opal was not and is not yet ‘aware of any matter that gives or may give rise to a Claim’ within the meaning of cl 19.7.
Opal seeks, by way of interlocutory relief, an order that the proceeding be stayed with liberty to relist on seven days’ notice, alternatively an order for a separate question or questions to be determined on terms to be formulated.
Opal seeks as final relief:
(a) a declaration that:
(i) Opal does not become aware of any matter that gives or may give rise to a Claim under or in connection with the Environmental Indemnity within the meaning of cl 19.7 unless and until:
(A) it becomes aware of circumstances indicating that there is or may be an existing accrued right under the Amended SAPA; and
(B) further or alternatively, it becomes aware of circumstances indicating that there will or may, within a reasonable future time, be an accrued right under the Amended SAPA; and
(C) further or alternatively, it becomes aware of circumstances indicating a reasonable probability that there will or may, within a reasonable future time, be an accrued right under the Amended SAPA;
(ii) no notification obligation under cl 19.7 arises until a formal notice requiring remediation of any Pre-Existing Contamination is issued by a government agency;
(iii) the mere fact of Contamination or Pre-Existing Contamination being identified at a site does not of itself give rise to a notification obligation under cl 19.7;
(b) a declaration that Opal has not been subject to an obligation under cl 19.7(a) in respect of any claim or potential claim under cl 2.1 of Sch 13 which arises or may arise out of the Mowbray Contamination and/or the Botany Contamination;
(c) alternatively, a declaration that:
(i) Opal has a claim against Orora under the Environmental Indemnity in respect of the Mowbray Contamination and the Botany Contamination and Orora will be obliged to indemnify Opal in respect of its reasonable costs incurred to remediate such contamination if remediation is required under a formal notice issued by a government agency ; and
(ii) for the purposes of cl 19.6 of the Amended SAPA, by its Writ and Statement of Claim Opal has commenced proceedings in respect of each such Claim, and that Opal may make and bring each such Claim;
(d) alternatively, an order that Orora pay Opal all reasonable costs incurred by Opal to remediate any Pre-Existing Contamination where such contamination is required by a government agency to be remediated under a formal notice issued to either Opal or Orora and whether such notice is issued before or after Completion.
On 3 July 2023, Orora filed and served their Defence and Counterclaim. An Amended Defence and Counterclaim was filed on 1 September 2023.
In substance Orora alleges that on the proper construction of the Amended SAPA, Opal was ‘aware’ of a ‘matter that gives or may give rise to a Claim’ within the meaning of cl 19.7 by, at the latest, 14 June 2022 at the Mowbray Site and 17 May 2022 at the Botany Site by reason of Opal receiving the various GHD reports referred to above.
Orora alleges that the matters disclosed in each of the GHD reports were of such a character that they:
(a) gave rise to a state of affairs from which the prospects of a Claim being made in the future were real as opposed to false, fanciful or imaginary; and/or
(b) may reasonably be regarded as matters which may give rise to a Claim or which any reasonable person in Opal’s position would recognise as a matter which may give rise to a Claim.
Orora seeks as final relief in its counterclaim:
(a) a declaration that Opal’s claim to be entitled to be indemnified under the Environmental Indemnity in respect of the Mowbray Contamination and the Botany Contamination is barred and precluded by cl 19.5(b) by reason of its failure to notify compliant with clauses 19.7(a)–(b) and 25.1 of the Amended SAPA;
(b) a declaration that Opal’s claim to be entitled to be indemnified under the Environmental Indemnity in respect of the Botany Contamination is barred and precluded by cl 19.6(b) by reason of its failure to commence a proceeding within 12 months of purporting to give notice;
(c) a declaration that Opal’s claim to be entitled to be indemnified under the Environmental Indemnity in respect of the Mowbray Contamination and the Botany Contamination is barred and precluded by cl 19.15(f) by reason that it is a claim in relation to a contingent liability;
(d) a declaration that Opal is not permitted to make or bring a Claim under the Environmental Indemnity, in respect of the Mowbray Contamination and the Botany Contamination; and
(e) a declaration that Opal assumed responsibility on and from Completion for the performance, satisfaction and discharge of all of the Orora’s liabilities in respect of any Contamination at the Mowbray Site and the Botany Site, and is liable to indemnify Orora against any Claims against Orora, and which arise out of or in connection with Orora’s liabilities in respect of any Contamination.
In its Reply and Defence to Counterclaim filed on 2 August 2023, Opal alleges that Opal and Orora acted on the common and underlying assumption that the requirements and operation of cl 25.1 would not be enforced or otherwise relied on by the parties and that Orora is estopped from departing from that convention.
D.OPAL’S SUMMONS
By its summons, Opal seeks :
(a) an order that the proceeding be adjourned to a date to be fixed, but not less than six months from the date of the orders, with liberty to relist;
(b) alternatively, an order that the proceeding be stayed until further order, with liberty to relist;
(c) further alternatively, an order pursuant to r 47.04 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’) and the inherent powers of the Court that the following questions be tried separately before any trial of the proceeding:
(a)Prayer 1 under the heading ‘Final Relief’ in the Statement of Claim filed on 23 May 2023 and paragraph 62 of the Statement of Claim;[[6]]
(b)whether, in the event that the Counterclaimants establish the matter/s alleged in sub-paragraphs (i) and/or (ii) of the particulars to paragraphs 57B and 57D of the Amended Defence and Counterclaim filed on 1 September 2023,[[7]] the Defendant by Counterclaim was, by reason of one or both of those matters being established, obliged to give a notice of a ‘Claim’ to the Plaintiffs by Counterclaim under cl 19.7(a) of the Amended SAPA.
E.ORORA’S SUMMONS
[6]See paragraph 45(a) above.
[7]See paragraph 48 above.
By their summons, Orora seeks an order pursuant to r 47.04 of the Rules that there be a separate trial, before the trial of the proceeding, to determine the following questions:
Mowbray
(a)Whether the Plaintiff is barred and precluded, in the events that have happened, from bringing its claims against the Defendants under the Environmental Indemnity (Environmental Indemnity) in clause 2.1 of Schedule 13 of the Share and Asset Purchase Agreement (SAPA) (as amended) in respect of the Mowbray Contamination as defined in paragraph 39 of the Amended Statement of Claim (Mowbray Contamination) by reason of any failure to comply with the requirements of clauses 19.5(b) and 19.7(a) and (b) of the SAPA (as amended).
(b)Whether the Plaintiff is barred and precluded, in the events that have happened, from bringing its claims against the Defendants under the Environmental Indemnity in clause 2.1 of Schedule 13 of the SAPA (as amended) in respect of the Mowbray Contamination by reason of any failure to comply with the requirements of clauses 19.5(b) and 25.1 of the SAPA (as amended).
Botany
(a)Whether the Plaintiff is barred and precluded, in the events that have happened, from bringing its claims against the Defendants under the Environmental Indemnity in clause 2.1 of Schedule 13 of the SAPA (as amended) in respect of the Botany Contamination as defined in paragraph 42 of the Amended Statement of Claim (Botany Contamination) by reason of any failure to comply with the requirements of clauses 19.5(b), 19.7(a) and (b) and 19.6(b) of the SAPA (as amended).
(b)Whether the Plaintiff is barred and precluded, in the events that have happened, from bringing its claims against the Defendants under the Environmental Indemnity in clause 2.1 of Schedule 13 of the SAPA (as amended) in respect of the Botany Contamination by reason of any failure to comply with the requirements of clauses 19.5(b) and 25.1 of the SAPA (as amended).
F.SUBMISSIONS
Opal’s Submissions
Opal submits that the proceeding should be adjourned for a period of not less than six months from the date of the orders, with liberty to relist. Alternatively, Opal seeks that the proceeding be stayed, with liberty to relist. Opal’s expectation is that the liberty to relist will be exercised if and when the commercial dispute between the parties ripens, for example, if and when a formal notice is issued by a government agency that requires contamination to be remediated and costs are incurred.
Opal acknowledges that it is unusual for a plaintiff to contend that its own case should be held in abeyance. Opal submits that this position arises because of the unusual drafting of the Amended SAPA which obliges a party to commence legal proceedings within a relatively short time period and, on the view propounded by Orora, even if the plaintiff’s cause of action has not yet accrued.
Opal submits that it is appropriate to stay or, alternatively, adjourn the proceeding for the following reasons:
(a) Formal notices to remediate may never be issued by a government agency. Even if a formal notice is issued, that may not occur for over a year. If formal notices are not issued, the Environmental Indemnity will never arise and it will never be necessary to decide any of the various legal and factual issues currently identified in the pleadings. Significant costs incurred by the parties and court time will have been wasted.
(b) The costs incurred in responding to any formal notice to remediate have not yet been incurred. The nature and quantum of those costs are not, and cannot be, known. Those costs are not the subject of an existing cause of action, nor are they the subject of an existing pleaded claim or evidence.
(c) If a formal notice is issued, that will need to form part of the evidence. As and when costs are incurred to remediate in accordance with any such notice, further evidence will be needed to verify costs. The pleadings will need to be amended to allege the existence of the formal notice and the steps taken pursuant to it. Orora may file an amended defence taking issue, for example, with the reasonableness of the costs incurred. Expert evidence may be required on that issue. Similar issues may arise in respect of other sites, in circumstances where it is efficient to resolve all issues relating to all sites together. It is therefore premature to move the proceeding forward at this point.
(d) The Amended Counterclaim is also premature. The gist of the Amended Counterclaim is that all claims in relation to the Mowbray Site and the Botany Site are barred. A point of that kind is best and most efficiently taken once all claims in relation to those sites have accrued, are pleaded and are the subject of evidence, giving contours to the claim. At present, all claims in relation to the Mowbray Site and the Botany Site have not accrued, have not been pleaded, and cannot be the subject of evidence.
If the proceeding is not held in abeyance, Opal submits in the alternative that the separate questions it proposes raise legal issues concerning the proper construction of cl 19.7 of the Amended SAPA. It submits that these questions can be efficiently resolved through legal argument, not exceeding one day. Opal submits that if its position on the proper construction of cl 19.7 is accepted, it will follow that there is no existing obligation on Opal to notify Orora of claims, and there can be no existing time bar under cl 19.5 or cl 19.6. The result will be that the Orora’s current defence is wholly or partially flawed. The further practical result will likely be that the proceeding can and should appropriately be adjourned because it will be reasonably clear that it is premature and its progression should await the issue of formal notices and the incurring of costs. The further likely practical result will be that the parties will have certainty going forward as to when notifications must be given (under cl 19.7) and when legal proceedings must be commenced (under cl 19.6).
Opal submits that the separate questions proposed by Orora are not appropriate for the following reasons:
(a) Orora’s questions depend on the correctness of unspecified ‘events that have happened’. The ‘events that have happened’ are best determined at a trial. It is not appropriate to order a separate question which depends on the correctness of’ unspecified facts. The use of the expression ‘events that have happened’ (emphasis added) exposes a vice in Orora’s proposal: Orora’s case assumes that it is only events that have happened that are relevant to the present claim; but there are events yet to happen which will determine whether Opal has a claim and if so what its nature is.
(b) Orora’s questions seek an answer that Opal is barred from bringing ‘its claims’. The ‘claims’ referred to are not specified. There is no utility in answering a question that unspecified ‘claims’ are barred. This is not just a technical point. Opal’s claims on the Environmental Indemnity have not yet accrued (and may never accrue), are not yet pleaded or the subject of evidence, and Opal will have a new claim on the indemnity each time it incurs costs. If the question Orora wants answered is to the effect that Opal is barred from bringing unspecified, non-existent, unaccrued, unpleaded possible future claims, that is a question which, plainly, is not ripe and should not be ordered. If the only question Orora wants answered is that some other category of claim (not yet specified) is precluded, the separate question is similarly inappropriate because it is not directed to resolving the real commercial dispute between the parties.
(c) Although Orora has not identified the ‘events that have happened’, it is likely that those events will raise issues of disputed fact, not appropriate for resolution on a separate question. The disputed issues of fact concern at least: the existence, nature and extent of ‘Pre-Existing Contamination’ at the two sites; the likelihood that causes of action will accrue in the future based on certain information;[8] what a reasonable person would make of information in various documents;[9] whether there was and is an estoppel;[10] the scope of the authority of Orora’s solicitors, and when certain information came to the attention of Orora.[11] These are matters about which there will be a need for lay evidence and expert evidence, directed to the likelihood of certain matters eventuating. These are not matters which are appropriate for resolution by separate questions. It is reasonably likely that Opal will need to call lay and expert witnesses on the separate questions, who would then be exposed to duplicative cross-examination at the final hearing. Orora has indicated that they expect the separate questions themselves would take 3–4 days to determine.[12] That alone is enough to indicate that stating them is not an efficient course. It would be most undesirable to spend 3–4 days hearing separate questions, have them answered in a particular way, have an appeal which reaches a different decision to the primary judge and, in the meantime, have the underlying facts develop in such a way which confirms that the separate questions were premature (e.g. because the commercial dispute never arises).
[8]See paragraphs 57D and 57F of the Amended Defence.
[9]See paragraphs 57D and 57F of the Amended Defence.
[10]See paragraph 2(c) of the Reply and the Defence to the Counterclaim.
[11]See paragraph 34 of the Reply and the Defence to the Counterclaim.
[12]See Affidavit of Peter Michael Lucarelli dated 22 September 2023 at [11]. In oral submissions, Senior counsel for Orora said the trial of Orora’s separate questions could occupy ‘five or more days’: Transcript of Proceedings (2 February 2024) 62.6.
In oral submissions in reply senior counsel for Opal, as ‘a final fallback position’, submitted that if the Court was minded to accept Orora’s separate questions they should be supplemented to also include Opal’s separate questions. Senior counsel handed to the Court a marked up document containing both sets of questions.
Orora’s Submissions
In respect of its summons, Orora submits that, irrespective of whether Opal ultimately incurs any reasonable costs to remediate the Mowbray Site or the Botany Site pursuant to a formal notice issued by a government agency (‘Remediation Costs’), Opal will be precluded and barred from claiming those costs under the Environmental Indemnity unless it has complied with the requirements of the Amended SAPA in so far as the Remediation Costs arise from matters in respect of which (1) Opal possessed the relevant knowledge of circumstances and (2) failed to notify them in accordance with the Amended SAPA.
Orora submits that it has identified the matters of which Opal was aware which might give rise to a claim, when that awareness arose and which were not notified in accordance with the Amended SAPA.[13] It is those matters which will be barred from being the subject of a Claim under the Environmental Indemnity. Thus, Orora does not agree with Opal’s argument that Orora’s position is premature because ‘whether a claim is barred must depend on the contours of the precise claim being advanced’.[14] To the contrary, Orora submits that its questions will decide the ‘contours’ of Claims which cannot now be advanced at all.
[13]Amended Defence, [39(b)-(h)], [57A]-[57B], [58] (Mowbray); [42(b)-(d)], [57C]-[57D], [58] (Botany).
[14]Opal’s Brief Submissions in respect of the Summonses dated 14 September 2023, [4].
Orora submits that it will therefore be necessary for Opal to prove either that the time for the giving of notice has not arisen, or that the notice it has purported to give under the Amended SAPA in relation to the Mowbray Contamination and the Botany Contamination has been properly given. If not, Orora will not be liable to indemnify Opal in relation to the Remediation Costs (now or at some undefined time in the future). If notice has been properly given, the issues in dispute in the proceeding will have substantially narrowed because important aspects of Orora’s defence and counterclaim will have been determined.
Orora submits that given Opal’s position that the obligation to notify has not yet arisen, that no commercial dispute has yet crystalised and that the proceeding need not have been commenced and that it does not wish to prosecute the proceeding (which is self-evident from its application for a stay), if the Court finds that Opal need not have commenced the proceeding, presumably it will seek leave to discontinue the proceeding, thus bringing the proceeding to an end.
Orora submits that significant time and cost will be saved if the proceeding (or potential Claims raised by the proceeding) are able to be brought to an end following the determination of the separate questions (which is the likely outcome after the separate questions hearing).
The issues (and sub-issues) which are to be determined under Orora’s separate questions were more fully set out in an annexure to Orora’s written submissions. The annexure was in the following terms:
ANNEXURE B
Issues arising on Orora’s separate questions
* These issues relate to whether the Plaintiff (Opal) became required to give notice of known circumstances, whether it did so in accordance with the Amended SAPA and within any time limit, and (if not) the consequences of it not having done so – they arise in respect of both the Mowbray Site and the Botany Paper Mill Site
·The proper construction of cl. 19.7 of the Amended SAPA (Amended Statement of Claim, [62]);
·Whether compliance with cl. 19.7 of the Amended SAPA was a condition precedent to the arising of a right to bring a claim: (Reply and Defence to Counterclaim, [35(b)]);
·Whether the time limit imposed by cl. 19.5(b) of the Amended SAPA (if any) is six years after the Completion Date (which is yet to arise) (Reply and Defence to Counterclaim, [35(a)]) or, rather, lack of notification of the relevant circumstances within 20 Business Days from the acquisition of knowledge within the meaning of cl. 19.7(a) of the Amended SAPA bars the making of a Claim in respect of the Environmental Indemnity (Amended Defence, [57A]-[57D], [62(a)];
·Whether Opal became aware, on the dates pleaded by the Defendants (together, Orora), of circumstances which may give rise to a Claim within the meaning of cl. 19.7(a) of the Amended SAPA (Amended Defence, [57A]-[57D]);
·Whether Opal failed to give notice to Orora of those circumstances within 20 Business Days of the date on which any such knowledge was acquired in compliance with cl. 19.7(a) and (b) of the Amended SAPA (Amended Defence, [57A]-[57D]);
·Whether Opal is thereby barred and precluded from bringing its claims in the proceeding by operation of cl. 19.5(b) of the Amended SAPA (Amended Defence, [62A]).
* These questions are premised on Opal having given timely notice but raises the issue of whether strict compliance with cl 25.1 was required for it to have given valid notice – they arise in respect of both the Mowbray Site and the Botany Paper Mill Site
·The proper construction of cl 25.1 of the Amended SAPA (Reply and Defence to Counterclaim, [2(c)(i)]);
·Whether cl. 25.1 imposed a condition precedent for the provision of notice for the purposes of cl. 19.7 of the Amended SAPA or otherwise (Reply and Defence to Counterclaim, [2(c)(ii)]);
·Whether Orora is estopped by convention from relying on non-compliance with the mode of notification requirements of cl. 25.1 of the Amended SAPA (Reply and Defence to Counterclaim, [2(c)(iii)]);
·Whether, if strict compliance with cl. 25.1 of the Amended SAPA was required, Opal gave valid notice by its letter of 11 August 2022 (Amended Statement of Claim, [58]; Amended Defence, [58(a)]);
·Whether, if strict compliance with cl. 25.1 of the Amended SAPA was not required, Opal gave valid notice by its letter of 11 August 2022 (Reply and Defence to Counterclaim, [34]);
·Whether Opal failed to give notice to Orora of those circumstances within 20 Business Days of the date on which any such knowledge was acquired in compliance with cl. 19.7(a) and (b) of the Amended SAPA (Amended Defence, [57A]-[57D]);
·Whether Opal is thereby barred and precluded from bringing its claims in the proceeding by operation of cl. 19.5(b) of the Amended SAPA (Amended Defence, [62A]).
* This question is premised on Opal having given timely notice and in compliance with cl 25.1 – this issue arises only in respect of the Botany Paper Mill Site
·Whether Opal failed to properly issue and validly serve proceedings on Orora in respect of its claims (other than in respect of the Botany Groundwater Contamination Issue) within 12 months of giving the notice of those matters by the 11 August 2022 Letter, in compliance with cl. 19.6(b) of the Amended SAPA (Amended Defence, [58(ba)]);
·Whether Opal is thereby barred and precluded from bringing its claims (other than in respect of the Botany Groundwater Contamination Issue) in the proceeding by operation of cl. 19.6(b) of the Amended SAPA (Amended Defence, [62A]).
In opposing Opal’s summons, Orora submits that the cases where a stay has been granted have generally involved the postponement of the determination of the subject proceeding pending some other defined activity concluding, most often a proceeding raising a related issue.
Orora submits that a stay should not be granted and Opal, having commenced this proceeding, ought to be ready to take positive steps to progress it. Orora submits that it should not be faced with the uncertainty, for an indeterminate period, of an unresolved claim under the Environmental Indemnity, which may be up to the capped amount of $90 million.
Orora submits that it is a ‘grave matter’ for the Court to interfere with a party’s prima facie right to have its action tried in the ordinary course of the procedure and business of the Court and that the burden is on the party seeking a stay to show that it is just and convenient for those ordinary rights to be interfered with.
Orora’s written submissions did not address Opal’s primary position that the matter should be adjourned for a period not less than six months from the date of the orders, with liberty to relist. In oral submissions Orora’s senior counsel said that ‘adjourning or staying to wait and see what happens in the future is not going to affect the time bar defences’.[15]
[15]Transcript of Proceedings (2 February 2024) 36.22–34.
In respect of Opal’s proposed separate question, Orora submits that while, in effect, it is a subset of Orora’s separate questions, Opal’s proposed question only concerns whether, on the proper construction of clause 19.7 of the Amended SAPA, notice was required to be given, but stops short of dealing with the issue of whether, if notice was required to be given, it was properly given. Orora submits that, in this regard, Opal’s proposed question ‘smacks of hypotheticality’.
G.LEGAL PRINCIPLES
Stay or Adjournment
The court has a wide jurisdiction to temporarily stay proceedings in the interests of justice. This is an incident of its general power to control its own proceedings, and is recognised under s 30 of the Supreme Court Act 1986.[16]
[16]YZ v Beit Habonim Pty Ltd & Anor [2023] VSC 222, [104].
The Court also has power to make directions, including directions adjourning a matter. Further, under s 47(1) of the Civil Procedure Act 2010 (Vic) (Civil Procedure Act), the Court has power to ‘give any direction or make any order it considers appropriate, including any directions given or orders made— (a) in the interests of the administration of justice; or (b) in the public interest’. In making any order or giving any direction in a civil proceeding, the Court shall further the overarching purpose of the Civil Procedure Act which is ‘to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute’.[17]
[17]Section 7(1).
Separate Questions
Rule 47.04(a) of the Rules provides that the Court may order that ‘any question in a proceeding be tried before, at or after the trial of the proceeding, and may state the question or give directions as to the manner in which it shall be stated’.
The principles governing the exercise of the discretion in r 47.04 were summarised by the Court of Appeal in Murphy v Victoria in the following terms:[18]
[18](2014) 45 VR 119, 126 [28].
1)A separate trial should be ordered under r 47.04 only with great caution and only in a clear case.
2)The attraction of trials of issues rather than of cases in their totality, “are often more chimerical than real”, so that separate trials should “only be embarked upon when their utility, economy and fairness to the parties are beyond question”.
3)The advantages of trying separate questions for one party may unfairly disadvantage another party, including because the questions will be determined without the benefit of all the evidence relevant to the proceeding.
4)There should be no trial of a separate question on the basis of assumed facts unless the facts are agreed or can readily be determined judicially. Otherwise, the parties remain free to dispute the relevant facts at any later trial.
5)As a general rule, it is inappropriate to order that a preliminary issue be isolated for determination unless the determination of the issue in favour of the plaintiff or the defendant will put an end to the action, or where there is a clear line of demarcation between issues and the determination of one issue in isolation from the other issues in the case is likely to save inconvenience and expense.
6)Factors which tell against making order under r 47.04 include that the separate determination of the question:
a)may give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial;
b)may result in significant overlap between the evidence adduced on the hearing of the separate question and at trial; possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding; and
c)may prolong rather than shorten the litigation.
H.CONSIDERATION
The fact that Opal has commenced the proceeding but now wishes for it to be adjourned or stayed is unusual. However, as Opal submits, the Amended SAPA obliges a party to commence legal proceedings within a relatively short time period in circumstances where it may be argued that no cause of action has yet arisen.
It is common ground that no formal notice has been issued by a government agency requiring contamination at the Mowbray site or the Botany site to be remediated and that no costs have been incurred by Opal remediating contamination under a formal notice.
Any obligation by Orora to indemnify Opal pursuant to the Environmental Indemnity has not arisen at least because a condition of the cause of action (namely, the existence of a formal notice from a government agency requiring remediation) has not crystallised.
If no formal notice is issued by a government agency requiring contamination at the Mowbray site or the Botany site to be remediated then no cause of action will ever arise requiring determination by the Court. In those circumstances, the proceeding will likely be discontinued without the need for a trial. If a formal notice is issued and the costs of remediation exceed (or are expected to exceed) $500,000, then Opal will likely seek to amend its statement of claim to add a cause of action arising after the commencement of the proceeding.[19]
[19]Rule 36.01(3) provides that an amendment may be ordered notwithstanding that the effect is to add a cause of action arising after the commencement of the proceeding. It abrogates the old rule that a plaintiff could not, by amendment, introduce a cause of action that arose after the date of the writ: Eshelby v Federated European Bank Ltd [1932] 1 KB 254.
Senior counsel for Opal submitted that ‘if there is no formal notice issued and no indication of that sort as at the end of April 2026, then it’s very difficult, if not impossible, to see that the Environmental Indemnity could ever bite’. That is because Opal may not bring any Claim in respect of the Environmental Indemnity unless the Claim has been notified to Orora in accordance with clause 19.7 within six years after the Completion Date, ie. by 20 April 2026.[20]
[20]Clause 19.5(b).
In the unusual circumstances in which this proceeding has arisen, I consider that it is appropriate that the proceeding be adjourned for a period of six months. By that time it may be clear that a formal notice has been issued or is likely to issue. Alternatively, the relevant government agency may have indicated that it does not propose to issue a formal notice. The future conduct of the proceeding can be assessed at that time.
I do not consider it is appropriate to order that separate questions in the terms proposed by either Opal or Orora be tried before any trial of the proceeding. Neither Opal nor Orora has demonstrated beyond question the utility, economy and fairness to the parties of separate trials of the questions they propose.
Senior counsel for Orora acknowledged that Orora seeks to have its separate questions determined in order to give it ‘peace of mind as to what its prospective liability might be in the future’.[21]
[21] Transcript of Proceedings (2 February 2024) 35.6–9.
Orora however will suffer no substantive prejudice if the proceeding is adjourned. It will have the opportunity to deploy all of its arguments concerning Opal’s failure to notify or to commence the proceeding within the time limits prescribed by the Amended SAPA if the need to do so arises at a later time.
The separate questions that Orora proposes would require the Court to undertake a trial of ‘five or more days’[22] duration and for the parties to prepare evidence and submissions in respect of that trial in circumstances where an accrued cause of action in respect of the Environmental Indemnity may never arise.
[22]Transcript of Proceedings (2 February 2024) 62.6.
As is apparent from the annexure to Orora’s written submissions, Orora’s four separate questions raise at least 15 issues.
Orora’s questions are also predicated on unspecified ‘events that have happened’. There should be no trial of a separate question on the basis of assumed facts unless the facts are agreed or can readily be determined judicially. I am not satisfied that the underlying facts necessary to resolve the separate questions proposed by Orora are agreed or can readily be determined judicially.
Orora does not dispute that its separate questions will raise contested issues of fact concerning the likelihood that causes of action will accrue in the future based on certain information;[23] what a reasonable person would make of information in various documents;[24] whether there was and is an estoppel concerning the manner of notification;[25] and when certain information came to the attention of Orora.[26]
[23]See paragraphs 57D and 57F of the Amended Defence.
[24]See paragraphs 57D and 57F of the Amended Defence.
[25]See paragraph 2(c) of the Reply and the Defence to the Counterclaim.
[26]See paragraph 34 of the Reply and the Defence to the Counterclaim.
There is also force in Opal’s submission that the ‘claims’ referred to in Orora’s separate questions which are alleged to be time barred are not specified and therefore are not appropriate for preliminary determination.
I also do not consider that the separate questions proposed by Opal in its summons should be tried before any trial of the proceeding. A determination as to whether, on the proper construction of clause 19.7 of the Amended SAPA, notice was required to be given by Opal, will not put an end to the proceeding. If the Court determines, in favour of Orora, that notice was required to be given by Opal, other questions remain such as whether notice was in fact given by Opal. Conversely, if the Court determines, in favour of Opal, that notice was not required to be given by Opal, the proceeding will likely remain on foot at least until it is clear whether a formal notice will be or will not be issued.
ORDERS
I will make orders to the following effect:
(a) The proceeding is adjourned until 4 September 2024 or further order.
(b) The Plaintiff’s summons is otherwise dismissed.
(c) The Defendants’ summons is dismissed.
As Opal has succeeded on its application and Orora has been unsuccessful on their application, I am inclined to order that the Defendants pay the Plaintiff’s costs of the applications having regard to the usual rule that costs follow the event. As there may be circumstances of which I am unaware that would displace the usual rule, the parties are asked to confer and either submit a consent minute in respect of the appropriate costs order or, failing agreement, an outline of submissions of no more than 3 pages identifying the precise costs order sought and why it should be made. I propose to resolve the issue of costs on the papers. Any consent minute, or exchange of submissions, should be submitted by 4:00 PM on 7 March 2024.
SCHEDULE
| OPAL PACKAGING AUSTRALIA PTY LTD (ACN 636 682 883) | Plaintiff/Defendant by Counterclaim |
| v | |
| ORORA LTD (ACN 004 275 165) | First Defendant/First Plaintiff by Counterclaim |
| ORORA PACKAGING AUSTRALIA PTY LTD (ACN 165 443 667) | Second Defendant/Second Plaintiff by Counterclaim |
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