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IN THE HIGH COURT OF AUSTRALIA
[2020] HCATrans 158
AUSTRALIA
Office of the Registry
Brisbane
No B57 of 2020
Between-
ZEPH INVESTMENTS PTE LTD
Plaintiff
and
STATE OF WESTERN AUSTRALIA
Defendant
Directions hearing
KIEFEL CJ
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON FRIDAY, 9 OCTOBER 2020, AT 2.00 PM
Copyright in the High Court of Australia
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MR G.A.F. CONNOLLY: In this matter I appear for the plaintiff, Zeph
Investments Pte Ltd. (instructed by Sophocles Lawyers)
5 MR J.A. THOMSON, SC, Solicitor-General for the State of Western
Australia: May it please the Court, I appear with MS J.E. SHAW on
behalf of the defendant. (instructed by State Solicitor's Office (WA))
10 HER HONOUR: Thank you. Mr Connolly, the plaintiff is not a party to
the arbitrations which are the subject of the West Australian Amendment
Act, as I understand it.
MR CONNOLLY: That is correct, your Honour. Zeph Investments is the
15 beneficial owner of – well, Zeph Investments owns Mineralogy which owns
International Minerals and so it is a covered investment for the purposes of
the Singapore-Australia Free Trade Agreement.
HER HONOUR: But it has quite distinct and separate claims which
found these proceedings?
20 MR CONNOLLY: We would accept that, but we would accept it is the
same defendant and it is the same Act that gives rise to it and some of the
relief is similar.
HER HONOUR: Could you expand a little on the arbitral claims that it is
25 pleaded that the plaintiff has?
MR CONNOLLY: Your Honour, we claim that under the
Singapore-Australia Free Trade Agreement, Zeph being a Singaporean
corporation, it owns Mineralogy which owns International Minerals. Those
30 are covered investments for the purposes of the Singapore-Australia Free
Trade Agreement in Article 24(3)(a). Those are covered investments that
are affected by this Act. This Act purports to bar proceedings in relation to
the disputed matters under it. Those include a very broad idea of what is
being barred which includes non-Western Australian proceedings, including
35 proceedings that arise under international agreements and treaties such as
the Singapore-Australia Free Trade Agreement.
HER HONOUR: I understand that, but the arbitral claims that are
referred to in the pleading are claims against the Commonwealth which
40 have not as yet been brought. Is that right?
MR CONNOLLY: That is correct, your Honour. We plead they have not
been brought because the effect of the Act – its legal and practical effect of
the Act is that it impairs our client's ability to proceed with this because of
45 the indemnities that are contained in the Western Australian Act.
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HER HONOUR: What would the claims against the Commonwealth be if
you were not so impeded?
50 MR CONNOLLY: They would be claims for breach of the
Singapore-Australian Free Trade Agreement. If your Honour goes to our
statement of claim, we set these out at sections 73 and 74 of our statement
of claim but for fear of triggering these indemnities, which, your Honour,
are extremely broadly worded and that even in our argument go to
55 indemnities where proceedings are threatened or imagined – sorry, not
threatened – but threatened or purported – these are very broad liabilities
that our client, the Singaporean corporation, cannot avail itself of its
remedies against the Commonwealth without fear of triggering these
indemnities.
60 HER HONOUR: I understand that, and I am not suggesting that it is a
precondition - necessary precondition to these proceedings that those claims
be brought, but for present purposes I would just like to have an idea of the
basis for the claims against the Commonwealth.
65 MR CONNOLLY: The Commonwealth is the party to the
Singapore-Australia Free Trade Agreement, along with Australia. The
Commonwealth owes obligations to a Singaporean corporation in the
position of Zeph, so if your Honour looks at paragraph 40 of our statement
of claim we plead those out. There are obligations on the parties. Those
70 obligations include protections against expropriation and nationalisation
which include expropriation without compensation. So, those would be
among the arbitral claims that Zeph would be bringing.
The problem is, your Honour, from Zeph's perspective, that there is
75 an indemnity against Zeph in section 15 of the Act in respect of protective
proceedings. We say that Zeph has rights under the Singapore-Australia
Free Trade Agreement which is a non-Western Australian right. There is a
broad definition of “proceedings” which is defined by section 7 of the Act
at subsection (c) of the definition of “proceedings” to include “non-WA
80 proceedings". These are defined to mean proceedings under international
law or a treaty or agreement such as the Singapore-Australia Free Trade
Agreement and they include that Zeph must be prepared to indemnify the
Commonwealth, which would be the respondent party under such an
arbitration - Zeph would have to indemnify Western Australia under
85 sections 16 and 24 of the Act. This includes, your Honour, an indemnity
against a liability which may be actual, contingent or prospective.
HER HONOUR: Yes, I see. Returning to the issues for directions today,
Mr Solicitor, I take it it is not suggested this is a case appropriate for
90 remitter?
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MR THOMSON: No, your Honour.
95 HER HONOUR: I will come to the question about whether this should be
joined with B52 and B54. If we could return then, Mr Connolly, to the
matter of the claims and the plaintiff's pleading? The defendant has said
that as presently pleaded it is hypothetical and that there needs to be at least
a statement of belief or some such thing to take it out of that territory. The
100 defendant has not said, and I will come to it if necessary, what would
happen if the pleading were not amended in those terms. What do you say
to that?
MR CONNOLLY: We say, your Honour, given the Act – and the Act
105 captures our client in these indemnities and purports to bar proceedings
such as in section 11(3) of the Act it purports to bar proceedings, including
a non-Western Australian proceeding such as a claim being made under the
Singapore-Australia Free Trade Agreement, there is nothing hypothetical or
advisory about this matter. Our client's arbitral claims that are seeking to
110 be brought I accept the Commonwealth is the party, but insofar as this Act
includes provision that Zeph is required to indemnify Western Australia,
including against the liability to the Commonwealth, this is a live matter
and it is not a hypothetical one.
115 HER HONOUR: I understand that that is the effect you say of the
amending Act. I understand the defendants to say that the hypothetical
aspect of the proceeding is that the arbitral claims are not extant and there
would need at least to be an averment of there being a belief that there are
such claims because it is not something upon which this Court can rule.
120 MR CONNOLLY: Your Honour, we plead our arbitral claims at
sections 73 and 74 and we have to respond by saying Western Australia has
enacted this law. It purports to bind, or it binds our client insofar as the
triggering of the indemnities and provides for an indemnity even in
circumstances where Western Australia has not actually expended any
125 moneys under the Act.
The idea that there is anything hypothetical about this from our
perspective, when we cannot seek relief under the Singapore-Australia Free
Trade Agreement for fear of this Act being enforced against our
130 subsidiaries so the idea that somehow my client should have to take such a
significant risk in a law that is under challenge here is one that we would
reject.
HER HONOUR: Mr Solicitor.
135 MR THOMSON: Yes. There are two difficulties in the hypothetical
nature of what is proposed. The first is in relation to the existence of
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arbitral claims. That is alleged as a fact. Now, we cannot plead in any way
140 which admits or establishes those claims because we would not be a party to
those claims. So they would have to be proved if there was to be a proper
basis for that allegation and the relief sought in the case. But there is a
separate issue that follows out of it which we mentioned which is the very
general nature of the way in which the arbitral claims have been defined in
145 paragraph 73. Those arbitral claims do not allow the Court to understand
the particular rights or duties or areas of inconsistency that might possibly
arise.
Can I give you, for example, something that my friend has said? He
150 has referred to section 11(3) as preventing all types of claims. If you look
at section 11(3) of the covering Act, which was inserted by the amending
Act, it actually only says that:
On or after commencement, no proceedings can be brought, made or
155 begun against the State to the extent that the proceedings are or
would be -
and so forth. The similar corresponding provision in relation to protection
matters is in section 19(3).
160 So unless the arbitral claims were intended to be against the State,
then there would be no difficulty about contravening section 11(3) or 19(3).
Yet, if you look at paragraph 81 of the statement of claim, it is alleged that:
Subsections 11(3) and 19(3) of the WA Act prevent the
165 commencement of a proceeding (including an ICSID Convention
arbitration seeking an award unfavourable to the defendant) which is
in any way connected, respectively, with a 'disputed matter' or a
'protected matter'.
170 Now, one answer to that might be well, the proceedings that are
contemplated are not contemplated to be made or begun against the State.
We would not know whether that is the case or not without some
explanation of the nature of the proceedings. If I can carry that thought
through, it might well be that the nature of the proceedings as they are
175 properly defined may not give rise to all of the inconsistencies which are
alleged.
So while there is a “covering the field” inconsistency which is
alleged, there is also an inconsistency based upon the alteration, impairment
180 or detraction from particular rights or duties and without knowing the
particular claims that are contemplated, it would not be possible to know
what particular rights are altered, impaired or detracted from and to the
extent that the claim is made against all of the provisions of the amending
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Act as being inconsistent, if you get to that point it may be that if the claims
185 were properly defined you would understand what it is that is said to be
inconsistent but at the moment it is impossible to know that in any detail.
Perhaps I can illustrate that in a different way. In relation to the B54
proceedings there is a general claim of inconsistency – sorry, invalidity in
190 relation to a number of provisions which relate to the commencement of
proceedings in a particular time period and there never have been any and
will not be any proceedings within those areas and therefore the question of
constitutional invalidity will not arise.
195 It is the same sort of question here. What is really sought is a
general ruling from this Court as to the invalidity of the Act without having
defined the particular area of inconsistency in relation to concrete claims.
So, as I said at the outset, there are two points. One is that there is a
question about the existence of arbitral claims and then there is a question
200 about the precise nature of any arbitral claims and both of those matters
feed into the great difficulty that we would have in pleading to this.
Now, we have raised that at this point in a directions hearing so that
there might be an opportunity to re-plead if the plaintiff thinks that is
205 appropriate. If not, then we might need to take other steps to deal with this.
In terms of pleading a defence we should raise the hypothetical nature of
these matters and then seeking a determination of the Court about that, but
it would seem - - -
210 HER HONOUR: What would the determination of the Court be? Would
you be applying for a strikeout?
MR THOMSON: Quite possibly. It depends on the Court's attitude. It
might be that it is raised if there was in response to the special case that
215 might be generated out of it. But we would suggest that the Court will have
a problem in determining all of these matters without some knowledge of
there being arbitral claims that Zeph believes it will begin and also knowing
the nature of those claims in order to know the areas of inconsistency that
are said to arise.
220 HER HONOUR: Yes. Mr Connolly, I can see the force of what the
Solicitor-General says in relation to this Court apprehending in a proper
way what the inconsistency and the area of operation of the inconsistency
is. Do you wish an opportunity to re-plead or do you wish the matter to
proceed to defence or strikeout?
225 MR CONNOLLY: Your Honour, we believe the matter is in a shape that
can be responded to by way of defence by Western Australia and if the
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Solicitor-General in Western Australia wishes to take the separate course,
230 then it can obviously avail itself of that under an interlocutory proceeding.
HER HONOUR: Mr Solicitor, do you wish me to make directions as to
the filing of a defence – do you want to allow for any other steps, including
requests for particulars? I take it that no formal request has been made
235 because of the nature of what you say is the pleading problem?
MR THOMSON: That is correct. No formal request has been made.
Perhaps we should do that and then perhaps plead a defence in response,
having regard to any particulars that might be provided.
240 HER HONOUR: You do not have any particulars for me to direct the
plaintiff to respond to.
MR THOMSON: No. Your Honour is right. I suppose we – perhaps I
could take a step back. Perhaps we should just simply plead a defence and
245 if the plaintiff wishes to provide particulars then it may do so, but the
position is that we have made clear the hypothetical problems that we see in
this statement of claim and we propose to raise those and pursue those as
necessary.
250 HER HONOUR: I can see no problem with my directing that a defence
be filed by a particular time and the defendant at the same time, without me
directing it, providing a request for particulars to the plaintiff. That might
facilitate any further argument down the track about the nature of the
pleading. It would also give the plaintiff an opportunity to better
255 understand your concerns, I suspect.
MR THOMSON: Yes.
HER HONOUR: So there would seem to be good reason, perhaps, for
260 undertaking that dual path.
MR THOMSON: Yes. I gratefully adopt that course, your Honour.
HER HONOUR: How long would you take – do you need to file a
265 defence? I should say here, probably before we talk about that, I see that
the date proposed by Mr Connolly attempts to line up with B52 and B54, so
this is probably the time to discuss whether that should be the case. I have
to say, Mr Connolly, I am not - as presently minded, although it might
change in the future – presently minded to load up B52 and B54 with what
270 are very substantial topics.
The way I would envisage this matter proceeding would be for it to
most likely – and I am open to argument about this as we proceed with case
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management - the most likely course would seem to me to be for this
matter to follow as a hearing on B52 and B54 so that the Court would hear
B52 and B54 and be familiar then with the amending Act provisions and
280 then it could proceed in a separate hearing following to grapple with the
inconsistency questions arising here.
MR CONNOLLY: Understood, your Honour, and I, to continue the
analogy, would not like to see B52 and B54 be delayed in their departure
285 from the runway, to use the military analogy of the planes. But in respect of
us, your Honour, I understand my friend might find 19 October a date that
is too soon and - - -
HER HONOUR: Particularly if he is going to be supplying a request for
290 particulars at the same time.
MR CONNOLLY: I understand that, your Honour. We are in your
hands, your Honour.
HER HONOUR: What is a realistic timeframe, Mr Solicitor?
295 MR THOMSON: If we could have till 26 October, which is just over two
weeks from today, that would be helpful, your Honour.
HER HONOUR: Yes, I see no difficulty with that.
300 MR THOMSON: Can I just raise one other matter and that is that
your Honour has referred to there being a directions hearing on the 21st for
both B52 and B54. The position at the moment, as I understand it, is that
technically only B52 is listed for directions on that date. I think that is
correct.
305 HER HONOUR: Yes, that is right because – I think if I am getting the
numbers right, B54 is awaiting the pleadings being put in order in B52, or is
it the other way around?
MR THOMSON: So B52 is the proceeding by Mr Palmer personally.
310 HER HONOUR: That is where the pleadings need to be regularised
before either matter, because they are proceeding in tandem.
MR THOMSON: Yes.
315 HER HONOUR: So B54 is waiting for those matters to be resolved
before it gets back on track for further case management with B52.
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MR THOMSON: Yes, and we propose to file a defence in B54 today, as
ordered. I just thought I would raise that it is only B52 that has formally
325 been listed on the 21st. Of course, I would be in a position to deal with
whatever other orders are necessary in B54.
HER HONOUR: No. I think for the moment we just leave B52 resolve
its problems.
330 MR THOMSON: Yes.
HER HONOUR: I do not think we need to try to line up this matter in
terms of case management with the others, although down the track that
may well be what we do. I think for the moment we just overcome the
335 difficulties in pleading here and see where we are down the track.
MR THOMSON: Thank you, your Honour.
HER HONOUR: I would direct the defendant to file and serve its defence
by 26 October and I will allow the parties some time to consider both the
340 defence and what might be a request for particulars. If I put the matter over
for further directions to 16 November it will, of course, be, you would
appreciate, the intervening - the November sittings when Mr Palmer's
section 92 case is being heard. I think unless there is – and I cannot see that
there is any urgency and the parties could probably well do with
345 considering their positions - the pleadings if they want this matter to
proceed with any kind of pace after that. So I will list the matter for
directions on Monday, 16 November at – it would have to be minimum of
12 noon, I suppose, Mr Solicitor, with the time difference now.
350 MR THOMSON: Yes, thank you, your Honour.
HER HONOUR: Is 2.00 pm more convenient?
MR THOMSON: Your Honour, I think it is most likely – anticipating all
things being considered – that I will be in self-isolation during that period
355 of time. So I may be - - -
HER HONOUR: Of course, coming back from Canberra.
MR THOMSON: Yes. I have no difficulty about appearing from
self-isolation, but I just mention that so that other people who might also
360 need to be on that appearance call will be in a different location.
HER HONOUR: If that proves difficult, you would be out of isolation by
the following week, the 23rd?
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MR THOMSON: That is correct. I will come out on the 20th.
HER HONOUR: You will not be available – when you say out of it on
370 the 20th, you would not be able to appear on the 20th?
MR THOMSON: No, that is correct. The first day I would be able to
appear would be the 23rd – with everyone else in the same room. I mean, I
can appear on the 16th with other people in other rooms. In fact,
375 your Honour would know, I think, that I did that previously.
HER HONOUR: If that causes no difficulty we will stay with the 16th
and we will list it for 12 noon.
MR THOMSON: Thank you, your Honour.
380 HER HONOUR: I do not think there are any other directions we can
make today. We will review the matter. Hopefully, the parties can have
some discussions in the meantime in order to advance the matter at the next
directions hearing.
385 MR THOMSON: Thank you, your Honour.
MR CONNOLLY: Thank you, your Honour, understood.
HER HONOUR: Thank you, Mr Solicitor and Mr Connolly. The Court
390 will now adjourn.
AT 2.25 PM THE MATTER WAS ADJOURNED