Australia: 28/14 Falzon v Gladstone Port Corporation [2014] QPEC 37

P&E Court Updates - July 2014

Andrews SC DCJ - 11 July 2014
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PRACTICE AND PROCEDURE – Pleadings – whether to strike out points of claim – whether allegations of costs and impacts were allegations of financial loss – where only persons whose interests are significantly adversely affected by the subject matter of the litigation may claim a declaration – whether the applicant sufficiently alleged material facts to establish status to apply for declarations

Facts: In this proceeding Gladstone Ports Corporation (GPC) applied to strike out the Points of Claim (POC) filed by the Applicant in proceedings commenced by the Applicant against GPC seeking declarations under section 54G of the State Development and Public Works Organisation Act 1971 (Qld) (SDPWO Act) that GPC had not complied with certain conditions imposed on its dredging activities in the Port of Gladstone (Project). The Applicant was a commercial fisherman in Gladstone Harbour and purported to commence the proceeding as a representative proceeding for certain persons listed in his POC (Purported Represented Class).

The Coordinator-General's report evaluating the environmental impact statement in respect of the project imposed a number of conditions on GPC. Specifically, Condition 20 required GPC to mitigate all reasonable financial losses to existing commercial fishing operators attributable to the Project. Condition 21 required GPC to meet any costs associated with the investigation, negotiation and administration of any compensation package.

The issues in dispute at the hearing were whether:

  1. the Applicant had pleaded his standing to apply for a declaration;
  2. the Applicant had pleaded sufficiently to obtain both declarations;
  3. the declarations sought were too wide to be available; and
  4. the proceeding was not validly brought as a representative proceeding.


It was agreed between the parties that the Applicant was required to allege and establish that the Applicant was a person whose interests were significantly adversely affected by the subject matter of the proceeding pursuant to section 54F(2)(e) of the SDPWO Act. The Applicant's POC alleged that the Project had necessitated his incurring expenses exceeding $480,000 and had interfered with and otherwise delayed his commercial activities. However he did not allege that the expenses or the delays had caused a financial loss to him. The Applicant argued that he need not allege and prove his own financial loss as a material fact to establish his status as a person whose interests were "significantly adversely affected" by the proceeding.

GPC submitted that there was no allegation in the POC that the interests of the Applicant and the Purported Represented Class were significantly adversely affected by the subject matter of the proceeding.

Sufficiency of pleading

In relation to Condition 20, there was no issue between that parties that GPC must mitigate certain types of financial losses. The Applicant argued in his POC that he had incurred costs with respect to additional equipment and that the program did not compensate existing commercial fishing operators. GPC argued that the Applicant needed to plead facts which established that financial losses had been incurred and that the losses had not been mitigated by GPC. GPC also argued that the Applicant had not pleaded sufficient allegations in relation to "existing commercial fishing operators" which on construction of Condition 20, was a necessary element to be satisfied.

Likewise, in relation to Condition 21, the POC did not allege that the Applicant or any of the Purported Represented Class had suffered reasonable financial losses attributable to the Project by way of costs associated with the preparation, submission and prosecution of a claim, let alone plead or particularise what such losses were.

Declarations sought

GPC submitted that the declarations sought by the Applicant were too wide. Firstly, GPC argued that the relief sought must be limited to the Applicant personally and that he was only entitled to seek a declaration that GPC's compensation program did not substantially comply with Conditions 20 and 21 insofar as it affected him personally. Secondly, it was argued that the declarations sought were not available to the Applicant on the basis that he had not alleged the material facts to show that he was significantly adversely affected by the issue the subject of the declarations. Thirdly, GPC argued that the POC did not plead sufficient material facts or circumstances concerning persons other than the Applicant.

Validity of representative proceeding

In light of the above, the Court was not required to consider whether the proceeding was validly brought as a representative proceeding.

Decision: The Court held, in allowing the application:

  1. The Applicant did not allege his expenses or the delays and interferences had caused reasonable financial loss to him, let alone a reasonable financial loss which the scheme did not mitigate. That omission meant he did not establish a tenable case of status to claim a declaration.
  2. An obligation to compensate for financial losses was not equivalent to an obligation to compensate for increased costs. Those increased costs may well be mirrored by financial losses resulting from those costs and in an identical amount. However it did not necessarily follow that a financial cost or an interference with business operations had caused financial loss.
  3. In relation to Condition 20, the Applicant had:
    1. made no allegation in the POC that any "commercial fishing operator" (let alone the Applicant or the Purported Represented Class) had in fact suffered any "reasonable financial losses;" and
    2. had not sufficiently pleaded a case to establish that he and each of the Purported Represented Class were "existing commercial fishing operators," making the entire POC liable to be struck out.
  1. In relation to Condition 21, the POC did not allege that the Applicant or any of the Purported Represented Class had suffered reasonable financial losses attributable to the Project by reason of legal and accountancy fees associated with the preparation, submission and prosecution of a claim, let alone plead or particularise what such losses were.
  2. Until the pleading alleged sufficient material facts to create a tenable argument that another relevant person sustained a reasonable financial loss which the compensation program failed to mitigate the Applicant could not rely on the Project's consequences to any other. If the pleading were to adequately allege a failure to mitigate all reasonable financial losses of another relevant person there may then be an issue as to whether the Applicant was significantly adversely affected by the failure in respect of that other person. The declarations sought are too wide having regard to the material facts currently pleaded.
  3. It was too hypothetical to consider the issue of whether it was appropriate to permit the Applicant to bring a representative proceeding because it required one to foreshadow what the case would become.

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