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The call that shaped history

When John Gordon got a phone call from an old law-school mate one May day in 1992, he hardly imagined it could change the course of history.

John was manager of Slater and Gordon’s Perth office. His old friend was a solicitor in Port Moresby who had been approached by a group of highland villagers to sue the Australian mining giant BHP.

The potential legal battle loomed too large for any Papua New Guinea firm. And so, Slater and Gordon stepped into uncharted territory.

A gold and copper mountain

A decade earlier BHP had bought the mining rights to Ok Tedi, a rain-drenched slice of PNG rich in gold and copper ore. It then set up Ok Tedi Mining Limited to mine the once-sacred site.

The company had handed a 20 per cent share to the PNG government, with the understanding BHP would build a tailings dam on the steep mine slope to avoid poisoning the Ok Tedi River – lifeblood of about 40,000 villagers.

Disaster triggered

After a landslide wiped out the dam foundations, BHP started dumping up to 90,000 tons of tailings every day into the river. A slew of treatment-plant accidents followed, adding concentrated cyanide to the toxic mix.

The once-noble river system silted up and ‘turned a brown-red overnight,’ according to BHP’s own environmental scientist.

Rex Dagi, one of the first villagers to gain formal education, urged his people to seek a peaceful, legal resolution.

Welcome to the jungle

Control of the case was entrusted to Nicholas Styant-Browne in Slater and Gordon’s Melbourne office. In 1993 Nick sat for examinations in Papuan law and was certified to practice in PNG.

About 30,000 villagers from more than 500 clans signed agreements to participate as plaintiffs – ‘no mean feat in one of the remotest areas of the world,’ said Nick.

BHP lawyers had been expecting writs, but all expert advice – including that of Victorian QCs retained by Slater and Gordon – was that the writs could only be lodged in the PNG Supreme Court.

‘BHP’s home town’

In May 1994, consternation erupted when Slater and Gordon announced that test cases would be filed in the Victorian Supreme Court on behalf of Rex Dagi and villagers, on the ground that BHP was incorporated in Victoria.

Reporters were handed dramatic footage of Ok Tedi River pollution, and told $4 billion would be sought from BHP and OTML in compensatory and exemplary damages.

Rex Dagi and Slater and Gordon’s Ike Nwokolo strode the steps of the Supreme Court in Melbourne to lodge their writ.

Slater and Gordon’s strategy was ‘to tell anyone in the media that the reason we issued the writ in Melbourne was because it was BHP’s home town.’ The strategy worked. Every newspaper front page and TV station ran with the story.

Ok Tedi Ike Rex Cropped

Links in the chain

Justice David Harper entered judgement by default after BHP failed to file its defence within the 30 day deadline.

Meanwhile in PNG, the government planned to pass legislation making it a criminal offence for residents to pursue legal action beyond its borders.

BHP claimed they had nothing to do with it but John Gordon noticed that the word-processing code on the draft belonged to BHP lawyers in Port Moresby.

Justice Philip Cummins ruled BHP had interfered with the administration of justice in Victoria by co-operating with the PNG government in drafting legislation denying villagers access to foreign courts.

With shares plummeting, BHP launched an advertising blitz claiming the Ok Tedi mine ‘provided major social benefits’.

‘Threats and improper inducements’

Slater and Gordon lodged a fresh action for contempt of the Victorian Court, alleging that BHP and OTML made ‘threats and improper inducements’ to villagers.

Rex Dagi further claimed clan leaders were secretly offered $200 cash to ‘solve the problem the Melanesian way’.

If they had accepted it would have been the end.

Cue the ‘Casablanca Scene,’ now part of Slater and Gordon folklore: Scrambling to get their plaintiffs onto a charter flight out of PNG, the Slater and Gordon team was met at the airport by a group including PNG’s ex-Governor-General Sir Ebia Olewale, now a BHP consultant.

According to eye-witnesses Sir Ebia got on his knees begging the men not to go. At the same time, the BHP team told the pilot that if he took off they would never use his airline again.

Rex holds fast

With the Keating Labor government ousted in March 1996, the new Liberal Foreign Minister Alexander Downer declared that ‘the PNG Parliament has the sovereign right to decide what law should be applied to PNG citizens.’

Rex Dagi, risking jail on his return home, instructed Slater and Gordon to file a challenge to the constitutional validity of the PNG legislation.

In May 1996, shortly before Rex’s constitutional challenge was to be heard, BHP directors called a halt to more potential public-relations disasters. They at last took up Slater and Gordon’s longstanding invitation to settle all Ok Tedi matters out of court.

Finally, a breakthrough

On June 7 1996, a formal agreement was struck between BHP, its subsidiary mining company, and all plaintiffs and their lawyers, which finally settled the four-year legal battle.

The agreement put a stop to further mine tailings polluting the Ok Tedi River, using a 130-kilometre piping system. BHP also agreed to dredge the choked river. The total cost: $400 million.

A $110 million compensation package for villagers would stand. The worst-affected villages would also receive at least $40 million to help landholders learn new skills.

Hard-won victory

Slater and Gordon’s costs and disbursements alone came to $7.6 million, to be paid by BHP. The settlement cost BHP an estimated $560 million.

BHP apologised more than once for what happened, with the incoming chairman saying he regretted the failure to develop better relationships with villagers.

To the triumphant villagers and their lawyers, the mountain gods had spoken. Their victory was hard-earned proof that might was not always right.

Primary source: That Disreputable Firm, by Michael Cannon (MUP, 1998).

The contents of this blog post are considered accurate as at the date of publication. However the applicable laws may be subject to change, thereby affecting the accuracy of the article. The information contained in this blog post is of a general nature only and is not specific to anyone’s personal circumstances. Please seek legal advice before acting on any of the information contained in this post.

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