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  • Unreported Judgment

Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd (No 27)

 

[2020] QLC 32

LAND COURT OF QUEENSLAND

CITATION:

Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 27) [2020] QLC 32

PARTIES:

Cherwell Creek Coal Pty Ltd

(ACN 063 763 002)

(applicant)

v

BHP Queensland Coal Investments Pty Ltd

(ACN 098 876 825)

QCT Resources Pty Ltd

(ACN 010 808 705)

BHP Coal Pty Ltd

(ACN 010 595 721)

QCT Mining Pty Ltd

(ACN 010 487 840)

Mitsubishi Development Pty Ltd

(ACN 009 779 873)

QCT Investment Pty Ltd

(ACN 010 487 831)

Umal Consolidated Pty Ltd

(ACN 000 767 386)

(respondents)

FILE NO:

MRA1332-08

PROCEEDING:

General application

DELIVERED ON:

Orders delivered 10 August 2020

Reasons delivered 20 August 2020

DELIVERED AT:

Brisbane

HEARD ON:

5, 6 & 7 August 2020

HEARD AT:

Brisbane

PRESIDENT:

FY Kingham

ORDERS:

  1. The Respondents have leave to file and rely upon:  
    1. (a)
      the Fifth Amended Defence which is exhibit CEM-21 to the affidavit of Corin Eileen Morcom filed 3 July 2020;  
    2. (b)
      the report of Mr David Nevell filed 29 July 2020.  
  2. The Respondents must pay the applicant’s costs of the application unless, within seven days, they file and serve brief written submissions seeking a different order.
  3. If the Respondents file and serve submissions pursuant to order 2, the applicant has seven days from service to file and serve brief written submissions in reply. Costs will then be determined on the papers.

CATCHWORDS:

CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COURT SUPERVISION – AMENDMENT – ORIGINATING PROCESS, PLEADINGS ETC – where the respondent sough to amend its defence – where the applicant opposed the application in part and disputed the respondents’ assertion that leave was not required for some of the amendments – where the Court found that leave was not required for some amendments, and was required for others – where the Court granted leave to rely on the amended defence to the extent that leave was required

Adelaide Steamship Co Ltd v Spalvins [1999] FCA 781, applied

Aon Risk Services Australia Limited (2009) 239 CLR 175; [2009] HCA 27, applied

Ashby v Slipper (2014) 219 FCR 322, applied

ASIC v Healey (2011) 196 FCR 291; [2011] FCA 717, cited

Banque Commerciale SA (in Liq) v Akhil Holdings (1990) 169 CLR 279; [1990] HCA 11, applied

Barclay Mowlem Construction Limited v Dampier Port Authority (2006) 33 WAR 82, applied

Berry v CCL Secure Pty Ltd [2020] HCA 27, cited

BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union (CFMEU) (2013) 239 IR 363; [2013] FCA 1291, cited

Briginshaw v Briginshaw (1938) 60 CLR 336, [1938] HCA 34, cited

Cement Australia Pty Ltd v ACCC (2010) 187 FCR 261; [2010] FCAFC 101, applied

Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No. 6) [2017] QLAC 1, applied

Clurname Pty Limited v McGraw-Hill Financial Inc [2017] FCA 1319, cited

Ensham Resources PL v AIOI Insurance Company Limited [2012] FCA 537, applied

Fair Work Ombudsman v Offshore Marine Services Pty Ltd (No 2) [2013] FCA 943, cited

Jonesco v Beard [1930] AC 298, applied

Joyce v Palassis (No 3) [2007] WASC 214, applied

Krakowski v Eurolynx [1995] 183 CLR 563; [1995] HCA 68, applied

LM Investment Management Pty Ltd (in liq) v Ernst and Young [2017] QSC 73, applied

Major v Woodside Energy Ltd (No 4) [2009] WASC 248, applied

Millhouse IAG v Environautics [2000] QDC 196, applied

Neat Holdings Pty Ltd v Karajan Holdings Pty Limited [1992] HCA 66, cited

Protean (Holdings) Ltd (Receivers and Managers Appointed) v American Home Assurance Co [1985] VR 187, applied

Rejfek v McElroy (1965) 112 CLR 517; [1965] HCA 46, applied

Ritter v North Side Enterprises Pty Ltd (1975) 132 CLR 301; [1975] HCA 18, applied

S, DJ v Channel Seven Adelaide Pty Ltd (2009) 260 LSJS 287 [22]; [2009] SASC 6, applied

Southern Equities Corporation Ltd (in liq) v Arthur Anderson (1997) 70 SASR 166; [1997] SASC 6373, applied

Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15, applied

APPEARANCES:

J Gleeson SC, with N Owens SC, J Redwood, L Sheptooha, D Delany (instructed by Holding Redlich) for the applicant

S Doyle QC, A Pomerenke QC, A Stumer, S Webster, D Marckwald (instructed by Allens) for the respondents

  1. [1]
    BMA has applied for leave, to the extent leave is required, to file and rely upon an amended Defence (the Fifth Amended Defence).[1] Cherwell Creek opposed the application, in part,[2] and disputed BMA’s assertion that leave was not required for some of the amendments.
  1. [2]
    On 10 August 2020, I made orders on the application with written reasons to follow. These are my reasons for those orders.
  1. [3]
    The most significant amendments involve allegations of fraud based on unlawful drilling and false reporting. The written and oral submissions were directed primarily to those allegations. It makes sense to address them first, before considering the parties’ arguments about other disputed amendments.

Fraud allegations

  1. [4]
    The relevant paragraphs are 1D1 to 1D53. BMA says it does not require leave for some paragraphs and, to the extent it does require leave, it should be granted. If proved, BMA says they will provide a complete answer to the claim. Their pleading is adequate to support the allegations of fraud. They have provided a satisfactory explanation for the timing of the amendments. The prejudice to Cherwell Creek can be mitigated, in large part, by delaying the commencement of the trial.
  1. [5]
    Cherwell Creek contests each of those propositions. If leave is granted, it proposes the trial commence with a special fixture hearing of the fraud allegations, to test whether Cherwell Creek has a case to answer on them.

Is leave required for 1D1-1D5 and 1D7-1D17?

  1. [6]
    BMA says leave is not required for amendments described as the 1995 allegations, made in ID1-1D5 and ID7-ID17 by which it alleges:
  1. (a)
    Cherwell Creek unlawfully drilled two boreholes outside EPC 545 and within what would later become EPC 900, in breach of the Mineral Resources Act 1989 and conditions of EPC 545;
  1. (b)
    Cherwell Creek falsely reported the results in the 1995 Annual Report and 1996 application to renew EPC 545;
  1. (c)
    The Minister’s decision to renew was made with regard to that information and has no effect, having been obtained by fraud.
  1. [7]
    Cherwell Creek submitted BMA’s application was not in proper form because it did not seek leave for those paragraphs. That is an arid argument, given BMA’s application sought leave, to the extent required, to rely on the pleading.
  1. [8]
    By order made on 11 June 2020, the parties had leave to file further pleadings, with amendments limited to changes necessary to bring the pleadings into conformity with the oral evidence or to respond to amendments made by the other party.
  1. [9]
    BMA says the 1995 allegations are within the terms of the order because they were responsive to Cherwell Creek’s latest pleading. For the first time, Cherwell Creek asserted it was the holder of EPC 545 with the statutory entitlements provided for by Part 5 of the MRA.[3] Further, it pleaded its rights, entitlements, and interests in the MDLA 364 coal resource, including as the holder of EPC 545.[4] This is the first time it explicitly pleaded EPC 545 as a source of its claimed rights in the resource.
  1. [10]
    BMA says the paragraphs are responsive, because they do not relate only to allegations not affected by the amendments.[5]  Having made the allegation, Cherwell Creek cannot prevent BMA from responding “in such manner as it may be advised.”[6]
  1. [11]
    Cherwell Creek says it has always been implicit in its case that its rights to the MDLA 364 coal resource were traced to its rights as holder of EPC 545. A pre-existing tenure is, and was at the relevant time, an effective precondition to applying for a mineral development licence. Whether it held EPC 545 was validly renewed has been in contest since BMA filed its first defence. BMA pleaded that EPC 545 was not validly granted or renewed and, without that, Cherwell Creek would not or could not have been granted a mineral development licence or a mining lease.[7] Cherwell Creek joined issue with that allegation in its reply.[8] The amendments now seek to challenge the validity of EPC 545 on a different basis – that it was obtained, or at least renewed, by fraud.
  1. [12]
    The purpose of pleadings is to identify the issues in dispute, but they are not an end in themselves. Contemporary approaches to case management have resulted in courts not taking an unduly technical or restrictive approach to pleadings.[9]
  1. [13]
    A fair reading of the pleadings prior to the Sixth Amended Annexure A is that Cherwell Creek relied on EPC 545 as the source of its entitlement to apply for MDLA 364 and that BMA contested its validity. To accept BMA’s submission that the Sixth Amended Annexure A raised a new issue requires an overly pedantic reading, which feigns “ignorance of the substantive issues that emerge from” the pleading.[10]
  1. [14]
    I consider leave is required for BMA to amend its Defence to include paragraphs 1D1 to 1D5 and 1D7 to 1D17.

Is the pleading adequate?

  1. [15]
    BMA provided its proposed Fifth Amended Defence to Cherwell Creek in early July. Thereafter there was an exchange of correspondence about the fraud allegations. Cherwell Creek and, in reply, BMA, addressed that exchange, at some length in their written submissions.[11] At the hearing, BMA confirmed it stood by its pleading and the application should be determined on that basis. Counsel for both parties agreed I need not consider their arguments about that correspondence.[12]
  1. [16]
    Fraud must be pleaded specifically[13] and with particularity.[14]
  1. [17]
    Cherwell Creek argues the pleading is not in an appropriate form to go forward for trial. BMA says the relevant paragraphs of the proposed Fifth Amended Defence contain a detailed pleading of facts that are sufficiently particular to support its allegations of fraud.
  1. [18]
    BMA pleads unlawful entry by Cherwell Creek, or its contractors, onto land outside the boundaries of EPC 545 and drilling:
  1. (a)
    of two boreholes in 1995: HC003and BP006 (the 1995 Outlying Boreholes)
  1. (b)
    seven boreholes in 2004: HC009, HC010, HC011, BP016, BP017, BP026 and BP027 (the 2004 Outlying Boreholes)
  1. (c)
    one borehole in 2005: BP040 (the 2005 Outlying Borehole).
  1. [19]
    It alleges Cherwell Creek falsely represented:
  1. (a)
    that the 1995 Outlying Boreholes were drilled on EPC 545:
  1. (i)
    in the 1995 Annual Report for EPC 545
  1. (ii)
    in its application to renew that permit in 1996;
  1. (b)
    that the 1995 and the 2004 Outlying Boreholes were drilled on EPC 545, in the 2004 Annual Report for EPC 545.
  1. (c)
    that the 1995, 2004 and 2005 Outlying Boreholes were drilled on EPC 545:
  1. (i)
    in the 2005, 2006 and 2007 Annual Reports for EPC 545
  1. (ii)
    in its applications to renew that permit in 2005 and 2007
  1. (iii)
    in its application for MDLA 364 in 2006
  1. (d)
    that it had complied with the conditions of EPC 545 in those reports and applications, in specified correspondence with the Department and submissions to the Minister.
  1. [20]
    The pleading identifies the relevant documents. It alleges that, for each false representation, Cherwell Creek, by Mr Wallin, knew it to be false or was recklessly indifferent as to whether it was false. BMA pleads the consequences for the false representations.[15]
  1. [21]
    At the hearing, Cherwell Creek took issue with only one aspect of the pleading, the articulation of Cherwell Creek’s knowledge or reckless indifference.[16] Knowledge, and any fact from which it is to be inferred, must be specifically pleaded.[17] As I understood Cherwell Creek’s submission, it considers the facts from which knowledge is to be inferred are inadequate to support the allegations of fraud.
  1. [22]
    Counsel for Cherwell Creek posed the question in this way:

…has the respondent articulated, in a manner that’s fair to us and appropriate with the court, a case of knowledge and recklessness which is fit to go forward to trial.[18]

  1. [23]
    Counsel identified the following paragraphs as the focus of his submissions: 1D5, 1D6, 1D24, 1D25 and 1D26. These are the paragraphs in which BMA alleged Cherwell Creek, by Mr Wallin, knew of or was recklessly indifferent to the falsity of representations about the location of the Outlying Boreholes made by Cherwell Creek in the 1995, 2004, 2005 and 2006 Annual Reports for EPC 545. Cherwell Creek did not criticise other paragraphs pleading Cherwell Creek’s knowledge of false representations in its applications to renew EPC 545 and for the grant of MDLA 364, and in correspondence with and submissions to the Department or the Minister.
  1. [24]
    1D5 pleads:

At the time the 1995 Annual Report was provided to the Department, the applicant, by Mr Wallin knew that, or alternatively was recklessly indifferent as to whether:

  1. the 1995 Annual Report falsely depicted the locations of the 1995 Outlying Boreholes;
  2. the representation that the 1995 Outlying Boreholes were within the area of EPC 545 was false.

PARTICULARS

Mr Wallin’s knowledge, or alternatively reckless indifference, is to be inferred from the following:

  1. (i)
    Mr Wallin was the controlling mind of the applicant.
  1. (ii)
    Mr Wallin is a geologist and was familiar with the system of recording the location of boreholes by reference to their grid coordinates.
  1. (iii)
    Mr Wallin was the author of the 1995 Annual Report.
  1. (iv)
    Prior to submission of the 1995 Annual Report, Mr Wallin had reviewed a drawing of the locations of 1995 Outlying Boreholes which showed them in a location which was outside the area of EPC 545 [CCC.432051].
  1. (v)
    The position of the 1995 Outlying Boreholes in Figure 2 of the Annual Report differs from the position of the 1995 Outlying Boreholes as depicted in that drawing.
  1. (vi)
    The location of the 1995 Outlying Boreholes shown in Figure 2 of the 1995 Annual Report is inconsistent with the grid references for the 1995 Outlying Boreholes recorded in Table 2 of the 1995 Annual Report, which required the 1995 Outlying Boreholes to be plotted outside EPC 545.
  1. [25]
    Counsel for Cherwell Creek said the first three particulars are likely to be “fairly uncontroversial”[19] and focussed his submissions on the remaining particulars. He argued that for any of those particulars to support an inference of knowledge, BMA would need to establish that Mr Wallin would have engaged in some exercise that would have revealed the falsity, and that it should plead that so Mr Wallin knows what case he must meet. A summary of counsel’s submissions on the point follows.
  1. [26]
    For particular (iv), because the drawing does not show the boundary of EPC 545, Mr Wallin would have had to have superimposed the boundary on the map to know the 1995 Outlying Boreholes were outside EPC 545. Otherwise, BMA is ignoring other evidence that the author of the drawing, the drilling contractor ISCOR, represented to Mr Wallin that the holes were drilled on EPC 545.
  1. [27]
    For particular (v), Mr Wallin would have had to compare the drawing with Figure 2 in the Annual Report to know they showed the holes in different locations. For particular (vi), Mr Wallin would have had to have plotted the grid references in Table 2 of the Annual Report on Figure 2 to know they were inconsistent.
  1. [28]
    Counsel submitted Cherwell Creek’s “simple proposition is that “(iv), (v) and (vi), taken together, do not go any distance towards”[20] establishing Mr Wallin knew the drilling was outside the boundary and falsely represented the position to the Department.
  1. [29]
    As counsel for BMA submitted, this argument ignores the first three particulars. BMA pleads knowledge or reckless indifference is to be inferred from all the material facts alleged. I need to assess the adequacy of the pleading on the material facts alleged, considered together.
  1. [30]
    Critically, those particulars are Mr Wallin’s role as the controlling mind of Cherwell Creek, his expertise as a geologist, his familiarity with the system of recording borehole locations by reference to grid references, and his authorship of the relevant annual report. BMA has pleaded particulars that, if proved, show that when Mr Wallin prepared the annual report, he had information which he would have understood because of his expertise, and which demonstrated the holes were drilled outside EPC 545.
  1. [31]
    BMA took a similar approach in 1D6, which picks up the particulars pleaded in 1D5 and adds the following as particulars from which knowledge or reckless indifference may be inferred:
  1. (a)
    That Mr Wallin was the controlling mind of Energy Minerals Pty Ltd which held a 95% interest in EPC 900 (the other 5% being held by Cherwell Creek).
  1. (b)
    That the 2006 Annual Report for EPC 900 represented the 1995 Outlying Boreholes as located within EPC 900 and outside EPC 545.
  1. (c)
    That the report annexed borehole summaries and logs for those boreholes with the drilling dates removed.
  1. (d)
    That it is to be inferred that Energy Minerals would not have submitted the report without Mr Wallin first reviewing it.
  1. [32]
    For the other paragraphs said to be deficient (1D24 – 1D26), BMA has adopted the same approach, picking up the particulars pleaded in either 1D5 or 1D6 and adding further particulars which relate specifically to the relevant report.
  1. [33]
    Counsel for both parties made submissions about evidence contrary to or supporting the inference that, when he prepared the 1995 Annual Report for EPC 545, Mr Wallin knew the 1995 Outlying Boreholes were drilled outside the tenure area. That is a matter for trial. It is also not necessary to address arguments about BMA’s sole reliance on Mr Wallin to allege fraud. Mr Wallin’s status as the controlling mind of the relevant companies is a key particular of Cherwell Creek’s knowledge of pleaded facts.
  1. [34]
    Counsel for Cherwell Creek relied on authorities about the clear, cogent, or strict proof necessary to prove a serious allegation such as fraud.[21] He referred me to a passage from Neat Holdings Pty Ltd v Karajan Holdings Pty Limited[22](reiterated in a recent High Court decision Berry v CCL Secure Pty Ltd[23]) in which the majority observed the conventional perception is that members of our society do not ordinarily engage in fraudulent conduct.
  1. [35]
    In Berry, Bell, Keane and Nettle JJ said:

That perception, which underpins the need for clear evidence of fraud, implies that a person would not intentionally mislead another without sufficient cause to do so.[24]

  1. [36]
    Except to the extent that Cherwell Creek’s submissions might suggest BMA must prove motive to prove its case on fraud,[25] BMA does not dispute these principles apply at trial. However, it argues that is not the test to apply here.
  1. [37]
    BMA says I must be satisfied the material facts, as distinct from the evidence required to establish those facts, have been stated with particularity.[26] If the pleading alleges facts “from which it is possible that the inferences may be drawn. That is enough to justify the plea.”[27] I accept that is the test I must apply when deciding whether the pleading is adequate to support the allegations of fraud.
  1. [38]
    Applying that test, I have concluded that paragraphs 1D1 to 1D53 of the Fifth Amended Defence, plead an “unequivocal and particularised claim of fraud.”[28] The particulars in the disputed paragraphs (1D5, 1D6, 1D24-26) are capable of supporting a “reasonable and direct inference”[29] of either knowledge or reckless indifference.
  1. [39]
    Whether BMA can establish either state of mind at trial will depend on what material facts are proved on the evidence, and whether, applying the Briginshaw test,[30] the Court is satisfied sufficiently to draw the relevant inference.

Should leave be granted?

  1. [40]
    BMA must satisfy the Court that leave should be granted. The High Court identified the relevant considerations for an application of this nature in Aon Risk Services Australia Ltd v Australian National University:[31]
  1. (a)
    the point in the litigation at which the application is made;
  1. (b)
    the adequacy of the explanation for delay;
  1. (c)
    the nature and importance of the amendment to the party seeking to make it;
  1. (d)
    the extent of delay and costs associated with the amendment, together with any demonstrated or assumed prejudice to the party opposing leave.
  1. [41]
    What weight to give to those factors, individually and in combination, and how they will weigh in the balance depends on the facts in the individual case.[32] In this case, where fraud allegations are made at a late stage in the proceedings, delay is particularly serious.[33] It follows that the explanation for the timing of the amendments, and the extent to which any prejudice caused by that delay can be ameliorated, weigh strongly in the balance.

BMA’s explanation for the timing of the amendments

  1. [42]
    Given the strong contest between the parties on this consideration, it is necessary to set out BMA’s explanation for proposing the amendments, and the evidence it led about that, in some detail. In brief, its explanation is that it was not on notice of matters that indicated fraud until recently. The evidence about that comes from Ms Morcom, a senior associate with the solicitors for BMA.
  1. [43]
    Ms Morcom commenced working on this case in about August 2019. In December 2019, she commenced a review of Mr Wallin’s summaries of evidence and the documents he referred to. Her purpose was to assist counsel to prepare to cross-examine Mr Wallin at trial, considering matters in issue as well as matters going to credit.
  1. [44]
    One of the matters then, and still, in issue is whether Cherwell Creek’s past performance was satisfactory. In denying that it was, BMA alleged Cherwell Creek’s exploration of EPC 545, one of the tenures underlying MDLA 364, was inadequate. In a summary of evidence, Mr Wallin has given a precis of the evidence he will give about Cherwell Creek’s exploration activity on EPC 545.
  1. [45]
    In January 2020, Ms Morcom commenced a detailed review of the geological information then available to BMA. In his further amended summary of evidence, Mr Wallin raised an issue about the location of two boreholes in the southern section of EPC 545. He said that these holes were not as close to the boundary of the Peak Downs mining lease as they appeared in a fax he had received from ISCOR, the drilling contractor who undertook the work.[34]
  1. [46]
    Ms Morcom understood this reference to be the boreholes BP003 and BP004, which are in the area Mr Wallin described. Ms Morcom looked at the fax referred to by Mr Wallin. She also looked at a map contained in the EPC 545 annual report for 1995. Ms Morcom did not closely compare the maps by putting them side by side and did not consider the other two holes (the 1995 outlying boreholes). She agreed that she could have made a detailed comparison of all four boreholes but had no reason to do so. She was focused on the specific issue raised by Mr Wallin about BP003 and BP004.
  1. [47]
    On 2 March 2020, she formed the view that BMA should subpoena copies of the annual reports for EPC 900 from Energy Minerals Pty Ltd. By then, BMA had the second further amended summary of evidence of Mr Wallin, filed on 19 February 2020, in which he referred to exploration activity on EPC 900.
  1. [48]
    Part of EPC 900 is included in the area of MDLA 364. Cherwell Creek took a 5% interest in that tenure on 23 January 2006. Mr Wallin is, and was then, a director of both companies.
  1. [49]
    BMA did not have the annual reports for EPC 900 until late May 2020. I will return to this shortly.
  1. [50]
    On 6 March 2020, Ms Morcom decided she needed expert assistance in investigating the geological information. Amongst other requests, she asked Ms Jordan, the Superintendent Mine Geology of BHP Minerals Australia, to produce maps showing the location of the drilling conducted by Cherwell Creek on EPC 545 each year and one map showing the cumulative drilling program, colour coded by year.
  1. [51]
    Ms Jordan was delayed in responding to Ms Morcom’s request for about six weeks due to ill health. Ms Morcom said she was not then looking for evidence of illegal drilling or false reporting as she had no reason to expect that. There was no sense of urgency, because the information was to assist counsel cross-examine Mr Wallin at a trial listed to commence in August 2020.
  1. [52]
    On 7 May 2020, before she had received Ms Jordan’s maps, Ms Morcom gave close consideration to the two maps showing the 1995 drilling.
  1. [53]
    Comparing them side by side, Ms Morcom considered two boreholes, HC003 and BP006, may have been drilled outside EPC 545, contrary to the information contained in the 1995 annual report. When she reviewed the annual reports for EPC 545 for 1995 and 2006, and the coordinates used by Mr Whitby in his May 2012 expert report, she identified two sets of coordinates related to HC003, potentially attributable to different survey datum standards. That day, she raised the possibility of illegal drilling with Mr Pappalardo, the partner at her firm in charge of the matter, and Ms Jordan.
  1. [54]
    On 13 May 2020, Ms Jordan provided Ms Morcom with a number of maps, including three maps which showed the drilling activity reported for EPC545 in each of 1995, 2004 and 2005. The location of the boreholes was mapped against the boundaries of EPC 545 and EPC 900. They showed 10 boreholes outside EPC 545, but within EPC 900: the 1995, 2004 and 2005 Outlying Boreholes.
  1. [55]
    By then, BMA had already filed requests for subpoenas to be issued to Energy Minerals and QCoal to produce the annual reports for EPC 900. On 26 May 2020, the morning of the hearing, a lawyer for the subpoena recipients advised BMA’s solicitors that one of the 1995 Outlying Boreholes (HPC003) was identified in the EPC 900 annual report as MW010C.[35] This information was offered in response to BMA’s written submission that an expert had not taken into account MW010C in preparing his report, and that it is impossible to tell where the drill hole was located.
  1. [56]
    That day, I heard and refused an application by the subpoena recipients to redact the annual reports. In order to preserve confidentiality in the information in the reports, I ordered that, until agreement or further order of the Court, the contents of the unredacted reports could be disclosed only to BMA’s lawyers and administrative assistants.
  1. [57]
    After the hearing, and because of the information about HC003, Ms Morcom reviewed the borehole lithological logs and identified, for the first time, the alternate identifiers for the 1995, 2004 and 2005 outlying boreholes.
  1. [58]
    The day after the hearing, when BMA’s solicitors received the unredacted annual reports for EPC 900, they had evidence that all 10 outlying boreholes had been reported against both tenures. Ms Morcom considered that this might provide a defence to Cherwell Creek’s plea that it would have been granted MDLA 364 and, subsequently, a mining lease over that area.
  1. [59]
    Until 19 June 2020, because confidentiality arrangements had not yet been agreed with the subpoena recipients, BMA’s solicitors were constrained in what they could reveal to BMA about the unredacted annual reports. They sought limited instructions on 12 June 2020, and then consulted with counsel and received their advice. On 23 June 2020, BMA obtained instructions to file an Amended Defence, which it did that day.
  1. [60]
    Cherwell Creek says this does not provide a satisfactory explanation for the delay in pleading illegal drilling and false reporting. BMA must prove the allegations could not have been made earlier, exercising reasonable diligence, including having regard to whether there existed anything that would have put BMA on notice of the matters giving rise to the allegation of fraud.[36] BMA was under a duty to inquire into any basis upon which it might challenge the validity of EPC 545 as soon as it had pleaded its invalidity in 2008. It should have “investigated the constituent material going to the fraud allegations”[37]
  1. [61]
    Although BMA referred to the test of reasonable diligence,[38] which applies to an application for leave to make a claim outside a limitation period, it did so by way of analogy. At the hearing, BMA confirmed the relevant test on the application is set out in Aon Risk Services Australia Limited.[39] That requires the Court to assess a range of factors, including whether there is a ‘satisfactory’ or ‘adequate’ explanation for the delay.
  1. [62]
    BMA argued there was no connection between the issues it raised in its Defence, about delegation of Ministerial decision-making, and Cherwell Creek illegally drilling and falsely reporting its exploration activities. Nor had Cherwell Creek identified what could have been investigated by BMA’s solicitors earlier than it was, and how it is said reasonable diligence required that to be done.
  1. [63]
    This is an unusual case of fraud. The party asserting the fraud is not the party on whom the alleged fraud was perpetrated. That is the Department to whom Cherwell Creek reported, not BMA.
  1. [64]
    Cherwell Creek made something of the fact that Ms Morcom, a senior associate only recently involved in the matter, provided evidence on the application and that Mr Pappalardo, the partner in charge of the file, and Mr Hurford, another senior associate with lengthy involvement in the matter, did not do so. However, Ms Morcom was the person who undertook the investigations and would be expected to provide that evidence. Further, she affirmed, on information and belief, that Mr Pappalardo and Mr Hurford had not considered the possibility of illegal drilling and false reporting before she raised it with them in May 2020.
  1. [65]
    There is no dispute BMA has had in its possession, for some years, important information that it now relies upon in support of its fraud allegations. The lithological logs that Ms Morcom used on 26 May to discover the alternate identifiers for the 10 outlying boreholes were disclosed by Cherwell Creek in 2011.
  1. [66]
    Cherwell Creek conceded that, alone, the logs could not establish a fraud, but it “provided a common reference point from which experts on both sides could then investigate any and every issue they wished which was relevant to the issues in the proceedings.”[40] Any party who wished to explore any question about location should have done so from 2011.[41]
  1. [67]
    BMA says there was no reason to explore a question about location of the boreholes in 2011. The adequacy of BMA’s explanation must also be viewed in context. This is a complex case. There is a multiplicity of legal and factual issues. There has been voluminous disclosure. There is a protracted procedural history involving numerous interlocutory disputes and appeals from procedural rulings.
  1. [68]
    The logs were disclosed in 2011 at the instigation of Member Smith, who was then managing the proceeding, so the parties and their experts could consider the geology of the coal resource in issue: that is, the coal resource in MDLA 364. The area of MDLA 364 includes both EPC 545 and part of EPC 900. All the outlying boreholes are within MDLA 364. The Court and the parties were then focussed on investigating the geology of that coal resource, not whether bores were drilled on or off particular exploration tenements. That likely explains why the experts who reported on the geology of the coal resource also failed to identify the issue.
  1. [69]
    Ms Morcom has given a detailed explanation of her investigations.
  1. [70]
    By 7 May 2020, she had suspicions about illegal drilling when she closely compared the two maps from 1995. On 13 May she had Ms Jordan’s maps showing the outlying boreholes. By then she had information that indicated false reporting of exploration activity on EPC 545. On 26 May she had information that one outlying borehole was reported for both EPC 545 and EPC 900. On 27 May, she had information that all 10 outlying boreholes were reported for both tenures. The fraud allegations were first notified to Cherwell Creek on 23 June, when BMA filed the Fourth Amended Defence. Between 27 May and 19 June, BMA’s solicitors were constrained in what they could report to their client. It proceeded promptly once it could obtain full instructions.
  1. [71]
    Cherwell Creek has not explained what could have put BMA or its solicitors on notice of potential fraud earlier than it was identified. BMA has given an adequate explanation for the timing of the proposed amendments.

The prejudice to Cherwell Creek

  1. [72]
    The relevant prejudice is not the prejudice of Cherwell Creek having to meet a defence it would not have to meet if BMA cannot plead the fraud allegations. It is the prejudice to Cherwell Creek of having to meet those allegations now, and not having earlier notice of them.[42]
  1. [73]
    Mr Boys, the solicitor for Cherwell Creek, gave evidence about the potential prejudice to Cherwell Creek. Physical evidence of the location of the outlying boreholes has been lost. Cherwell Creek may have some difficulty accessing information kept on an old geological database. It needs time to investigate the allegations and lead further evidence. This application has distracted its attention from other necessary pre-trial preparation.

Loss of physical evidence

  1. [74]
    Cherwell Creek concedes there is an arguable case that the outlying boreholes have been drilled outside EPC 535. It is exploring whether to call expert evidence on the question. It says it suffers irremediable prejudice from the timing of these allegations, because physical evidence of the location of the drilling has been lost.
  1. [75]
    Mr Stapleton, a mine planning expert engaged by Cherwell Creek, advised the solicitors for Cherwell Creek that the 10 outlying boreholes have been mined through. This limits Cherwell Creek’s ability to check the physical location of the boreholes. There is evidence that, when ISCOR reported in 1995 to Mr Wallin, one of the 1995 outlying boreholes was yet to be surveyed. It is not clear if it was ever surveyed.
  1. [76]
    BMA does not dispute physical evidence has been lost but says it would likely have been lost by 2011. Mr Nevell, a surveyor engaged by the solicitors for BMA, advised Ms Morcom that by mid-2011, if properly rehabilitated, and in light of the passage of time and heavy rainfall in the area, it is likely there would have been no clear physical evidence of drilling, aside from the possibility of some subsidence.
  1. [77]
    It seems, then, that Cherwell Creek is no worse off in this regard than it would have been when the lithological logs were disclosed. Cherwell Creek has not pointed to any information that could have laid a foundation for fraud allegations before 2011 and conceded that the lithological logs, alone, would not have established what is now alleged.

Difficulty in accessing geological information

  1. [78]
    QCoal held the geological data, from which annual reports for EPC 545 and EPC 900 were produced, on a database known as “Geohole.” Mr Boys is instructed that in 2011 and 2012, the data was transferred from Geohole to a new database and Geohole was not retained. Cherwell Creek has engaged a forensic technology specialist to investigate and report on how to access the information formerly on that database.
  1. [79]
    BMA says the issue with the Geohole database is of Cherwell Creek’s own making. It transferred relevant data and did not retain Geohole some years after this proceeding commenced. Mr Boys has not said, presumably because he cannot know until he gets the report, whether the metadata on Geohole has been lost.

Investigations and further evidence

  1. [80]
    Mr Boys says Cherwell Creek will need to lead further evidence from Mr Wallin and, possibly, two other lay witnesses. It will need to investigate what the Department understood about the position of the outlying boreholes. It may need to lead expert evidence about the location of the boreholes.
  1. [81]
    BMA does not say any of those steps are unnecessary. Mr Boys estimates the earliest that all of those steps will be complete is early August. I have no reason to question that assessment, which appears reasonable.
  1. [82]
    At my request, the parties provided alternate case management directions depending on whether BMA was or was not granted leave. Assuming leave was granted, Cherwell Creek proposed the trial commence on 19 October, albeit with a special fixture hearing. At the oral hearing, counsel for Cherwell Creek did not suggest a different date if the trial commenced without a special fixture hearing. It can be accepted, then, that to the extent that evidence (physical or digital) has not been lost, Cherwell Creek can be ready to commence the trial then, only three weeks after the date proposed by BMA.
  1. [83]
    The prejudice to Cherwell Creek of meeting the fraud allegations now, rather than having earlier notice of them, can be largely remedied by, when viewed in the context of this proceeding’s lengthy history, a short delay in the trial listing.
  1. [84]
    To the extent its prejudice cannot be remedied by that adjournment, the prejudice is not due to BMA. The physical evidence would likely have been lost by 2011, the earliest it might be said that BMA could have considered the location of the boreholes. It was QCoal’s decision to transfer its geological database, and it did this some years after this proceeding commenced.

Leave should be granted

  1. [85]
    BMA says that if the allegations are proved they will demonstrate that Cherwell Creek had no valuable opportunity to commercialise the MDLA 364 coal resource. That is, it would be a complete answer to the claim. Although Cherwell Creek contests the legal consequence of the fraud allegations, if made out, and alleges the validity of EPC 545 is not justiciable in this proceeding in this Court, it did not ventilate these arguments at the hearing. Both parties proceeded on the basis that these are arguments for trial.
  1. [86]
    Counsel for BMA took me through the pleaded documents in some detail and demonstrated an arguable claim on the pleadings.
  1. [87]
    Cherwell Creek would have been in a better position to respond to the fraud allegations had they been made earlier in the proceeding. However, the earliest disclosure of relevant information by Cherwell Creek was when the lithological logs were disclosed in 2011. Before then, BMA was not in possession of information that would have allowed it to investigate the location of the boreholes, assuming it had cause to do so. I accept that it was not, then, on notice of any reason to make that enquiry.
  1. [88]
    By 2011, the physical evidence would likely have been lost. Any difficulty in Cherwell Creek accessing its geological records is of its own making. Cherwell Creek has had notice of the fraud allegations since 23 June 2020 and has spent considerable time, already, investigating them. A short delay in the commencement of the trial will allow it to finalise its investigations and prepare further evidence.
  1. [89]
    BMA has provided an adequate explanation for making the fraud allegations at this stage of the proceeding.
  1. [90]
    Weighing all those circumstances, it is not in the interests of justice to prevent a respondent to a multi-million dollar compensation claim from running what it says is a complete answer to the claim.
  1. [91]
    BMA has leave to rely on the fraud allegations made in 1D1 to 1D53 of the Fifth Amended Defence.

The special fixture proposal

  1. [92]
    Having determined that question, I will turn to the procedure proposed by Cherwell Creek for hearing the fraud allegations.
  1. [93]
    Cherwell Creek submits that, as a matter of basic fairness, it should not be placed at a forensic disadvantage by having to call Mr Wallin to give evidence, until the Court has evaluated the merits of the documentary material on which BMA relies. It proposes that BMA lead all its evidence in support of the fraud allegations, without Cherwell Creek having to go into evidence. It may then make a no case submission. If BMA does not make out a case on all or any of its fraud allegations, they will be removed from the pleadings. In any case, the trial will proceed, although it is not clear to what extent there may be a further delay between the special fixture and the commencement of the trial.
  1. [94]
    As first proposed by Cherwell Creek, the timing for various steps prior to the special fixture would have confined BMA to leading evidence identified before Cherwell Creek had either replied to the fraud allegations, provided disclosure in relation to them, or produced witness summaries and expert reports on the topic. Counsel for Cherwell Creek said this was infelicity in drafting, not intentional, and amended its proposed directions so as to remedy that unfairness.
  1. [95]
    The parties agree the Court has the power to make directions about the order in which evidence is presented.
  1. [96]
    In cases where each party bears the onus in relation to different issues, the Court has a discretion about the most convenient way of dealing with the matter, in the interests of justice, in the interests of the parties, and from the point of view of the court.[43] The Court will consider what method of trial is the fairest and most effective.[44]
  1. [97]
    Cherwell Creek says its proposed course is justified where fraud is alleged. However, in each of the cases it cites in support of its proposal, the fraud or misconduct was alleged against, not by, the defendants/respondents.[45] I was not referred to any case in which a respondent pleading fraud in defence was required to present its case on fraud before the applicant had opened its case or led any evidence on its own case.
  1. [98]
    BMA submits the trial could never be fairly conducted if BMA had to establish the allegations in 1D1 to 1D53, before Mr Wallin gives evidence and is cross-examined.
  1. [99]
    Cherwell Creek must establish it lost a valuable opportunity to develop the mine. One aspect of its case is that it would, or would likely, have been granted a mining lease, in part because its past performance was satisfactory. That is an issue of fact on which Cherwell Creek bears the onus.
  1. [100]
    Cherwell Creek’s assertion that its past performance was satisfactory and BMA’s fraud allegations are interdependent and could not easily be dealt with discretely. BMA relies upon its allegations of fraud as one of a number of explanations for its denial that Cherwell Creek’s past performance was satisfactory.
  1. [101]
    It is not just a question of whether or not there was unlawful drilling. The following matters, pleaded by the fraud allegations, are also relevant in assessing whether Cherwell Creek’s past performance was satisfactory. Did Cherwell Creek comply with the conditions of EPC 545 and the MRA in undertaking activities related to EPC 545? Was the information that it provided to the Department about its exploration activities false? Did Mr Wallin know it was false, or was he recklessly indifferent to whether it was false?
  1. [102]
    The interdependence of the issues presents difficulties for Cherwell Creek in splitting its case, but that should be not be determined until the pleadings have closed. Further, if the location of the outlying boreholes is in issue at trial it may be appropriate for expert evidence to be led about that before Mr Wallin gives evidence. These questions can be considered once the pre-trial preparation has concluded.
  1. [103]
    What Cherwell Creek is now proposing is not splitting its case, but a separate trial of BMA’s, but not Cherwell Creek’s, case on the fraud allegations.
  1. [104]
    As observed above, on Cherwell Creek’s proposal, it would not be required to open or lead evidence on any aspect of its case before BMA had led all its evidence. Cherwell Creek could then elect whether to make a no case submission. If Cherwell Creek succeeds in a no case submission, the relevant allegations will be removed from the pleading. Presumably this would have implications for the further conduct of the trial.
  1. [105]
    BMA says that almost everything it wishes to say about the fraud allegations arises out of Mr Wallin’s evidence. The question then arises, what can the Court make of evidence later given by Mr Wallin if he makes concessions, admissions or gives answers during cross-examination that might otherwise support the alleged fraudulent conduct? BMA says it would be perverse to ignore such evidence, which is a proper matter of defence on the issue.
  1. [106]
    BMA has raised legitimate concerns about the fairness to the respondents of a procedure which is unorthodox and, as far as I am aware, unprecedented.
  1. [107]
    As to fairness to Cherwell Creek, it faces a detailed pleading of fraud based on documents it did or should have disclosed, and on inferences arising from Mr Wallin’s authorship of the documents and/or his role in the relevant companies.
  1. [108]
    The fact that Mr Wallin will be called upon to prove a negative is a highly pertinent factor of considerable weight, at least in deciding whether a party should be allowed to split its case.[46] Nonetheless, I accept the submission by counsel for BMA that the difficulty seems greater in the abstract than when applied to this case. Ultimately it is a question of Mr Wallin’s knowledge of the location of the relevant boreholes and the falsity of the representations in the relevant reports and applications, something to which he can attest.
  1. [109]
    To a large degree, the prejudice in Cherwell Creek facing these allegations now can be ameliorated by delaying the start of the trial. The special fixture does nothing to address any remaining prejudice caused by the boreholes being mined through or Cherwell Creek disposing of databanks, making the investigation of its record more difficult.
  1. [110]
    Further, I must consider whether the procedure is in the interests of justice. Effective use of public resources is a relevant factor,[47] particularly for a case such as this which has drawn heavily on the Court’s resources over many years.
  1. [111]
    I am not persuaded the proposed special fixture is an efficient use of either the Court’s or the parties’ resources. Once BMA’s evidence on the fraud allegations had been led, and tested, it is reasonable to expect detailed submissions and some delay in obtaining a ruling on a no case submission. Depending on the outcome, there may be further delays in the parties revising their pleadings, or preparing further evidence if the fraud allegations go forward. If the no case submission succeeds in whole or in part, it is likely there will be disputes at trial about the extent to which, if at all, Mr Wallin can be cross-examined on matters relied on in support of the fraud allegations.
  1. [112]
    For reasons of both fairness and efficiency, I consider the special fixture process proposed by Cherwell Creek is not appropriate.
  1. [113]
    I will now turn to the remaining disputed amendments.

Other Disputed Amendments

  1. [114]
    There are a number of disputes about other amendments, some of which BMA says it does not require leave to make. Cherwell Creek says leave is required for each of the following categories of amendments and should not be granted.

Quantity of coal no more than 14 Mt ROM coal

  1. [115]
    BMA denies leave is required for this amendment, which is contained in paragraph 19(fa)(ii) of the Fifth Amended Defence. In that paragraph, BMA denies Cherwell Creek’s allegation that the MDLA 364 coal resource would have contained at least 15.1 Mt ROM coal because, relying on an opinion given by Mr Maiden,[48] the quantity would have been no more than 14 Mt ROM coal.
  1. [116]
    BMA says this amendment falls within the order dated 11 June because it is responsive to Cherwell Creek’s amended pleading and brings BMA’s pleading into line with the expert evidence.
  1. [117]
    Cherwell Creek denies it does so and says that this amendment is linked to BMA’s application for leave to lead further expert evidence on the topic. It is not necessary to address BMA’s application to lead further expert evidence on the topic. That will be heard shortly. BMA says the pleading is justified by the expert evidence currently before the Court.
  1. [118]
    Cherwell Creek says the mine experts agreed on a mine plan for a resource of 15.1 Mt ROM coal. The implication is that there is agreement between the relevant experts about the quantity of the coal resource and that to allow the amendment would undo and reopen a matter settled between the relevant experts.
  1. [119]
    It is true that Mr Maiden accepted the agreed mine plan was a ‘reasonable representation of the mineable coal reserve”.[49] However, I accept BMA’s submission that there is still a difference of expert opinion about the quantity of the MDLA 364 coal resource and that it is entitled to advance a case based on its own experts’ assessment of quantity.
  1. [120]
    Mr Maiden’s assessment, also contained in the mining JER, is 14.1 Mt ROM coal. That is based on Mr Whitby’s geological model, assuming it was adjusted to increase the amount of coal in the DYLO seam by 0.27 Mt. Mr Maiden made that adjustment because he and Mr Stapleton had been informed that Mr Whitby had adjusted his geological model to account for that increase. It is not clear why, but the mine planners did not have Mr Whitby’s updated geological model.[50]
  1. [121]
    In any case, BMA is entitled to rely on Mr Whitby’s model, which he did not depart from, adjusted by Mr Maiden, to plead its case on the quantity of the coal resource. On that basis, leave is granted for this amendment.

Washing coal on Carborough Downs

  1. [122]
    BMA accepts leave is required for these amendments. They are contained in paragraphs 5(d), 19(g)(iii), 19(i)(iii) and 19(i)(iv) of the Fifth Amended Defence. They relate to Cherwell Creek’s assertion that it would have washed coal extracted from bulk samples at Carborough Downs and would have continued to wash coal there for the life of the mine.[51]
  1. [123]
    Those allegations were first made in Cherwell Creek’s Third Amended Annexure A filed on 6 May 2016. BMA denied them in its Third Amended Defence, on the basis that, inter alia, Cherwell Creek had disclosed no document from which it could be inferred that the owner or operator of Carborough Downs would have permitted that to occur.[52]
  1. [124]
    Cherwell Creek did not positively assert the owner or operator would have permitted it to do so but that is a necessary inference from its pleading. There is now lay evidence from both parties about both the capacity and the willingness of Carborough Downs to enter into a toll washing arrangement with Cherwell Creek.
  1. [125]
    The amendments raise a matter closely related to existing allegations and which both parties address in their lay evidence.
  1. [126]
    At the hearing, counsel for Cherwell Creek said if the amendments are allowed there should be further directions about lay evidence on the topic.
  1. [127]
    Leave should be given for these amendments. If Cherwell Creek seeks directions beyond those I have made on this application, its lawyers should discuss that with BMA’s and, if necessary, I will hear from the parties about that.

Judicial Review if a mining lease were granted

  1. [128]
    BMA accepts leave is required for this amendment, contained in paragraphs 11(e) of the Fifth Amended Defence. It inserts an allegation that, if a mining lease had been granted prior to the resolution of the Judicial Review Proceeding, BMA would have amended its application to challenge the grant of that lease. BMA says the change is minor, consequential on the fraud allegations, and Cherwell Creek will suffer no prejudice, Mr Wallin having already addressed the possibility in a summary of evidence.[53]
  1. [129]
    Although Cherwell Creek said it opposed this amendment, it did not address it directly in its written or oral submissions, perhaps because it considered its fate rested with the outcome of the fraud allegations.
  1. [130]
    In any case, leave is granted for the reasons advanced by BMA.

The economics of the MDLA 364 coal resource

  1. [131]
    BMA says leave is not required for these amendments. They are contained in paragraphs 1C(g), 12(a)(iiia) and 12(b)(iiia) of the Fifth Amended Defence. They relate to Cherwell Creek’s allegation that it would have undertaken certain steps to develop the MDLA 364 coal resource.
  1. [132]
    Formerly, BMA denied Cherwell Creek would have developed the MDLA 364 coal resource because it was not economically viable. By the amendments, BMA seeks to plead in the alternative that “the economics of the MDLA 364 coal resource were not sufficiently attractive that the applicant would have proceeded to develop a coal mine in respect of the MDLA 364 coal resource”.
  1. [133]
    BMA says this is responsive to Cherwell Creek’s amendments by which it advanced a new case about the steps it would have taken to develop the resource.[54] I accept BMA’s submission that it was entitled to respond to that plea.
  1. [134]
    In any case, if leave is required, it should be granted. Cherwell Creek proposes to lead evidence from Mr Wallin that his approach to developing a mine is very different from other mining companies and does not involve a formal feasibility study. Rather, he conducts his own assessment of viability. To the extent that BMA’s amendment introduces a subjective element to whether the mine would be developed, it arises out of Mr Wallin’s evidence.

Other reasons Cherwell Creek would not have taken steps to develop the MDLA 364 coal resource

  1. [135]
    BMA says leave is not required for these amendments. They are contained in paragraphs 1C(e), 5(f), 6(c) and 7(c) of the Fifth Amended Defence. As with the previous category of amendments, these amendments seek to add a further explanation for BMA’s denial that Cherwell Creek would have taken steps to develop the resource.
  1. [136]
    That explanation is that Cherwell Creek would not have taken those steps in circumstances where:
  1. MDLA 364 had not been granted; or
  2. EPC 545 and MDLA 364 continued to be the subject of dispute; or
  3. MDLA 364 (if it had been granted, which is denied) continued to be the subject of dispute.
  1. [137]
    Cherwell Creek says these are unexplained and unparticularised allegations. They raise new issues and require further evidence from Mr Wallin.
  1. [138]
    However, the issue has been previously pleaded. In its Third Amended Defence, BMA pleaded that Cherwell Creek would not have taken the pleaded steps because MDLA 364 would not have been granted and MDLA 364 and EPC 545 were the subject of dispute.[55] In any case, I accept they are responsive to Cherwell Creek’s amended pleading.[56]

Mining the BAS1 seam in the Bowen Basin

  1. [139]
    BMA says leave is not required for this amendment, contained in paragraph 19(e)(iv) of the Fifth Amended Defence. It relates to Cherwell Creek’s assertion that the MDLA 364 coal resource was or is readily mineable.[57]
  1. [140]
    BMA seeks to plead that the BAS1 seam has not been mined at any location in the Bowen Basin due to its depth, characteristics and costs of extraction, with the consequence there is limited coal quality and yield data about the seam.
  1. [141]
    BMA says this amendment is important because about 75% of the MDLA 364 coal resource is located in the BAS1 seam.[58] It also brings its pleading into conformity with the expert evidence. Dr Clarkson and Mr Swanson agreed in their joint expert report that the seam has not been mined elsewhere and there is no suitable data about the seam.[59] Mr Whitby identified these problems in the joint expert report with Mr Saunders.[60] Leave is not required, but if it were, it should be granted.

Commissioning of the Coal Handling and Processing Plant for full production in 2011

  1. [142]
    BMA says leave is not required for this amendment, contained in paragraph 19(h)(ii)(A) and (B) of the Fifth Amended Defence. By this amendment, BMA seeks to deny Cherwell Creek’s allegation that Cherwell Creek could have commissioned a Coal Handling and Processing Plant by January 2011 because it would take at least 12 months to design and construct it and Cherwell Creek would not have committed to constructing it without a mining lease.
  1. [143]
    The amendment relates to paragraph 10(g), which was amended by Cherwell Creek in the Sixth Amended Annexure A. Cherwell Creek changed the former allegation that it would have commissioned the plant to an allegation that it is likely that it could have done so.
  1. [144]
    Cherwell Creek said BMA’s amendment is not responsive to the change, raises new issues and does not bring the pleading into conformity with the expert evidence. If allowed, Mr Wallin will be required to provide further lay evidence on the matter.
  1. [145]
    BMA says it is responsive to Cherwell Creek’s amendment. The change in tenor from would to it is likely that it could means BMA is entitled to respond to it. Further, it is consistent with expert evidence.[61] Mr Wallin has already addressed timing for commissioning the CHPP in his evidence.[62] No further evidence is required unless he wishes to depart from what he has already indicated.
  1. [146]
    I am satisfied the amendment is responsive and leave is not required. In any case, given the minor nature of the amendment and the expert and lay evidence already filed on the topic, I would grant leave, if required.

Conclusion

  1. [147]
    BMA has succeeded in its application for leave to rely on the Fifth Amended Defence, to the extent leave is required. I have accepted its submission that leave was not required for some amendments which were responsive to the Sixth Amended Annexure A or brought its pleading into conformity with the expert evidence. For other amendments I found leave was required, but should be granted.
  1. [148]
    On the substantial amendments, the fraud allegations, I decided leave was required, but should be granted. The pleadings raise an arguable case, BMA has provided an adequate explanation for the timing of the amendments, and the prejudice to Cherwell Creek can be largely ameliorated by delaying the trial. I have rejected Cherwell Creek’s proposed special fixture on BMA’s fraud allegations. I have made directions that I settled after I announced my conclusion on the leave application and heard from the parties about the further case management directions.
  1. [149]
    Neither party has addressed me on the costs of the application. BMA sought an indulgence of the Court in seeking leave to amend. The usual course is that a party seeking an indulgence of the Court bears the costs of the application.[63] If BMA seeks a different order it must file and serve brief written submissions within seven days and Cherwell Creek will have seven days to respond in kind. If BMA files written submissions within time, I will determine costs on the papers. If not, I will order that the respondents pay the applicants costs of the application.

Orders

  1. The Respondents have leave to file and rely upon:  
    1. (a)
      the Fifth Amended Defence which is exhibit CEM-21 to the affidavit of Corin Eileen Morcom filed 3 July 2020;
    2. (b)
      the report of Mr David Nevell filed 29 July 2020.
  2. The Respondents must pay the applicant’s costs of the application unless, within seven days, they file and serve brief written submissions seeking a different order.
  3. If the Respondents file and serve submissions pursuant to order 2, the applicant has seven days from service to file and serve brief written submissions in reply. Costs will then be determined on the papers.

Footnotes

[1] Affidavit of Corin Eileen Morcom, sworn on 2 July 2020, Exhibit CEM-21. This contained minor amendments to the Fourth Amended Defence filed on 23 June 2020.

[2] Cherwell Creek does not oppose leave being granted for the amendments described by BMA as categories 2, 5 and 6. Although it disputes BMA’s assertion that leave is not required for the amendments in paragraphs 14(h)(ii)(F) and 25A(c)(ii)(A), it does not oppose leave being granted for those paragraphs.

[3] Fifth Amended Annexure A to Originating Application, filed 27 April 2020 [1(aa)].

[4] Ibid [16A(a)], [17(b)], [17(bb)].

[5] Joyce v Palassis (No 3) [2007] WASC 214 [30].

[6] Adelaide Steamship Co Ltd v Spalvins [1999] FCA 781 [83].

[7] Defence, filed by the Respondents on 13 October 2008 [3(b)(ii) and (iii)].

[8] Reply, filed by the Applicant on 30 March 2009 [2(b)].

[9] Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15 [13].

[10] Barclay Mowlem Construction Limited v Dampier Port Authority (2006) 33 WAR 82 [4]–[8].

[11] Outline of Submissions on behalf of Cherwell Creek, filed 28 July 2020 [51]-[72]; Reply Submissions for the Respondents – Application for leave to file and rely on the Fifth Amended Defence, filed 4 August 2020 [73]-[89].

[12] T 2-44, lines 20 to 42. 

[13] UCPR r 150(1)(f).

[14] Banque Commerciale SA (in Liq) v Akhil Holdings (1990) 169 CLR 279, 285; [1990] HCA 11.

[15] The parties made submissions about legal arguments as to those consequences, which are matters for trial.

[16] T 2-53, line 29 to T 2-54, line 21.

[17] UCPR rr 150(1)(k), 150(2).

[18] T2-53, lines 30 to 32.

[19] T 2-57, lines 10 to 11.

[20] T 2-58, lines 42 to 45.

[21] Briginshaw v Briginshaw (1938) 60 CLR 336, 362; [1938] HCA 34; Rejfek v McElroy (1965) 112 CLR 517, 521; [1965] HCA 46; Jonesco v Beard [1930] AC 298, 300.

[22] [1992] HCA 66 [84].

[23] [2020] HCA 27.

[24] Ibid [39].

[25] Krakowski v Eurolynx [1995] 183 CLR 563, 579-580; [1995] HCA 68.

[26] Ritter v North Side Enterprises Pty Ltd (1975) 132 CLR 301, 303-304; [1975] HCA 18; Millhouse IAG v Environautics [2000] QDC 196 [20].

[27] LM Investment Management Pty Ltd (in liq) v Ernst and Young [2017] QSC 73 [146]-[147].

[28] Southern Equities Corporation Ltd (in liq) v Arthur Anderson (1997) 70 SASR 166; [1997] SASC 6373.

[29] Ashby v Slipper (2014) 219 FCR 322, 346-7.

[30] Briginshaw v Briginshaw (1938) CLR 336; [1938] HCA 34.

[31] (2009) 239 CLR 175 [102]-[103]; [2009] HCA 27.

[32] Cement Australia Pty Ltd v ACCC (2010) 187 FCR 261 [51]; [2010] FCAFC 101.

[33] Ensham Resources PL v AIOI Insurance Company Limited [2012] FCA 537 [15].

[34] Further Amended Summary of Evidence of Christopher Ian Wallin, filed 20 September 2018 [20].

[35] Affidavit of Allana May Agnew, filed 26 May 2020.

[36] Clurname Pty Limited v McGraw-Hill Financial Inc [2017] FCA 1319 [78]-[79]; Outline of submissions on behalf of Cherwell Creek, filed 28 July 2020 [76].

[37] Outline of submissions on behalf of Cherwell Creek, filed 28 July 2020 [76(a)].

[38] Submissions for the Respondents: Application for leave for amendments to Fourth Amended Defence, filed 1 July 2020 [22].

[39] T 3-34, lines 13 to 39; Aon Risk Services Australia Limited (2009) 239 CLR 175 [5], [30], [102]-[103]; [2009] HCA 27. 

[40] T 2-66, lines 18 to 20.

[41] Ibid lines 43 to 44.

[42] Major v Woodside Energy Ltd (No 4) [2009] WASC 248 [49].

[43] Protean (Holdings) Ltd (Receivers and Managers Appointed) v American Home Assurance Co [1985] VR 187, 190.

[44] S, DJ v Channel Seven Adelaide Pty Ltd (2009) 260 LSJS 287 [22]; [2009] SASC 6.

[45] ASIC v Healey (2011) 196 FCR 291; [2011] FCA 717; Fair Work Ombudsman v Offshore Marine Services Pty Ltd (No 2) [2013] FCA 943; BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union (CFMEU) (2013) 239 IR 363; [2013] FCA 1291.

[46] Protean (Holdings) Ltd (Receivers and Managers Appointed) v American Home Assurance Co [1985] VR 187, 191.

[47] Aon Risk Services Australia Limited (2009) 239 CLR 175 [23]-[24]; [2009] HCA 27.

[48] Joint Expert Report of Ken Stapleton, Robert Thatcher and Gregory Maiden, filed 2 December 2019, [4.41], [4.42], Table 7.

[49] Ibid [4.36].

[50] Ibid [3.11], [3.12], Table 7.

[51] Sixth Amended Annexure A to Originating Application, filed 9 June 2020 [10(h)], [10(i)].

[52] Amended Defence to the Third Amended Annexure A, filed 21 July 2017 [19(g)], [19(i)].

[53] Second Further Amended Summary of Evidence in Reply of Christopher Ian Wallin, filed 25 February 2020 [20]-[21].

[54] Sixth Amended Annexure A to Originating Application, filed 9 June 2020 [3A].

[55] Amended Defence to the Third Amended Annexure , filed 21 July 2017 [2], [3(a)], 4(a), 5(a), 6(a), 7(a), 8, 9(a), 10, 11(a), 12(a)(i), 12(b)(i), 13(a), 14(a), 14(b), 14(c)(i), 14(g)(i), 14(k)(i), 15, 16, 20(a), 21(a), 22(a), 23(a) and 24(a).

[56] Sixth Amended Annexure A to Originating Application, filed 9 June 2020 [3A].

[57] Ibid [10].

[58] Joint Expert Report of Ken Stapleton, Robert Thatcher and Gregory Maiden, filed 2 December 2019, Table 5.

[59] Joint Expert Report of Christopher Clarkson and Andrew Swanson, filed 31 July 2019 [35], [47], [64].

[60] Supplementary Joint Expert Report of Barry Saunders and Ken Whitby, filed 27 February 2019, section 4.

[61] Expert Report of Carolyn Hillard, filed 5 March 2018, figure 9.1; Expert report of Robert Thatcher, filed 5 March 2018 [13.2].

[62] Second Further Amended Summary of Evidence in Reply of Christopher Ian Wallin, filed 25 February 2020 [169].

[63] Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No. 6) [2017] QLAC 1.

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Editorial Notes

  • Published Case Name:

    Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd, QCT Resources Pty Ltd, BHP Coal Pty Ltd, QCT Mining Pty Ltd, Mitsubishi Development Pty Ltd, QCT Investment Pty Ltd and Umal Consolidated Pty Ltd (No 27)

  • Shortened Case Name:

    Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd (No 27)

  • MNC:

    [2020] QLC 32

  • Court:

    QLC

  • Judge(s):

    Kingham P

  • Date:

    20 Aug 2020

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.
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