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Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd QCA 276
 QCA 276
COURT OF APPEAL
Appeal No 12371 of 2019
LAC No 006 of 2018
LAC No 007 of 2018
CHERWELL CREEK COAL PTY LTD Applicant
ACN 063 763 002
BHP QUEENSLAND COAL INVESTMENTS PTY LTD Respondents
ACN 098 876 825
QCT RESOURCES PTY LIMITED
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
MONDAY, 2 DECEMBER 2019
FRASER JA: Cherwell Creek Coal Pty Ltd (“Cherwell Creek”) has applied for leave to appeal from a decision of the Land Appeal Court made on 25 October 2019. The Land Appeal Court dismissed appeals LAC006-18 and LAC007-18 from decisions of the Land Court ordering the disclosure, without redaction, of certain contractual provisions relating to take or pay elements of rail contracts.
It is common ground that those documents are commercially sensitive. QCoal Pty Ltd (“QCoal”), which is the parent company of companies within the QCoal Group, owns 50 per cent of Cherwell Creek, the remaining 50 per cent being owned by the managing director of QCoal and Cherwell Creek, Mr Wallin. The respondents (collectively, “BMA”) compete with QCoal in the export market for coking coal. The Land Court accepted that the documents required to be disclosed would be commercially valuable information for a trade rival of Cherwell Creek. Accordingly, the orders for disclosure were accompanied by orders designed to protect the confidentiality of the documents. By order 4 made by the Land Court on 14 December 2018, the Land Court restricted the disclosure of the documents by precluding their disclosure to any person other than a solicitor or barrister acting in that capacity on behalf of the respondents in the proceeding in the Land Court, a secretary or administrative assistant instructed by that person to perform secretarial or administrative work for the purpose of the proceeding, and any other person as determined by the Court or agreed by the applicant. By order 3 in appeal LAC002-19 the Land Appeal Court varied that order. The order as varied also allows access to the disclosed documents by a legal practitioner employed by BMA and a named individual employed in a business unit of BMA who has signed a confidentiality undertaking.
What is before me is Cherwell Creek’s application for a stay of the Land Court’s orders for disclosure pending determination of Cherwell Creek’s application for leave to appeal and appeal from the Land Appeal Court’s orders dismissing appeal LAC006-18 and LAC007-18.
Cherwell Creek’s principal proceeding in the Land Court is for compensation under provisions of the Mineral Resources Act 1989 for the loss of opportunity to commercialise a coal resource in land over which it formerly held an exploration permit. The relevant provisions were introduced into the Mineral Resources Act 1989 by an amending Act. The Land Appeal Court concluded that the Land Court had proceeded upon the footing that the rail agreements were relevant to the timing for the proposed Cherwell Creek mine alleged in paragraphs 4(b) and (k) of Cherwell Creek’s claim, which were put in issue by BMA’s defence. The Land Appeal Court affirmed the Land Court’s conclusion “that the rail agreements were relevant to the timing for the Cherwell Creek mine which must be a reference to the allegations in paragraphs 4(b) and (k) of the claim that were expressly put in issue … .”
Paragraph 4 alleges steps that Cherwell Creek would have taken but for the enactment of the amending Act. Subparagraph (b) alleges that between May and September 2008 Cherwell Creek would have prepared certain matters including preliminary engineering studies in relation to a required rail spur design to identify the optimal location of infrastructure. The next relevant step pleaded is that Cherwell Creek would have commenced the extraction and selling of the coal from the coal resource at certain times. It may be noted that there is no reference in the pleading to the take or pay provisions ordered to be disclosed or to the contracts in which those provisions are contained.
The Land Appeal Court considered that the primary judge had based the decision to order disclosure of the take or pay elements of the rail agreements by reference to the issue of timing of the Cherwell Creek mine “and the emphasis in Mr Wallin’s evidence on the timing of the negotiations he would have undertaken in relation to the rail agreement and the terms he would have achieved, based on the rail agreement he negotiated for the mines.”
The reference to Mr Wallin’s evidence is in fact to paragraph 142 of a summary of the evidence he would give. Paragraph 142 states:
“He will say that he knew at the time through his experience with developing the Sonoma mine that one of the “long lead items” are the negotiations with the rail provider for the design and construction of a rail loop. He would have been keen to get these discussions started immediately and to have the contract signed before Christmas so the project was not delayed over the Christmas break and he will say why. He will say that he would have sought and (in his view) obtained a clause in the contract which would have deferred the commencement of the take or pay element of the contract until after the rail loop joined the QR Infrastructure. He will say that he had successfully negotiated a similar arrangement for the Sonoma project and later also successfully negotiated for the insertion of a clause of this nature in the Drake mine later in 2010/2011.”
The applicant disclaimed any proposal to tender at the trial the contracts containing the take or pay elements referred to in the last sentence of that paragraph. It therefore appears that, as was submitted for the applicant, the last sentence would be inadmissible. The applicant contends that it does not propose at the trial to rely upon that evidence, but it did not make that clear in the Land Court or in the Land Appeal Court.
The Land Appeal Court rejected an alternative argument advanced by Cherwell Creek that if disclosure were required on the basis of paragraph 142 of Mr Wallin’s summary of evidence, that evidence was limited to the negotiation of a clause for the deferral of the take or pay elements of the rail agreements for the mines, and disclosure should have been narrower than was ordered. In rejecting that contention the Land Appeal Court concluded that the primary Judge’s decision to order disclosure of clauses relating to the take or pay element “was not based on the bare reference in  of Mr Wallin’s summary of evidence, but on their relevance to the issue in the proceeding as to the timing of the steps that Cherwell Creek would have been able to undertake in commercialising the mine.” The Land Appeal Court also concluded that the deferral of the take or pay elements could be assessed only in terms of the context of those obligations: “the success of Mr Wallin in negotiating deferral clauses may have been related to the price for the services under the rail agreements.”
Upon my present and inevitably limited understanding of the material, it is not clear to me that the Land Appeal Court’s reasons identify the nature of the link between the content of the take or pay clauses and the timing issue pleaded by the applicant in paragraphs 4(b) and (k).
At the hearing of the application before me senior counsel for BMA withdrew a written submission that there were substantial jurisdictional problems with the stay application. The power to grant a stay under r 761 of the Uniform Civil Procedure Rules 1999 is not enlivened until an application of leave to appeal has been granted: Perovich v ASIC (2005) 56 ASCR 303; Stone v Copperform Pty Ltd  1 Qd R 106; Hare v Mt Isa Mines Ltd & Ors  QCA 328. But the Court retains an inherent power to grant a stay pending the grant of an application for leave of appeal, and that power comprehends a stay of a decision other than the decision subject to the application for leave to appeal where that is necessary to prevent the proposed appeal from being nugatory, see: Upton v Westpac Banking Corporation  QCA 55; Simonova v Department of Housing and Public Works  QCA 60 and Brennan J’s decision in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681.
In Cook’s Construction Pty Ltd v Stork Food Systems Australasia Pty Ltd  2 Qd R 453, Keane JA described the fundamental justification for staying judicial orders pending appeal as being to ensure that the orders which ultimately might be made by the courts are fully effective. The focus of the court’s attention should be on whether or not the appeal right might be rendered nugatory and upon whether the appellant would irretrievably be prejudiced. Such a justification exists here. Unless a stay is granted, the applicant will be required to make disclosure of commercially sensitive documents which later may be found to fall outside the category of documents it is required to disclose.
In itself that is insufficient to justify exercising the discretion to order a stay in the present case. The applicant for a stay is usually required to demonstrate a good arguable case on appeal, that the applicant will be disadvantaged if a stay is not ordered, and that any competing disadvantage to the respondent, should the stay be granted, does not outweigh the disadvantage suffered by the applicant if the stay is not granted: Asia Pacific International Pty Ltd v Peel Valley Mushrooms Ltd  2 Qd R 458; Elphick and MMI General Insurance Ltd & Anor  QCA 347; Raschilla & Anor v Westpac Banking Corporation  QCA 255.
I have had the advantage of carefully reasoned written and oral arguments about the prospects of success in the proposed appeal, but the limitations inherent in an interlocutory application of this kind necessarily preclude me from forming any but a provisional and very preliminary view upon that topic. Bearing in mind the substantial focus of the Land Appeal Court’s reasons upon the timing issue raised only by paragraphs 4(b) and (k) of the applicant’s claim, I am prepared to accept for present purposes that Cherwell Creek has a good arguable case that the content of the take or pay arrangements relating to the Sonoma and Drake rail agreements have no direct relevance to the identified issue arising on the pleadings. Furthermore, if the relevant paragraph of the summary of proposed evidence by Mr Wallin might be regarded as identifying an issue upon which disclosure might be required, my provisional and very preliminary view is that it is reasonably arguable that, if there is any relevance in the content of the take or pay provisions on that basis, it is at best an indirect rather than direct relevance.
The error of law for which Cherwell Creek contends does not involve a challenge to the exercise of discretion, which raises particular difficulties for an applicant in establishing that the case is appropriate for leave to appeal, see: Pickering v McArthur  QCA 294 at . There remains the difficulty for Cherwell Creek that the orders sought to be appealed concern only procedural matters and as is submitted for BMA, leave to appeal in analogous contexts is usually granted only if the proposed appeal is necessary to correct a substantial injustice or where it raises a question of some general importance, although the discretion to grant leave is unfettered, see: Arnold Electrical & Data Installations Pty Ltd v Logan Area Group Apprenticeship/Traineeship Scheme Ltd  QCA 100 and Brisbane City Council v Mio Art Pty Ltd  2 Qd R 1 at .
In this respect Cherwell Creek’s case is that the QCoal Group will be irretrievably prejudiced if Cherwell Creek is required to disclose the unredacted take or pay elements of the Sonoma and Drake rail agreements to its trade rival BMA. The prejudice comprises the risk that, notwithstanding the confidentiality orders, commercially sensitive information will leak out and be misused and cause very substantial detriment to the QCoal Group. The risk is submitted to arise particularly from the circumstance that the orders permit that information to be disclosed to persons within the BMA organisation, including both a legal practitioner and a person in BMA’s commercial unit. The applicant argues that a misuse of the information would potentially be catastrophic for the QCoal Group, and it would be very difficult to prove the source of any leak of that information.
BMA contends that evidence of the absence of any apparent misuse of commercially sensitive information previously disclosed by the applicant under the same form of confidentiality orders demonstrates that there is no risk. There is no appeal against those confidentiality orders. It therefore should be presumed, so BMA argues, that those orders would adequately protect the commercially sensitive information in the rail agreements. It is also submitted to be relevant that Cherwell Creek has accepted the adequacy of the confidentiality orders after the initial disclosure order was made and it did not seek a more restricted regime before the Land Court.
The position is different, however, in this application. If the application for leave to appeal is granted and an appeal succeeds, it will be demonstrated that the take or pay provisions should never have been disclosed. Hindsight would reveal that there never should have been any risk that the relevant commercially sensitive information might be misused to the detriment of QCoal. Furthermore, the evidence does not make it clear that any document already disclosed has a commercial sensitivity and significance of the order of which are attracted by the take or pay provisions the subject of the relevant disclosure orders. The appropriateness of the confidentiality regime for other documents the applicant was required to disclose does not deny that the risk of misuse of these very commercially sensitive documents amounts to a prejudice in the case of documents which might be found on appeal to be not disclosable.
It is submitted for BMA that a stay will prejudice it. The trial of the very large and complex proceeding of the Land Court has been appointed to commence in August 2020. It is submitted that a stay of the disclosure orders until after judgment in the application for leave to appeal and any appeal for which leave is given might disadvantage BMA by interfering with its preparation for the trial and the detailed directions made in the Land Court to take the matter to trial. A conspicuous example of the potential difficulty arises from BMA’s requirement to obtain the agreement of the applicant, or an order of the Court, if it proves necessary for it disclose the take or pay arrangements to other persons in order to meet the applicant’s case. BMA submits that its lawyers cannot properly understand the deferral of the take or pay obligations whilst the redactions of the take or pay elements of the rail agreements disclosed so far remain in force.
There is some force in those arguments. Whilst I have concluded that a stay should be granted, Cherwell Creek’s case is not sufficiently strong to justify an unqualified stay of the order made in the Land Court requiring the applicant to make the required disclosure in an unredacted form. Having regard to the potential difficulties for BMA in preparing for trial and complying with the Land Court’s directions relating to the trial, any stay should be qualified so as to permit disclosure of the relevant documents in an unredacted form to the solicitors and barristers acting for BMA.
Rather than expressing such a qualification upon the terms of an order staying the orders made by the Land Court, the same might be achieved more simply by staying order 3 made by the Land Appeal Court in LC0002-19. Subject to any submissions upon the form of the order, I propose to order that order 3 made by the Land Appeal Court in appeal LAC002-19 be stayed pending determination of the application for leave to appeal and the appeal from the decisions of the Land Appeal Court in LAC006-18 and LAC007-18.
The orders of the court are that:
- Order 3 made by the Land Appeal Court in appeal LAC002-19 be stayed pending determination of the application for leave to appeal and the appeal from the decisions of the Land Appeal Court in appeal LAC006-18 and LAC007-18.
- Costs be reserved.
- Published Case Name:
Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors
- Shortened Case Name:
Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd
 QCA 276
02 Dec 2019
|Event||Citation or File||Date||Notes|
|Primary Judgment|| QLC 40||30 Oct 2018||Respondents' application for further disclosure granted: Kingham P.|
|Primary Judgment||MRA1332-08 (No Citation)||26 Nov 2018||Ruling that certain affidavit paragraphs relied upon by the applicant were inadmissible: Kingham P.|
|Primary Judgment|| QLC 48||14 Dec 2018||Applications by the respondents to set aside orders made on 3 August 2016; for further disclosure by the applicant and for non-party disclosure granted: Kingham P.|
|Primary Judgment|| QLAC 5||25 Oct 2019||In applicant's appeal LAC006-18: (appeal from  QLC 40) appeal dismissed; in applicant's appeal LAC007-18 (appeal from 26/11/2018): appeal dismissed; in applicant's appeal LAC001-19 (appeal from  QLC 48): appeal dismissed; in respondents' appeal LAC002-19 (in respect of confidentiality regime from  QLC 48): appeal allowed with consequential directions: Mullins J with Members Cochrane and Isdale.|
|QCA Interlocutory Judgment|| QCA 276||02 Dec 2019||Application for a stay of  QLAC 5 granted: Fraser JA.|
|Notice of Appeal Filed||File Number: Appeal 12371/19||08 Nov 2019||-|
|Appeal Discontinued (QCA)||File Number: Appeal 12371/19||27 Feb 2020||Determined on the papers (by consent): leave to appeal granted; specific orders for disclosure made in  QLAC 5 set aside otherwise appeal dismissed: Sofronoff P.|