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  4. Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd (No 8) - [2017] QLC 7

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Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd (No 8)[2017] QLC 7

Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd (No 8)[2017] QLC 7

LAND COURT OF QUEENSLAND

CITATION:

Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No. 8) [2017] QLC 7*

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

DIVISION:

General division

PROCEEDING:

Hearing of application

DELIVERED ON:

17 February 2017

DELIVERED AT:

Brisbane

HEARD ON:

10 February 2017

HEARD AT:

Brisbane

PRESIDENT:

FY Kingham

ORDERS:

  1. The application to strike out the amendments is refused.
  1. The application to extend time for filing the Amended Defence is allowed.
  1. The dates allocated for trial of the Originating Application are vacated.
  1. The matter will be listed for further directions and argument as to costs, on a date to be fixed, in consultation with the parties.

CATCHWORDS:

CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – AMENDMENT – STRIKING OUT – where the respondent filed an Amended Defence –  where the applicant applied to strike out the pleadings – whether the applicant was taken by surprise – whether the amendments disclose no reasonable defence – whether the amendments delay the fair trial of the proceedings

CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – AMENDMENT – TIME, EXTENSION AND ABRIDGMENT – where the respondent sought an extension of the time fixed by directions to file the Amended Defence – whether leave to amend was required – whether the Court has power to vary a direction to extend time – where the applicant opposed leave being granted – where the respondent argued the amendments were relevant, central to the proceedings, and responsive to the applicant’s case – whether the applicant was taken by surprise – whether the amendments lacked merit – whether the amendments delay the fair trial of the proceedings – whether the amendments result in additional and wasted costs – whether the Court should exercise its discretion to extend time.

Land Court Act 2000, s 7, s 22(2)

Land Court Rules 2000, r 4, r 19, r 45

Mineral Resources Act 1989, s 179, s 269(4), s 269(4)(m), s 279(1), s 281(3)(a)(vi), s 281(4)(b), s 281(4)(c), s 334ZJ, s 334ZJ(5)

Mineral Resources (Peak Downs Mine) Amendment Act 2008

Uniform Civil Procedure Rules 1999, r 5, r 7, r 171, r 378

Aon Risk Service Australia Ltd v Australian National University (2009) 239 CLR 175 applied

Hartnett v Hynes  [2009] QSC 225 followed

Monto Coal 2 Pty Ltd v Sanrus Pty Ltd (as Trustee of the QC Trust) [2014] QCA 267 applied

The Beach Retreat P/L & Anor v Mooloolaba Marina Ltd & Anor [2008] QCA 224 considered

Wills v Minerva Coal Pty Ltd [No. 2] (1998) 19 QLCR 297 considered

APPEARANCES:

G Gibson QC and Ms J Chapple of Counsel (instructed by Holding Redlich Lawyers) for the applicant

S Doyle QC and Mr A Stumer of Counsel (instructed by Allens Linklaters) for the respondents

  1. [1]
    The parties have brought competing applications about an Amended Defence[1] filed by the respondent companies (“BMA”) 26 days after the date fixed by direction of the Court.  Although the applications are procedural, they have weighty consequences for both parties. The outcome will determine the issues BMA may raise at trial and will affect what further work each party must undertake to prepare the claim for a trial listed to commence in a few weeks’ time.
  1. [2]
    BMA sought an extension of time or, if required, leave to file the Amended Defence. It argued the amendments relate to issues already raised by the pleadings, explicitly or inferentially. It asserted they are relevant, central to the proceedings, and responsive to the applicant’s case.
  1. [3]
    The applicant, Cherwell Creek Coal Pty Ltd (“Cherwell Creek”), challenged the Court’s power to vary the direction, opposed leave being granted and applied to strike out the pleadings. It argued it was taken by surprise by the amendments, which disclose no reasonable defence or lack merit, and which will delay the fair trial of the proceeding, resulting in additional and wasted costs.
  1. [4]
    Argument proceeded on the basis that similar factors were raised by both applications, although the strike out application was brought under r 171 of the Uniform Civil Procedure Rules 1999 (“UCPR”), which specifies particular grounds upon which a strike out application might proceed. 
  1. [5]
    The issues raised by the parties can be dealt with by addressing the following questions:
  • Does BMA need leave to file an Amended Defence or can the direction be varied to extend time?
  • Was Cherwell Creek taken by surprise by the amendments?
  • Do the amendments disclose a reasonable defence?
  • Do the amendments delay the fair trial of the proceedings?
  • Will the amendments result in additional and wasted costs?
  • Should the Court allow the Amended Defence or should the amendments be struck out?
  1. [6]
    Those questions must be answered in the context of the background to, and history of, the proceeding.
  1. [7]
    Cherwell Creek claims compensation from BMA under s 334ZJ of the Mineral Resources Act 1989 (“MRA”).  That section sits in a special purpose part of the MRA introduced by what the parties refer to as the Amending Act,[2] which came in to force in May 2008.
  1. [8]
    The Amending Act brought to an end what was then a lengthy dispute between the parties about their eligibility for mining and associated rights over land owned by BMA near its Peak Downs Mine.
  1. [9]
    Before the Amending Act commenced, Cherwell Creek and BMA held overlapping and apparently inconsistent resource tenures. Cherwell Creek held an exploration permit (EPC545). It had also applied for a mineral development licence over the land (MDLA364). BMA held a special lease over the same area. The Amending Act determined the matter in BMA’s favour, while providing Cherwell Creek a limited opportunity to claim compensation from BMA for its loss of opportunity to commercialise the MDLA364 coal resource. 
  1. [10]
    To make out its claim, Cherwell Creek must persuade the Court that compensation is payable. In deciding whether it is, and in what amount, the Court must consider the likelihood of a hypothetical proposition: that, but for the Amending Act, Cherwell Creek would have been able to commercialise the MDLA364 coal resource, having regard to factors including:
  1. (a)
    the likely extent and quality of the MDLA364 coal resource;
  1. (b)
    the likely mineability of the MDLA364 coal resource;
  1. (c)
    the likely market for any coal mined from the MDLA364 coal resource;
  1. (d)
    the likely life of a mine for the MDLA364 coal resource;
  1. (e)
    the likely coal revenue generated from the MDLA364 coal resource;
  1. (f)
    the likely coal revenue generation costs;
  1. (g)
    the likelihood of a mining lease, appropriate for Cherwell Creek to commercialise the MDLA364 coal resource, being granted under this Act;

Note—

See sections 269(4) and 271 for matters that the Land Court and Minister take into account in dealing with an application for the grant of a mining lease.

  1. (h)
    any other relevant matter.[3]

Against that background, I turn to the questions posed above.

Does BMA need leave to file an Amended Defence or can the direction be varied to extend time?

  1. [11]
    BMA’s primary position is that it does not need leave to file the Amended Defence.
  1. [12]
    From the outset the parties agreed that the claim should proceed by way of pleadings so the issues could be clearly defined for trial.  Pleadings are not provided for in the Land Court Act 2000 (“LCA”), the Land Court Rules 2000 (“LCR”) or a Practice Direction issued under s 22(2) of the LCA. Rule 4 of the LCR applies the UCPR, with necessary changes, if the LCR does not provide for a matter provided for by the UCPR. 
  1. [13]
    BMA relied on r 378 of the UCPR which allows a party to amend its pleading without leave at any time before it has filed a request for trial date. It argued the trial listing in November 2014 cannot be equated to a request for trial date. 
  1. [14]
    Although Cherwell Creek accepts the listing was not due to a formal request, it said BMA was not relieved from seeking leave.
  1. [15]
    In The Beach Retreat P/L & Anor v Mooloolaba Marina Ltd & Anor[4] Keane JA, as he then was, observed there was some merit in the argument that if a matter is placed on the Supervised Case List in the Supreme Court, r 378 of the UCPR no longer applies. 
  1. [16]
    That observation was obiter. In Monto Coal 2 Pty Ltd & Ors v Sanrus Pty Ltd (as Trustee of the QC Trust) & Ors,[5] Flanagan J questioned, again without deciding, whether all that is required to oust r 378 is for a matter to be placed on the supervised case list.
  1. [17]
    In The Beach Retreat Keane JA referred to clause 19 of Practice Direction No 6 of 2000, which applies to supervised cases. It provides once the matter has been allocated a trial date, a party who becomes aware of any proposal to amend a pleading must notify the Supervised Case List Manager forthwith so that it can be dealt with by the Court. There is no equivalent Practice Direction in this Court.
  1. [18]
    I am not satisfied the trial listing ousted the operation of r 378. The trial listing was instigated by the Member then case-managing the claim. It was done more than two years prior to the dates allocated, when neither party was in a position to confirm they would be ready for trial. Later directions made by the Court confirmed that amended pleadings were expected. Those directions did not specify proposed pleadings or require prior leave. They placed no restriction on the scope of the amendments.
  1. [19]
    In those circumstances, I find BMA does not need leave to file an Amended Defence.
  1. [20]
    BMA is, however, in breach of a direction of this Court to file the Amended Defence by 4 November 2016. By making its application, BMA conceded some form of order was necessary, whether to vary that date or extend time, so as to regularise its filing of the Amended Defence. 
  1. [21]
    Cherwell Creek submitted the Court does not have power to vary the direction. It appears to have been made under either s 22(3) of the LCA or r 19 of the LCR. Nothing seems to turn on which head of power was used. Cherwell Creek argued the direction is an order of the Court which can only be varied or set aside if the circumstances specified in r 45 of the LCR apply. None of those circumstances apply here.
  1. [22]
    However, r 7 of the UCPR provides for extension of time fixed by order, a matter not provided for by the LCR. Applying r 4 of the LCR r 7 of the UCPR confers power on the Court to extend the time fixed by direction for the Amended Defence to be filed.

Was Cherwell Creek taken by surprise by the amendments?

  1. [23]
    This question cannot be addressed without some exploration of the amendments and the history of the pleadings.
  1. [24]
    There are three groups of amendments which, for the sake of clarity, I will name:
  • the JR issue;
  • the prospective use issue; and
  • the special loss issue.
  1. [25]
    The JR issue is raised by paragraphs 2(f) and 2(g) of the Amended Defence and are pleaded to support BMA’s denial of Cherwell Creek’s claim that, but for the Amending Act, Cherwell Creek would have been granted MDL364. One aspect of that claim is that, as the holder of EPC545, Cherwell Creek was eligible to apply for MDL364.
  1. [26]
    In paragraph 2(f), BMA alleges it commenced proceedings in the Supreme Court in 2003 to challenge the initial grant of EPC545 and the decision to renew it. In paragraph 2(g) BMA alleges that, but for the Amending Act, it would have pursued that proceeding, and any appeals, and would have obtained an order quashing or setting aside the renewal of EPC545.
  1. [27]
    It seems many issues were raised in those proceedings. Prior to the hearing, BMA advised Cherwell Creek that it would deliver particulars to confine the arguments that would be relied upon to further the JR issue to the allegations already pleaded in paragraph 2.[6] On that basis, the amendments are not as far reaching as they might otherwise appear and do not raise new issues about the validity of that tenure. All they do is assert that BMA would have pursued the proceeding in the Supreme Court and been successful in challenging the renewal of EPC545. The arguments relied on by BMA to establish the allegation would have succeeded in the proceeding were already pleaded.
  1. [28]
    The prospective use issue is raised by paragraphs 11(b)(iii), 14(f)(ii), 14(f)(iii), 14(f)(iv) and 14(f)(v)(C). These paragraphs are pleaded to advance BMA’s denial that, by 1 July 2010, Cherwell Creek would have been granted a mining lease for the disputed area, but for the Amending Act. That is one of the matters the Court must consider in determining whether compensation is payable.[7]
  1. [29]
    In making its recommendation on a disputed application for a mining lease, the Court must consider the matters specified in s 269(4) of the MRA. They include the prospective use of that land.[8] In deciding the application, the Minister must consider the same matters, as well as the recommendation made by the Court.[9]
  1. [30]
    BMA alleges the Court would not have recommended the grant of a mining lease because of BMA’s plans to use the disputed area for infrastructure for the Caval Ridge Mine. It alleges that was the most appropriate and economic use for that land and that was a good reason to refuse to grant the mining lease.
  1. [31]
    BMA said the prospective use of the land by BMA for the Caval Ridge Mine was always in issue. BMA’s plans for the land and the impact of granting tenure to Cherwell Creek was referred to in the Second Reading Speech given by the Minister for Mines and Energy when he introduced the Amending Act.
  1. [32]
    That speech was referred to in paragraph 2 of the Defence filed on 13 October 2008.  It was pleaded in support of an allegation that MDLA364 had already been rejected by the Minister; not that it would have been rejected but for the Amending Act.
  1. [33]
    However, by its particulars delivered on 24 April 2009 (at paragraph 7) BMA squarely raised the prospective use as a reason the mining lease would not have been granted. The particulars related to the allegation in paragraph 3(b)(v) of the Defence that the Minister would not have granted the mining lease. It pleaded it could not be more particular but the reasons are to be inferred from the Minister’s Second Reading Speech.
  1. [34]
    The prospective use of the land by BMA was clearly raised in the Minister’s Second Reading Speech. Although the Amended Defence filed in November 2016 is much more detailed in its particulars, Cherwell Creek was not taken by surprise by the issue.
  1. [35]
    The special loss issue arises from paragraphs 11(c)(v), 11(c)(vi) and 11(c)(vii).[10] BMA alleges Cherwell Creek would have withdrawn its application for a mining lease because its compensation liability to BMA, as the owner of the land, would have made the mining lease economically unviable. BMA alleges total compensation payable by Cherwell Creek would have exceeded $180 million, which includes its loss as a result of having to relocate the infrastructure for the Caval Ridge Mine onto its mining lease ML1775.
  1. [36]
     BMA conceded this issue has not been pleaded before; but argued the broader issue of compensation was already raised, at least inferentially, on the pleadings. Cherwell Creek alleged it would have complied with the requirements of the MRA for the grant of tenure. That includes prior payment of compensation.[11] The level of compensation liability is relevant to the viability of the mine. However, neither party had identified that, specifically, as an issue.
  1. [37]
    Cherwell Creek did not contest its relevance. The economic viability of the mine, is an important factor the Court must consider.[12]
  1. [38]
    Cherwell Creek has had, for some years, information that BMA relies upon to make this allegation: submissions made by BMA about the renewal of EPC545 and the application for MDL364. Both submissions raise the prospective use issue and estimate the loss BMA faced if held out from that use. So Cherwell Creek was aware of the claimed loss, even if it had not identified precisely how it might be relied upon in these proceedings. 
  1. [39]
    Neither, it appears, did BMA. It was one of their experts, Mr Eales, who brought this matter to light. A solicitor for BMA, Ms Alana Maree Petty, explained how it came to her attention and the steps then taken to investigate, calculate and then articulate this allegation.[13]
  1. [40]
    BMA also argued that Cherwell Creek seeks to use a special value assessment to support its case, while trying to hold BMA out from running a positive argument about it. Dr Rudenno, an expert engaged by Cherwell Creek, was asked to provide an opinion on a fair market value for both the coal resource and the application for MDL364.
  1. [41]
    Dr Rudenno cross-checked his valuation by considering BMA’s submission to government in June 2006 opposing the renewal of EPC545.[14] He said the clear implication is that there was likely special value to BMA in using the area of EPC545. He noted BMA’s assessment of $180 million and, assuming no economic quantities of coal on EPC545, he adopted a mid-point range of $90 million to show his valuation of MDLA364 at $132 million[15] was not unreasonable.[16]
  1. [42]
    BMA wishes to contradict Dr Rudenno’s opinion. It argued Cherwell Creek seeks to rely on a special value assessment against it, while denying BMA the opportunity to run a positive case about its loss.
  1. [43]
    Although the way in which that loss relates to these proceedings has taken Cherwell Creek by surprise, BMA’s assertion that it would lose some $180 million if MDL364 was granted is not new to Cherwell Creek. Just as BMA could have recognised its significance for this proceeding earlier, so could have Cherwell Creek. The surprise is in the articulation of the issue.

Do the amendments disclose a reasonable defence?

  1. [44]
    One ground for striking out a pleading is that it fails to disclose a reasonable cause of defence.[17] Cherwell Creek advanced that ground in relation to two issues: the JR issue and the special loss issue.
  1. [45]
    It questioned the utility of the JR issue as success in those proceedings would not necessarily result in Cherwell Creek being disentitled to apply for or be granted MDL364.  Quashing EPC545 or setting aside its renewal would have no consequence because Cherwell Creek held EPC545 at the time it made the application for MDL364. This is all that was required.
  1. [46]
    BMA argued the requirement for an exploration permit to apply for a mineral development licence should be interpreted to mean “a valid exploration permit”. That is a question of statutory interpretation best left to trial. Although the JR proceedings would not necessarily result in a declaration that EPC545 was void ab initio, that is one aspect of the relief sought in the Supreme Court proceeding and is directly pleaded in the Defence.
  1. [47]
    Cherwell Creek advanced a number of arguments about the special loss issue. 
  1. [48]
    It referred to the report of Mr Eales, the valuer engaged by BMA. Cherwell Creek construed BMA’s pleading regarding special loss as one made under both s 281(3)(a)(vi) and s 281(4)(c) of the MRA. Section 281(3)(a)(vi) is a head of compensation for all loss or expense that arises. Section 281(4)(c) allows a premium to be applied if the owner of land proves the status and current use of the land justifies it. 
  1. [49]
    BMA has advanced the special loss issue relying on s 281(3)(a)(vi).[18] That may counter Cherwell Creek’s argument the claim can only be made for a current not a prospective use.
  1. [50]
    The distinction between the two compensation provisions was recognised by Mr Scott in Wills v Minerva Coal Pty Ltd [No. 2][19] when he found he could not allow a claim for loss of a prospective use under s 281(4)(c) but could do so under s 281(3)(a)(vi). That approach has been taken in other cases at first instance in this Court, and has not been challenged on appeal.[20]
  1. [51]
    Cherwell Creek also contended Mr Eales’ compensation assessment involves an element of double dipping. He determined the highest and best use of the land affected by MDLA364 was for infrastructure for the Caval Ridge Mine; yet also assessed the loss of access to the land for that purpose as a special loss to BMA. If its value for infrastructure purposes is accounted for in the market value of the land, it cannot also be claimed as a special loss.
  1. [52]
    Whether the loss can be claimed as a special loss and, also, the extent to which they are already accounted for in the assessment of market value are issues for trial. It may well be that BMA will have to elect one calculation or the other.
  1. [53]
    Another argument raised by Cherwell Creek about the merit of the amendments is that compensation cannot include any allowance for minerals; something it says the special loss assessment appears to do. Certainly s 281(4)(b) of the MRA prohibits an allowance being made for any minerals that are or may be on or under the surface of the land concerned. The question is what is the land concerned. 
  1. [54]
    BMA wears two hats in this respect. It is the owner of the land affected by the hypothetical proposed mining lease (over MDLA364). It appears to be common ground that s 281(4)(b) would preclude compensation for the minerals on that land.
  1. [55]
    However, BMA also holds a mining lease over adjacent land (ML1775). The special loss calculation involves the sterilisation of the coal resource on ML1775, not on Cherwell Creek’s proposed mining lease area (MDLA364). Whether s 281(4)(b) precludes an allowance for minerals on ML1775 is a matter of statutory construction, and an issue for trial.
  1. [56]
    Cherwell Creek raised a number of other issues about Mr Eales’ methodology and proof of the assumptions he has made in his assessment. Questions of methodology can be determined at trial. However, Cherwell Creek has questioned whether all the expert and other evidence upon which Mr Eales will rely has been disclosed or included in the existing expert reports. Further directions may be needed about such matters.
  1. [57]
    Finally, Cherwell Creek claims BMA is prevented from claiming special loss because it could not demonstrate it could have secured a mining lease for infrastructure purposes due to EPC545, held by Cherwell Creek. Whether EPC would have precluded BMA from becoming eligible to apply depends on at least two issues: firstly; the validity of EPC545, a live issue on the pleadings; and secondly, construction of the relevant provisions regarding eligibility. Again these are questions for trial.
  1. [58]
    Cherwell Creek has raised numerous arguments about the special loss issue amendments. Some appear to misconceive BMA’s case. Others raise issues for trial.
  1. [59]
    The discretion to strike out pleadings should only be exercised in clear cases. I am not persuaded BMA’s amendments regarding either the JR or the special loss issues are unarguable. I am not satisfied they should be struck out for failing to disclose a reasonable defence.

Do the amendments delay the fair trial of the proceedings?

  1. [60]
    Unnecessary delay can constitute sufficient irreparable prejudice.[21] Cherwell Creek argued the amendments will significantly delay the proceeding; holding out Cherwell Creek from potential compensation. 
  1. [61]
    As I understand the submissions, the parties agree amendments raising the JR issue, at least as clarified by BMA before the hearing, would not, alone, delay the fair trial of the proceedings.
  1. [62]
    The focus of Cherwell Creek’s submissions about prejudice arising from delay (and cost) relate to the amendments raising the prospective use and the special loss issues. It said these raise significant new issues that must be considered by its experts for the first time. BMA must provide substantial further disclosure. Cherwell Creek’s experts will need to revise their expert reports.
  1. [63]
    Although BMA contested the prospective use issue was new, it did not seriously contest any of the other propositions or challenge the deponents of the affidavits that Cherwell Creek relied upon to advance them.[22]
  1. [64]
    BMA could, and arguably should, have identified and pleaded the special loss issue earlier. Against that, BMA is defending Cherwell Creek’s claim.
  1. [65]
    Cherwell Creek alleged it would comply with all requirements for grant of the mining lease. That inferentially raised compensation. Neither party addressed in their pleadings how compensation would be calculated.
  1. [66]
    Economic viability is central to the likelihood of commercialisation of the coal resource. Its compensation liability is an aspect of that assessment.  Cherwell Creek had some information from BMA which identified and indeed sought to quantify a loss that, arguably, may be compensated for.
  1. [67]
    When BMA delivered its previous Amended Defence (August 2009) and its particulars (February 2010) Cherwell Creek’s case was not fully particularised. In its March 2009 response to BMA’s request for particulars of the claim, Cherwell Creek repeatedly stated it could not give particulars regarding matters of substance until it had obtained expert reports.
  1. [68]
    That is understandable, given the hypothetical nature of the exercise it had to engage in and the need for experts in various disciplines to rely on the work of others before they could express their opinion. It seems this was accepted by the Member managing the matter, as well as the parties.
  1. [69]
    Cherwell Creek did not deliver its fully particularised case until 18 December 2015. The Court has granted Cherwell Creek a number of indulgences regarding late delivery of its material.
  1. [70]
    BMA did not deliver amended pleadings until 30 November 2016; and then only 26 days after it had been directed to do so.
  1. [71]
    I am not persuaded BMA could not raise the issue until it had Cherwell Creek’s fully documented mine plan. I accept that it was open to BMA to flag potential amendments during reviews or in correspondence with Cherwell Creek.
  1. [72]
    Nevertheless, the directions did not constrain BMA in what amendments it could make. It has put on evidence about how and when it recognised this issue was open and the steps taken to investigate and articulate it. Although the further delay is unfortunate, it must be assessed in the context of the consensus that expert reports should precede pleadings.
  1. [73]
    Arguably, that approach to case management is justified by what has transpired. The experts played the role the Court and the parties anticipated. It was the process of preparing and, in BMA’s case, responding to the expert reports that brought to light an important issue which had been overlooked by both parties. In reviewing and responding to Mr Knight’s report, Mr Eales clarified a matter likely to be in dispute. Better that was identified then than after the trial had commenced.
  1. [74]
    The question of delay is also coloured by the circumstances in which the trial was listed. Dates were allocated in late 2014. That listing was prompted by the Member managing the matter, not the parties.[23] It was well intentioned to advance the case and secure time in the Court calendar. It is clear, though, that the directions were retrofitted to meet the trial listing.
  1. [75]
    In hindsight the trial listing was premature. Neither party had delivered final pleadings. Neither could then confirm they would be ready for trial. Neither could say the period allocated was sufficient or excessive.
  1. [76]
    The later directions allowed both parties to deliver amended pleadings after they had obtained their expert reports, but before the experts had jointly conferred. That is an unusual way to proceed, but is explained by the unusual nature of the proceedings. Without detailed expert evidence about the criteria in s 334ZJ(5), the parties were unable to distil disputed issues with sufficient particularity.
  1. [77]
    However, the timetable allowed an Amended Defence only four months before trial. It set a compressed timetable for joint conferencing by the experts only two and a half months before trial; a period which included the Christmas and New Year vacation. Given the history of the proceedings, these features made the directions to trial inherently risky.
  1. [78]
    Although the listing and the later directions appear to have been largely by consent, this cannot be equated to a case where a party has pressed for trial on dates later abandoned because of their conduct.
  1. [79]
    One final aspect of delay should be mentioned. The parties were asked to propose directions for the further conduct of the matter, dealing, alternatively, with the Amended Defence being allowed, or not. Cherwell Creek’s proposed directions, assuming BMA could not file its Amended Defence, assume the trial cannot proceed until the second half of 2017. The trial could not have proceeded as listed and the delay attributable to the amendments is some five months less than the 13 months Cherwell Creek asserted.

Will the amendments result in additional and wasted costs?

  1. [80]
    The payment of costs does not necessarily entitle a party to procedural relief. However, the efficacy of a costs order is a relevant factor in exercising discretion. BMA argued it is good for any costs order made on the application.
  1. [81]
    Cherwell Creek estimates the additional costs of responding to the amendments could be in the order of $2 million. Although BMA did not cross-examine the experts who estimated their further costs, it does not accept all the costs are attributable to the amendments. It challenged an underlying assumption about the scope of the work required by Cherwell Creek’s Mining Engineer, Mr Stapleton. He said he would be required to develop a practical mine plan for the coal resource within ML1775 based upon geological data and modelling. He also said he would need to investigate alternative mine plans for both Caval Ridge Mine and the Cherwell Creek Mine to deal with infrastructure and mining options.[24]
  1. [82]
    BMA does not accept that is a necessary exercise and, therefore, cost. BMA had already developed its own mine plan for Caval Ridge in the period between 2008 and 2010. If that work is not required that also has implications for the argument about delay as Mr Stapleton said he would need 13 months to undertake the exercise.
  1. [83]
    There is also the argument that BMA’s opposition to Cherwell Creek having access to its drilling data resulted in unnecessary costs. BMA’s position that the data was not relevant, although open given the state of the pleadings at the time, is now inconsistent with its Amended Defence. Had BMA identified the special loss issue earlier, those costs might have been reduced or avoided altogether.
  1. [84]
    It is difficult to determine the scale of additional and wasted costs at this stage of the proceedings. That is better done after trial. However, I accept there will be considerable cost consequences for both Cherwell Creek and BMA; some additional and some wasted. Even discounting Cherwell Creek’s assessment by 50%, the figure is substantial. 

Should the Court allow the Amended Defence or should the amendments be struck out?

  1. [85]
    I have already stated my reasons for concluding that leave to file the Amended Defence was not required. However I have approached both the application to extend time and the application to strike out the amendments in light of the principles enunciated in Aon Risk Services Pty Ltd v ANU.[25] They would guide my decision on an application for leave, if that was required.
  1. [86]
    That is consistent with the philosophy of the UCPR expressed in r 5 and the requirement in s 7 of the LCA that the Court act according to equity, good conscience and the substantial merits of the case. Where the Court is called upon to exercise its discretion in relation to amended pleadings, the Aon principles are accepted to be generally applicable, whether or not leave to amend is required.[26] They provide useful guidance in ensuring the rules are applied to facilitate the just and expeditious resolution of the real issues at a minimum expense. Respectfully, I adopt the compendious distillation of relevant factors in the judgment of Applegarth J in Hartnett v Hynes.[27]
  1. [87]
    The application to strike out the amendments is made on particular grounds canvassed in these reasons. I am not satisfied any of the amendments should be struck out because they fail to disclose a reasonable defence. The remaining grounds raise considerations common to both applications. I have sufficiently canvassed whether Cherwell Creek was taken by surprise by the amendments and the prejudice to Cherwell Creek by delay of the trial and additional or wasted costs.
  1. [88]
    The rules require a balancing of factors specific to the case at hand. As well as the considerations advanced by Cherwell Creek, the Court must consider any prejudice to BMA if it cannot raise the real issues canvassed by the amendments at trial.
  1. [89]
    BMA is entitled to a proper opportunity to plead its case. The JR issue does not rest on new factual allegations; except about BMA’s allegation that it would have persisted in the proceedings. The prospective use issue further particularises a live question on the former pleadings, which is fundamental to the matters the Court must consider at trial of the claim.
  1. [90]
    Although the special loss issue is newly pleaded, it relates to an important factor for the claim. BMA has provided some explanation for the delay. Although Cherwell Creek considers the explanation is not adequate, BMA’s failure to identify and articulate the special loss argument earlier is not surprising given the unique and complex nature of the claim. Cherwell Creek did not identify it either, although being seized of relevant information.
  1. [91]
    Neither party advocated for the trial dates. The directions left clarification of the issues for trial until the 11th hour. The compressed timetable for final pleadings and expert conferences presented an appreciable risk that the trial might not proceed as listed. As matters have transpired, Cherwell Creek is not ready to proceed even if the amendments are not allowed.
  1. [92]
    Balancing all the factors canvassed, it would be inappropriate to hold out BMA from pleading matters which are central to the claim. The prejudice to Cherwell Creek must be viewed in the context of the proceedings as a whole and can be somewhat ameliorated by orders about costs.

Orders

  1. [93]
    Having regard to all those factors, I make the following orders:
  1. The application to strike out the amendments is refused.
  1. The application to extend time for filing the Amended Defence is allowed.
  1. The dates allocated for trial of the Originating Application are vacated.
  1. The matter will be listed for further directions and argument as to costs, on a date to be fixed, in consultation with the parties.

FY KINGHAM

PRESIDENT OF THE LAND COURT

Footnotes

[1]  The document is entitled Defence to the Third Amended Annexure A (to the originating application) but is referred to throughout these reasons as the Amended Defence.

[2]Mineral Resources (Peak Downs Mine) Amendment Act 2008.

[3]  Section 334ZJ(5)(a)-(h) of the Mineral Resources Act 1989.

[4]  [2008] QCA 224.

[5]  [2014] QCA 267.

[6]  Ex. 1, letter from Allens Linklater to Holding Redlich dated 9 February 2017.

[7]  Section 334ZJ(5)(g) of the Mineral Resources Act 1989.

[8]  Section 269(4)(m) of the Mineral Resources Act 1989.

[9]  Section 271 of the Mineral Resources Act 1989.

[10]  Of the Defence to the third Amended Annexure, filed 30 November 2016.

[11]  Section 279(1) of the Mineral Resources Act 1989.

[12]  Section 334ZJ(5)(g) of the Mineral Resources Act 1989.

[13]  Affidavit of Alana Maree Petty, sworn on 30 January 2017, at paras 13-25.

[14]  Ex. 4, dated 22 June 2006.

[15]   Expert report of Dr Rudenno, dated 15 February 2016, at [12].

[16]  Expert report of Dr Rudennos, dated 15 February 2016, at [66].

[17]  Rule 171(1)(a) of the Uniform Civil Procedure Rules 1999.

[18]  Although paragraph 11(c)(iv) contains a typographical error noting the section as s 281(3)(vi).

[19]  (1998) 19 QLCR 297.

[20]Xstrata Coal Queensland Pty Ltd & Ors v Keys & Anor; Xstrata Coal Queensland Pty Ltd v Sky Grove Pty ltd; Xstrata Coal Queensland Pty Ltd v Erbacher; Xstrata Coal Queensland Pty Ltd v Edmonds & Anor [2013] QLC 34; McDowall v Reynolds [2015] QLC 32.

[21]Aon Risk Service Australia Ltd v Australian National University (2009) 239 CLR 175 (‘Aon’) at para [5].

[22]  See 1st affidavit of Toby Michael Boys; 1st affidavit of John Stapleton; 1st affidavit of Jamie Ivan Freeman; 1st affidavit of Jeffrey lewis Hall; affidavit of Alana Maree Petty; Affidavit of Kenneth Edward Stapleton sworn 6 February 2016; and affidavit of Geoffrey Charles Streeton.

[23]  Transcript of proceedings 5/12/2014, at pp 1-2.

[24]  Stapleton affidavit at [4](b)(i) and (iii).

[25]  (2009) 239 CLR 175 at [5].

[26]Monto Coal 2 Pty Ltd v Sanrus Pty Ltd (as Trustee of the QC Trust) [2014] QCA 267 at [73].

[27]  [2009] QSC 225 at [27].

Close

Editorial Notes

  • Published Case Name:

    Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No. 8)

  • Shortened Case Name:

    Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd (No 8)

  • MNC:

    [2017] QLC 7

  • Court:

    QLC

  • Judge(s):

    Kingham P

  • Date:

    17 Feb 2017

Appeal Status

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

Cases Cited

Case NameFull CitationFrequency
Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175
3 citations
Jump To
Cite 1 - (2009) 239 CLR 175
Cite 2 - (2009) 239 CLR 175
Cite 3 - (2009) 239 CLR 175
Hartnett v Hynes [2009] QSC 225
2 citations
Jump To
Cite 1 - [2009] QSC 225
Cite 2 - [2009] QSC 225
McDowall v Reynolds [2015] QLC 32
1 citation
Jump To
Cite 1 - [2015] QLC 32
Monto Coal 2 Pty Ltd v Sanrus Pty Ltd [2014] QCA 267
3 citations
Jump To
Cite 1 - [2014] QCA 267
Cite 2 - [2014] QCA 267
Cite 3 - [2014] QCA 267
The Beach Retreat Pty Ltd v Mooloolaba Marina Ltd [2008] QCA 224
2 citations
Jump To
Cite 1 - [2008] QCA 224
Cite 2 - [2008] QCA 224
Wills v Minerva Coal Pty Ltd (No 2) (1998) 19 QLCR 297
2 citations
Jump To
Cite 1 - (1998) 19 QLCR 297
Cite 2 - (1998) 19 QLCR 297
Xstrata Coal Queensland Pty Ltd v Keys [2013] QLC 34
1 citation
Jump To
Cite 1 - [2013] QLC 34

Cases Citing

Case NameFull CitationFrequency
Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd [2019] QLC 412 citations
Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd (No 22) [2019] QLC 472 citations
1

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