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- Unreported Judgment
LAND COURT OF QUEENSLAND
Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 23)  QLC 18
Cherwell Creek Coal Pty Ltd
(ACN 063 763 002)
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)
3 June 2020
15 May 2020
I will grant Cherwell Creek leave to rely on the revised Fifth Amended Annexure A, except for the proposed amendment to paragraph 17.
I will grant Cherwell Creek leave to amend paragraph 17 to particularise its claim for compensation by stating the amount or amounts claimed and how they have been calculated, including by reference to the special value claim should it wish to maintain that claim.
I will hear from the parties about costs and the form of orders to give effect to these reasons and to readjust the trial timetable for the remaining pre-trial steps.
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – where the Court had made orders that any amendments to pleadings were limited to those required to bring them into conformity with expert evidence – where the applicant sought to file pleadings beyond this scope – where the respondent opposed leave being granted to file the amended pleadings – where the applicant submitted that the amendments do not raise any new claims and more clearly articulate their interpretation of the relevant statute – where the respondents submitted that the amendments are a significant departure from the previous formulation of the applicant’s claim – where the Court granted leave to allow all proposed amendments except paragraph 17, which failed to adequately particularise the amount of compensation sought and how that was calculated
Land Court Act 2000 s 7(b)
Land Court Rules 2000 r 4
Mineral Resources Act 1989 s 334ZJ
Uniform Civil Procedure Rules 1999 r 5, r 155(1)
Allianz Australia Insurance Ltd v Mashaghati  1 Qd R 429 ;  QCA 127, applied
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175;  HCA 27, applied
Australian Securities and Investments Commission v Rich (2009) 236 FLR 1;  NSWSC 1229, applied
Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 6)  QLAC 1, cited Graham & Linda Huddy Nominees Pty Ltd & Anor v Byrne & Ors  QSC 221, applied
Harris v Australand Apartments No. 6 Pty Ltd  QSC 204, applied
Sellars v Adelaide Petroleum NL (1994) 179 CLR 221;  HCA 4, applied
N Owens SC, with J Redwood and L Sheptooha (instructed by Holding Redlich) for the applicant
S Doyle QC, with A Stumer and S Webster (instructed by Allens) for the respondent
- The lengthy history of this statutory claim for compensation is well documented in previous decisions and is evident from Cherwell Creek’s application for leave to deliver a Fifth Amended Annexure A, the equivalent of its Statement of Claim in this proceeding.
- The claim is in the final stages of pre-trial preparation. Although the parties have filed pleadings, the position of the parties has long been that the pleadings would be refined in light of the expert evidence prepared for the trial. For that reason, I granted the parties leave to amend their pleadings for consistency with the expert evidence. Unless otherwise ordered, I ordered that no party could file further amended pleadings.
- Cherwell Creek’s proposed amended pleading was out of time and, it accepts, some of its proposed amendments go beyond the scope of the Court’s leave, hence this application.
- The principles enunciated in Aon Risk Services Australia Ltd v Australian National University apply to the application. Questions of prejudice and delay are central considerations, including whether the amendments will unnecessarily delay proceedings, particularly where proposed amendments raise a new claim.
- Cherwell Creek argues there will be no impact on the commencement of the trial. It is not due to start until 20 August 2020. It has made this application well in advance of trial and the amendments objected to do not have significant consequences for pre-trial preparation. The amendments do not represent a substantial reformulation of its claim. They more clearly articulate Cherwell Creek’s case in the context of its interpretation of Chapter 12, Part 4 of the Mineral Resources Act 1989, which governs this claim. They do not raise any new claim.
- BMA opposed the Court granting leave with respect to many of the amendments. Some refinements to the proposed pleading made after oral argument substantially reduced the scope of the dispute. However, BMA maintains that those amendments it still objects to involve a significant departure from the way in which Cherwell Creek previously formulated its case, with consequences for expert and lay evidence, costs thrown away, and delay or disruption to the trial.
- I will address the objections maintained by BMA under the following headings:
- 1.The construction of s 334ZJ and the counterfactuals;
- 2.The special value case;
- 3.Particularisation of the claim for compensation; and
- 4.Other amendments.
The construction of s 334ZJ and the counterfactuals
- Although BMA identified the amendments falling in this category as discrete issues, they are related, and it is convenient to address them together.
- The first issue arises in this way. BMA objects to amendments that change the terminology used in a number of allegations. In some paragraphs of the proposed pleading, Cherwell Creek wishes to replace an assertion that a certain thing “would” have happened to an assertion that it “could” have done so. It says this is consistent with, and more clearly articulates, its interpretation of s 334ZJ. BMA says to introduce the “possibility” rather than the “probability” of a counterfactual occurring has significant implications for the expert evidence, which has only been prepared on the latter, not the former, basis.
- The second issue relates to the counterfactuals involving Cherwell Creek selling its rights in coal resource; in either May 2008 or July 2012. BMA says Cherwell Creek has “walked away from” the counterfactuals. The effect of the proposed amendments is that Cherwell Creek cannot recover compensation for loss of the opportunity to sell its interests in the resource in either May 2008 or July 2012, because it has not pleaded it would have done so.
- Cherwell Creek says it has not walked away from the counterfactuals. It argues the amendments make clear the role and relevance of the counterfactuals within the statutory scheme and valuation exercise. Further, the Court must read the amendments to which BMA objects in the context of the pleading as a whole.
- The central provision is s 334ZJ of the MRA. Section 334ZJ(1) permits Cherwell Creek to apply to this Court “for an order for the payment of compensation for the loss of its opportunity, because of the enactment of this part, to commercialise the MDLA364 coal resource.”
- Pursuant to s 334ZJ(4), on that application, this Court must:
- (a)decide whether any compensation should be payable; and
- (b)if it decides compensation should be payable –
- (i)decide the amount of compensation; and
- (ii)make an order for payment of the amount…
- In making a decision under s 334ZJ(4), s 334ZJ(5) requires the Court to “have regard to the likelihood that, had this part not been enacted, Cherwell Creek, alone or in conjunction with another person, would have been able to commercialise the MDLA364 coal resource, having regard to” a number of stated criteria.
- The Court’s task, therefore, is to make two decisions: whether compensation is payable and, if so, the amount. The nature of those decisions may be equated to questions of causation and valuation.
- A claim for damages for loss of opportunity raises difficult issues about what must be proved, and to what standard, to establish causation and to assess quantum (or value). For this statutory claim, s 334ZJ uses the phrase “loss of opportunity” which invites reference to the case law on these issues for claims in contract, tort or under other statutory regimes. However, those difficult issues must be resolved as a matter of statutory interpretation. What needs to be proved, and to what standard, may differ depending on which decision the Court is making pursuant to s 334ZJ(4).
- Cherwell Creek argues the distinction between the decisions on causation and valuation is important. It accepts its current pleading does not draw the distinction, and the role the counterfactuals play in those decisions, clearly enough.
- Cherwell Creek proposes to amend its pleading through paragraph 3A to make it explicit that it need only prove that, as a result of the commencement of Chapter 12, Part 4, it has lost a valuable commercial opportunity to commercialise the coal resource, which it would have done by taking specified steps. That relates to its intention to commercialise the resource.
- In paragraph 4, it proposes to plead the means by which it could have commercialised the resource. That includes, in paragraph 4(l), “continuing the extraction and selling of coal…until the earlier of production of the coal becoming cash flow negative or upon a sale of its interest in the mine.” That assertion relates to its ability to commercialise the resource.
- The effect of paragraph 4(l), if allowed, is that Cherwell Creek will no longer assert that it would have sold its interests on either of the two dates formerly pleaded.
- It is clear from both the proposed amendments and Cherwell Creek’s submissions that it asserts the dates for the possible sale relate to questions of valuation, not causation. It says it need not plead nor prove that it would have sold on either of the dates, to recover compensation assessed by reference to hypothetical sales on those dates.
- BMA argues there is no basis for recovering compensation assessed by reference to a sale on a particular date unless Cherwell Creek establishes that, but for the commencement of Chapter 12, Part 4, it would have sold or sought to sell its interests on that date.
- The purpose of pleadings is to expose the issues that must be determined at trial. Cherwell Creek’s proposed amendments expose a significant dispute between the parties about the requirements for recovering compensation pursuant to s 334ZJ. The correct interpretation is a complex question best decided after full argument at trial. I am not satisfied Cherwell Creek’s interpretation is so untenable that it should be rejected in a summary way on an application to amend a pleading.
- There is, though, the question of the implications of the proposed pleading for the evidence.
- BMA relied on an affidavit by its solicitor, Mr Hurford, in support of its submission that the amendments would involve significant revision of the expert evidence. Most of the further work identified by Mr Hurford related to an issue since resolved by Cherwell Creek’s revisions to the proposed pleading made after oral argument. This clarified that Cherwell Creek maintained that MDLA364 would have been granted, either as a matter of statutory implication or as a matter of fact. That means the further work asserted in paragraphs 14 to 27 of Mr Hurford’s affidavit will not be required.
- Mr Hurford also referred to expert reports which considered hypothetical sales on the pleaded dates. However, the parties’ time and expense in obtaining those reports will not be wasted if the proposed amendments are allowed.
- Cherwell Creek has maintained its reliance on hypothetical sales in May 2008 or July 2012, as they relate to a decision on value. The proposed pleading particularises statutory criteria the Court must consider by reference to those expert reports. It is sufficiently obvious from the proposed pleading that Cherwell Creek does not assert a sale at any other time. That is now on the record. Cherwell Creek says it will not need to or seek to lead further evidence in support of its proposed amendments, and the parties need not develop any new counterfactual scenario.
- I am not satisfied the change to the way in which the counterfactuals sales are pleaded, as they pertain to either causation or value, has any serious consequence for the expert evidence.
- The remaining argument on these amendments arises from the change in terminology from “would” to “could.” BMA says this change from assessing probabilities (it would occur) to assessing possibilities (it could occur) has significant implications for the expert evidence. Mr Hurford did not address this in his affidavit. During argument, BMA referred to the joint expert report of the environmental experts (Mr Hansen for Cherwell Creek and Mr Smith for BMA). BMA argues they have each set out their view on the likely timetable for obtaining environmental approvals, “but neither has sought to address the mere possibility that environmental approvals could have been obtained so as to enable the grant of a mining lease by July 2010.”
- That example does not persuade me the proposed amendments will have significant consequences for the evidence. The authors of the report, who include Mr Thatcher and Mr Ritchie, address the work involved, the likely timing and the risks involved in environmental regulatory processes prior to the grant of a mining lease, and, after grant, prior to construction. There are some areas of disagreement about timeframes, and whether certain discrete regulatory processes would have been triggered, but the disagreements are limited, concisely stated and the reasons for disagreement appear, on my brief review of this report, to be explained clearly enough.
- The joint expert report, and the oral evidence counsel will adduce from the experts at trial, is relevant evidence for a live issue in the proceedings: the likelihood of Cherwell Creek securing the grant of a mining lease by July 2010. However, the experts could not express their opinion on that assertion, whether as a matter of possibility or probability. That is for the Court to decide. The experts’ role is to assist the Court to make that decision, by drawing on their expert knowledge and experience, and advising what environmental processes may apply, the steps involved in securing those environmental approvals, and the risks and time involved in each of those steps.
- It should not matter to the experts, and their evidence should not differ, whether the Court must be satisfied of a grant by July 2010 as a matter of probability or possibility, and for what purpose (i.e. in determining causation or assessing value).
The Special Value case
- Cherwell Creek proposes to add a reference to special value in the pleadings in two respects. First, it proposes to include it in paragraph 16A as one of the “other relevant matters” the Court must consider pursuant to s 334Z(5)(h). Second, in paragraph 17, it claims compensation is to be “assessed having regard to any special value to BMA.”
- BMA objects to Cherwell Creek introducing what it says is a new claim. Cherwell Creek says there is no surprise to BMA, given the expert report of Dr Rudenno, which BMA relied on when seeking leave to amend its Defence to introduce the Caval Ridge allegations. It complained then that Cherwell Creek wanted to run a special value case against it, while opposing proposed amendments to BMA’s Defence to assert a special loss claim in defence.
- I accept that BMA cannot claim to be taken by surprise that Cherwell Creek now proposes to plead in paragraph 16A that special value to BMA is a “relevant matter” for s 334ZJ(5)(h).
- BMA says it will need to investigate and may wish to lead further lay evidence about whether BMA would have bought EPC545 from Cherwell Creek. This will involve time and expense and there may be an interlocutory dispute about whether without prejudice privilege regarding some negotiations between the parties has been waived.
- Cherwell Creek has not pleaded that BMA would have bought EPC545 from Cherwell Creek and says it need not do so. In any case, Cherwell Creek says it will not oppose BMA leading further lay evidence on the topic and any dispute about without prejudice discussions between the parties can be dealt with before trial.
- I accept there would be limited consequences for the evidence if paragraph 16A is allowed. However, the proposed amendment to paragraph 17 to include a special value claim demands further consideration and I will turn to that now.
Particularisation of the claim for compensation
- Paragraph 17 pleads Cherwell Creek’s claim for compensation. The current pleading quantifies loss (and the claimed compensation) in alternative scenarios. Proposed paragraph 17 does not do that. It pleads that compensation is to be “assessed having regard to” a number of matters: the values assigned to each counterfactual, and the special value case. BMA says this leaves it not knowing what case it must meet.
- Cherwell Creek argues that the statutory task before the Court is “one of informed estimation in identifying a fair and appropriate amount of compensation for the legislative expropriation of [its] rights… for the benefit of BMA.” This involves “an evaluative judgment rather an inflexible, mechanical application of any single metric.”
- That may well be so, but it does not answer the complaint that its claim is inadequately particularised.
- Paragraph 17 does not plead an amount, or alternative amounts, that Cherwell Creek claims by way of compensation. Instead, it says compensation should be assessed “having regard to” specified matters. Nor does paragraph 17 plead the extent of the loss Cherwell Creek should be compensated for on the possibilities relating to the counterfactuals. Further, this paragraph introduces a further degree of uncertainty by introducing a special value claim.
- BMA argues that any special value to BMA is not within the ambit of s 334ZJ, but that is a matter for trial. The difficulty I have with the pleading is that Cherwell Creek fails to quantify its claim for compensation, as a whole, given the asserted special value.
- In its submissions, Cherwell Creek says its special value claim is relevant to the market value of property (the rights in EPC545) that has a special potential for appropriate purchasers, in this case BMA. This seems to be consistent with the approach taken by Dr Rudenno in his 2016 report. He did not purport to assess special value, but relied on BMA’s submissions as evidence of special value, which supported his argument that his valuation, arrived at using a different methodology, was reasonable.
- However, proposed paragraph 17 separates out special value from the assessments of fair market value otherwise particularised in paragraph 17. It is not clear whether Cherwell Creek proposed to argue the amount pleaded for special value is encompassed by or in addition to the amounts pleaded in relation to the assessments of the value of the counterfactuals.
- This further obscures Cherwell Creek’s case on the value of its lost opportunity to commercialise the coal resource.
- A properly pleaded claim ensures the basic requirement of procedural fairness, that the opposite party has the opportunity of meeting the case against it. BMA has good cause to complain it does not know what Cherwell Creek’s case now is on the decision about valuation.
- If this were a damages claim, Cherwell Creek would have to state what amount it claims by way of damages, and how it calculates that claim. The Court must decide compensation in accordance with s 334ZJ, but that requires an assessment of the loss to be compensated. I see no reason to adopt a different approach to pleading this claim than applies to a damages claim.
- I turn now to two other amendments not addressed above.
- First, it proposes to change the date by which it asserts Cherwell Creek would have applied for a mining lease from “in or about September 2008” to “in or about December 2008.” Cherwell Creek says the proposed amendments to paragraphs 4(e) and (f) bring the pleading into conformity with the evidence of Mr Wallin.
- Mr Hurford identified some potential implications for expert evidence in his affidavit. All but one of these are individual reports, many of which precede Mr Wallin’s summary of evidence. Mr Hurford did not explain the implications for their evidence of the proposed change of date.
- Mr Hurford also referred to one joint expert report, by Mr Smith and Mr Hanson, which deals with the environmental approval process. However, as Cherwell Creek observes, the change in dates is consistent with the statement in the report that Cherwell Creek could have submitted a mining lease application in late 2008. Further, the experts link timing to the date of grant of an environmental approval, which involves a different application process, not the date on which Cherwell Creek would have applied for a mining lease.
- I am not satisfied the proposed change has serious consequences for the expert evidence.
- Second, is the “other relevant matter” pleaded by paragraph 16A(c):
…other matters known, as at the date of the Land Court’s decision under section 334ZJ(4) of the Act, about the likelihood that the MDLA 364 resource could have been developed and commercialised by the applicant having regard to the contents of the expert reports relied on by the applicant addressing the staututory criteria in paragraphs 8-14 above.
- BMA says this expands the scope of relevant matters to anything contained in an expert report and would prevent it from objecting to any part of an expert report on the ground of relevance. I accept Cherwell Creek’s submission that is not so. The reference point for the Court’s state of knowledge is the date of its decision, preserving BMA’s ability to object to evidence on the ground of relevance before or during the trial.
- In exercising its jurisdiction, the Court must act according to the substantial merits of the case without regard to legal technicalities and forms or the practice of other courts. However, where the rules of the Court do not provide for a matter, the Uniform Civil Procedure Rules 1999 apply, with necessary changes. The purpose of those rules is to facilitate the just and expeditious resolution of the real issues at a minimum of expense. The Court must apply them with the objective of avoiding undue delay, expense and technicality and to facilitate the purpose of the rules.
- Most of the amendments BMA objected to better articulate Cherwell Creek’s interpretation of s 334ZJ. That interpretation is not so untenable that the amendments should be refused. Further, they serve the purpose of pleadings, that is, to expose the issues for the trial.
- The timing of the application is explained by the considerable work the parties were required to do to bring the pleadings into conformity with the voluminous expert evidence. I accept it was also an appropriate time for the parties to revisit the precise formulation of their case.
- Cherwell Creek has not raised any new claims and the implications for the evidence are limited. Cherwell Creek’s revisions to the proposed pleading mean that most of the further work on the evidence, identified by BMA, will not be necessary. This materially reduces the risk of the trial being delayed.
- There may be some further cost involved in BMA reconsidering its lay evidence on special value, and there may be further interlocutory disputes about privilege and waiver. The parties will also have to revisit the timetable for pre-trial steps regarding the remaining pleadings. In particular, the parties will need to revisit the particulars previously provided by Cherwell Creek.
- I am not persuaded there is a substantial risk that the trial will be delayed if the proposed amendments are allowed.
- A just resolution of proceedings is the paramount objective and factors of speed and efficiency “must not detract from a proper opportunity being given to the parties to put their case.”
- Given my conclusions about the effect and implications for evidence of the proposed amendments, I consider the Aon principles favour granting leave to Cherwell Creek to rely on all proposed amendments except those to paragraph 17.
- I will not give leave to Cherwell Creek to amend paragraph 17 as proposed because it fails to particularise its claim. I will grant Cherwell Creek an extension of time in which to deliver a revised paragraph 17 that states the amount or amounts sought by way of compensation, and how they are calculated, including by reference to the special value claim should it wish to maintain that claim.
- I will hear from the parties about costs and the form of orders to give effect to these reasons and to readjust the trial timetable for the remaining pre-trial steps.
After oral argument, Cherwell Creek revised its proposed amendments to deal with some matters clarified at the hearing, which reduced the number of matters in contention.
Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 6)  QLAC 1.
Orders made by this Court in the present matter on 17 September 2019.
Orders made by this Court in the present matter on 14 November 2019.
(2009) 239 CLR 175;  HCA 27.
Proposed paragraphs 4 (chapeau), 4(b)-(l), 10(f)-(i), (10)(l)-(n).
Proposed paragraphs 4(k)(i)-(iii), 13(a)-(b), 14(a)-(b), 17(a)-(b).
Sellars v Adelaide Petroleum NL (1994) 179 CLR 221;  HCA 4 -.
Affidavit of Stephen James Hurford, filed on 12 May 2020.
T 1-5 line 46 to 1-6 line 3.
T1-8 line 1 to line 7.
Joint Expert Report of Robert Thatcher, Peter Hansen, Peter Smith and Douglas Ritchie dated 2 April 2020, Appendix 9.
Further Submissions for the Respondents: Applicant’s Application Filed on 1 May 2020 for Leave to File Fifth Amended Annexure A filed 26 May 2020 .
Affidavit of Stephen James Hurford, filed 12 May 2020 -.
Outline of Submissions on behalf of Cherwell Creek, filed 8 May 2020 .
Graham & Linda Huddy Nominees Pty Ltd & Anor v Byrne & Ors  QSC 221 .
Above n 16 ; Cherwell Creek’s Reply to Respondent’s Further Submissions filed 26 May 2020, filed 28 May 2020 .
Expert Report of Victor Rudenno dated 15 February 2016 -.
 Australian Securities and Investments Commission v Rich (2009) 236 FLR 1 –;  NSWSC 1229.
UCPR r 155(1).
Harris v Australand Apartments No. 6 Pty Ltd  QSC 204 .
Above n 15, .
Joint Expert Report of Robert Thatcher, Peter Hansen, Peter Smith and Douglas Ritchie dated 2 April 2020, para 3.3(a).
Above, para 3.7.
Land Court Act 2000 s 7(b).
Land Court Rules 2000 r 4.
UCPR r 5.
Allianz Australia Insurance Ltd v Mashaghati  1 Qd R 429 ;  QCA 127.
- Published Case Name:
Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 23)
- Shortened Case Name:
Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 23)
 QLC 18
03 Jun 2020