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Rolleston Coal Holdings Pty Ltd v McDonald[2024] QSC 310

Rolleston Coal Holdings Pty Ltd v McDonald[2024] QSC 310

SUPREME COURT OF QUEENSLAND

CITATION:

Rolleston Coal Holdings Pty Ltd v McDonald [2024] QSC 310

PARTIES:

ROLLESTON COAL HOLDINGS PTY LTD

ACN 098 156 702

(plaintiff/applicant)

v

GRAEME ANTHONY MCDONALD

(first defendant/first respondent)

SUSAN WENDY MCDONALD

(second defendant/second respondent)

NICHOLAS CHRISTOPHER MCDONALD

(third defendant/third respondent)

FILE NO/S:

BS No 1923 of 2024

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

10 December 2024

DELIVERED AT:

Brisbane

HEARING DATE:

5 December 2024

JUDGE:

Kelly J

ORDER:

  1. It is declared that in the events that have occurred, pursuant to cl 3(b)(ii) of the Offsets Deed, it is necessary or desirable to enable the Legally Binding Conservation Mechanism to be made and registered on the title of the Land, that the defendants obtain the written consent of any mortgagee of the Land to a declaration being made under s 19F of the Vegetation Management Act 1999 (Qld).
  2. The defendants shall obtain such written consent by on or before 31 January 2025.
  3. There shall be liberty to apply.
  4. I will hear the parties as to costs of the application filed 22 November 2024.

CATCHWORDS:

PROCEDURE – STATE AND TERRITORY COURTS: JURISDICTIONS, POWERS AND GENERALLY – DECLARATIONS – GENERALLY – where the plaintiff applied pursuant to a liberty to apply provision in orders made on 10 April 2024 – where the application seeks further declaratory and injunctive orders and involves issues as to the proper construction of the 10 April 2024 orders, the plaintiff’s entitlement to further orders, whether the defendants have established the defence of hardship and the form of any further orders – whether the defendants have established the defence of hardship – whether further declaratory and injunctive orders were necessary or desirable

Uniform Civil Procedure Rules 1999 (Qld), r 166, r 288

Vegetation Management Act 1999 (Qld), s 19E, s 19F

Australian Energy Ltd v Lennard Oil NL (No 2) [1988] 2 Qd R 230; [1988] QSCFC 27, considered

Billabong Gold Pty Ltd v Vango Mining Ltd (No 2) [2023] WASCA 58, cited

Blanch v British American Tobacco Australia Services Ltd (2005) 62 NSWLR 653, cited

Collins v Marinovich [2023] QSC 175, cited

Couran Cove Resort Community Body Corporate v The Proprietors - Couran Cove Resort - Eco Lodges Group Plan No 106783 [2024] QSC 172, cited

Guardianship and Administration Tribunal v Perpetual Trustees Qld Ltd [2008] 2 Qd R 323; [2008] QSC 49, considered

Longtom Pty Ltd v Oberon Shire Council (1996) 7 BPR 14,799, considered

Pacific Century Production Pty Ltd v Lambgrove Pty Ltd [2000] QSC 263, cited

Radmanovich v Nedeljkovic [2002] NSWSC 212, cited

Repatriation Commission v Nation (1995) 57 FCR 25, cited

COUNSEL:

A Pomerenke KC and S McCarthy for the plaintiff/applicant

J Horton KC with W Isdale for the defendants/respondents

SOLICITORS:

Allens for the plaintiff/applicant

Suthers Taylor for the defendants/respondents

An application made under liberty to apply

  1. [1]
    This application is made by the plaintiff (“Glencore”) pursuant to a liberty to apply provision[1] in my orders made on 10 April 2024 (“the April orders”). The application seeks further declaratory and injunctive orders and involves issues as to the proper construction of the April orders, Glencore’s entitlement to further orders, whether the defendants (“the Landowners”) have established the defence of hardship and the form of any further orders.
  2. [2]
    On 23 February 2024 and 19 February 2024 respectively, Glencore filed the amended claim and statement of claim. By 10 April 2024, the Landowners had not filed a defence. On 10 April 2024, Glencore applied for judgment by default under r 288 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”). The application on 10 April 2024 which resulted in the making of the April orders, proceeded on the basis that the allegations of fact in the statement of claim were deemed to have been admitted.[2]

Material events leading to the April orders

  1. [3]
    The Landowners are the registered proprietors of land comprising some 4,574 hectares known as “Wildhorse” in central Queensland (“the Land”). They operate on the Land a partnership business which trades as “Wildhorse Pastoral”.
  2. [4]
    Glencore is the proponent of the Rolleston Coal Mine Expansion Project. Arising out of its mining activities, Glencore holds an environmental authority (“the EP Authority”) under the Environmental Protection Act 1994 (Qld) (“the EP Act”) and an approval (“the EPBC Approval”) under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (“the EPBC Act”). The EP Authority and the EPBC Approval regulate Glencore's mining activities by imposing conditions, the contravention of which exposes Glencore to the risk of statutory liability.
  3. [5]
    The EPBC Approval requires Glencore to enter and implement a Biodiversity Offset Management Plan and register a legally binding conservation mechanism over offset areas referred to in that plan. Under the EPBC Approval, a legally binding conservation mechanism means a covenant or similar legal agreement in relation to a site, to provide enduring protection for the site against developments incompatible with conservation. The EP Authority requires land-based offsets to be made in accordance with the Environmental Offsets Act 2014 (Qld) and the Queensland Environmental Offsets Policy. To comply with these conditions, Glencore and the Landowners entered a Biodiversity Offset Management Plan (“the Offset Management Plan”) and a supporting Deed styled as the Biodiversity Offsets Deed for Wildhorse, which was amended by an Amendment and Reinstatement Deed - Biodiversity Offsets Deed for “Wildhorse” (“the Offsets Deed”).
  4. [6]
    The Offset Management Plan provides for some 216 hectares of the Land to be the “Offset Area” which is required to be protected by a voluntary declaration by the Landowners under ss 19E and 19F of the Vegetation Management Act 1999 (Qld) (“the VM Act”). By s 19E of the VM Act, the making of a declaration under s 19F by the Chief Executive of the Department of Resources depends upon a voluntary request made to the Chief Executive by the owner of the land. Section 19F(2) of the VM Act requires the written consent of any person other than the proponent of the declaration who has an interest in the land. In this case, the Land is subject to registered mortgages and consent of the mortgagees is required.[3]
  5. [7]
    A sufficient summary of the key terms and obligations in the Offsets Deed may be set out as follows:
    1. The Offsets Deed provided for the same Offset Area as contained in the Offset Management Plan.
    2. The Approvals were defined essentially to mean the EP Authority and the EPBC Approval, as modified from time to time.
    3. Glencore was required to pay an Offset Payment to the Landowners, in the amount of $730,000 plus GST.
    4. The Landowners were required to make a “Request” for a “Legally Binding Conservation Mechanism” within 40 business days of the commencement date of the Offsets Deed.
    5. A “Request” was defined to mean written notice requesting the Chief Executive of the Department of Natural Resources and Mines (or its successors) to put in place a Legally Binding Conservation Mechanism for the Offset Area.
    6. A “Legally Binding Conservation Mechanism” was defined to mean a mechanism to legally secure the Offset Area sufficient to satisfy the requirements of Glencore and a number of identified government departments in relation to the Approvals and might include an environmental protection area under the Environmental Offsets Act 2014 (Qld) or an area of high value conservation under the VM Act or the use of a covenant under the Land Act 1994 (Qld) or Land Title Act 1994 (Qld).
    7. Clause 3(b)(ii) relevantly provided:

“3(b) The [Landowners] will …

(ii) do all things necessary or desirable to enable the Legally Binding Conservation Mechanism to be made and registered on the title of the Land, including but not limited to:

  1. obtaining the written consent to the proposed Legally Binding Conservation Mechanism of any person with an interest in the Offset Area.”
  1. There was a term (clause 3(d)) that the Landowners must not take action to remove the Legally Binding Conservation Mechanism from the title of the Land until the vegetation within the Offset Area met the objectives of the Offset Management Plan and satisfies the requirements of the Approvals (the estimated time for which was 20 years).
  2. The Landowners could not wilfully act contrary to the Approvals, including the outcomes of management actions of the Offset Management Plan.
  1. [8]
    On or about 4 February 2019, Glencore and the Landowners executed and delivered the “Amendment and Reinstatement Deed - Biodiversity Offsets Deed for ‘Wildhorse’” which relevantly increased the total amount of the Offset Payment to $876,000 plus GST.
  2. [9]
    From on or about 4 February 2019, the Landowners were bound by the Offsets Deed.
  3. [10]
    Between 26 April 2019 and 25 June 2019, the Landowners made a request to the Chief Executive pursuant to s 19E of the VM Act for a declaration over the Offset Area. On or about 9 July 2019, the Chief Executive made a declaration over the Offset Area under s 19F of the VM Act in accordance with the Landowners’ request. Necessarily, that declaration required as a pre-requisite the consent of any person with an interest in the Land.  The declaration declared the Offset Area as an area of high nature conservation value in accordance with s 19F of the VM Act.
  4. [11]
    In October 2017 and February 2019, Glencore paid deposits towards the Offset Payment. In August 2019, by reason of the Landowners having made the request and the declaration having been made, Glencore paid the balance of the Offset Payment to the Landowners under the Offsets Deed. The total amount of the Offset Payment paid to the Landowners was $963,000. 
  5. [12]
    On or around 6 February 2023, the Landowners withdrew their consent to the Voluntary Declaration. As a result, the Department of Natural Resources, Mines and Energy notified Glencore that it had revoked the declaration made on or about 9 July 2019 and that it would take steps to ensure that the declaration would be removed from the title to the Land.
  6. [13]
    In these proceedings, Glencore alleged that the conduct of the Landowners involved breaches of the Offsets Deed because, inter alia, the Landowners had wrongfully taken action to remove a Legally Binding Conservation Mechanism from the title of the Land (clause 3(d) and by their conduct they had failed to do all things necessary or desirable to ensure that the declaration made on or about 9 July 2019 remained registered on the title to the Land or that a Legally Binding Conservation mechanism was registered on the Land (clause 3(b)(ii)). Glencore alleged that the breaches involved “wilful conduct”. 

The 10 April 2024 hearing

  1. [14]
    At the 10 April 2024 hearing of Glencore’s application for judgment, the parties provided to the Court an agreed form of order which was intended to resolve the proceedings.[4] Glencore was given leave to file and read written submissions.[5] The written submissions referred to the Offsets Deed and “key terms and obligations” contained within it which had been referenced in the statement of claim. Notably, the written submissions referred to one of those terms and obligations as being the obligation upon the Landowners to “do all things necessary or desirable to enable the Legally Binding Conservation Mechanism to be made and registered on the title of the Land”. The written submissions noted that those things included but were not limited to obtaining the written consent of any person with an interest in the Offset Area.[6] The written submissions stated that “the declarations follow the requirements of the Offsets Deed”. 
  2. [15]
    A discretion was involved in making the declaratory relief and mandatory injunctions sought by Glencore. The written submissions argued that the proposed declaratory orders were appropriate relevantly because they “identify the steps the Landowners must take to restore a voluntary declaration over the Land as required … [including] an order that the Landowners do all things necessary or desirable to achieve that end, which is appropriate because, it accords with the express terms of the parties’ agreement in cl 3(b)(ii) of the Offsets Deed as summarised above”.[7] The written submissions described the injunctive orders as being appropriate “to require the Defendants to repair the consequences of their wrongful conduct”.[8]
  3. [16]
    The written submissions then relevantly stated:[9]

“The requirement that the Landowners do all things necessary or desirable to enable the Legally Binding Mechanism to be made and registered on the title of the Land is appropriate to secure the objects of cl 3(b)(ii) of the Offsets Deed… [t]o the extent there is any problem introduced by this order, or any of the steps compelled by Order 2, there is liberty to apply. This order is appropriate to ensure any such problems can be worked out without the need to issue fresh proceedings.”

  1. [17]
    Senior and junior counsel who appeared on behalf of Glencore relied upon the written submissions and made oral submissions to the effect that “[t]he breaches plainly require repair”[10] and the declarations and injunctions were appropriate in those circumstances “to effect that repair”. [11] Glencore’s senior counsel stated that the form of orders was agreed.[12] When invited to make any submission as to the orders sought, counsel for the defendants said, “[n]othing to add, your Honour”.[13]
  2. [18]
    The transcript reveals that, immediately prior to making the April orders, I stated that I had read the plaintiff’s written outline of submissions and then said, “… for the reasons expressed in that outline it seems to me to be entirely appropriate to make the orders contained in the draft”.[14]
  3. [19]
    I then made the April orders.

The April orders

  1. [20]
    It is convenient to set out the particularly relevant paragraphs of the April orders as follows: 

“1. It is declared that:

  1. (a)
    The ‘Offset Area’ as defined in the Deed made on or about 7 September 2017 between the Plaintiff and the Defendants styled the ‘Biodiversity Offsets Deed for “Wildhorse”’ (as amended by the Deed made on or about 4 February 2019 between the Plaintiff and the Defendants styled the ‘Amendment and Reinstatement Deed - Biodiversity Offsets Deed for “Wildhorse”’) (the Offsets Deed) comprises an area of 216.19 hectares of the land described as Lot 3, on Survey Plan 100437 (Land) which is depicted in Annexure A to this Order.
  1. (b)
    In the events that have occurred, the Offsets Deed obliges the Defendants to:
  1. (i)
    execute the Offset Management Plan v 6 in the form annexed at Annexure B to this Order;
  1. (ii)
    seek the written consent of the Mortgagees with registered   mortgages over the Land to a declaration being made under s 19F of the Vegetation Management Act 1999 (Qld) (Mortgagees' Consent) pursuant to 1(b)(iii) below;
  1. (iii)
    make a Request under the Offsets Deed to the Chief Executive of the Department of Resources:
  1. (A)
    for a Legally Binding Conservation Mechanism under s 19E of the Vegetation Management Act over the Offset Area;
  1. (B)
    comprising the following documents:
  1. (1)
    a signed Voluntary Declaration in the form annexed in Annexure C to this Order;
  1. (2)
    a Shapefile map and PDF version of the Shapefile map of the Offset Area in the form annexed to Annexure D to this Order; and
  1. (3)
    an executed copy of the Offset Management Plan v 6 in the form annexed in Annexure B to this Order; and
  1. (4)
    the Mortgagees’ Consent;

…

  1. (vi)
    do all further things necessary or desirable to enable the Legally Binding Conservation Mechanism to be made and registered on the title of the Land.

2.The Defendants shall:

…

  1. (b)
    forthwith seek the Mortgagees’ Consent to a declaration being made under s 19F of the Vegetation Management Act pursuant to the Request in 2(c) below;
  1. (c)
    make a Request under the Offsets Deed to the Chief Executive of the Department of Resources:
  1. (i)
    for a Legally Binding Conservation Mechanism under s 19E of the Vegetation Management Act over the Offset Area;
  1. (ii)
    comprising the following documents:
  1. (A)
    a signed Voluntary Declaration in the form annexed at Annexure C to this Order;
  1. (B)
    a Shapefile map and PDF version of the Shapefile map of the Offset Area in the form annexed to Annexure D to this Order; and
  1. (C)
    an executed copy of the Offset Management Plan v 6 in the form annexed at Annexure B to this order; and
  1. (D)
    the Mortgagees’ Consent,

(Request)

  1. (d)
    make the Request within the following timeframes:
  1. (i)
    the documents identified in 2(c)(ii)(A) to (C) above must be provided to the Chief Executive of the Department of Resources within 14 days of the date of this Order;
  1. (ii)
    the Mortgagees’ Consent must be provided to the Chief Executive of the Department of Resources within 3 days of the Defendants receiving those documents;

…

  1. (g)
    do all further things necessary or desirable to enable the Legally Binding Conservation Mechanism to be made and registered on the title of the Land.

…

3.The Plaintiff and the Defendants have liberty to apply.

4.The Defendants pay the Plaintiff's costs of the proceeding, to be assessed on a standard basis.

If you, Graeme Anthony McDonald, Susan Wendy McDonald and Nicholas Christopher McDonald do not obey this order within the time specified, you will be liable to court proceedings to compel you to obey it and punishment for contempt.”

  1. [21]
    On 15 April 2024, a further order was made by consent in the following terms:

“1.Order 4 of the Orders of Justice Kelly dated 6 March 2024 is vacated.

  1. Annexure C to the orders of Justice Kelly dated 10 April 2024 is replaced with Annexure A to this order.
  2. The time for compliance with paragraph 2(d)(i) orders of Justice Kelly dated 10 April 2024 be extended to the time that is 14 days of the date of this Order.
  3. There be no order as to costs.”

Events following the April orders

  1. [22]
    By 29 April 2024, the Landowners made a request under the Offsets Deed to the Chief Executive of the Department of Resources for a Legally Binding Conservation Mechanism under s 19E of the VM Act over the Offset Area (“the Legally Binding Conservation Mechanism”). That request was made pursuant to paragraph 2(c)(i) and 2(d)(i) of the April orders.
  2. [23]
    The Landowners requested the consent of a mortgagee of the Land, the Commonwealth Bank of Australia (“the CBA”) to a declaration being made under s 19F of the VM Act.
  3. [24]
    At 5.10pm on 5 September 2024, the CBA (by its Agribusiness Executive, Mr John Hack) sent an email to the Landowners’ lawyers which materially provided:

“The Bank presently holds a mortgage security over the property known as ‘Wild Horse’ 14469 Carnarvon Highway, Consuelo QLD 4702 to support existing loan facilities provided to our Borrower (McDonald). As the mortgagee, the Bank been requested to consent to a Biodiversity Offset Management Plan (BOMP) for this property.

We have now had the opportunity to review the BOMP prepared by Glencore Coal Queensland Pty Ltd.

I refer to Valuation Report for ‘Wild Horse’ 14469 Carnarvon Highway, Consuelo QLD 4702 undertaken by Acumentis and dated 10/07/2024 (ref: 2405009813). The basis of valuation was ‘As Is’ and ‘As If Complete’ pertaining to the BOMP over 216.9 hectares of land. The ‘As If Complete’ is the assessed market value of the property following implementation of the BOMP over 216.9 hectares of land. (refer page 3).

The valuer’s opinion of Estimated Market Value (EMV) of the subject property at as 10/07/2024 was:

  • ‘As Is’ - $33,400,000 (ex GST)
  • ‘As If Complete’ - $33,000,000 (ex GST)

Therefore, the valuer’s estimation of diminution in value due the existence of the BOMP is $400,000.

The Bank's normal security lending margin for real property of this nature is 60% of the EMV. As the existence of the BOMP has reduced the EMV by $400,000 this will result in a reduction in extended security value of $240,000 (ie. 60% of $400,000).

When assessing the outcome of our review, the Bank will also take account of the impacts on the Borrower's equity position, capacity to repay and saleability of the security property due to the existence of the BOMP.

In view of these issues, the Bank would require permanent reduction of the available limit for existing lending facilities made available to the Borrower by $240,000.

The Bank agrees to execute relevant documentation relating to the Consent subject to:

  • payment of the Bank’s consent fee of $2,000 (GST excl) plus any external or internal legal costs (capped at $15,000) incurred relating to this matter;
  • permanent reduction of the Borrower’s existing loan facility limit by $240,000;
  • confirmation that by the Bank agreeing to this Consent the Borrowers are not placed in a worse financial position (excepting loss of access to the pastoral land parcel).

The Bank reserves the right to revoke this agreement to consent should any additional information come to light not disclosed in relation to the proposed BOMP that have the potential to impact the Bank's rights in its mortgage security.

Please let me know if you have any queries relating to this matter and expected next steps.”

  1. [25]
    At 10.09am on 6 September 2024, the Landowners’ lawyers sent an email to Glencore’s lawyers which materially provided:

“We refer to previous correspondence in connection with this matter.

[The Landowners] action to seek written consent from mortgagee: CBA

[The Landowners] sought written consent of the mortgagee: CBA to the declaration being made under s 19F of the Vegetation Management Act (VDec) over McDonald’s property, ‘Wildhorse’, being Lot 3 on SP1000437 (Wildhorse) on 8 April 2024, prior to the Order of Justice Kelly made on 10 April 2024 (Orders), and then again on 12 April 2024, in accord with the Orders.

Correspondence from CBA

Would you please see below, correspondence from CBA, received on 5 September 2024 at 5.09pm, regarding the provision of consent to the VDec over Wildhorse.

CBA is agreeable to the provision of the required mortgagee consent to the VDec, on express agreement to the following:

  1. payment of the Bank’s consent fee of $2,000 (GST excl) plus any external or internal legal costs (capped at $15,000) incurred relating to this matter;
  2. permanent reduction of the Borrower’s existing loan facility limit by $240,000;
  3. confirmation that by the Bank agreeing to this Consent the Borrowers are not placed in a worse financial position (excepting loss of access to the pastoral land parcel).

[The Landowners’] position

[The Landowners]:

  • ha[ve] satisfied and complied with [their] obligations in accord with the Orders and the Amendment and Reinstatement Deed - Biodiversity Offsets Deed for ‘Wildhorse’”) [sic] (the Offsets Deed) to seek the written consent of the mortgagee of Wildhorse; CBA; and
  • ha[ve] no obligation in accord with the Orders and/or Offsets Deed to make any payments to the mortgagee of Wildhorse; CBA to enable the provision of consent.”
  1. [26]
    At 1.38pm on 6 September 2024, Glencore’s lawyers sent an email to the Landowners’ lawyers which relevantly stated:

“As discussed could you please clarify the following with CBA in regards to items 2 and 3 of their proposed conditions.

  1. In relation to condition 2, does CBA require a cash payment of $240,000.00, or are they reducing the draw down limit of the [Landowners’] facility by $240,000. The wording in Mr Hack's email is not clear.
  2. In relation to condition 3, what specifically would provide the bank comfort that the [Landowners] are not placed in a worse financial position upon registration of the voluntary declaration.

Upon answers to those questions we will seek instructions in regards to CBA’s requirements.

For the avoidance of doubt nothing in this email should be construed as our client providing consent to any condition whatsoever.”

  1. [27]
    At 1.49pm on 6 September 2024, the Landowners’ lawyers forwarded the 1.38 pm email from Glencore’s lawyers to the CBA with the following message:

“Would you please see attached as discussed.

Would you please consider and revert at your earliest convenience.”

  1. [28]
    At 3.17pm on 6 September 2024, CBA (again by Mr Hack) sent an email to the Landowners’ lawyers which relevantly stated:

“As requested expanding on the points below:

  1. The Bank requires payment of $240,000 off the balance of the loan in order to effect an equivalent limit reduction for the Borrower’s loan facilities.
  2. We require assurance that there will be no additional cost burden placed on the Borrowers as a result of the proposed Consent.

I hope these comments clarify the situation sufficiently.”

  1. [29]
    At 3.27pm on 6 September 2024, the Landowners’ lawyers forwarded the CBA’s 3.17pm email to Glencore’s lawyers,
  2. [30]
    At 12.21pm on 4 October 2024, the third defendant on behalf of the Landowners sent an email to the CBA (Mr Hack) which relevantly stated:

“As you are aware [the Landowners have] requested CBA mortgagee consent for an area of 216 hectares on Wildhorse in accordance with the Orders of Justice Kelly of 10 April 2024.

We have previously received the CBA conditions to the provision of CBA mortgagee consent.

After continued correspondence with Glencore, [the Landowners request] financial accommodation from the CBA for the $240,000 debt reduction required by CBA.

[The Landowners] request further provision of a credit facility of circa $300,000 for legal fees required to be paid to Glencore in accordance with the Orders of Justice Kelly of 10 April 2024.

[The Landowners need] a response or indication as to the CBA position regarding this request by COB on 8 October 2024 so as we can revert to Glencore with a way forward.”

  1. [31]
    At 3.21pm on 8 October 2024, the CBA sent an email to the third defendant on behalf of the Landowners which relevantly stated:

“Thank you for your request for additional accommodation. Unfortunately the Bank is not in a position to provide additional support as requested at this time.

I reiterate, as per my email dated 5/09/2024, the Bank agrees to execute relevant documentation relating to the Consent subject to:

  • payment of the Bank's consent fee of $2,000 (GST excl) plus any external or internal legal costs (capped at $15,000) incurred relating to this matter;
  • permanent reduction of the Borrower’s existing loan facility limit by $240,000;
  • confirmation that by the Bank agreeing to this Consent the Borrowers are not placed in a worse financial position (excepting loss of access to the pastoral land parcel).

The Bank reserves the right to revoke this agreement to consent should any additional information come to light not disclosed in relation to the proposed BOMP that have the potential to impact the Bank's rights in its mortgage security.

Please do not hesitate to let me know should you have any queries relating to this matter.”

The proper construction of the April orders

  1. [32]
    A starting point is that if the true meaning of an order is “immediately plain, the terms of the order will speak for themselves”.[15] If the true meaning is not immediately plain, the task of ascertaining meaning is to be approached having regard to what might be described as ordinary rules of construction.[16] The task of construing orders is not concerned to “delve into the subjective intention of the judge pronouncing the order”.[17] Whilst it is appropriate for the judge who made an order to hear an application involving the construction of the order,[18] a judge sitting in my current position “must keep out of his or her mind what might have been intended and construe only the words that were used in the order”. [19]
  2. [33]
    If there is ambiguity, extrinsic evidence may be called in aid of the task of construction.[20] The learned authors of Interpretation,[21] note that there is conflicting intermediate appellate authorities on the question as to whether it is necessary to identify ambiguity before considering any extrinsic material. In Australian Energy Ltd v Lennard Oil NL (No 2),[22] Andrews CJ (with whom Kelly SPJ agreed), considered that it was appropriate, in the circumstances of that case, to construe orders made by a judge by reference to the surrounding circumstances and extrinsic evidence acted upon by the judge. In that case, the judge, McPherson J, had made declaratory orders about the defendant’s liability pursuant to a written agreement. In those circumstances, Andrews CJ did not consider it necessary to first establish ambiguity in the terms of the order before regard might be had to the surrounding circumstances and extrinsic evidence. The Chief Justice relevantly observed:[23]

“Some argument was at first directed to the effect that it is open to the Court to construe the declaration only if it was shown to be ambiguous. I would hold that its meaning emerges only when considered with the written agreement … of which it is either explanatory or complementary or both. I would further hold that it is necessary in order fully to understand the effect of the declaration to examine the reasons expressed by McPherson J in coming to his decision and the extrinsic evidence and surrounding circumstances relied upon by him. This is not so much to construe the words of the declaration as to understand it in its place in the context of the matter and thus give it its true construction.”

  1. [34]
    In Guardianship and Administration Tribunal v Perpetual Trustees Qld Ltd,[24] Mullins J, as the President then was, considered the construction of an order which had been made in circumstances where there had been no reasons.[25] In that case there was an issue as to what matters could be considered in construing the order. Her Honour framed the issue as “whether the Court is confined now to the terms of the order itself or whether the Court can have regard to other materials, such as the nature of the application that resulted in the order, the affidavits that were before the Court on the application, and the transcript of the hearing of the application”.[26] After having referred to the judgment of the Full Court in Lennard Oil, her Honour relevantly found:[27]

“Although there is not an originating judgment against which to construe the orders …, the nature of the application that resulted in the orders, the affidavits filed in support of the application and the submissions made at the hearing of the application (as recorded in the transcript) provide the context for construing the orders.”

  1. [35]
    A notable feature of the April orders is their reference to “the events that have occurred”, the Offsets Deed and terms defined in the Offsets Deed such as a “Request under the Offsets Deed” and a “Legally Binding Conservation Mechanism”. I find that the meaning of the April orders emerges only when considered with the Offsets Deed, of which it is either explanatory or complementary or both. I further find that it is necessary in order fully to understand the effect of the April orders to examine my brief reasons, Glencore’s written submissions and the oral submissions made on 10 April 2024. Adopting the approach of Andrews CJ, this is not so much to construe the words of the April orders as to understand them in their place in the context of the matter and thus give them their true construction.  In any event, I am also prepared to find that the April orders are relevantly ambiguous because, on their face, they reference unparticularised “events that have occurred”, reference, without annexing, the Offsets Deed and deploy certain terms which are defined in the Offsets Deed.
  2. [36]
    The Landowners submitted that, on the proper construction of the April orders, they were only obliged to seek the Mortgagees’ consent, not obtain that consent.  They relied upon paragraphs 2(b) and (g) of the April orders to submit that their only obligation in relation to the Mortgagees was to do something “very specific”, namely to seek their consent and they were not required to “go any further” in respect of that consent.  The Landowners sought to limit the general words contained in paragraph 2(g) because of the presence of paragraph 2(b).  The general words in paragraph 2(g) were said to be “confined” in that they did not extend to a subject matter already dealt with by paragraph 2(b) and were limited to steps other than seeking the Mortgagees’ consent.  This conclusion was submitted to be consistent with a rule of construction to the effect that a specific provision prevails over a more general provision.
  3. [37]
    I reject the Landowners’ submissions as to the proper construction of the April orders.  Immediately prior to making the April orders, it was submitted to me in writing that the proposed orders followed the requirements of the Offsets Deed.  The written submissions noted that one of the obligations imposed upon the Landowners by the Offsets Deed was an obligation to obtain the written consent of any person with an interest in the Offset Area.  The Landowners’ construction would mean that by the proposed consent orders the parties should be taken to have intended to achieve an outcome which significantly diluted the terms of the Offsets Deed.  On the Landowners’ construction of the April orders, rather than the Landowners being required to obtain the written consent of any person with an interest in the Offset Area, they were merely required to seek the consent of such a person.  Further, the statement of claim alleged that the Landowners were in breach of the Offsets Deed, inter alia, because they had failed to ensure that a Legally Binding Conservation Mechanism was registered on the Land.  At the time of the April orders, the allegations in the statement of claim were deemed to have been admitted.  Prior to making the April orders, Glencore’s counsel orally submitted that the Landowners’ breaches plainly required repair and the proposed orders were appropriate to “effect that repair”.  A requirement to merely seek the consent of the Mortgagee would not, of itself, effect a repair of the identified breach.  The Landowners’ submissions also tended to overlook the word “further” as it appears in paragraph 2(g) of the April orders. 
  4. [38]
    I find that paragraph 2(b) imposed an obligation upon the Landowners which had to be performed forthwith, that is immediately or without delay.  That obligation was to seek the consent of the Mortgagees.  That was not the extent of the Landowners’ obligations in relation to the Mortgagees.  Paragraph 2(g) made it clear that the Landowners were further required to do all things necessary or desirable to enable the Legally Binding Conservation Mechanism to be made and registered on the title of the Land.  Consistently with the requirements of the Offsets Deed, that obligation includes obtaining the Mortgagees’ consent.

Whether further orders should be made and hardship

  1. [39]
    Glencore submitted that it was necessary and desirable that further orders be made to compel the Landowners to repair the consequences of their breach of the Offsets Deed by taking the steps required of them under that instrument.  It is uncontroversial that Glencore has not engaged in any disentitling conduct.  There is no allegation that Glencore itself is in breach of the Offsets Deed.  Glencore has paid the full amount of the Offset Payment to the Landowners.  It was admitted in the proceeding that Glencore has been placed in a position of substantial hardship in consequence of the Landowners’ breaches which, inter alia, meant that the Offset Area is or will not be secured by a Legally Binding Conservation Mechanism.[28]  It was also admitted that there is a public interest in the Offset Area being legally secured by a Legally Binding Conservation Mechanism.  I accept that addressing the breaches is in the public interest because, as was submitted to me on 10 April 2024, remedying the breaches will address a source of non-compliance with approvals made under the EP Act and the EPBC Act, which have objectives of promoting ecologically sustainable development.[29] I find that if the breaches are not repaired, Glencore will be exposed to the prospect of liability under the EP Act and the EPBC Act by reason of non-compliance with the conditions in the EP Authority and the EPBC Approval.  I accept that damages will not be an adequate remedy for Glencore in the circumstances of the breaches. Presently, Glencore has a Transitional Environmental Program with the Queensland Government issued under s 340 of the EP Act (“the TEP”).  The objective of the TEP is to provide a reasonable time period for Glencore to re-establish compliance with the EP Authority and the EPBC Approval to ensure that a Legally Binding Protection Mechanism is secured over the Offset Area.  The achievement of that objective will enable Glencore to be compliant with the EP Authority and the EPBC Approval. The TEP has already been extended and will end on 6 March 2025. 
  2. [40]
    The orders sought are in the nature of mandatory injunctions which, in the realm of contract, approximate in some degree to decrees of specific performance.[30] The Landowners submitted in writing that it would cause hardship for them if the Court were to grant further declaratory and injunctive orders. The hardship identified by the Landowners was very much directed to perceived difficulties they had complying with the CBA’s requirements as distinct from the hardship involved in requiring them to specifically perform their contractual obligations to Glencore.  In that respect, the hardship was submitted to arise because the Landowners could not satisfy the CBA’s requirement to reduce their loan facility by $240,000 and they could not confirm that the CBA’s consent would not result in them being placed in a worse position. By the time of the conclusion of the oral argument, the Landowners made a concession that it was “open” to the Court to conclude that the Landowners had not “satisfied … the hardship threshold”.[31] At that point, the Landowners’ position shifted to resisting orders fashioned in terms of the CBA’s requirements.[32]
  3. [41]
    In Billabong Gold Pty Ltd v Vango Mining Ltd (No 2),[33] the Court of Appeal of the Supreme Court of Western Australia described the defence of hardship in these terms (references omitted):

“Hardship may be raised as a defence to equitable relief in the nature of specific performance. Hardship, with its focus on the effect upon the defendant of a decree of specific performance, is the hardship involved in a decree of specific performance as opposed to an order for common law damages – not for hardship flowing from the enforcement of the contract at law. The defendant must show that a decree of specific performance would impose hardship amounting to oppression, outweighing the inconvenience to the plaintiff if the plaintiff were left to its remedy in damages. At least generally speaking, the defendant must show that specific performance would be ‘highly unreasonable’.”

  1. [42]
    In Longtom Pty Ltd v Oberon Shire Council,[34] Young J relevantly said:

“The defence of hardship these days very rarely meets with much success. In order to give the defendant the benefit of a defence of hardship there must normally be some unconscionable bargain or some compassionate grounds … Normally hardship is to be judged at the time the contract is made and subsequent events are immaterial …  Such propositions are stated in general terms and there would be no difficulty at all in showing that there are some cases which do not fit into the general statements I have made…. In all cases, the matter is one for the judge to assess in the light of all the other facts of the case. The mere fact that a party will suffer financial hardship is seldom enough. … The matter is always … a matter of degree, though the defence does not succeed unless specific performance should be considered by the court to be highly unreasonable: Wedgwood v Adams (1843) 6 Beav 600 at 605; 49 ER 958 at 960.

One in this connection looks at the hardship in granting equitable relief as opposed to common law damages, not the hardship in the decision to enforce the contract: Spry p 196. Thus, historically the strongest cases were where a person had made a contract do so something which was of no value to the other party such as restoring buildings to their condition at the start of a long lease when it was commercially apparent that this would be a waste of money: see for instance Dean Chapter of Ely v Stewart (1740) 2 Atk 44; 26 ER 423.”

  1. [43]
    Young J also observed that “ordinarily, financial difficulty would not amount to a defence of hardship… There must be something more… That something more would appear to be circumstances which mean that there would be imposed on the defendant a hardship amounting to injustice”.[35]
  2. [44]
    The Landowners did not adduce sufficient cogent evidence to prove that they were unable to reduce their loan by $240,000.  Included within the evidence was documentation described as the “Latest Financials of the Partnership”.  Those financial documents included a balance sheet which indicated that the partnership, amongst other assets, held “shares in listed companies” valued at $222,519.  The assets also included “cattle on hand” valued at $1,926,977.  There was no explanation in the evidence as to why the shares and even some of the cattle could not be sold to raise the required funds to reduce the loan facility with the CBA.  There was also no explanation as to what had become of the Offset Payment or how it had been used by the Landowners.  There was no evidence from the individual Landowners as to their respective personal financial positions.  It was apparent from the material that at least the first and second defendants were engaged in other businesses.  There was no evidence about the profits, if any, derived from those businesses.  The balance sheet noted that the partnership had total liabilities of $11,836,926.  The latest estimate of the market value of the land was approximately $33,000,000.  There was evidence to the effect that the CBA’s “normal security lending margin for real property of this nature is 60% of the estimated market value”.  That evidence suggested that there was ample equity in the land to support a significant borrowing.  The Landowners’ evidence did not reveal that, as at the date of Glencore’s application for further orders, they had exhausted all possible lines of negotiation with the CBA or, indeed, pursued alternative finance from any other lender. On the evidence adduced by the Landowners, I am not satisfied that they are not able to raise or access $240,000.
  3. [45]
    The Landowners placed reliance upon the condition proposed by the CBA (by Mr Hack) which involved “confirmation that by the bank agreeing to this Consent the Borrowers are not placed in a worse financial position (excepting loss of access to the pastoral land parcel)”.  That condition was not a circumstance which existed at the date of the Offsets Deed. The Landowners sought to rely upon their state of mind at the time of the Offsets Deed as one which did not contemplate that the CBA would impose the requirements contained in Mr Hack’s 5 September 2024 email. The relevance to the defence of hardship of circumstances which did not exist at the time of the Offsets Deed and the Landowners’ state of mind at that time is highly questionable. Glencore objected to the evidence concerning the Landowner’s state of mind on the grounds of relevance. I have decided to admit this evidence because, as I understand the relevant authorities, there are no settled categories of hardship and the defence may be established by atypical cases. In my consideration the prudent course involves not applying general statements but having careful regard to the facts said to give rise to the defence.
  4. [46]
    The Landowners submitted that, properly construed, the confirmation condition meant or required that the $240,000 “can’t come from us because it would [result in] a worse financial position or a cost burden either way”.[36] That submission was further developed by an argument to the effect that the requirement to repay $240,00 necessarily made the Landowners worse off because they “otherwise have a facility which allows us to keep the [$240,000] from the bank under the terms of the facility”.[37] The Landowners submitted that the Court could not order them to provide a false or incorrect confirmation to the CBA.  The Landowners further submitted that, in any event, they should not be required by an order of this Court to provide the confirmation because the CBA’s condition did not place that obligation specifically upon them, as distinct from some other party or entity. 
  5. [47]
    Mr Hack did not provide any affidavit. He was not called as a witness.  By the 5 September 2024 email sent at 5.09 pm, Mr Hack foreshadowed that the CBA had now “had the opportunity to review” the Offset Management Plan. The email stated that the CBA had obtained a valuation of the Land “following the implementation of the [Offset Management Plan]”. The implementation of the Offset Management Plan would affect some 216 hectares of the Land and, according to the valuation, reduce the market value of the Land by $400,000. The email stated that the CBA was still to assess the “outcome of our review” and would “also take account of the impacts on the Borrower’s equity position, capacity to repay and saleability of the property due to the existence of the [Offset Management Plan]”. In that same email when Mr Hack later spoke about “confirmation”, it is arguable that he was contemplating confirmation by the CBA following its review.  It is also arguable that the confirmation was to come from the Landowners. Glencore ultimately did not seek an order that the Landowners provide the confirmation so there is no relevant hardship arising out of the vexed identity of the confirming party.
  6. [48]
    What apparently required confirmation was that, by the CBA agreeing to consent, the Landowners would not be placed in a worse financial position (excepting loss of access to the affected parcel of the Land). Mr Hack’s later email of 6 September 2024 sent at 3.17 pm indicated that the CBA wanted confirmation that “there will be no additional cost burden placed on the [Landowners] as a result of the proposed consent”. Whatever confirmation was required, and by whom, it was a confirmation to be provided in a specific context where the CBA was consenting to the Offset Management Plan and requiring a permanent reduction of the Landowners’ existing facility by $240,000. That reduction apparently reflected 60% of the reduction in the Land’s market value caused by the implementation of the Offset Management Plan, a figure consistent with the CBA’s normal security lending margin for real property. These matters were known, and indeed pressed, by the CBA. The evidence does not compel or warrant a finding that, by Mr Hack’s emails. the CBA was insisting, or requiring, that the $240,000 could not be paid from the Landowners’ funds or by realisation of their assets or that, simply by reason of the permanent reduction in their facility, it was impossible for the Landowners to provide the confirmation sought by the CBA.  
  7. [49]
    The Landowners have failed to establish that there was anything relevantly oppressive or highly unreasonable in requiring them to perform their contractual obligations owed to Glencore. The Landowners have failed to establish the defence of hardship.
  8. [50]
    Having regard to the date of the expiry of the TEP and in circumstances where no defence of hardship has been established, the Landowners should perform their relevant contractual obligation as contained in cl 3(b)(ii) of the Offsets Deed by on or before 31 January 2025.

Orders

  1. [51]
    The further orders I make are as follows:
    1. It is declared that in the events that have occurred, pursuant to cl 3(b)(ii) of the Offsets Deed, it is necessary or desirable to enable the Legally Binding Conservation Mechanism to be made and registered on the title of the Land, that the Landowners obtain the written consent of any mortgagee of the Land to a declaration being made under s 19F of the VM Act.
    2. The defendants shall obtain such written consent by on or before 31 January 2025.
    3. There shall be liberty to apply.
    4. I will hear the parties as to costs of the application filed 22 November 2024.

Footnotes

[1]  April orders, [3].

[2]Pacific Century Production Pty Ltd v Lambgrove Pty Ltd [2000] QSC 263 and UCPR, r 166(1).

[3]  See statement of claim, [3].

[4]  10 April 2024 Transcript, p 2 at line 31.

[5]  Plaintiff’s submissions on form of Orders filed 10 April 2024.

[6]  Plaintiff’s submissions on form of Orders, [15(d)].

[7]  Ibid, [24].

[8]  Ibid, [25]

[9]  Ibid, [31].

[10]  10 April 2024 Transcript, p 4 at line 15.

[11]  10 April 2024 Transcript, p 4 at line 21.

[12]  10 April 2024 Transcript, p 2 at line 27.

[13]  10 April 2024 Transcript, p 5 at line 14.

[14]  10 April 2024 Transcript, p 5 at line 46 – p 6 at line 2.

[15]Collins v Marinovich [2023] QSC 175, [28]; Couran Cove Resort Community Body Corporate v The Proprietors - Couran Cove Resort - Eco Lodges Group Plan No 106783 [2024] QSC 172, [62].

[16]  Ibid.

[17]Radmanovich v Nedeljkovic [2002] NSWSC 212, [7].

[18]Blanch v British American Tobacco Australia Services Ltd (2005) 62 NSWLR 653, 655.

[19]  Ibid.

[20]Repatriation Commission v Nation (1995) 57 FCR 25, 33-34.

[21]  Perry Herzfeld and Thomas Prince, Interpretation (Lawbook Co, 3rd ed, 2024) 825 [36.90].

[22]  [1988] 2 Qd R 230, 232.

[23]  Ibid.

[24]  [2008] 2 Qd R 323.

[25]  Ibid, [32].

[26]  Ibid, [33]-[36].

[27]  Ibid.

[28]  Statement of claim, [43(e)].

[29]  EP Act, s 3 and EPBC Act, s 3(1)(b).

[30]  John Dyson Heydon, Mark James Leeming and Peter Turner, Meagher, Gummow & Lehane’s Equity Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2015) [21-445].

[31]  5 December 2024 Transcript, p 54 at lines 4-10.

[32]  5 December 2024 Transcript, p 54 at lines 10-15.

[33]  [2023] WASCA 58, [188].

[34]  (1996) 7 BPR 14,799, 14,807-14,808.

[35]  Ibid, 14,809.

[36]  5 December 2024 Transcript, p 43 at lines 38-40.

[37]  5 December 2024 Transcript, p 43 at lines 40-43.

Close

Editorial Notes

  • Published Case Name:

    Rolleston Coal Holdings Pty Ltd v McDonald

  • Shortened Case Name:

    Rolleston Coal Holdings Pty Ltd v McDonald

  • MNC:

    [2024] QSC 310

  • Court:

    QSC

  • Judge(s):

    Kelly J

  • Date:

    10 Dec 2024

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2024] QSC 31010 Dec 2024-
Notice of Appeal FiledFile Number: CA 52/2507 Jan 2025-
Appeal Discontinued (QCA)File Number: CA 52/2505 Feb 2025-

Appeal Status

Appeal Discontinued (QCA)

Cases Cited

Case NameFull CitationFrequency
Australian Energy Ltd v Lennard Oil NL [1988] QSCFC 27
1 citation
Jump To
Cite 1 - [1988] QSCFC 27
Australian Energy Ltd v Lennard Oil NL (No 2) [1988] 2 Qd R 230
2 citations
Jump To
Cite 1 - [1988] 2 Qd R 230
Cite 2 - [1988] 2 Qd R 230
Billabong Gold Pty Ltd v Vango Mining Ltd (No 2) [2023] WASCA 58
2 citations
Jump To
Cite 1 - [2023] WASCA 58
Cite 2 - [2023] WASCA 58
Blanch v British American Tobacco Australia Services Ltd (2005) 62 NSWLR 653
2 citations
Jump To
Cite 1 - (2005) 62 NSWLR 653
Cite 2 - (2005) 62 NSWLR 653
Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14
2 citations
Jump To
Cite 1 - (1996) 7 BPR 14
Cite 2 - (1996) 7 BPR 14
Collins v Marinovich(2023) 16 QR 50; [2023] QSC 175
2 citations
Jump To
Cite 1 - [2023] QSC 175
Cite 2 - [2023] QSC 175
Couran Cove Resort Community Body Corporate v The Proprietors – Couran Cove Resort – Eco Lodges Group Plan No 106783 [2024] QSC 172
2 citations
Jump To
Cite 1 - [2024] QSC 172
Cite 2 - [2024] QSC 172
Dean Chapter of Ely v Stewart (1740) 2 Atk 44
1 citation
Jump To
Cite 1 - (1740) 2 Atk 44
Guardianship and Administration Tribunal v Perpetual Trustees Qld Ltd[2008] 2 Qd R 323; [2008] QSC 49
3 citations
Jump To
Cite 1 - [2008] QSC 49
Cite 2 - [2008] 2 Qd R 323
Cite 3 - [2008] 2 Qd R 323
Pacific Century Production Pty Ltd v Lambgrove Pty Ltd [2000] QSC 263
2 citations
Jump To
Cite 1 - [2000] QSC 263
Cite 2 - [2000] QSC 263
Radmanovich v Nedeljkovic [2002] NSWSC 212
2 citations
Jump To
Cite 1 - [2002] NSWSC 212
Cite 2 - [2002] NSWSC 212
Repatriation Commission v Nation (1995) 57 FCR 25
2 citations
Jump To
Cite 1 - (1995) 57 FCR 25
Cite 2 - (1995) 57 FCR 25
Wedgwood v Adams (1843) 6 Beav 600
1 citation
Jump To
Cite 1 - (1843) 6 Beav 600

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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