Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd
[2008] QLC 216
•5 December 2008
LAND COURT OF QUEENSLAND
CITATION:Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors [2008] QLC 216
PARTIES:Cherwell Creek Coal Pty Ltd
(applicant)
v.
BHP Queensland Coal Investments Pty Ltd, QCT Resources Pty Ltd, BHP Coal Pty Ltd, QCT Mining Pty Ltd, Mitsubishi Development Pty Ltd, QCT Investment Pty Ltd and Umal Consolidated Pty Ltd
(respondents)
FILE NO:MRAA00136/2008
DIVISION:Land Court of Queensland
PROCEEDING: Application by respondents for security for costs
DELIVERED ON: 5 December 2008
DELIVERED AT: Brisbane
MEMBER:Mr PA Smith
ORDER:1. The application for security for costs is refused.
2.I will hear from the parties with respect to the costs of the application.
CATCHWORDS: Security for costs – jurisdiction of Court to make order – key elements to be considered: financial means of applicant; prospects of success; whether applicant really defendant; likelihood of ultimate costs award – finely balanced application – security for costs refused
Land Court Act 2000 s.34
Land Court Rules 2000 r.4
Uniform Civil Procedure Rules 1999 r.672-677
Mineral Resources Act 1989 Part 18A
APPEARANCES: Mr B O’Donell QC and Ms J Chapple of Counsel for the applicants
Mr S Doyle SC and Mr GD Sheehan of Counsel for the respondents
Holding Redlich, solicitors, for the applicant
Allens Arthur Robinson, solicitors, for the respondents
This is an application brought by the respondents, BHP Queensland Coal Investments Pty Ltd, QCT Resources Pty Ltd, BHP Coal Pty Ltd, QCT Mining Pty Ltd, Mitsubishi Development Pty Ltd, QCT Investment Pty Ltd and Umal Consolidated Pty Ltd (hereafter referred to collectively as the BHP Group), for security for costs to be paid by the applicant in the head proceedings, Cherwell Creek Coal Pty Ltd (hereafter referred to as Cherwell Creek).
Background
The litigation between Cherwell Creek and the BHP Group arises in rather unique circumstances. In 1994, Cherwell Creek was granted Exploration Permit for Coal no. 545 (EPC545). The BHP Group contends that EPC545 was not validly granted. Over the course of the following years, Cherwell Creek applied for and was granted renewals of EPC545. The BHP Group challenges the validity of the renewals. Reliant upon the background tenure of EPC545, in 2006 Cherwell Creek applied for Mineral Development Licence no. 364 (MDLA364), which was located in the northern region of EPC545, and Mineral Development Licence no. 366 (MDLA366) which was contained in the southern region of EPC545.
Issues as between Cherwell Creek and the BHP Group relating to both EPC545 and MDLAs 364 and 366 have been ongoing. Cherwell Creek had a stated intention of commercially developing the coal resource within MDLA364 and MDLA366. For its part, the BHP Group, which has for many years operated the Peak Downs Mine located on Mining Lease 1775, proposes a major expansion of the Peak Downs Mine to be known as the Caval Ridge Mine.
The BHP Group holds Special Lease 12/42239 granted for “industrial (coal mining) purposes”. Certain mining infrastructure used for ML1775 is located outside of ML1775 but on SL12/42239. Part of EPC545 over that part of SL12/42239 on which the BHP Group’s mining infrastructure for ML1775 is located.
On 9 May 2008, the Mineral Resources (Peak Downs Mines) Amendment Act 2008 (the MRA Amending Act) came into effect. The MRA Amending Act amended the Mineral Resources Act 1989 (the MRA) by the inclusion of a new part 18A. Significantly, s.722G of the MRA, inserted by the MRA Amending Act, provides as follows:
722G Compensation payment by prescribed persons
(1) Cherwell Creek may apply to the Land 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.
…
(4) On an application under this section, the Land 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 by the prescribed persons to Cherwell Creek.
The BHP Group is defined as the prescribed persons referred to in s.722G.
The explanatory notes to the MRA Amending Act set out the policy objectives of the amendments to the MRA contained within the new part 18A. Those policy objectives are of assistance in understanding the background to the proceedings instituted by Cherwell Creek and are as follows:
The policy objectives of the Bill are to amend the Mineral Resources Act 1989 to:
· Resolve a long-standing tenure dispute between the Central Queensland Coal Associates (CQC Associates) and BHP Mitsubishi Alliance Coal Operations Pty Ltd (BMA) and Cherwell Creek Coal Pty Ltd (Cherwell Creek) by:
· Renewing Cherwell Creek’s application for Exploration Permit for Coal 545 up to the date the legislation commences;
· Ending Cherwell Creek’s Exploration Permit for Coal 545 on the date the legislation commences; and
· Rejecting Cherwell Creek’s application for Mineral Development Licenses 364 and 366 from the date the legislation commences;
· Secure the current and future operations of the Peak Downs Coal Mine by:
· Making the area currently covered by Cherwell Creek’s application for Mineral Development License 364 available to the holders of Mining Lease 1775 for the purposes of applications for mining leases to be lodged within two years;
· Making the area of Special Lease 12/42239 which is not comprised within a mining tenement, or covered by an application for a mining tenement, available to the holders of Mining Lease 1775 for the purposes of an application for a mining lease to be lodged within one year; and
· Make it clear that compensation is not payable by the State to Cherwell Creek or any other person for anything done under the Bill; and
· Provide Cherwell Creek with a right to apply for compensation to be paid by the holders of Mining Lease 1775 for the loss of opportunity to commercialise the coal resource in the area currently subject to its application for mineral development license 364.
Application for security for costs
The BHP Group seeks an order for security for costs against Cherwell Creek in the sum of $1,629,440. Significant factual material was placed in affidavit evidence before the Court by both parties relating to the application for security for costs. Neither party required any of the deponents for cross-examination. Save for issues relating to the assessment of the quantum of any award for the security of costs, the bulk of the facts relevant to the application for security are not in dispute.
The core facts relating to the application for security for costs can be summarised as follows:
· Cherwell Creek is a company with a paid up capital of $2
· Those standing behind Cherwell Creek are independently wealthy. In particular, one of those peoples, Mr Wallin, features on the most recent list of the wealthiest individuals in Queensland
· Cherwell Creek has paid all debts as they fall due up until the present time
· Litigation between Cherwell Creek and the BHP Group is likely to incur expenditure by each party of very extensive sums by way of legal costs
· Those who stand behind Cherwell Creek are not prepared to give any indemnity or personal guarantee of payment of costs which may be ordered to be paid by Cherwell Creek to the BHP Group at the conclusion of this matter
· The BHP Group comprises very large companies with very significant assets
· The BHP Group has gained a significant benefit by the inclusion of Part 18A into the MRA
· Cherwell Creek believes that it would have obtained all necessary approvals to exploit the coal reserves from EPC545 and that any such exploitation of such coal would have been highly profitable to Cherwell Creek
· The BHP Group believes that Cherwell Creek could never have obtained the relevant mining tenures and authorities to exploit coal from EPC545 and that accordingly Cherwell Creek has suffered no financial loss by the inclusion of Part 18A into the MRA
Submissions by the BHP Group
Mr Doyle SC and Mr Sheehan for the BHP Group provided the Court with extensive written submissions. Additionally, Mr Doyle SC supplemented the written submissions with oral submissions to the Court. After setting out the BHP Group’s view of the facts and the basis upon the which the Land Court may make an award for security for costs, the written submissions went on to contend that a number of features of this matter make the case presented on behalf of the BHP Group for security for costs compelling. Key contentions made by Mr Doyle SC and Mr Sheehan are:
1.That Cherwell Creek lacks sufficient assets to satisfy any order that may be made for costs;
2.The likely high level of the costs burden to which the proceedings will expose the BHP Group;
3.The ease with which those persons standing behind the applicant could provide the required security;
4.The “very large hurdle”[1] that Cherwell Creek will have to overcome to show that it would have been issued with a mining lease and the resulting speculative nature of Cherwell Creek’s claim for compensation; and
5.The impecuniosity of Cherwell Creek given its paid up capital of $2 and its lack of assets.
[1] Submissions Mr Doyle SC and Mr Sheehan 17 November 2008 paragraph 43.
In considering other discretionary elements to be taken into account by the Court in determining the application for security for costs, Mr Doyle SC and Mr Sheehan for the BHP Group contend that:
A.The application brought by Cherwell Creek is a standard form of litigation between the parties and Cherwell Creek cannot be viewed in any sense as effectively being in the position of a defendant;
B.Given the obvious financial means of those standing behind Cherwell Creek, and in particular the principal, Mr Wallin, there can be no question that any order for security for costs against Cherwell Creek could be viewed as being oppressive;
C.Given the financial means of those who stand behind Cherwell Creek, there would appear to be no prospect that the litigation would be stifled by an order for security for costs.
D.There is no issue of public importance involved in the proceeding as, in the view of the BHP Group, Cherwell Creek has not, in effect, lost anything by the coming into force of Part 18A of the MRA. Cherwell Creek did not lose any tenements by the introduction of Part 18A as those tenements were rejected by the Minister after consultation with qualified personnel and experts. Further, Part 18A, unlike s.281 of the MRA, does not give Cherwell Creek an entitlement to compensation, but merely a right to apply for compensation which will only become payable by the BHP Group should Cherwell Creek be able to satisfy the Court that certain pre-conditions are met by Cherwell Creek; and
E.Whether or not the BHP Group have obtained a benefit from the introduction of Part 18A is an irrelevant consideration, as is the financial capacity of the BHP Group.
Submissions by Cherwell Creek
Counsel for Cherwell Creek, Mr B O’Donnell QC and Ms J Chapple, also provided the Court with extensive written submissions which were supplemented by Mr O’Donnell QC in oral submissions. Counsels’ submissions on behalf of Cherwell Creek can be summarised as follows:
1.The Land Court, unlike other courts where costs, although discretionary, ‘follow the event’, has an unfettered discretion to order costs as it considers appropriate. It is common in proceedings before the Land Court for each party to bear its own costs of a proceeding;
2.Cherwell Creek in these proceedings is not a ‘typical plaintiff’ and this is not ‘ordinary litigation’ as Cherwell Creek’s proprietary interests in EPC545 and MDLA364 and MDLA366 were taken from it by the enactment of Part 18A of the MRA;
3.In essence, Cherwell Creek can properly be considered to be, although nominally a plaintiff, in truth a defendant defending itself and its proprietary rights from attack and, as such, is not liable to any order for security for costs;
4.The complexities of the legislation, and the compulsory characteristics of such legislation, mitigate against the Court making any order for costs against Cherwell Creek in these proceedings, even if it failed in its application for compensation. The direct value of the enactment of Part 18A of the MRA to the BHP Group is conservatively, on the BHP Group’s own assessment, upwards of $1,936,000,000 with respect to the additional revenue the BHP Group is forecast to receive from the additional coal extracted from ML1775. In addition, should the BHP Group be successful in its application for mining tenements over the areas of the former EPC545, MDLA364 and MDLA366, the BHP Group will incur savings conservatively estimated at $26,000,000;
5.As Cherwell Creek has suffered a compulsory acquisition of its tenements, there needs to be a strong justification for awarding costs against Cherwell Creek. Cherwell Creek has expressed a desire to limit the costs of the proceeding to the greatest extent possible by way of use of joint experts wherever possible and agreement of facts as between itself and the BHP Group;
6.Cherwell Creek had no option but to join the BHP Group in the proceedings by reason of s.722G of the MRA;
7.Cherwell Creek validly obtained the grant and renewal of EPC545 and, pursuant to the provisions of the MRA (save for the inclusion of Part 18A) Cherwell Creek would have obtained the grant of MDL364 and MDL366;
8.There are inconsistencies in the facts as set out in the explanatory memorandum to the MRA Amendment Act and former submissions made by the BHP Group;
9.The BHP Group instituted legal proceedings in the Supreme Court against the Minister for Mines regarding the decision to grant the original EPC545, but those proceedings have not been progressed expeditiously by the BHP Group and were, importantly, discontinued in recent times, only for the Notice of Discontinuance to be subsequently withdrawn;
10.The strong financial position of the BHP Group is a factor which should weigh against the exercise of any discretion to award security for costs; and
11.The estimate of costs by the BHP Group is manifestly excessive.
Analysis of the submissions
The submissions by each party have been set out above in a bare summary form only. So far as I consider it relevant, I will highlight certain aspects of the submissions more fully as I consider each of the elements which I am bound to take into account in considering the application for security for costs.
I have been provided with a number of useful authorities which detail the matters to be taken into account in determining an application for security for costs. In particular, I note the very useful summary provided by Deputy President Kingham of the Land and Resources Tribunal (as she then was) in the case of McDowell v Reynolds[2] which concerned an application for security for costs in proceedings under the MRA. In that case, Deputy President Kingham had this to say:[3]
[2] [2003] QLRT 90.
[3] [2003] QLRT 90 at paragraph [4].
“Rule 671(h) provides that the plaintiff may be ordered to give security for costs if the court is satisfied that the justice of the case requires the making of the order. In deciding whether the justice of the case so requires, I have considered factors relevant to exercising my discretion, including those set out in rule 672. Other relevant considerations are usefully discussed by his honour Justice Kirby in Merribee Pastoral v ANZ Banking Group (1998) 193 CLR 502 at pp513-5. In summary, Justice Kirby identified the following considerations as those that had been considered relevant by the High Court in exercising its discretion on such applications:
1. The governing consideration is what is required by the justice of the matter.
2. There is no absolute rule that the impecuniosity of a party will entitle its opponent to an order, although it may be a relevant consideration.
3. Whilst the strength of the case may be relevant, this consideration should be treated with caution because the real merits of a case may not emerge until the final hearing. Further, there are other remedies available if a case manifestly lacks legal merit.
4. Other considerations include:
°the timing of application relative to the timing for the hearing of the matter;
°Whether any party is legally aided;
°Whether the proceeding raises issues of general public importance;
°Whether the nature of the jurisdiction is such that a costs order may not be made or may be limited;
°The history of costs orders in the proceedings;
°The location of the plaintiff or its assets out of the jurisdiction;
°Whether an order would prevent the plaintiff from obtaining relief in circumstances where the litigation may help to cure the party’s impecunisoity.”
Jurisdiction of Land Court to make order for security for costs
It is common ground between the parties that the Land Court has jurisdiction to make an order for security for costs. Rule 4 of the Land Court Rules 2000 sets out that, in circumstances where the Land Court Rules do not expressly provide for a “matter in relation to a proceeding”, the Uniform Civil Procedure Rules 1999 (UCPR) apply with the necessary changes. As the Land Court Rules do not expressly provide for orders for the provision of security for costs, the provisions of the UCPR are applicable.
The relevant rules relating to security for costs are set out in chapter 17 of the UCPR at Rules 672-677. Rule 671 provides for a necessary pre-requisite before any order for security for costs can be made. Pre-condition (a) is that the plaintiff (applicant for the purposes of the Land Court proceedings) is a corporation and there is reason to believe that the corporation will not be able to pay the defendant’s (respondent’s in the case of the Land Court proceedings) costs if ordered to pay them. Further, pre-requisite (h) provides that orders for security for costs may be made in circumstances where the justice of the case requires the making of such an order. If the submissions of counsel representing the BHP Group are accepted, there is no doubt that the pre-conditions exist allowing an order for security for costs to be made.
Additionally, the UCPR by Rule 672 sets out discretionary factors to be taken into account when considering an application for security for costs. Rule 672 is in the following terms:
[r 672] Discretionary factors for security for costs
672 In deciding whether to make an order, the court may have regard to any of the following matters—
(a)the means of those standing behind the proceeding;
(b)the prospects of success or merits of the proceeding;
(c)the genuineness of the proceeding;
(d)for rule 671(a) — the impecuniosity of a corporation;
(e)whether the plaintiff’s impecuniosity is attributable to the defendant’s conduct;
(f)whether the plaintiff is effectively in the position of a defendant;
(g)whether an order for security for costs would be oppressive;
(h)whether an order for security for costs would stifle the proceeding;
(i)whether the proceeding involves a matter of public importance;
(j)whether there has been an admission or payment into court;
(k)whether delay by the plaintiff in starting the proceeding has prejudiced the defendant;
(l)whether an order for costs made against the plaintiff would be enforceable within the jurisdiction;
(m)the costs of the proceeding.
Having considered all of the evidence and all of the submissions in this matter, in my view the determination of the application for security for costs principally centres on a consideration of four key elements, being the financial means of Cherwell Creek and those who stand behind Cherwell Creek; the prospects of success of Cherwell Creek and the genuineness of its proceedings against the BHP Group; whether Cherwell Creek is effectively a defendant in the proceeding; and the likelihood of orders for costs being made at the end of the day in the proceedings.
Financial means of Cherwell Creek and those standing behind it
There can be little doubt that the capacity of a plaintiff/applicant to meet any costs orders made against it must be a significant factor to be taken into account in considering an application for security for costs. As Connolly J said in Harpur v. Ariadne Australia Limited:[4]
“For practical purposes, once the legislature has made it legitimate to regard the lack of means of the plaintiff and its likely inability to meet an order for costs, this must always be a consideration of great weight and it will frequently be the determining factor.”
[4] [1984] 2 Qd.R. 523 at 529.
Justice Connolly went on in Harpur to consider the circumstances where individuals conduct their business affairs behind the medium of a corporation without assets. Justice Connolly had this to say:[5]
“The mischief at which the provision is aimed is obvious. An individual who conducts his business affairs by medium of a corporation without assets would otherwise be in a position to expose his opponent to a massive bill of costs without hazarding his own assets. The purpose of an order for security is to require him, if not to come out from behind the skirts of the company, at least to bring his own assets into play.”
[5] At 532.
The case of Maggbury Pty Ltd v. Hafele Australia Pty Ltd[6] is also relevant. In that case, Justice White noted the decision in Harpur, observing that an order for security for costs will not generally be made when those standing behind a corporation bring their own assets into play. In Maggbury, Justice White considered a situation where directors of a corporation, which was a plaintiff in proceedings, had offered personal guarantees as to costs. However, both the corporation and those directors had limited resources. Another individual who stood behind the plaintiff was not prepared to offer any personal guarantee. In this regard, Justice White had this to say:[7]
“There is, however, someone standing behind the plaintiffs who stands to gain from the successful outcome of the litigation and who is funding it, either in whole or in part, and, unlike Mr and Mrs Allen, is not prepared to offer any security for the costs of the second defendant. It is to him that the plaintiffs can look, Drumdurno Pty Ltd v. Braham (1982) 42 A.L.R. 563; Impex Pty Ltd v. Crowner Products Ltd (1994) 13 A.C.S.R. 440; Dalrymple Park Pty Ltd v. Tabe & Lees (1996) 22 A.C.S.R. 71.”
Justice White went on to make an order for security for costs.
[6] [2001] 2 Qd.R 187.
[7] At 192.
Further, in Yandil Holdings Pty Ltd v. Insurance Co of North America & Ors,[8] Clarke J had said:[9]
“It must be observed however in this respect that the mere fact that the plaintiff is financially unable to provide security does lead inevitably to the conclusion that the making of an order will stultify the plaintiff’s claim. There is a line of authority, commencing with the unreported decision of Yeldham J. in Tullock v. Walker (8 December 1976), standing for the proposition that if the personnel behind the corporate plaintiff, or other parties who will benefit if the plaintiff succeeds, are financially able to provide adequate security then it is, generally speaking, inappropriate to refuse an order.”
[8] (1985) 3 ACLC 542.
[9] At 545.
In the circumstances of the case at hand, I am in little doubt that if the only considerations to take into account were the assets of the plaintiff/applicant and the ability of those standing behind the applicant to meet any order for security for costs and therefore not have a situation occur where an order for security for costs would frustrate the claims of the applicant, then the circumstances of this matter, given the considerable wealth of the primary person standing behind Cherwell Creek and the very limited assets of Cherwell Creek, coupled with the potentially high costs of litigation involved in this matter, would be such as to favour the exercise of my discretion in ordering that security for costs be made by Cherwell Creek. However, there are other important matters of discretion which I am required to take into account before determining this matter
Prospects of success/genuineness of proceedings
In the Merribee Pastoral case referred to earlier, Justice Kirby made important observations as to considerations of the relevant strength of a plaintiff’s case as a factor in considering an application for security for costs. Justice Kirby had this to say:[10]
“Another consideration that has sometimes been judged to be relevant is the strength of the case of the party resisting an order that it provide security for costs and an evaluation (necessarily tentative) of its prospects of success. Thus, the fact that a party has secured special leave to argue its case on appeal has been thought a relevant consideration in some circumstances. Similarly, if a proceeding appeared hopeless and such as was bound to fail, the lack of apparent merit in a party’s case might be a reason for ordering it to provide security for the costs to which, it appears, it is needlessly putting its opponent. Such a consideration would need to be exercised with care, given that the real merits of a case might not emerge until the final hearing or might not sufficiently emerge in the necessarily brief proceedings typically involved in an application for security for costs. Furthermore, if a party asserts that its opponent’s proceedings are manifestly lacking in legal merit, other remedies are available to it to protect it from needless vexation.”
[10] (1998) 193 CLR 502 at 513.
In my view, Justice Kirby’s reasoning in the Merribee Pastoral case in this regard is highly pertinent to the facts at hand. The case before me is clearly one where the real merits may not emerge until the final hearing of the matter. There are a myriad of issues where the views and submissions of the parties, together with the relevant facts, vary greatly. Further, if this is a matter that the BHP Group believes to be manifestly lacking in merit, then they can most certainly seek other remedies before the Court. In this regard, it is pertinent to note that the proceedings instituted by the BHP Group against the Minister relating to the grant and renewal of EPC545 have been ongoing for a period of five years and were actually discontinued by the BHP Group, only to have such discontinuance subsequently withdrawn. The proceedings in the Supreme Court relating to EPC545 are ongoing.
In my view, it is also relevant to note that, prima-facie, Cherwell Creek, in seeking compensation pursuant to s.722G of the MRA, is doing nothing more than taking advantage of a special legislative provision placed in the MRA for its sole benefit.
Given the significant areas of dispute between Cherwell Creek and the BHP Group, I do not consider it appropriate to make any determination at this point as to the merits of the proceedings brought by Cherwell Creek or of their likelihood of ultimate success or failure.
Whether Cherwell Creek is effectively a defendant in the proceedings
The principle that security for costs will not be ordered against a plaintiff who is in effect defending itself and its assets from attack originated in the case of Maatschappij Voor Fondsenbezit & Anor v. Shell Transport and Trading Co & Ors.[11] Although the facts of the case are rather complex, in substance the plaintiff sought an order for security for costs against one of the defendants on the basis that such defendant was in truth the aggressor in the proceedings. The Court declined to make an order for security for costs. Scrutton L.J. had this to say:[12]
“There are however a set of cases in which foreign claimants have to come to England to protect property attacked in English proceedings, but have not been ordered to give security, because they are only there in defence of property threatened by English proceedings.
…In these cases there is an invitation to come by advertisement, but the position, I think, extends to every case where the person against whom security is sought is really defending himself against attack, even if he be nominally a plaintiff, but really defending himself against defendants’ previous action against him.”[11] [1923] K.B. 166.
[12] At 177.
The principle from Maatschappij Voor Fondsenbezit was applied in Australia in Willey v Synan.[13] The plaintiff, Willey, was a sailor who found money on a ship while travelling from New Zealand to Australia. On arrival in Australia, Customs took possession of the money. After Willey made a claim for the money, Customs gave a notice to him requiring him to commence an action for the recovery of the money, and stating that in default of bringing such proceedings the money would be forfeited. Willey was not ordinarily resident in Australia. Willey commenced proceedings in Australia for recovery of the money from Customs, and Customs sought security for costs on the basis that Willey was not ordinarily resident in Australia. At first instance, Starke J ordered that unless Willey returned to Australia and brought the action to trial within four months, he should give security for costs. Willey appealed to the High Court, which upheld the appeal and found that, as Willey was in effect defending his position, it was not appropriate for security for costs to be ordered against him. In this regard, Chief Justice Latham had this to say:[14]
“In this case the Collector really initiated legal process by giving a notice under sec. 207 which would result in the exclusion of any right of the plaintiff unless the plaintiff himself took legal proceedings. If the Collector had not acted under sec. 207, it would not have been necessary for the plaintiff, in order to prevent the extinction of his right, to take any proceedings. If, no notice having been given, he took proceedings in conversion or detinue, he would be in the same position as any plaintiff who comes into the jurisdiction to complain of an act which he alleges to be wrongful. But, as the Collector has given him a notice under sec. 207, he is, in effect, forced into legal proceedings, not merely to enforce his claim but to prevent his claim from being extinguished. He is therefore really in the position of a defendant.”
[13] (1935) 54 C.L.R. 175.
[14] At 180.
The observations of Dixon J in Willey are also pertinent. Justice Dixon had this to say:[15]
“It appears to me that the collector is the actor. The notice is a step taken by him directed at obtaining a condemnation. It is a statutory substitute for judicial proceedings by the Crown against the goods. Its effect is to case the onus of taking proceedings upon the owner or supposed owner.
…
The provisions of the Customs Act, in effect, enable the officers of the Crown to take the preliminary steps by simple notices out of Court so that it is the claimant who must issue process. But when he does issue a writ he does so to protect his supposed ownership. In substance he is not the attacker, actor or person seeking redress.For these reasons I think he is not liable to give security for the costs of the action.”
[15] At 185-6.
The case of Re Travelodge Australia Ltd[16] is also relevant in considering whether or not Cherwell Creek should properly be characterised as a plaintiff or defendant for the purposes of the security for costs application. Newnes J of the Supreme Court of Western Australia recently considered the case of Re Travelodge Australia Ltd in Mabrouk Minerals Pty Ltd v Mabrouk Holdings Ltd.[17] Justice Newnes set out a very useful summary of Re Travelodge Australia Ltd which I respectfully adopt. Justice Newnes had this to say:[18]
“In Re Travelodge Australia Ltd, the applicant was a holder of stock in a company which had been the subject of a takeover offer. The applicant did not accept the offer and thus became a ‘dissenting offeree’ within the meaning of the Companies Ordinance 1962 (ACT). He was served with a notice under a provision of that statute, the effect of which would have been that, if nothing more occurred, the respondent would have been entitled and bound to acquire the applicant’s stock units. In an endeavour to prevent this happening, the applicant commenced proceedings seeking to obtain an order under the Ordinance that the relevant provision was inapplicable to the case. The respondent sought an order for security for costs. Blackburn CJ refused the application for security. After referring to Willey v Synan, his Honour said:
There is a clear resemblance to the facts of the case before me. The applicant is a person who invokes a special statutory procedure in order to preserve to himself a right which he considers a valuable one, which by the combined effect of a statute and the actions of the respondent may be taken away from him. The respondent asserts that the applicant is the owner of the stock units and relies on the statute to effect a transfer of those stock units to himself. The case clearly falls within the principle which was applied by the High Court, and illuminated by the judgment of Dixon J, in Willey v Synan … (19-20).”
[16] (1978) 21 ACTR 17.
[17] [2008] WASC 132.
[18] At [66].
Counsel for Cherwell Creek summed up their written submissions in this regard as follows:[19]
“… the effect of the amending Act was to strip Cherwell Creek of its proprietary rights in each of the tenements. It was compelled to bring the present application to preserve any right it had to compensation under the amending Act. It was compelled to enjoin CQCA in those proceedings. In that sense, although Cherwell Creek is nominally the ‘moving party’ in the application, it is in substance a defendant which is seeking to obtain just compensation from CQCA for the compulsory acquisition of its property. In principle espoused in Willey v Synan is equally applicable to this case and the Court ought to exercise its discretion to refuse the application on that basis.”
I am inclined to agree with the submissions of Counsel for Cherwell Creek in this regard.
[19] Written submissions, paragraph 48.
Likelihood of order for costs
Clearly, a relevant consideration in this matter is whether or not, at the end of the day, there is a likelihood that the Court will make an order for costs. Interestingly, in this regard, Counsel for both parties have referred, for different purposes, to one of the same authorities, that being a decision of myself in the case of Sykes v Minister for Mines and Energy & Anor.[20] Mr Doyle SC and Mr Sheehan in their written submissions rely upon s.34 of the Land Court Act 2000 and what I had to say in Sykes at paragraph [9] of my reasons in Sykes. Relevantly, as far as Counsel for the BHP Group are concerned, I had this to say in Sykes:[21]
[20] [2008] QLC 0116.
[21] At paragraphs [8] and [9].
“[8] The Land Court’s power to award costs is set out in s.34(1) and (2) of the LC Act as follows:
34Costs
(1) Subject to the provisions of this or another Act to the contrary, the Land Court may order costs for a proceeding in the court as it considers appropriate.
(2) If the court does not make an order under subsection (1), each party to the proceedings must bear the party’s own costs for the proceeding.
[9]Clearly, s. 34 of the LC Act provides the Land Court with a wide discretion to award costs in any matter, subject of course to other statutory considerations.”
Mr O’Donell QC and Ms Chapple of Counsel in their submissions rely upon what I had to say at the beginning of paragraph [12] of my reasons in Sykes as follows:[22]
“I am mindful of the fact that unless the Court makes an order for costs under s. 34(1) of the LC Act, pursuant to s. 34(2) of the LC Act each party must bear their own costs for a proceeding. I am also cognizant of the fact that the Land Court regularly makes no awards for costs in proceedings, or orders that each party must bear their own costs.”
[22] [2008] QLC 0116 at [12].
In many respects, my decision on costs in Sykes supports the contentions of both of the parties in the matter currently before me. As I went on to indicate in Sykes, there were special circumstances evident in that case which, in my view, warranted the payment of part of the respondent’s costs in each action by Mr Sykes. In that case, I had this to say:[23]
“I agree with the submissions made by Counsel for QGC that, given the circumstances of this matter, it is appropriate that an order be made that Mr Sykes pay at least part of QGC’s costs. Counsel for QGC have gone to some length in their submissions to detail aspects of Mr Sykes’ conduct of the proceeding which were unreasonable and caused greater costs to be incurred by QGC than should be anticipated for a matter such as this which was determined by a preliminary question. I also note the contents of the affidavit of Michael John Kimmins, solicitor for QGC sworn 9 May 2008. In that affidavit, Mr Kimmins estimates that in excess of 50% of QGC’s costs have arisen due to Mr Sykes’ unreasonable conduct of the proceedings. I agree with the submissions by Counsel for QGC and Mr Kimmins. In my view, it is appropriate to award costs to QGC assessed at one-half of QGC’s costs of proceeding PGC00114/2007 on the standard basis.”
[23] At [12].
Given my current understanding of the proceedings at hand, there is nothing before me to suggest that Cherwell Creek will conduct the proceedings in the unsatisfactory manner in which Mr Sykes did, which led to considerably greater costs being incurred by the respondents than would ordinarily be expected. On the contrary, I have every confidence that the expert legal skills of Counsel engaged by each of the parties in the present proceedings will ensure, as much as it is possible, that the proceedings proceed as efficiently and cost effectively as possible. Accordingly, applying the reasoning that I set out in Sykes, at this stage I am unable to say with any certainty at all that, at the end of the day, if Cherwell Creek fails in its application for compensation, that it would necessarily follow that an award for costs would be made in favour of the BHP Group. Of course, in exercising my discretion, an award for costs may be made in those circumstances, but the issue is far from certain.
Conclusion
In considering the application for security for costs in the Merribee Pastoral case, Justice Kirby regarded the case “as finely balanced”.[24] Likewise, I view the application for security for costs in the case at hand as finely balanced. In exercising my discretion, I have ultimately decided that security for costs should not be ordered. My reason for so ordering is primarily based on my conclusion that, at this stage of the proceedings, and in light of the provisions of s.34 of the Land Court Act, it is far from certain that, even if Cherwell Creek ultimately fails to establish that the BHP Group is liable to pay it any compensation pursuant to s.722G of the MRA, it would necessarily follow that an award for costs in favour of the BHP Group would be made. Additionally, it is my view that, in light of the provisions of the MRA as contained within Part 18A, although Cherwell Creek is by name the applicant in the proceedings, it has commenced its proceedings as the only recourse left available to it in order to recover what is sees as proper compensation for the loss of the opportunity to extract coal from mining tenements that it held or had an expectation that it would be granted, and therefore its actions can be viewed as responsive to the circumstances thrust upon it by Part 18A.
[24] 155 ALR 1 at 13.
I will hear from the parties with respect to the costs of the application.
Orders
1.The application for security for costs is refused.
2.I will hear from the parties with respect to the costs of the applications.
PA SMITH
MEMBER OF THE LAND COURT
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