NSW Coal Compensation Board v Nardell Colliery P/L - [2004] NSWCA 35

NEW SOUTH WALES COURT OF APPEAL

CITATION: NSW Coal Compensation Board v Nardell Colliery P/L [2004] NSWCA 35

FILE NUMBER(S):
40518/03

HEARING DATE(S): 02/12/03
03/12/03

JUDGMENT DATE: 02/03/2004

PARTIES:
NSW Coal Compensation Board
v
The Nardell Colliery Pty Ltd & NSW Coal Compensation Review Tribunal

JUDGMENT OF: Meagher JA Sheller JA Hodgson JA

LOWER COURT JURISDICTION: Supreme Court - Common Law Division

LOWER COURT FILE NUMBER(S): 1999/11

LOWER COURT JUDICIAL OFFICER: Sperling J

COUNSEL:
A: Mr N Perram
R: Mr S D Robb QC & N Kidd

SOLICITORS:
A: Michael Burke, NSW Coal Compensation Board
1R: Allen Arthur Robinson
2R: I V Knight - Crown Solicitor

CATCHWORDS:
APPEAL - COMPENSATION - LEASE - DAMAGES ASSESSMENT - LEGISLATIVE AMENDMENTS - COSTS - Compensation determination made pursuant to loss of entitlements arising under variations to a lease - effects to a lease flowing from legislative amendments - appeal concerning: 1(a) the tribunal's choice of methodology regarding the assessment of damages; 1(b) quantum assessments made thereunder; and 2 the tribunal being bound to make a 'just and equitable' finding for compensation for the loss of particular entitlements under a lease - Held: Appeal allowed in part - lower tribunal's damages assessment methodology in part quashed - parties to agree to quantification assessment of factors "r" and "e" as set out in judgment, or submit supported written alternatives to the Court within 14 days - appeal otherwise dismissed - first respondent to pay the appellant's costs of instituting the appeal proceedings and preparing the appeal books, otherwise each party to bear its own costs.

LEGISLATION CITED:
Coal Mining Act 1973
Coal Acquisition Act 1981
Mining Act 1992
Coal Ownership (Restitution) Act 1990
Coal Acquisition (Amendment) Act 1997

DECISION:
1. Appeal allowed, in part, quashing the part of the NSW Coal Compensation Review Tribunal's decision which determined the quantification of factors referred to as "r" and "e"; 2. The parties to submit to the Court, within fourteen (14) days, either: (i) agreed orders; or, alternately, (ii) alternative versions with supporting written submissions, to give quantitative effect to the "r" and "e" factors in accordance with the findings of this judgment; 3. Appeal dismissed otherwise; 4. First respondent to pay the appellant's costs of instituting the appeal and preparing the appeal books, and further each party to pay its own costs apart from this aspect of the appellant's preparations.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40518 of 2003
MEAGHER JA
SHELLER JA
HODGSON JA
Tuesday, 2 March 2004

NEW SOUTH WALES COAL COMPENSATION BOARD v THE NARDELL COLLIERY PTY LIMITED & NSW COAL COMPENSATION REVIEW TRIBUNAL

FACTS
The facts considered in this appeal are set out in the first thirteen (13) paragraphs of Hodgson JA’s judgment.
DECISION

Appeal allowed, in part, quashing the part of the NSW Coal Compensation Review Tribunal’s decision which determined the quantification of factors referred to as “r” and “e”;
The parties to submit to the Court, within fourteen (14) days,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2004] NSWCA 35
Decision Date: 2 March 2004

CaseChat Overview and Summary

The NSW Coal Compensation Board appealed a decision of the NSW Coal Compensation Review Tribunal concerning the assessment of compensation payable to Nardell Colliery Pty Ltd. The dispute arose from legislative amendments that affected Nardell's entitlements under a lease, leading to a claim for compensation for the loss of those entitlements. The appeal raised questions regarding the methodology used by the Tribunal to assess damages, the quantum of those assessments, and whether the Tribunal was bound to make a "just and equitable" finding for the loss of specific entitlements.

The Court was required to determine the appropriate methodology for assessing compensation for the loss of coal entitlements, specifically considering whether a "but for" causation test was sufficient and how to approach the assessment of "just and equitable" compensation. The Court also had to consider the application of the principles established in *Malec v. J.C. Hutton Pty. Limited* to the assessment of compensation in this context, particularly in light of the specific provisions within the relevant compensation arrangements.

The Court reasoned that compensation should be approached on the basis of Nardell being compensated for the loss of its coal on 1 January 1982, rather than for the refusal of an application for restoration. It clarified that while the *Malec* approach, which considers degrees of probability, is generally applicable, the return to an entity that exploits the lost asset can be a reliable guide. However, the Court found that the compensation arrangements, particularly concerning the calculation of "t", did not require a *Malec* approach, instead relying on actual tonnage won and best estimates for future extraction. The Court also noted that the 1997 Arrangements allowed for a "just and equitable" determination of factor "r", moving beyond a fixed amount.

The appeal was allowed in part, with the Tribunal's determination of the quantification of factors "r" and "e" being quashed. The parties were directed to agree on the quantification of these factors or submit alternative written proposals to the Court within 14 days. The appeal was otherwise dismissed, and the first respondent was ordered to pay the appellant's costs for instituting the appeal and preparing the appeal books, with each party bearing its own costs for other aspects of the appeal.

Orders

Orders of the court

1. Appeal allowed, in part, quashing the part of the NSW Coal Compensation Review Tribunal's decision which determined the quantification of factors referred to as "r" and "e"; 2. The parties to submit to the Court, within fourteen (14) days, either: (i) agreed orders; or, alternately, (ii) alternative versions with supporting written submissions, to give quantitative effect to the "r" and "e" factors in accordance with the findings of this judgment; 3. Appeal dismissed otherwise; 4. First respondent to pay the appellant's costs of instituting the appeal and preparing the appeal books, and further each party to pay its own costs apart from this aspect of the appellant's preparations.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

As regards any argument based on NSW Coal Compensation Board v. NSW Coal Compensation Tribunal NSWCA 26/7/97 (Gilder’s case), to the effect the 1992 Act was consequential on the 1991 CAA, Mr. Perram submitted that “but for” causation was not sufficient. The Court should not speculate as to the reasons for legislation eleven years later, and it could not be said that, as a matter of common sense, the 1992 MA was consequential on the 1981 CAA. Decision In my opinion, it is clear that the questions concerning super-royalty and up-front payment should be approached on the basis that Nardell is being compensated for the loss of its coal on 1 January 1982, not for the refusal of its application for restoration of the coal. This is made clear by the word “re-determined” in s.6(7) of the CAA as amended in 1997, by the specification in cl.10 of the 1997 Arrangements that what is being re-determined in the original compensation claim, and by the identification in Schedule 1 of the 1997 Arrangements of the base date as being 1 January 1982. However, in determining what is “just and equitable” it may be relevant that the re-determination is pursuant to arrangements that are “in relation to” the fact of refusal. The calculation of compensation of a person for an event usually requires comparison of what actually happened to the person as a result of the event with what would have happened if the event had not occurred. In this case, what actually happened to Nardell was that (apart from compensation) it got no benefit from its coal. What would have happened if the event had not occurred would normally be determined on an approach in accordance with the decision in Malec v. J.C. Hutton Pty. Limited (1990) 169 CLR 638: that is, not by considering what would have happened on the balance of probabilities, but by assessing the degrees of probabilities of various possible outcomes. However, where what is being compensated is the loss of an asset to another person or entity that exploits the asset, the return to that other person or entity will often be a very reliable guide to the return which would have been achieved by the person to be compensated. Even on a Malec approach, the chances of doing better or doing worse would often cancel out. On the other hand, if the return to the party who acquires the asset can be seen as having been caused by some wholly unexpected event (such as for example the opening up of a new port which makes a coal deposit profitable to work), a Malec approach would presumably require a discount to be applied to the actual return. The Arrangements (both 1985 and 1997) make it clear that, at least in relation to the calculation of t, a Malec approach is not to be applied. It is the actual tonnage won that determines this element of compensation for the period up to the decision, and the best estimate at the time of the decision of what will be won in the future that determines this element of compensation for the future. The 1985 Arrangements also make it clear that r is not determined on a Malec approach, because it is specified at ninety cents. However, the 1997 Arrangements specified that r should be ninety cents or such other amount as the Board considers just and equitable; and these Arrangements are subject to a statutory requirement in s.6(7) of the CAA as amended in 1997 that the compensation must be just and equitable. So the question is, how should the determination of r be approached, under the 1997 Arrangements?

Ratio Decidendi

Legal Principle Established

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