Queensland Industrial Minerals Pty Ltd v Younger; Queensland Industrial Minerals Pty Ltd v Ryan (No. 2)

[2017] QLC 54

LAND COURT OF QUEENSLAND

CITATION:

Queensland Industrial Minerals Pty Ltd v Younger & Ors; Queensland Industrial Minerals Pty Ltd v Ryan (No. 2) [2017] QLC 54

PARTIES:

In application No. MRA432-15:

Queensland Industrial Minerals Pty Ltd
(applicant)

v

James Younger
Fay Dorelle Younger
Christopher Younger

(respondents)

In application No. MRA434-15:

Queensland Industrial Minerals Pty Ltd
(applicant)

v

Edith Elizabeth Ryan

(respondent)

FILE NOs:

MRA432-15
MRA434-15

DIVISION:

General division

PROCEEDING:

Application for costs

DELIVERED ON:

7 November 2017

DELIVERED AT:

Brisbane

HEARD ON:

Submissions closed 19 September 2017

HEARD AT:

Heard on the papers

PRESIDENT:

FY Kingham

ORDERS:

1.   Queensland Industrial Minerals Pty Ltd must pay James Younger, Fay Dorelle Younger and Christopher Younger’s costs assessed on the standard basis until 11 November 2016 and then on an indemnity basis; and

2.   Queensland Industrial Minerals Pty Ltd must pay Edith Elizabeth Ryan’s costs assessed on the standard basis until 22 November 2016 and then on an indemnity basis.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – where the Court determined compensation payable for the grant of a mining lease – where both parties applied for costs on a standard and indemnity basis – where both parties submitted their offers were Calderbank offers – whether the offers were genuine – where the applicant’s rejection of the respondents’ offers was unreasonable – where costs were awarded to the respondents on a standard and indemnity basis.

Land Court Act 2000, s 34, s 34(1)
Mineral Resources Act 1989, s 279(5), s 281(7)

Alborn & Ors v Stephens & Ors [2010] QCA 58, applied

Anson Holdings Pty Ltd v Wallace & Anor (No. 2) (2010) QLCR 130, applied
BHP Queensland Coal Investments Pty Ltd & Ors v Cherwell Creek Coal Pty Ltd (2009) 30 QLCR 140, applied
Bottoms v Reser & Morrissey [2000] QSC 413, applied

Castro v Hillery (2003) 1 Qd R 651, applied

Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322, applied
Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373, applied
ERO Georgetown Gold Operations Pty Ltd v Henry (No 2) [2016] QLAC 3, applied
Henry v ERO Georgetown Gold Operations Pty Ltd [2016] QLC 17, applied
Ibbs v Woodrow & Anor [2002] QCA 298, applied

Interchase Corporation Ltd (in liq) v Grosvenor Hill (Qld) Pty Ltd (No 3) [2003] 1 Qd R 26, applied
Leichardt Municipal Council v Green [2004] NSWCA 341, applied

Mentech Resources Pty Ltd v MCG Resources Pty Ltd (in liq) (No 2) (2012) 33 QLCR 43, applied

Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344, applied

Moreton Bay Regional Council v Mekpine Pty Ltd & Anor (2014) 35 QLCR 273, applied
Oshlack v Richmond River Council (1998) 193 CLR 72, applied
PT Limited and Westfield Management Limited v Department of Natural Resources and Mines (2007) 28 QLCR 295, applied

Sabah Yazgi v Permanent Cusdodians Limited (No 2) [2007] NSWCA 306, applied
Velvet Glove Holdings Pty Ltd v Mount Isa Mines Ltd (No 2) [2011] QSC 156, applied

APPEARANCES:

RE Laidely of Counsel, instructed by Websters Solicitors, for the applicant in both matters

E Morzone of Counsel, instructed by Hede Byrne Hall, for the respondent in both matters

Background

1. On 4 August 2017, I determined the amount of compensation payable by Queensland Industrial Minerals Pty Ltd in relation to a mining lease which will affect two rural properties. The Court has since received competing applications for costs orders, with both the landowners and QIM asserting they are the successful party in these proceedings. This unusual circumstance arises from arguments about the effect of offers to settle the proceedings made prior to the hearing, and whether the respective offers are more or less favourable to each landowner than the amount determined by the Court.

1. Before turning to those arguments, it is appropriate to identify the legal principles which apply to determining costs generally and where offers to settle have been made and rejected.

Costs generally

1. The Court has a general power under s 34 of the Land Court Act 2000 (LCA) to orders costs of a proceeding as it considers appropriate.[1] Section 34 is subject to any provision to the contrary in the LCA or any other Act. The Mineral Resources Act 1989 (MRA) provides the Court may order costs as it thinks fit for proceedings such as these.[2]

   [1]Land Court Act 2000 s 34(1).

   [2]Mineral Resources Act 1989 s 281(7).

1. Whether the Court is exercising the LCA power or, as in this case, the power conferred by the MRA, its discretion to award costs is unfettered. The Court must judge each case on its own facts and circumstances. It must exercise its discretion without caprice, having regard to relevant considerations and established principles.[3]

   [3]Oshlack v Richmond River Council (1998) 193 CLR 72 at 96; ERO Georgetown Gold Operations Pty Ltd v Henry (No. 2) [2016] QLAC 3 at [24].

1. Costs are not awarded to punish the unsuccessful party, but are intended to be compensatory. They indemnify the successful party against the expense to which they have been put in the litigation.[4]

   [4]PT Limited and Westfield Management Limited v Department of Natural Resources and Mines (2007) 28 QLCR at [25].

1. Although the power to award costs is expressed in similar terms, there is a distinction between the LCA and MRA provisions in one respect. Section 34(2) of the LCA provides that if the Court does not make an order for costs, each party must bear their own. It is sometimes argued this creates a general rule that each party bears their own costs unless the circumstances justify a departure from that position. That argument has been rejected by the Land Appeal Court.[5] The MRA does not contain an equivalent provision to s 34(2); and there seems little basis for pressing an argument of that kind in relation to compensation proceedings under that Act.

   [5]ERO Georgetown Gold Operations Pty Ltd v Henry (No 2) [2016] QLAC 3 at [24].

1. The rule that costs follow the event is deeply embedded in the law and that is a factor to be considered when exercising the Court’s discretion.[6] There is justice in this approach as it “protects those put to unnecessary and substantial expense at the behest of others”.[7]

   [6]Anson Holdings Pty Ltd v Wallace & Anor [2010] QLAC 4 at [10].

   [7]Mentech Resources Pty Ltd v MCG Resources Pty Ltd (in liq) (No 2) (2012) 33 QLCR 43 at [4]; Moreton Bay Regional Council v Mekpine (2014) 35 QLCR 273 at [12].

1. The Court should have regard not only to the orders made, but to the range of issues ventilated in the proceedings and the parties’ success in respect of those issues.[8] However, the Court should be cautious about undertaking an issue by issue analysis unless there is a particular issue or group of issues that is clearly dominant or separable from the others.[9]

   [8]Alborn & Ors v Stephens & Ors [2010] QCA 58 at [8]; Interchase Corporation Ltd (in liq) v Grosvenor Hill (Qld) Pty Ltd (No 3) [2003] 1 Qd R 26 at [60]-[61].

   [9]Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [6]-[7].

Costs where offers to settle have been made and rejected

1. Both the landowners and QIM have applied for orders that the other pay their costs; on a standard basis until the expiry of their offer to settle the proceedings, and on an indemnity basis from that date.[10]

   [10]In the case of the Youngers’ proceedings, on a standard basis up to 1 June 2016 and thereafter on an indemnity basis; and in the case of the Ryan’s proceedings, on a standard basis up to 22 November 2016 and thereafter on an indemnity basis.

1. Indemnity costs are all costs incurred by a party to litigation in undertaking proceedings, provided they have not been unreasonably incurred or are not of an unreasonable amount.[11]

   [11]Bottoms v Reser & Morrissey [2000] QSC 413 at 3 relying on EMI Records v E M Wallace Ltd [1983] 1 Chancery 59 at 74.

1. Each of the offers made by the landowners were marked “without prejudice save as to costs”. That is sufficient to put QIM, which was legally represented, on notice that the principles relating to a Calderbank offer would be invoked if the offers were rejected. A Calderbank offer is a without prejudice offer in which the offeror reserves the right to waive the confidential nature of the offer to rely on it for the purposes of making an application for indemnity costs.[12] Those principles should be applied in determining the costs orders in these proceedings.[13]

   [12]Velvet Glove Holdings Pty Ltd v Mount Isa Mines Ltd (No 2) [2011] QSC 156 at [7].

   [13]Henry v ERO Georgetown Gold Operations Pty Ltd [2016] QLC 17 at [67] relying on the Court of Appeal in J & D Rigging Pty Ltd v Agripower Australia Limited & Ors [2014] QCA 23 at [5]-[6].

1. Whether costs are ordered on an indemnity basis is a matter of discretion.[14] Generally two questions are posed. Was the offer a genuine attempt to compromise the proceedings? Was it unreasonable for the offeree to reject it?[15] Those questions will be addressed by reference to the offers made by all parties.

   [14]ERO Georgetown Gold Operations Pty Ltd v Henry (No 2) [2016] QLAC 3 at [36].

   [15]Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [7].

The offers by the landowners

1. The Court determined QIM must pay compensation to the landowners prior to undertaking any activities authorised by ML80116. In the case of the Youngers, the amount determined was $2,008,700. In the case of Mrs Ryan, the amount determined was $224,780.[16]

   [16]Queensland Industrial Minerals Pty Ltd v Younger & Ors; Queensland Industrial Minerals Pty Ltd v Ryan [2017] QLC 39 at [214].

1. The Youngers made 2 offers to settle. On 17 May 2016, they offered to settle for $1,700,000. On 28 October 2017, they offered to settle for $1,500,000. Mrs Ryan made one offer to settle, on 31 October 2016, for $200,000.

1. Each of the landholders’ offers sought costs as agreed or assessed on the standard basis and interest at the Land Court rate from the date of the order until payment of compensation and costs. QIM did not accept any of those offers.

1. The Youngers seek an order for costs on the standard basis to 1 June 2016 (the date the first offer expired) and then on an indemnity basis. Mrs Ryan seeks an order for costs on the standard basis to 22 November 2016 (when her offer expired) and then on an indemnity basis.

1. The Court must consider whether a particular offer was a genuine attempt to reach a negotiated settlement and not just a means of triggering a costs sanction.[17] I am satisfied each of the landowner’s offers were genuine attempts to compromise the proceedings.

   [17]Leichardt Municipal Council v Green [2004] NSWCA 341 at [39].

1. In each case, the offers were more favourable than the determination of compensation, an indication that they were real, not trivial or contemptuous.[18] In their second offer, the Youngers reduced the amount they were prepared to settle for, another indication of their desire to settle the proceedings.

   [18]Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [14]-[15].

1. Where the outcome is more favourable to the offeror than their offer was, it is generally accepted that a persuasive burden rests on the offeree to demonstrate its failure to accept the offer was “objectively reasonable”.[19]

   [19]G.E. Dal Pont, Law of Costs (3^rd ed, 2013, LexisNexis Butterworths: Australia) para 13.73.

1. The key question is whether “the rejection of the offer was unreasonable in the circumstances”.[20] Relevant factors include:

   [20]Henry v ERO Georgetown Gold Operations Pty Ltd [2016] QLC 17 at [67] relying on the Court of Appeal in J & D Rigging Pty Ltd v Agripower Australia Limited & Ors [2014] QCA 23 at [5]-[6].

(a)        Whether there was sufficient time to consider the offer;

(b)        Whether the offeree had adequate information to enable it to consider the offer; and

(c)        Whether any conditions are attached and if so, whether those conditions are reasonable.[21]

[21]ERO Georgetown Gold Operations Pty Ltd v Henry (No 2) [2016] QLAC 3 at [36].

1. Taking those factors into account, it was unreasonable for QIM to reject the offers. All the landowners’ offers were made well in advance of the hearing. The first offer by the Youngers was made more than six months before the hearing. The second offer by the Youngers and Mrs Ryan’s offer were both made more than a month before the hearing commenced. For all offers, QIM was given adequate time to consider them.[22]

   [22]Elite Protective Personnel v Salmon [2007] NSWCA 322 at [99].

1. QIM was also in a position to properly consider the offers. They were made when most of the expert evidence, compensation and hearing statements had been filed. The evidence filed subsequently did not materially alter the substance of the Youngers’ claim.[23] There were a number of live issues between experts at that stage, however QIM was in a position to consider the relative strengths of its case and of the landowners’. Further, although QIM had some success on a number of those issues, the amounts proposed by the Youngers was significantly less than the amount ultimately awarded.

   [23]Ibbs v Woodrow & Anor [2002] QCA 298 at [9].

1. The conditions attached to the landowners’ offers are frequently encountered in settlement offers and related to costs and interest. They were not unusual or excessive and gave certainty about the amount sought by way of compensation.

QIM’s offer

1. Shortly before the hearing, which commenced on 12 December 2016, QIM made offers to settle to both the Youngers and Mrs Ryan. The offers were emailed to counsel for the landowners on 9 December; the Friday before the hearing. It was formally made to their solicitor on the morning of Monday 12 December; the first day of the hearing. The landholders did not accept the offers.

1. There is a dispute about how QIM’s offers should be quantified. The offers provided for monetary compensation: to the Youngers, the sum of $1,500,000; and to Mrs Ryan, the sum of $200,000. That compensation was payable by instalments over five years with interest to accrue from the date of grant of the mining lease. QIM also offered to pay costs as agreed or assessed, although the costs were not subject to interest.

1. The offers included proposed terms and conditions in the nature of undertakings by QIM about how, when, and where mining would occur and what arrangements would be put in place to allow the landowners to access and use parts of their property not being actively mined.

1. An offer to compromise may include terms other than the payment of money. When this occurs there may be uncertainty about whether the offer is more or less favourable than the judgment or, in this case, determination of compensation made by the Court.[24]

   [24]Sabah Yazgi v Permanent Cusdodians Limited (No 2) [2007] NSWCA 306 at [10].

1. QIM argued a monetary value can be attributed to the undertakings it offered. It quantified conditions such as exclusion zones; access to homestead; access to equivalent water supplies; and access to cattle yards by references to my findings as to the value of certain property and infrastructure on which I determined compensation.[25]

   [25]Applicant’s submissions on costs filed 18 August 2017, paras 32 to 50.

1. On that basis, QIM argued their offers were more generous to the landowners than either the landowners’ own offers or the determination by the Court: $2,401,803 for the Youngers and $357,500 for Mrs Ryan.

1. The obvious difficulty with QIM’s submission is that the time for the offeree to evaluate an offer is when it is made.[26] The findings on which QIM quantifies its offers were not known to the landowners, or indeed to QIM, when the offers were made. QIM did not attempt to calculate their value at the time.

   [26]Castro v Hillery (2003) 1 Qd R 651 at [75].

1. The conceptual difference of the offer also needs to be analysed.[27] The offers involved payments by instalments over a five year period. That was less favourable to the landowners than the determination of a single payment prior to mining commencing.

   [27]Sabah Yazgi v Permanent Cusdodians Limited (No 2) [2007] NSWCA 306 at [11].

1. Even if it was accepted that the offers qualified as a genuine attempt to compromise the proceedings, it was reasonable for the landowners to reject it for a number of reasons.

1. Firstly, the offers were made the Friday before the hearing and only formally put to the landowners on the morning it was due to commence. By that time the landowners had already completed all their preparation for the hearing, which was about to commence. The landowners were not given adequate time to consider the offers.

1. Secondly, given the structure of the offers, the landowners had a reasonable basis for considering they would secure a more favourable outcome from the Court.[28] The offers volunteered conditions in conflict with the terms of QIM’s environmental authority, in the face of evidence which created significant uncertainty about QIM’s intentions for the mine.[29] Further, the landowners were entitled to take into account the difficulty in enforcing such conditions and the delay and expense involved in doing so.[30] Finally they conflicted with the assumption that QIM’s valuer accepted the Court should make in determining compensation; that the landowners would be excluded from their properties for the term of the lease.[31]

   [28]ERO Georgetown Gold Operations Pty Ltd v Henry (No 2) [2016] QLAC 3 at [38].

   [29]Queensland Industrial Minerals Pty Ltd v Younger & Ors; Queensland Industrial Minerals Pty Ltd v Ryan [2017] QLC 39 at [23]-[25].

   [30]Queensland Industrial Minerals Pty Ltd v Younger & Ors; Queensland Industrial Minerals Pty Ltd v Ryan [2017] QLC 39 at [25].

   [31]Queensland Industrial Minerals Pty Ltd v Younger & Ors; Queensland Industrial Minerals Pty Ltd v Ryan [2017] QLC 39 at [21]-[39].

1. In those circumstances, the landowners’ rejection of the offers to settle were not unreasonable.

Conclusion

1. My finding that QIM was unreasonable in rejecting the landowners’ offers favours the costs orders sought by the landowners. All offers were less favourable to the landowners than the ultimate determinations for each of them. In the Youngers’ case, I award costs on the standard basis until their second offer expired[32] and then on an indemnity basis. I have chosen the date the second offer expired, rather than the first, as the date indemnity costs commence because the Youngers filed a significant amount of evidence after the first offer. Although that did not change the nature of the claim it added to the information QIM could consider in assessing the offer. In Mrs Ryan’s case, I consider it appropriate to award costs on the standard basis until her offer expired and then on an indemnity basis.

   [32]11 November 2016.

Orders

1. I make the following orders:

1.          Queensland Industrial Minerals Pty Ltd must pay James Younger, Fay Dorelle Younger and Christopher Younger’s costs assessed on the standard basis until 11 November 2016 and then on an indemnity basis; and

2.          Queensland Industrial Minerals Pty Ltd must pay Edith Elizabeth Ryan’s costs assessed on the standard basis until 22 November 2016 and then on an indemnity basis.

FY KINGHAM
PRESIDENT OF THE LAND COURT