Slater v Appleton
[2011] QLC 31
•4 May 2011 (ex tempore)
LAND COURT OF QUEENSLAND
CITATION: Slater & Ors v Appleton & Anor [2011] QLC 0031 PARTIES: Sharyn, Ernest and Christopher Slater,
Jovan Krco, and
Phillip G, Geoffrey D & Regina Starr
(applicants)v. Victor John Edward & Janet Anne Appleton
(respondents)
FILES NO: MRA164-09, MRA520-09, MRA521-09, MRA018-10,
MRA019-10, MRA020-10 and MRA022-10DIVISION: Land Court of Queensland PROCEEDING: Application for disclosure DELIVERED ON: 4 May 2011 (ex tempore) DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: His Honour: PA Smith ORDER: (1) Each of the applications for disclosure of the put and call deed be dismissed.
(2) There be no order as to costs.
CATCHWORDS: Practice and Procedure - Disclosure of documents – put and call deed – relevance to mining lease compensation – "directly relevant" test.
Valuation evidence – options not determination of value.
APPEARANCES: Sharyn, Ernest and Christopher Slater, (self represented)
Denise Krco for Jovan Krco,
Phillip G, Geoffrey D and Regina Starr, (self represented)
Mr G Houen, agent for Mr and Mrs Appleton
HIS HONOUR: The Court has before it a number of mining lease applications which all have, as a unifying feature, the fact that they are what could be referred to as relatively small mining operations on land held by Mr and Mrs Appleton, the landowners. Each of the mining lease applications are set out in the heading of this decision and I will collectively refer to the miners with respect to each application for the purposes of this decision as 'the miners'. This is because each of the miners has brought a general application to the Court seeking essentially identical court orders. The general applications were filed on or about the 24 March 2011 and seek the production by the landholders of what is referred to as a deed put and call option to the Court. They also seek that the Appleton deed put and call option in its entirety be made available to the applicants. This application has been strongly resisted by Mr Houen, on behalf of the landholders.
All parties have provided affidavit evidence to the Court, on the miners' part in support of the application and providing reasons why they believe the document to be relevant; from Mr Houen's perspective, the argument has been put that this document is in no way relevant to a determination of compensation in any of the matters.
I should further add that Mr Houen has expressed some concerns that the contents of the deed may become public knowledge, if placed on the Court file or otherwise becomes part of the proceedings and that this would be against the interests of his clients. He has not, though, directly made out a claim for privilege as the authorities dictate in this regard, but I have taken account of his submissions regarding the desire of the landholders to keep the contents of the put and call deed confidential.
The question as to whether or not I should order disclosure of the put and call deed has been finely balanced. In the circumstances, I called for the production of the deed in question to the Court. That was subsequently done by Mr Houen on 29 April 2011 in chambers. As I stressed at the hearing of the applications, the production of the deed was for my purposes only, as a member of the Queensland judiciary, to assist in the determination of the applications, and the deed would not be filed on the Court file or shown to any person apart from myself. It was kept in my chambers, which were locked at all times when I was not present in the Court precinct, so its security was ensured. The document has been kept in my chambers until this afternoon when I have brought it into Court with me. I should also add that it has been of significant assistance to the Court to have had the opportunity to read the put and call deed.
If I can summarise the claim by the miners this way. They have not seen the put and call deed. All that they have seen has been part of a page extract which is from a corporate prospectus, which sets out a summary of a deed entered into by Sedimentary on 30 August 1996 with the landholders. That summary has been provided by Mr Houen to the parties and to the Court and it provides as follows[1]:
“10.6 Appleton deed
On 30 August 1996, Sedimentary entered into a deed with Victor and Janet Appleton in relation to put and call options over Grazing Homestead Perpetual Lease no 12/2560 and Occupation License 12/681. The Appleton deed has a term of 50 years from 30 August 1996. Tasman Goldfields Miclere is currently in the final stages of negotiating a deed of assignment and assumption in relation to the Appleton deed whereby it will replace Sedimentary as a party to the Appleton deed.
If the deed of assignment and assumption in relation to the Appleton deed is executed, Tasman will have a call option and Appleton will have a put option over the relevant lease and licence. Those options will be triggered where Tasman Goldfields Miclere decides to mine on the lease or licence area by way of an open pit operation, a large underground operation which requires substantial surface working areas or an underground mining operation which would result in subsidence to substantial surface areas.
On exercise of the option, Tasman Goldfields Miclere will be required to pay the original purchase price (including stamp duty and associated costs) that was paid by the Appletons for the relevant lease and licence, and must pay for the cost of improvements to the land by the Appeltons since the acquisition date. Where Tasman acquires the relevant lease or licence under the put and call option, the Appletons have ongoing rights in relation to grazing and water offtake and have an option to require the relevant lease or licence if Tasman Goldfields Miclere decides to permanently abandon all mining and exploration on the relevant land.
If the deed of assignment and assumption is executed, the Appleton deed will also provide for access rights for Tasman Goldfields Miclere to access the relevant land and govern the ongoing arrangements between Tasman Goldfields Miclere and the Appletons in relation to any impact caused by Tasman Goldfields Miclere’s activities on the relevant lease and licence."
[1]See attachment to letter, Landholder Services Pty Ltd to Land Court, 7 March 2011.
The miners contend that the summary of the deed raises more questions than answers and they are particularly concerned that the deed may, by its terms, have a significant impact on the compensation that they should properly pay with respect to mining operations they propose on the landholders' land. They are somewhat disadvantaged in that they do not have formal legal training or representation but, nevertheless, I am satisfied that they have done a good job in putting their views as to the relevance of the deed squarely before the Court and, as I have mentioned, they have confirmed their views by sworn affidavit material.
Mr Houen, for the landholders, contends that the deed should not be produced principally on the ground, as mentioned, of relevance. He has indicated in quite extensive written submissions and in his oral submissions before the Court that there is nothing in the put and call deed that can have any bearing on any claim for compensation or determination of compensation undertaken pursuant to the provisions of the Mineral Resources Act 1989 (MRA).
It is appropriate at this time that I refer in particular to s.281 of the MRA, which provides in subs.(3)(a)(2) that compensation payable to an owner of land is determined by reference to "diminution of the value of the land of the owner or any improvements thereon." That is but one of six parts to s.281(3)(a) relevant to the determination of compensation. There are, of course, other provisions also relevant to such determination. At first blush, therefore, it would ordinarily be the case that the value of a property was of significant interest to a Court in determining compensation pursuant to s.281 of the MRA.
The case before me, however, is somewhat different. As Mr Houen has indicated, the landholders are only seeking compensation for what he has generally referred to as "loss of grass" as a result of the mining operations of the miners. Indeed, Mr Houen, on behalf of the landholders, has specifically advised the Court - confirmed today - that the landholders are not relying upon a valuation report by Taylor Byrne dated 18 January 2010, filed in the Court in these proceedings, and that very specifically the claim for the landholders will proceed on the basis of no valuation evidence. The miners also have not provided valuation evidence to the Court for determination of this matter.
In the circumstances, therefore, the question as to the impact of the put and call option on valuation evidence may be seen as being somewhat academic; and were the matter to be decided purely on that basis, it may be the case that this would not be an appropriate case for disclosure to be ordered. However, as can be the case in so many cases there could, between now and the hearing of this matter, be amendments to the proceedings, the parties may change their view. And most particularly in this matter, I am concerned not to make a decision which would leave both the landholders in this matter and the miners both in some doubt as to the relevance or otherwise of the put and call deed.
I am mindful of the requirements on the Court pursuant to s.7 of the Land Court Act which provides as follows:
"In the exercise of its jurisdiction, the Land Court –
(a) is not bound by the rules of evidence and may inform itself in a way it considers appropriate; and
(b) must act according to equity, good conscience and the substantial merits of the case without regard to legal technicalities and forms or practice of the other courts."
I have heard it said that the Land Court, in its well over 100 years of operation, has been known colloquially as ‘The People's Court’. And it is certainly the existence of provisions such as s.7 which are designed to have landholders, miners, and indeed all parties who fall under the Land Court's jurisdiction come before the Court in circumstances where they believe their cases can be properly determined, grievances aired and decisions made but in a way that is understandable to the ordinary citizen. It is my endeavour, in moving forward with respect to this matter, not to turn the case into legal complexities but to attempt to clearly and relatively concisely explain the legal position to the parties as best I can.
The law with respect to disclosure in Queensland is set out in the Uniform Civil Procedure Rules, known as the UCPR. The Uniform Civil Procedure Rules are relatively recent, having come into effect in 1999. Prior to that date, the rules that applied in Queensland for matters in the Supreme Court were the Rules of the Supreme Court. Unfortunately, this is where matters do become somewhat technical, but I will take the time to explain those technicalities to the parties.
The Land Court, as a court of this State, has its own rules that it is governed by. It has specifically a rule relating to disclosure, which is rule 13 of the Land Court Rules 2000 which states that:
"...Chapter 7 of the uniform rules applies, with necessary changes, to the disclosure of documents in relation to a proceeding in the court."
What that means is that the processes to be followed in the Land Court are the same as processes applied for disclosure of documents, previously known as discovery, in the Supreme and District Courts of Queensland. That is why the provisions of the UCPR are directly relevant to this case.
Before turning to the particular UCPR rules which are contained within Chapter 7 of the UCPR, it is worth bearing in mind rule 5 of the UCPR which provides in Parts 1 and 2 as follows:
(1) "The purpose of these rules is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.
(2) Accordingly, these rules are to be applied by the courts with the objective of avoiding undue delay, expense and technicality and facilitating the purpose of these rules."
Again, I have attempted to follow both the law and the spirit of that provision, as well as s.7 of the Land Court Act, in determining this matter.
It is difficult to deal with any application for disclosure without going into some legal technicality. The question of disclosure is, as I've said, set out in Chapter 7 of the UCPR which commences at rule 209. I will not repeat in full all of the provisions of the UCPR.
The law as it relates to Queensland, though, in the UCPR and in the Rules of the Supreme Court which preceded are different to the rules of disclosure and discovery that apply to other courts and previously applied in Queensland. As the authorities show, the law of disclosure in Queensland has been substantially narrowed. I note in particular the reasoning of Justice Demack in the case of Robson v. REB Engineering Pty Ltd[2] at page 104 and 105 where his Honour said:
"The document must be 'directly relevant', not simply 'directly or indirectly allowing a party to advance his own case'. It seems to me that it is true that the Peruvian Guano formulation is different from that now in place. However, it will take many decisions to work out the full implications of the new wording. My opinion is that the word 'directly’ should not be taken mean on that which constitutes direct evidence as distinct from circumstantial evidence. Rather, 'directly relevant' means something which tends to prove or disprove the allegation in issue."
[2][1997] 2 QR 102
As I indicated, Justice Demack's observations related to the Supreme Court Rules which preceded the UCPR. The provisions in the UCPR were considered by the Queensland Court of Appeal in the case of Mercantile Mutual Custodians Pty Ltd v. Village/Nine Network Restaurants & Bars Pty Ltd[3]. I note in particular the judgment of Pincus J.A. where his Honour said as follows:
"The law in this State differs from that laid down by Brett L.J. in Compagnie Financiere du Pacifique v. Peruvian Guano Co. (1882) 11 Q.B.D. 55, in that if a document is not 'directly relevant' to an allegation in issue it need not be disclosed. It is not enough, to justify an order for disclosure, to hold the opinion that 'it is reasonable to suppose [that the document] contains information which may - not which must - either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary'. Nor, if a document sought is not directly relevant to an allegation in issue, does it matter whether or not it 'is a document which may fairly lead [the party requiring discovery] to a train of inquiry, which may have either of these two consequences": (see per Brett L.J. at 63).
No doubt this deliberate narrowing of the obligation to provide disclosure makes it all the more important that practitioners and their clients earnestly fulfil their obligations under the rules relating to the topic; but drawing attention, as Mr Wilson does, to a chance that a particular category of undisclosed documents may help one side's case will not necessarily provide a basis for an order for further disclosure."
[3][2001] 1 QR 276
It is to be noted that the Court of Appeal was in agreement with the reasons of Justice Pincus and that those reasons are an endorsement of the reasons provided by Justice Demack.
The question, therefore, for the Court to determine is whether or not the production to the applicants of the put and call deed is directly relevant to the issues in question in this case. As I have said, a strict reading of the MRA would appear to indicate that documents relating to the value of land may indeed be directly relevant to any compensation case. It is necessary, therefore, to consider the law relating to put and call options.
Fortunately, the Land Court has had the opportunity to consider a number of put and call deeds over the years, not so much (or at all that I have been able to find) in mining matters but in matters relating to the valuation of land for acquisition or related type purposes. The question of a particular put and call deed was considered by Member Scott in the case of Heavrey Lex No 64 Pty Ltd & Anor v. Chief Executive, Department of Transport.[4] A very useful summary of that decision is provided in the head note of the Land Court Report and part of that summary states as follows:
"No useful reliance could be placed on the ‘put and call option’. The contractual arrangements between the claimant and the third party revealed a quite causal and uninformed approach to business matters involving substantial sums of money. The contract purchase price was not supported by the evidence."
[4](1999) 20 QLCR at 296.
Although that is only a summary of the matter, I refer specifically to the direct comments of his Honour Scott at pages 362 to 365 of the report. I believe the summary in the head note is a fair summary of what his Honour had to say. A put and call deed is, in effect, an option. While it is a deed, it is a deed that contemplates something happening in the future at the option of the parties. In other words, what is contemplated by the put and call deed may never come to affect, or may come to affect partly or in its entirety. In this situation it is relevant to consider the impact that offers to sell or purchase, including put and call deeds, have on valuation methodology.
I note in particular the comments by Justice Jacobs in Nardone v South Australian Land Commission[5] that an offer is not evidence of value. This principle was applied specifically by the Land Court in the case of Stanfield v Commissioner of Main Roads[6] as follows:
"Reference was made by the claimant to certain options he had given for the purchase of portion of his land and it was urged that the sale price specified in the options was a guide to the value of the resumed land. Offers to buy and sell land, however, as distinct from concluded sales, are not evidence which can be applied in determining the value of the same or similar land sold or compulsorily acquired. This is nowhere better shown than in McDonald v Deputy Federal Commissioner of Land Tax.[7] In reading the judgment of the court, Isaacs J said at 239:
'When the matter has reached the point of a concluded contract, there has been a definite concrete fact established, which not only evidences value, but to some extent helps to create or modify it. Where an owner has actually parted with his land for a fixed sum and a buyer has parted with his money for the land, a clear event has arisen, which, based on the ordinary instincts and impulses of human nature, indicates a consensus of opinion between two adverse parties in a community respecting the value of similar lands. Some advantage to justice is therefore manifestly possible from considering it, and the law presumes that up to that point the disadvantages of having to undertake the collateral inquiries as to comparison do not outweigh the possible advantages.
But if the negotiations do not end in a concluded bargain, the field is at once open to a multitude of other considerations before the same point of opinion is reached. Excursions into the realm of collateral circumstances would be endless. They would so add to the costs, delay and uncertainty of litigation as on the whole to render a great disservice to the cause of justice. The court might have to inquire whether the owner or the other party really terminated the negotiations, and, if so, for what reason. Had either of the parties discovered the true worth of the property or been misinformed by some means as to its real value? Did the owner mistrust the ability of the purchaser, or did the latter find an adverse claimant to the property, or did his circumstances change, or was there a personal quarrel? Or did he learn of a still better bargain? Or, again, was the offer a sham on either side, or both sides? Such inquiries would render litigation intolerable, and defeat the purpose for which they were permitted.’ ”
[5](1978) 40 LGRA 164
[6] (1968) 21 The Valuer 624 at 627 – 628.
[7] (1915) 20 CLR 231 at 239 and 240.
I am indebted to the work of Alan Hyam in The Law Affecting Valuation of Land in Australia, 4th edition, for his exposition of the general principles relating to offers contained at page 139 and following of his excellent book on valuation.
What, then, does the law that I have outlined above mean when it comes to the particular put and call deed in question in this matter? I can answer that question, firstly, in a general way.
I do believe that it may be arguable in some cases that the existence of a put and call option would be something which a valuer, properly instructed, may take cognisance of for the purposes of preparing a valuation report with respect to the value of a property, the subject of a put and call deed.
However, that does not mean that that valuer so informed would determine that the put and call deed was, at the end of the day, of any assistance in determining the actual value of the land in question. Indeed, the authorities that I have referred to above indicate quite the opposite; that there are quite a number of circumstances where a put and call deed will be of little, if any, assistance, in determining in any way the value of a block of land. Each case, though, must be considered on its own merits and most importantly, I make these comments because I do not want the reasoning’s to be taken as more than what they are, for I do believe that in some circumstances a put and call deed may very well be required to be seen by a valuer for a party and considered by the other valuers, although that deed may never become part of the evidence in the case. This, however, for the reasons which I'll go into, is not one of those cases.
Firstly, the put and call deed in this case, whilst it covers a long period of time, is subject to many conditions. In respect of the privacy which the landholders wish to keep to the deed, I will not go into any detail greater than that set out in the summary I already provided, save for one particular element which Mr Houen has indicated on my specific questioning that he, on behalf of his clients, consents to the Court making specific reference to.
In this matter, the question that has been posed by the miners, quite correctly in my view, is that the contents of a deed unknown to them may have a significant impact upon the way in which this Court should arrive at a determination of compensation. Having viewed the deed in its entirety, it is clear that the deed is formulated to apply to what I will vaguely refer to as 'large scale mining' on the subject land. Specifically, though, this does not preclude other mining from occurring on the land, particularly mining of the size and nature that is applied for by each of the mining lease applicants in this matter. Indeed, the very fact that the mining leases have progressed to the state that they have indicate that the mining lease applicants are able to apply for the mining leases in question and, under the MRA, have those mining leases granted. That, in itself, is evidence that there is nothing in the put and call deed which directly impacts on the ability of the miners to undertake their mining operations on the land in question.
I do not have any evidence before me at this stage relating to the actual mining lease applications per se, nor have I considered any of the Mining Registrar Reports or other material in the matter, so I do not know if these are matters where the consent of an exploration holder was obtained, etc, and neither is any of that particularly relevant. The important fact is that authority was obtained by the miners, and they have the obtained proper legislative statutory authority to progress their mining lease applications. Once compensation is determined, if all other matters are in order, mining will proceed on these lands. At least that is my preliminary understanding of the status of these matters.
What, then, is to be said regarding the reasons why I consider the put and call option not relevant to these circumstances? The particular provision of the put and call option that I referred Mr Houen to was provision 5.6. In summary form, that provision sets out that should there be any mining by the mining party to the put and call deed, or any of their successors in title, that are not a large mining method as defined by the Deed itself, in other words, mining of a like nature to those mining lease applications currently before me, then compensation with respect to any such mining application by the mining party to the Deed must be paid to the landholders as determined by the normal compensation provisions under the MRA.
There can be no clearer indication that the MRA is to apply to the property in question, and compensation to proceed under normal heads, then the provision set out in 5.6 insofar as that relates to the nature of mining in the matters which I have currently before me. That, as I should stress, does not mean that in large scale operations containing significant valuation evidence there may be a case for production of the put and call deed. That is not the case in these matters, nor is it the case in any other matters that I believe I have before me or before the Court relating to this particular put and call deed.
In those very specific circumstances, then, in the consideration of the application made by the miners and in light of the lack of valuation evidence and taking particular account of 5.6 of the put and call deed as stated, I do not consider the put and call deed to be of direct relevance to the proceedings in this matter.
Accordingly I propose to order that the application for discovery by the miners in each of the applications for disclosure of the put and call deed be dismissed, and that there be no order as to costs.
ORDERS:
1.Each of the applications for disclosure of the put and call deed be dismissed.
2.There be no order as to costs.
PA SMITH
MEMBER OF THE LAND COURT
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