Williams v Chief Execuvite, Department of Environment and Resource Management (No. 2)
[2013] QLC 53
•23 August 2013
LAND COURT OF QUEENSLAND
CITATION: Williams v Chief Execuvite, Department of Environment and Resource Management (No. 2) [2013] QLC 53 PARTIES: Richard Fred Williams & Mary Olive Williams
(appellants)v. Chief Executive, Department of Environment and
Resource Management(respondent)
FILE NO: WAA022-07 PROCEEDING: Application for costs DELIVERED AT: Brisbane DELIVERED ON:
23 August 2013
HEARD AT:
HEARD ON:
Brisbane
22 April 2013
Submissions closed 24 May 2013
MEMBER: PA Smith ORDERS:
The appellant's application for costs against the respondent is dismissed.
CATCHWORDS: Water Licence – Application under Water Act2000 for costs – whether party acted frivolously or vexatiously – where party does not properly discharge its responsibilities in the appeal.
Water Act 2000
Bates v Crosby Tiles Pty Ltd [2011] VCC 838.
Chrismel v Department of Natural Resources and Mines
(2005) 26 QLCR 87.De Tournouer v Chief Executive, Department of Natural
Resources and Water [2008] QLC 151.
Mudie v Gainriver Pty Ltd & Anor (2002) 124 LGERA393.
Oceanic Sun Line Special Shipping Company Inc v Fay
(1988) 165 CLR 247.Rofail v Wells(No. 2) [2012] QPELR 164.
Solon Theo Family Trust v Chief Executive, Department of Natural Resources and Water [2011] QLC 0002.
Vanbrogue Pty Ltd v Department of Environment and
Resource Management (No 3) [2013] QLC 52.APPEARANCES:
SOLICITORS:
Mr GR Allan of Counsel for the appellants
Mr MD Hinson SC and Dr G Sammon of Counsel for the
respondent
p&e Law for the appellants
Crown Solicitor for the respondent
Background
On 5 April 2012 I delivered my decision[1] with respect to an appeal by Mr and Mrs Williams (“Williams”) against a review decision of the respondent, the Chief Executive, Department of Environment and Resource Management (“DERM”).[2] The appeal was allowed, to the extent that DERM was directed to grant Williams a licence to take 515 megalitres of water per annum.
[1] Gallo and Williams v Chief Executive, Department of Environment and Resource Management [2012] QLC 15
[2] It should be noted that the Department is now known as the Department of Natural Resources and Mines.
Williams has now made an application, pursuant to s.882 of the Water Act 2000 (“Water Act”) for an order that DERM pay its costs on the indemnity basis or, in the alternative, on the standard basis.
It is not contested between the parties that the Land Court has power to award costs under s.882 of the Water Act. In this regard, the provisions of s.882(3)-(5) are relevant. They provide as follows:
“(3) Each party to the appeal must bear the party’s own costs for the appeal.
(4) However, the court may order costs for the appeal, including allowances to witnesses attending for giving evidence at the appeal, as it considers appropriate in the following
circumstances—
(a) the court considers the appeal was started merely to delay or obstruct;
(b) the court considers the appeal, or part of the appeal, to have been frivolous or vexatious;
(c) a party has not been given reasonable notice of intention to apply for an adjournment of the appeal;
(d) a party has incurred costs because the party is required to apply for an adjournment because of the conduct of another party;
(e) a party has incurred costs because another party has defaulted in the court’s procedural requirements;
(f) without limiting paragraph (d), a party has incurred costs because another party has introduced, or sought to introduce, new material;
(g) a party to the appeal does not properly discharge its responsibilities in the appeal.
(5)If the court makes an order under subsection (4), the court may also order the party ordered to pay costs under subsection (4) to pay to the other party an amount as compensation for loss or damage suffered by the other party because of the appeal if the court considers—
(a) the appeal was started merely to delay or obstruct; or
(b) the appeal, or part of the appeal, to have been frivolous or vexatious.”
Costs claimed by Williams
Williams bases their application for costs on ss.4(b) and 4(g) of s.882 of the Water Act. Section 882(4)(b) of the Water Act relates to the appeal, or part of the appeal, as having been frivolous or vexatious, while s.882(4)(g) concerns the situation where one of the parties to the appeal does not discharge its responsibilities in the appeal properly.
Frivolous or Vexatious
In contending that the actions of DERM have been frivolous or vexatious, Williams has relied upon the Court of Appeal decision in Mudie v Gainriver Pty Ltd & Anor[3]. Although Mudie was concerned with the use of the words frivolous or vexatious in different legislation to that currently under consideration, in my view the reasoning of the Court of Appeal in Mudie is relevant to the determination of the costs question currently at hand.
[3] (2002) 124 LGERA 393
In Mudie, President McMurdo and Justice Atkinson in their joint reasons for judgment relevantly had this to say[4]:
[4] At pages 405 – 6
"35The words "frivolous or vexatious" are not defined in the Act and should be given their ordinary meaning, unfettered by their meaning in the very different context of striking out or stay proceedings for an abuse of process. By the time an application for costs is made, the court knows the issues which have been litigated whilst a interlocutory application, the court must to some extent speculate and must necessarily be cautious to ensure a deserving claimant is not unjustly deprived of the opportunity of a trial of the action. The Macquarie Dictionary defines "frivolous" as "of little or no weight, worth or importance; not worthy of serious notice: a frivolous objection. 2. characterised by lack of seriousness or sense: frivolous conduct ..." and "vexatious" as "1. causing vexation; vexing; annoying ...".
36Unquestionably, something much more than lack of success needs to be shown before a party's proceedings are frivolous or vexatious. Although in a different context, some assistance can be gained from the discussion of the meaning of these words in Oceanic Sun Line Special Shipping Company Inc v Fay where Deane J states that "oppressive" means seriously and unfairly burdensome, prejudicial or damaging and "vexatious" means productive of serious and unjustified trouble and harassment, meanings apparently approved by Mason CJ. Deane, Dawson and Gaudron JJ in Voth v Manildra Flour Mills Pty Ltd. Those meanings are apposite here.
37Whether proceedings are vexatious or oppressive will turn on the circumstances of the case and will include public policy considerations and the interests of justice.
Footnotes omitted
Guidance is to be found as to what is meant by the meaning of the word “vexatious” by reference to the observations by Justice Deane in the High Court decision in Oceanic Sun Line Special Shipping Company Inc v Fay[5]:
[5] (1988) 165 CLR 247
"... If the plaintiff is not acting bona fide or in pursuit of a legitimate advantage in pursuing the proceedings in the legal system of this country, that will, of course, make it much easier for a continuation of the proceedings to be characterized as vexatious or oppressive, since there will be little if anything to put into the balance against the inconvenience which would be sustained by the defendant. On that approach, ... "vexatious" should be understood as meaning productive of serious and unjustified trouble and harassment."
Footnote omitted
I agree with the observations of Judge Dorney QC in the Planning and Environment Court decision of Rofail v Wells (No. 2)[6] that it is not appropriate to cut down some of the essential elements of the term "vexatious" and then omit some of those elements. Judge Dorney QC made the following observations:
[6] [2012] QPELR 164
"[19]… the respondent has confined the aspect of vexation to the contention that the maintenance of the litigation after 8 July 2011 was “unjustifiably troublesome”.
[20]That aspect was particularised in the further submission that litigation which is lost on a point that is:
(a)squarely raised early in the proceedings as fatal; and
(b)found to be so at the final hearing; but
(c)not directly or satisfactorily responded to at any time up to and including the final hearing;
is a course which results in “serious and unjustified trouble”. The difficulty with that précis is that the meaning determined to be apposite in Mudie contained the additional words: “and harassment”. I do not accept that the term “vexatious” can be cut down in a way so that some of the elements that are said to be essential can be omitted leaving the remaining elements as arguably applicable alone: see, also, the discussion of the meaning advanced by Deane J in Fay, by Williams JA in Mudie: at 291[61].
Proper discharge of responsibilities in the appeal
As indicated, Williams also relies upon the provisions of s.882(4)(g) which allows for an order as to costs in circumstances where the Court is of the opinion that one of the parties to the appeal has not properly discharged its responsibilities during the course of that appeal.
The key authority on this aspect of the case is the decision of the Land Appeal Court in the case of Chrismel Pty Ltd v Department of Natural Resources and Mines[7]. In Vanbrogue Pty Ltd v Department of Environment and Resource Management (No. 3)[8] I referred to a summary of the reasoning in Chrismel as follows[9]:
[7] (2005) 26 QLCR 87
[8] [2013] QLC 52
[9] At paragraph 17
"15. The Land Appeal Court in Chrismel isolated the following principles in relation to construing s882(4)(g) of the Water Act.
(a) the interpretation of section 882(4) is subject to the following considerations:
(i)the primary rule that each party bear its own costs, which is designed to ensure that citizens are not discouraged from bringing proceedings in that jurisdiction because of the fear that a crippling costs order might be made; and
(ii)the primary rule also recognizes the wider public interest character likely to be involved in the proceedings (paragraph [46] of the judgment);
(b)the "appeal" for the purposes of section 882 is confined to the appeal from the review decision to the Land Court (paragraph [42] of the judgment). It does not include any failure by a party in discharging its responsibilities in respect of the internal review itself (paragraph [43] of the judgment);
(c)the provision is not confined to circumstances where there has been a default in compliance with procedural requirements (paragraph [49] of the judgment);
(d)potential instances of what might constitute conduct of failing to properly discharge responsibilities in the appeal include:
(i)presentation of evidence that is poorly researched (paragraph [48] of the judgment);
(ii)presentation of irrelevant evidence or the raising of plainly unarguable matters (paragraph [50] of the judgment);
(iii)when a party resists an appeal on grounds that are plainly baseless and completely unsustainable (paragraph [51] of the judgment);
(e)it is not necessary for a party seeking costs under the provision to show wilfulness or mala fides in the failure to discharge the relevant responsibility (paragraph [52] of the judgment)."
The Land Appeal Court in Chrismel was constituted by Justice Philippides, President Trickett and then Member MacDonald. Specifically, the Court had this to say:
"[50] Having regard to the apparent legislative intent evinced in the provisions of s 882(4), which is to give the court the power to compensate a party disadvantaged by the unmeritorious conduct of another party in the appeal, there is no reason why s 882(4)(g) ought not to be construed as extending to a wide variety of unmeritorious conduct in the appeal, such as the presentation of irrelevant evidence or the raising of plainly unarguable matters.
[51] ... can a party be said to fail to properly discharge its responsibilities in an appeal when it resists an appeal on grounds that are plainly baseless and completely unsustainable? In our view, s 882(4)(g) is capable of encompassing such a situation. That being so, it should be acknowledged that there may be some degree of overlap between the failure to discharge one's responsibilities in an appeal and the "frivolous or vexatious" ground in s 882(4)(b). Conduct which falls short of being "frivolous or vexatious", may come within s 882(4)(g) and a fortiori so would the more serious conduct that could be characterised as "frivolous or vexatious"."
Submissions in support of order for costs
Mr Allan of Counsel for Williams has provided the Court with detailed written submissions in support of their contention that DERM should pay their costs on an indemnity basis. Mr Allan supported his written submissions with oral submissions presented to the Court, as well as affidavit material exhibiting relevant documents. Taken in its entirety, the material in support of the application for costs is extensive.
At paragraph 17 of Mr Allan's outline of submissions, Mr Allan contends that the conduct of DERM throughout these proceedings has been such as to warrant the costs order sought. In this regard, Mr Allan has referred specifically to an affidavit of the solicitor acting on behalf of Williams, Mr Manning, filed 20 September 2012. That affidavit details the conduct of DERM that Mr Manning says supports the application for costs. Specifically, Mr Manning's affidavit states as follows:
"2. Exhibit A to this affidavit is a paginated, indexed bundle of documents being copies of correspondence passing between the parties and the Court.
The correspondence identifies:
i.Mr Lait was identified as the Chief Executive hydrogeological expert in 2007; (Exhibit A, Item 5, 6 and 7).
ii.On 13 September 2007, following confirmation of Mr Lait as the Chief Executive expert on 2 August 2007 and 6 September 2007, the hearing of the appeals was ordered to be deferred to allow the experts to do bore pump tests; (Ex A, Item 8).
iii.On 27 February 2008, following receipt of material from the order of the Court referred to above and upon receipt of material from Mr Lait and Mr Hair in the De Tournouer appeal the appellant wrote to the Respondent indicating a fundamental point of agreement from the evidence presented that 'there is no apparent connectivity between surface water flows and the aquifer in question in Area B.' On that basis we sought the resolution of the appeal. (Ex A, Item 9).
iv.On 7 April 2008 the Supplementary List of Documents of the Respondent at item 1 referred to the facsimile from Malcolm Heather, Department of Natural Resources and Water to Rob Lait, AGE request additional information from Rob Lait in a letter dated 24 December 2007. This letter became exhibit 12 at the hearing. (Ex C, Item 35).
v.On 23 June 2008 the Respondent denied any agreement that Mr Lait was to be the expert for the Respondent.
...
7. The Respondent nominated Mr Lait as its expert, through him identified bore testing required under court order, through him conducted the testing under the court order, provided that information to the Appellant under the Court order, gave a report from Mr Lait to the Appellant, sought to interrogate Mr Lait in relation to his report, following which Mr Lait concluded that the aquifer was 'confined', exhibit 13 in the hearing, (at Ex C, Item 36, page 1) and that 'Based on the evidence from the stable isotope investigation in Management Area B, it is concluded that there is no interchange of surface water in flowing water courses with the groundwater in the Atherton Basalt aquifer, in that section of management area B sampled in 2007', received correspondence from the Appellant saying the appeal should be settled following that expert evidence and then on 23 June 2008 indicated it would not call Mr Lait to give evidence.
8. The letter from the Appellant to the Respondent dated 27 February 2008 indicated the nature of the expert evidence that would be required if the threshold question determined by Mr Lait was not accepted.
9. The failure of the Respondent to accept the evidence of its nominated expert has directly necessitated the appellant incurring significant costs in the further conduct of the appeal that ought not have been incurred. Those costs included the costs of the modelling and work of Mr Smith in dealing with hydrology and the work of Mr Sutherland in dealing with efficient use of the water.
10. The Respondents failure to disclose the information contained in exhibit 43, the Freedom of Information Documents did not allow it to consider all of the factors required in making a decision based upon fairness and equity in a background of maladministration of efficient use of water. The Respondents letter of 23 June 2008 denied the relevance of the application documents behind the licences on the basis that the material was not directly relevant to the issues in dispute. The Respondent indicated it would disclose the licence. (Ex A, Item 14).
The Respondents letter of 27 July 2008 then indicated the Respondent would not disclose the licences. The Respondent disclosed spreadsheets it had created. (Ex A, Item 17).
On 12 September 2008 the Appellant wrote to the Respondent indicating the relevance of the application documents and licence to the assessment highlighting the need to consider efficient use of the water. (Ex A, Item 26).
11. Had the Respondent considered these matters fairness and equity and the efficient use of water in making allocations the need to bring the appeal would not have arisen. Had the Respondent addressed these concerns early in the appeal the hearing of the appeal would not have been necessary. This failure has directly given use to the extensive costs in running the appeal."
In broad terms, the case for Williams falls under three general points:
(a) DERM engaging in "expert shopping" until it found expert hydrology evidence
which supported its contentions.(b) Failure by DERM to provide disclosure of documents concerning previous water applications within Area B.
(c) Failure by DERM to comply with the statutory and regulatory regime with respect to previous applications for water licences within Area B.
I now turn to consider the submissions made in support of each of these issues.
‘Expert Shopping’
Mr Allan submits that DERM engaged in "expert shopping" by failing to accept the expert evidence of its nominated expert, Mr Lait, and instead calling expert evidence from Dr Evans. Specific support for this submission is gained by reference to comments by his Honour Member Scott in the Land Court decision of De Tournouer v Chief Executive, Department of Natural Resources and Water[10] where his Honour relevantly had this to say:
[10] [2008] QLC 151
"[14] The rationale behind Dr Prendergast's inclusion in the case is somewhat
perplexing. Orders were made requiring the parties to file and serve statements of experts' evidence by 29 October 2007 and statements in reply by 9 November 2007. Experts in each field of expertise were required to confer and to produce by 20 November 2007 a joint statement setting out points of agreement and disagreement. Pursuant to those orders Mr Hair and Mr Robert Lait (a Hydrogeologist retained by the Minister) met on 13 November 2007 and on 19 November 2007 produced a joint report dealing with matters of disagreement and agreement between them. The joint report both narrowed the issues and provided a useful focus on the matters which remained as issues for debate between the parties. Then on 24 December 2007 a facsimile was sent by the Department of Natural Resources and Water to Mr Lait asking him a number of questions which can best be characterised as challenging opinions expressed by him in his expert report (Exhibit 8) and his reply report (Exhibit 9) to Mr Hair's expert report and in the joint report produced by Mr Lait and Mr Hair. Mr Lait answered the questions by a memorandum dated 15 February 2008 (Exhibit 11).[15] Dr Prendergast had, according to his recollection, become involved in the case either in early 2008 or in December 2007. ... For reasons not clear to me, Dr Prendergast's report introduced a new case for the Minister - one inconsistent in important respects with the case based on Mr Lait's evidence and inconsistent with the pre-trial process of meeting of experts and the production of the joint report by Mr Lait and Mr Hair.
[16] I set out this brief history relating to the introduction of Dr Prendergast as a witness, not because it is relevant to my conclusion as to the acceptability of his opinion evidence, but because it indicates a lack of cohesion in the presentation of the case from the Chief Executive, an entity expected to demonstrate the attributes of the model litigation."
Footnotes omitted
[17] As Mr Allan points out in his written submissions:
"18. It is clear that the Chief Executive had notice, as at 27 February 2008, that its decision to change experts would cause both parties to incur very significant costs. Mr Sutherland's report dated 26 February 2008 outlined the scope of works that would be necessary if the 'threshold' position based on an agreement between Mr Lait (AGE, at that time the Chief Executive's witness) and Mr Hair (Douglas Partners, at that time De Tournouer's witness) as to the absence of connectivity between surface water flows and the aquifer in Area B.
19. Instead of relying upon the 'critical point of agreement' between Mr Lait and Mr Hair as set out and described in Mr Sutherland's February 2008 report, as the foundation for a compromise of the present appeal, in breach of his model litigant obligations, the Chief Executive rejected the opinion of his own nominated expert and resisted the appeal in a manner which resulted in lengthy, very expensive but ultimately unsuccessful litigation."
Footnotes omitted
[18] As regards the actions of DERM as alleged by Mr Allan given DERM's position as a "model litigant", Mr Allan drew my attention in particular to the County Court of Victoria decision of Bates v Crosby Tiles Pty Ltd[11] where Judge Bowman made the following observations at paragraph 61:
[11] [2011] VCC 838
"What appears to have been done by the VWA in the present case bears the appearance of what is sometimes described as 'doctor shopping' or, in this case, 'neurosurgeon shopping'. It is not the role of a Model Litigant to continue to expend public monies pursuing medical reports from additional experts in the face of opinions adverse to it from experts already consulted in the hope that, sooner or later, someone will say something which gives it some comfort. ..."
Failure to disclose relevant documents
[19] With respect to this issue, Mr Allan has this to say in his submissions:
"22. A further aspect of the Chief Executive's unmeritorious conduct concerns his resistance to the disclosure of documents which ultimately were tendered in evidence in Exhibit 43. The relevance of those documents is clear from the RJ. Ultimately, after a number of unsuccessful attempts to explain to the Chief Executive why the documents were relevant, the appellants made the decision to obtain the documents by way of FOI application.
23. Notwithstanding the Chief Executive's prolonged resistance to disclosure of the documents that comprise Exhibit 43, then inconsistently with that stance on 23 September 2010 the documents were tendered by the appellants at the hearing without objection from the respondent. It is submitted that the Chief Executive's resistance to disclosure of directly relevant documents provides another example of a breach of its model litigant obligations to comply with the Court's procedures designed to minimise cost and delay.
24.In summary, it is submitted that, the conduct of the Chief Executive in the present appeal is in a far worse category than the conduct of the Chief Executive in Chrismel."
Footnotes omitted
Failure to comply with water licence regime
[20] Mr Allan goes to some detail to set out the deficiencies of DERM in its implementation of the relevant statutory framework in so far as it relates to applications for water licences within Area B post 2002. This aspect of course received considerable comment in my reasons for judgment. It is unnecessary for the present purposes to repeat what I said in my reasons for judgment.
[21] Mr Allan is also critical of the evidence given by Mr Bell, in particular what he refers to as the late provision of Mr Bell's evidence to the appellants.
[22] Mr Allan's contentions speak for themselves in his written submissions where he has this to say:
"30 It is clear from the evidence of Mr Bell and Exhibit 43 relating to previous licence applications in Area B when assessing all applications for the period 2002 - 2010 that the Chief Executive breached the requirements of the Water Act 2000 including s 51 (2)(b) of the 2002 Plan. His Honour Mr Smith makes this express finding, to effect, at paragraph [69], page 45 of the RJ. In fact, the learned Member found that the applicants for licences in Area B should not had been granted if the Chief Executive had applied the provisions of the Water Act and the 2002 Plan.
31.In point of law, granting the licences in breach of s 205(1); s 210(l)(c) of the Act and s 51(2)(b) of the 2002 Plan ('BWRP') the Chief Executive acted unlawfully. see Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355 at page 393, paragraph [100].
32.As submitted earlier, instead of acknowledging in a timely way the unlawful conduct of the Chief Executive in carrying out the assessment of licence applications within Area B, the respondent sought to justify that conduct which in turn resulted in the appellant having to incur very significant costs for legal and expert fees in prosecuting and conducting the appeal."
Footnotes omitted
Mr Allan gave oral submissions regarding this aspect of the case in great detail. Quite clearly, those submissions were not made lightly. As Mr Allan put it[12]:
[12] See T 1-48 L 20-39.
"That's the seriousness and gravity of the conduct in this case. And if anyone doubts that they need to turn to the last page or the last paragraph of your decision and - and read it because it - it's incontestable. That this isn't - this didn't happen in a vacuum, your Honour. You've decided a case, a reviewed - an appeal from a review decision based on evidence and all of that evidence about that misconduct was before you and how it unfolded and how it affected my client's assessment and the averaging exercise that was apparently sought to be justified by the review decision maker to give those at the end of the line only 80 megalitres.
All of that's evidence upon which the Court's made a finding and all of that evidence is relevant in - in - and needs to be put in context when scrutinising the conduct of the case. Why was the evidence elicited and I - in the manner it was with the extraordinary delay where Mr Bell seems to have been called as an afterthought and then it - it - as I submitted, it - they still didn't provide a statement and do what the law required."
Indemnity Costs
[24] In further support of his contentions, Mr Allan submits that "the manner in which the Chief Executive resisted the appeal was unreasonable conduct ... which warrants an award of indemnity costs in order to ensure the appellant's are compensated as fully as possible for the legal and professional costs they incurred in conducting the appeal".[13] In making these submissions, Mr Allan referred specifically to the decision of mine in Solon Theo Family Trust v Chief Executive, Department of Natural Resources and Water[14] and in particular to my observations as follows:
[13] See appellants submissions, paragraph 34
[14] [2011] QLC 0002
"[43] The law relating to indemnity costs was conveniently summarised by
Chesterman J in Emanuel Management Ply Ltd (In Liquidation) & Ors v Foster's Brewing Group Ltd & Ors and Coopers & Lybrand & Ors. His Honour had this to say:
‘[17] The authority to which attention is usually directed is Colgate-
Palmolive Co. v Cussons Pty Ltd (1993) 46 FCR 225 in which
Sheppard J identified a number of circumstances in which it may
be appropriate to make an order for indemnity costs. They
include:(i)Making allegations of fraud knowing them to be false or
making irrelevant allegations of fraud.(ii)Misconduct that causes loss of time to the court and the
opponent.(iii)Commencing or continuing proceedings for some
ulterior motive or in wilful disregard of known facts or
clear law.(iv)Making groundless allegations.
(v)An imprudent refusal of an offer to compromise.
'The question must always be whether the particular facts and
circumstances ... warrant the making of an order for payment of
costs other than on a party into party basis.'[18] Rosniak v Government Insurance Office (1997) 41 NSWLR 608
(at 616) has perhaps taken the position furthest in deciding that it is not necessary for the party seeking the protection of indemnity costs to establish ethical or moral delinquency by its opponent. It is enough to show 'unreasonable conduct' of some sort. That case itself demonstrates that the inexactness of such a test can give rise to difficulty in its application.’
[44] Applying Chesterman J's reasoning, it would appear appropriate, given both Mr Theo's conduct and the fact that Mr Theo prosecuted his appeals on grounds which had already been dismissed by both this court and the Land Appeal Court and persisted without calling any valuation or other, sales evidence to support his case, that a order that Mr Theo pay the respondent's indemnity costs should be made."
Footnotes omitted
[25] I understand Mr Allan's submissions on indemnity costs to be two-fold. Firstly, when the
relevant authorities relating to indemnity costs are considered, the conduct of DERM, as Mr Allan sees it, is of itself sufficient to enliven the Court's jurisdiction under s.882 of the Water Act.[26] There is a further aspect to Mr Allan's application for indemnity costs, and those submissions relate to a Calderbank settlement offer made by Williams to DERM prior to the hearing of this matter. In fact, the Calderbank offer was a counter offer as it was made in response to an offer to settle the litigation made by DERM to Williams.
[27] In the manner in which the question of the Calderbank offer has been argued by Mr Allan, it is apparent that it is first necessary for Williams to get past the threshold point of an award of costs being appropriate pursuant to s.882 of the Water Act. It is only if it is appropriate that an award of costs in Williams favour be made that consideration is then given as to whether or not the Calderbank offer gives rise to a determination that those costs should be payable on an indemnity basis.
[28] For reasons which will become clear later in this decision, it is unnecessary to give further consideration to the Calderbank offer as my conclusion with respect to s.882 is, ultimately, that Williams has failed to show that the provisions of s.882(4) are enlivened.
Contentions on behalf of DERM
[29] Like Mr Allan, Mr Hinson SC and Dr Sammon have provided the Court with detailed written submissions, supported by oral submissions. Relevantly in their written submissions, Counsel had this to say:
"9. The applicants overstate the position when they say that there was a decision to 'change' experts in any sense that is capable of establishing the grounds in s 882(4)(b) or (g). As the letter from Crown Law to p&e Law dated 26 September 2008 notes, Dr Evans was properly notified as an expert for the respondent on 23 June 2008 in accordance with the Court's order made on 23 June 2008, more than 2 years prior to the hearing of this appeal.
...
13.The applicants invoke the 'model litigant obligations' to be followed by the respondent to contend that it was a breach of those obligations for the respondent to reject the opinion of his own nominated expert and resist the appeal in a manner which resulted in 'lengthy, very expensive but ultimately unsuccessful litigation'.
There are several problems with this submission:
(a) the expert nominated by the respondent in accordance with the Land Court's order on 23 June 2008 was Dr Evans;
(b) although the applicants invoke the 'model litigant' obligations, they do not cite any authority on how this binds government agencies in the selection of expert witnesses. There is nothing in either of the cases on the 'model litigant' principle cited by the applicants which is authority for that proposition. There is no unfair dealing with the applicants in the nomination of Dr Evans as an expert witness in accordance with the Land Court's order made on 23 June 2008, more than 2 years prior to the hearing. Indeed, the applicants nominated Mr Smith as their hydrology expert at about the same time - see the letter from p&e Law to the Department dated 2 July 2008, Exhibit A to Mr Manning's affidavit, item 15, page 38. Previously, Mr Lait had been dealing with Mr Hair of Douglas Partners - engaged by Ms De Tournouer - see letter Gilbert & Sutherland to p&e Law dated 26 February 2008, Exhibit A to Mr Manning's affidavit, item 10, page 24;
(c) the respondent, like any party to litigation, is entitled to choose an expert witness. Indeed, as the Land Court at first instance noted in De Tournouer v Chief Executive, Department of Natural Resources and Water [2008] QLC 0151 at [14] on 24 December 2007, a facsimile was sent by the Department to Mr Lait:
asking him a number of questions which can be best characterised as challenging opinions expressed by him in his expert report (Exhibit 8) and his rely report (Exhibit 9) to Mr Hair's expert report and in the joint reports produced by Mr Lait and Mr Hair.
(d) the relevant litigation had its length and its cost. It is true that the present applicants were partly successful in their appeal. This appeal was heard with the Gallo appeal. However, as noted above, mere success in an appeal does not of itself lead to an award of costs. Indeed, as to the different evidence of Dr Evans and Mr Smith on the connectivity between aquifers and surface water, there was no 'hard and fast' decision that either witness was correct or incorrect. The reasons noted that the issue 'is not without some doubt'. Paragraph [44] of the reasons noted that there was some interconnection between the aquifers and the surface water but the Land Court was not satisfied as to the extent of any such inter- connectivity. Instead, the Land Court resolved the question by the institution of an appropriate groundwater and surface monitoring program and in that way, applying the 'precautionary principle';
(e) Moreover, the success of the applicants in the appeal can be attributed not to the case put forward in submissions made on behalf of the applicants, but instead because the close examination by the Land Court of the applicants' application for the water licence was such as to distinguish it from the Court of Appeal's decision in De Tournouer;
(f) Finally, the applicants have simply not demonstrated that the appointment of Dr Evans somehow 'resulted in lengthy, very expensive litigation'. The chronology disproves that. The Land Court's decision on the hydrology found that there was some connectivity between the groundwater and the surface water, but the extent of the connectivity was uncertain - see paragraph (d) above.
...
14. The applicants make much of the contention that the assessment of licences in Groundwater Area B was unlawful, at least in the early days of the 'water rush' identified in the Land Court's reasons for decision in this matter. However, ultimately, the applicants argument that the Department's early erroneous approach should somehow be extended to the applicants' and the Gallos' appeals failed. As the reasons for decision reveal:
The plain and unambiguous provisions of the Water Act as to the fundamental criteria which applicants are required to meet including, importantly, details of the applicants' proposed use for the water, MUST be applied according to the legislation.
Indeed the respondent submitted as such in oral submissions at the end of the hearing of this matter.
...
18. The attached chronology demonstrates that the respondent responded to the applicants' request to disclose all documents concerning the previous licensing in Area B at an early stage more than two years before the hearing, raising the genuine and legitimate point that the other licence applications were not directly relevant to the issues raised in the Gallos and Williams appeals. Nonetheless, the respondent did disclose what is considered relevant, which is volumes of water the subject of other licences. Furthermore, as the Department pointed out the licensing documents filled 25 boxes and disclosure would be oppressive. That these points were genuine and well-founded is clear from the fact that the applicants could have applied for an order from the Land Court requiring disclosure of those documents if they were convinced of the correctness of their argument, but did not.
...
19. The applicants contended for a licence for 750ML not the 515ML that the
agricultural experts agreed was the volume that could be efficiently used. That
contention was based on notions of fairness and past unlawful conduct by the
Department in processing licence applications. The only relevance of documents
for which disclosure was sought was to support this untenable aspect of the
applicants' case, on which the applicants ultimately failed....
21. Had the applicants not burdened the Court with the FOI documents and incurred the expense of having Mr Sutherland examine past licence applications and give evidence about them, the hearing would have been much less lengthy. The applicants' pursuit of an entitlement of 750ML, an amount they could not efficiently use on the evidence of Mr Sutherland and Dr Watts, was itself an exercise which should be characterised as frivolous and vexatious.
...
24.In Chrismel, the LAC noted that the attitude of the chief executive in that case as reflected in its earlier submissions supporting the original decision-making process was 'seriously flawed'.
25.This led the LAC to the conclusion that the;
comprehensive nature of the respondent's concessions indicates that the respondent's resistance was always ill founded and unsustainable.
26.The LAC considered that it was difficult to see how the chief executive in that case could be said to have properly discharged its responsibilities in the appeal. The LAC found that the chief executive in Chrismel had a responsibility to properly consider the notice of appeal, to properly consider the sustainability in law of its resistance to the appeal and not to resist the appeal on a plainly groundless basis.
27.The present case is completely distinguishable from Chrismel. Most of the hearing was taken up with a genuine dispute in the expert evidence over the connectivity between the relevant aquifer and surface water, and, as far as the applicants' case was concerned, how the applicants proposed to make use of the water applied for. In the end, on the first of these issues, there was no 'hard and fast' finding by the Land Court between the expert witnesses, but instead, the Land Court applied 'the precautionary principle' referred to above. In any event, at RJ [84] the Land Court found that the effect of the Department's approach to water licensing in the early days of the 'water rush' was irrelevant to the application of the law that the Land Court was bound to consider.
In short, it would be an incorrect application of the grounds described in s 882(4) of the Water Act to visit on the respondent failures made by the Department in processing earlier applications for water in other cases."
Conclusions
[30] I am in general agreement with the submissions made by Mr Hinson SC and Dr Sammon. One aspect in which I disagree with their submissions relates to that of the actions of a model litigant in 'expert shopping'. I agree with the reasoning of Judge Bowman in Bates. That is, it is not appropriate for a model litigant to shop around experts until it ultimately finds an expert who supports, at least in some way, the model litigant's case. However, while I am prepared to follow the decision in Bates, that does not itself mean that I am satisfied on a close examination of this case that DERM has engaged in 'expert shopping’.
[31] There is no doubt that, in the early years of this litigation and in particular at the time that the De Tournouer decision was litigated, that DERM had some difficulty with respect to expert evidence as to the question of connectivity between the aquifer and streams in Area B. The comments of his Honour Scott in this regard in De Tournouer are quite telling. However, it is notable that Counsel for Williams did not consider it desirable or necessary to call Mr Lait at the hearing in this matter to give evidence in support of Williams contentions. The reason for this is, in my view, quite clear: that is, as my reasons for decision in the substantive case I trust make clear, there was highly qualified technical evidence given on behalf of both parties as to the state of the aquifer and, in particular, its interconnectivity with relevant creeks.
[32] A close examination of the material annexed to Mr Manning's affidavit of 19 September 2012 reveals a letter written by Crown Law to the solicitor for Williams on 3 September 2008 which contains inter-alia the following:
"I refer to your letter of 5 August 2008 and the letter from Paul Smith to your firm dated 28 July 2008 in relation to the additional drilling of groundwater monitoring bores in Area B.
I confirm that such drilling is taking place as part of an independent project, referred to as the 'SKM Groundwater — Surface Water Interaction Project’, that was commissioned by the National Water Commission in 2005 following a public call for proposals on this topic. SKM and CSIRO submitted a joint proposal for the project in 2005. SKM, nominated as the project manager, was awarded the contract in October 2006. Attached for your information is an email from Dr Evans to Mr smith dated 13 August 2008 outlining the chronology of events relating to the birth of the project and attaching a national media release about the project."
[33] In my view, the above extract makes it clear that DERM was not, at least directly, engaged in 'expert shopping'. Quite clearly, as part of a much broader project, Dr Evans had been engaged by DERM. The nature of those investigations undertaken in the other project by Dr Evans, which commenced in 2005, proved to be directly relevant to key points at issue in the current case. It is clearly reasonable, in those circumstances, for DERM to have engaged Dr Evans as its expert for these proceedings. This position is perhaps even more understandable when one takes into account the criticism that DERM received in De Tournouer from Member Scott.
[34] I do not take the submissions presented on behalf of DERM to be seeking to imply that the decision of the Land Appeal Court in Chrismel is incorrect. Clearly, in my view, the submissions of Mr Hinson SC and Dr Sammon embrace the decision in Chrismel. Mr Hinson SC and Dr Sammon have rather carefully shown that what DERM did in the present case was conduct proceedings properly applying the provisions of the Water Act.
[35] As I attempted to make clear in the substantive decision, this matter is a classic example of two wrongs not making a right. As I clearly found, neither Williams and for that matter Gallo (nor De Tournouer before them), were entitled to water licences of an overly large amount of water simply on the basis of maladministration by DERM in the granting of previous water licences. It is a matter entirely outside of the jurisdiction of this Court as to what may happen in the future as regards those water licences which have come into existence as a result of maladministration. It was the obligation of this Court to determine the Williams appeal on the basis of a strict and proper application of the law.
[36] This position, has, I note, been made clear by the solicitors for DERM to the solicitors for Williams over an extended period. Turning again to the material exhibited to Mr Manning's affidavit of 19 September 2012, I note the letter forwarded by the Department of Natural Resources and Water to p&e Law of 27 July 2008 which contains the following paragraph:
"It is clear from the Water Act 2000 and, in particular, section 210(l)(d), that the Court is required to determine these appeals on the assumption that existing water entitlements are valid. The Court's jurisdiction in these appeals does not extend to determining the validity or appropriateness of existing water entitlements. Once this position is accepted, it is irrelevant to question whether any existing water licences should have been granted to a different licensee or a different stated volume or for a different purpose. It is simply not a relevant enquiry under the Act."
[37] This point of course leads into the consideration of the question of the completeness or otherwise of disclosure by DERM.
[38] The material makes it clear that this is not a case where the existence of documents which might be considered relevant was withheld from one side. It is abundantly clear that the existence of 25 boxes of documentary material relating to earlier applications for water licences within Area B were made known to Williams' solicitors. The basis upon which DERM alleged that it was not necessary or relevant for DERM to provide those documents to Williams was also abundantly clear. There was an issue as to specific relevance and oppression given the volume of material. Had the solicitors for Williams and their Counsel considered it appropriate to take the matter further in the current proceedings rather than to proceed by way of FOI application, a relatively inexpensive and quick application could have been brought to this Court seeking formal discovery by DERM of the 25 boxes of material. No such application was ever made by Williams. This point is telling.
[39] The fact that no objection was made on behalf of DERM to the material that ultimately made up Exhibit 43 is not of itself an answer to the lack of a formal application for disclosure. The issue was never one as to whether or not the documents existed; it was a question of relevance and oppression. In my view, given the broad rules that apply to the Land Court for the receipt of evidence, Counsel for DERM were correct not to make any objection to the receipt into evidence of Exhibit 43. Further, such documentation was relevant to a consideration of the. issue of "fairness" which I canvassed extensively in my reasons for judgment.
[40] To the casual observer who reads my original reasons for judgment, one may find it unusual, if not bizarre, that I should on the one hand be so concerned about the actions of DERM with respect to maladministration of water licences within Area B that I drew issues of such maladministration to the attention of the Premier and the Honourable the Minister administering the Water Act, yet on the other hand find that the actions of DERM in the conduct of the case have not been such as to enliven the provisions of s.882(4) of the Water Act, thus resulting in the situation that each party should bear their own costs in accordance with s.882(3) of the Water Act.
[41] It is very important to keep a number of distinct elements of this case clearly to mind, as was well argued by Mr Hinson and Dr Sammon. As a proposition of law in determining the appeal by Williams, I was required to take into account existing water allocations granted under existing water licences. I had no jurisdiction in this case to consider the validity of any of those previous water licences. Clearly, I have no doubt that maladministration occurred within DERM as regards those previous water licences, but that is a matter which can only be remedied administratively by the Department and/or any further act of parliament, and not by this Court.
[42] Final determination of this matter, even given the provisions of s.882(4) of the Water Act, came down to a question of discretion. I have thought long and hard about the exercise of my discretion in this matter, I have reviewed my reasons for judgment in the substantive decision extensively. I have revisited relevant evidence where necessary. I have carefully considered all of the submissions made by both sides. At the end of the day, as regards a strict interpretation of the actions of DERM in running this litigation, I cannot see how the actions of DERM in running the case can be viewed as frivolous or vexatious or not properly undertaken in discharge of its responsibilities in the appeal. In saying this, I must note of course that essentially an identical case was run by DERM with respect to the Gallo appeal which was heard in conjunction with Williams and in that regard the case put by DERM was successful. In like manner, DERM was successful in its case in De Tournouer. Like Williams, both Gallo and De Tournouer are cases which fell for consideration under the backdrop of maladministration by DERM with respect to other licences under the Water Act.
[43] I should make one additional closing observation which I also made in the original reasons for judgment. This was also referred to by Mr Hinson SC and Dr Sammon in their submissions extracted above. In not an insignificant manner, the ultimate decision in Williams and Gallo turned on a clear distinction in the facts of the original Williams application documents as opposed to that to be found in the Gallo application documents and, indeed, in the De Tournouer application documents. Counsel for both Williams and DERM proceeded throughout the hearing on the basis that the application documents in Williams were in all respects the same as the application documents in Gallo and De Tournouer. It was only upon undertaking my own close examination of the application documents in Williams that I found a clear distinction between the Williams application documents and the De Tournouer and Gallo application documents. Had the Williams application documents been deficient in the same way in which the De Tournouer and Gallo application documents were, and had there been a subsequent disconnect between the application documents and the evidence as to use of the proposed water from the water licence as was the case with the evidence in De Tournouer and Gallo, then I can say without any shadow of doubt that like Gallo, the application by Williams would also have failed. This is a factor which, in my view, cannot be passed over lightly when exercising my discretion as to costs. It is an important feature as to how the legal representatives for both parties ran the Williams case.
[44] I have considerable sympathy for Williams and the expense to which they have been put, not only in prosecuting the appeal in this matter, but also in seeking a determination of costs in their favour. However, it is not permissible for this Court to do anything other than strictly apply the law as it falls upon me to do in the exercise of my discretion as to costs, and in so doing I conclude that I have no option in this matter other than to determine that the provisions of s.882(3) must apply as Williams has been unsuccessful in showing that any of the provisions set out in s.882(4) of the Water Act have been met.
[45] The order of the Court will be that the application by Williams for an order that DERM pay the costs of Williams be dismissed. As I previously indicated, in light of my finding that s.882(3) of the Water Act applies, it is not necessary for me to consider the issue of the Calderbank offer further.
Order
The appellant's application for costs against the respondent is dismissed.
P A SMITH
MEMBER OF THE LAND COURT
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