Application for costs successful – Material change of circumstances for mining lease
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Carter Newell first reported on the matter of Henry v ERO Georgetown Gold Operations Pty Ltd (ERO) [2015] QLC 13 in our previous newsletter issued in June 2015 titled ‘Material change in circumstances’.
In this case, the landholder successfully applied to the Land Court claiming that there had been a material change of circumstances in mining operations on the land, since the entry by the parties into a compensation agreement in 2002. The key issue in dispute was whether the actions of ERO, in fencing off and restricting access to an existing road on the land, amounted to a material change in circumstances warranting an adjustment to the compensation paid to the landholder.
It was reported that the landholder was successful at first instance, with the Land Court finding that the decision to restrict access to the road, and ERO’s failure to provide an alternative right of access, constituted a material change of circumstances.
ERO has since unsuccessfully appealed the decision to the Land Appeal Court, which handed down its judgement in November 2015, ERO Georgetown Gold Operations Pty Ltd v Henry [2015] QLAC 4.
With ERO’s appeal unsuccessful, the landholder has more recently applied for his costs of the primary proceedings before the Land Court. In March 2016, the Land Court handed down its judgment and ordered ERO to pay the landholder’s costs of the proceedings on the standard basis Henry v ERO Georgetown Gold Operations Pty Ltd [2016] QLC 17.
The appeal
The key submission put forward by ERO on appeal was that the Land Court had erred in finding that there had been a material change of circumstances, specifically because the Court did not identify that the change in circumstance was ‘for the mining lease’.
Relevantly, s 283B of the Mineral Resources Act 1989 (Qld) (MRA) empowers the Land Court to review the compensation which has been agreed or determined where:
‘There has, since the agreement or determination, been a material change in circumstances for the mining lease.’
Essentially, it was asserted that this provision should be construed such that the change in circumstances must have, ‘as its object or purpose, the mining lease itself’. In essence, a mining lease is a grant of rights. The effect of ERO’s submission was to suggest that the provision is limited to a change in circumstances relating to the mining lease, in the sense of a change impacting upon the rights granted.
In rejecting this narrow construction of the provision, the Appeal Court analysed the relevant provisions and found that the circumstances referred to in s 283B of the MRA are those related to the identification of compensation.
It was found that the key issue is whether there is a material change to circumstances relevant to the agreement about, or determination of the compensation. Therefore, the Appeal Court observed that s 283B extends to changes in the way in which the rights under a mining lease are exercised, such as operational changes, and to the effects of those changes on the person entitled to compensation. Nevertheless, the linkage of ‘for the mining lease’ may yet have importance, depending on the nature of the material change which is alleged to have occurred.
The costs decision
The landholder applied to have his costs of the proceedings in the Land Court on the indemnity basis, or otherwise on the standard basis. The starting point is s 34 of the Land Court Act 2000 (Qld) (Land Court Act), which empowers the Land Court to order costs for a proceeding as it considers appropriate. In contrast, in the superior civil courts, the starting position is that costs should follow the event.
While the Land Court will take into account the general law proposition that costs should follow the event,1 it is not the default position in resource compensation cases. In these types of matters, it has been observed that the discretion should be exercised judicially and cautiously.
A preliminary jurisdictional issue arose as to whether a review of compensation matter under the MRA was a ‘proceeding’ within the ambit of s 34 of the Land Court Act. Issues of this nature were brought into sharp focus in the Supreme Court decision of BHP Billiton Mitsui Coal Pty v Isdale and Others (2015) QSC 107.
The issue in that case was whether the Land Court’s function, in hearing objections to a mining lease application, is an administrative enquiry and not a ‘proceeding’. If the Land Court was merely carrying out an administrative function, then the disclosure of documents provisions of Chapter 7 of the Uniform Civil Procedural Rules 1999 (Qld) (UCPR) would not apply, as those disclosure requirements only apply to ‘proceedings’ in the Land Court. The Supreme Court ruled that the Land Court was carrying out an administrative, and not a judicial function, in hearing objections to the grant of a mining lease. The practical outcome was that the mining lease applicant was not required to comply with onerous disclosure requests by the objectors.
Issues of this nature were again raised in the present proceedings, particularly due to the fact that the yet to be proclaimed
s 97 of the State Development and Public Works Organisation and Other Legislation Amendment Act 2015 (Qld), refers to compensation hearings under the MRA as involving administrative functions of the Land Court. In the present matter, the Land Court found that, notwithstanding that reference, the hearing of a compensation application under the MRA is a judicial function and is therefore a ‘proceeding’ within the ambit of s 34 of the Land Court Act.
Turning to the substantive issues, the Land Court observed that neither the notable complexity of the matter itself, nor the conduct of ERO, who acted reasonably in the proceedings and enjoyed some prospects of success, warranted the award of costs to the landholder.
However, the Land Court emphasised the fact that the landholder had been wholly successful in the proceedings. The court cited the landholder’s entitlement to seek the aid of the Land Court to obtain compensation as a result of mining activities. Since ERO had refused to pay additional compensation after restricting access to a road on his property, which consequently caused him loss that he was only able to recover through successful proceedings, it was found that these factors justified the award of costs on the standard basis.
Indemnity costs were sought on the basis that a number of Calderbank offers had been made by the landholder throughout the proceedings, none of which had been accepted by ERO. While the court acknowledged that the rejection of such an offer, where the outcome of the proceedings is less favourable than the terms of the offer, may warrant the award of indemnity costs, the decision to do so is discretionary. Moreover, the discretion will generally not be exercised where it was not unreasonable or imprudent to have rejected the offer.
The court analysed the various offers made and noted a number of issues, such as, in the case of one of the offers, there having been insufficient time to consider the offer. The court also found that ERO had some prospects of success in the proceedings. This also supported the Land Court’s conclusion that it was not unreasonable to have refused the offers. Therefore, costs were awarded on the standard basis only.
Conclusion
The decisions of the Land Court and the Land Appeal Court in this matter provide further guidance on the application of the material change and circumstances provisions of the MRA. In addition, these proceedings also provide a valuable example of where a landholder may be successful in securing an order for the costs of these forms of proceedings in the Land Court.
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1 Mentech Resources Pty Ltd v MCG Resources Pty Ltd (In Liq) & Ors (No. 2) [2012] QLAC 002.
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