ERO Georgetown Gold Operations Pty Ltd v Henry

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27

Baini v The Queen [2012] HCA 59; (2012) 246 CLR 469

Calderbank v Calderbank [1976] Fam. 93

ERO Georgetown Gold Operations Pty Ltd v Henry [2015] QLAC 4

Chief Executive, Department of Natural Resources and Mines v Kent Street Pty Ltd & Ors [2010] QCA 56; [2011] 2 Qd R 417

Gallo v Department of Environment and Resource Management (No. 2) [2014] QLAC 11

Hegira Limited v Department of Natural Resources and Water [2006] QLC 0079

Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534

Mentech Resources Pty Ltd v MCG Resources Pty Ltd (in liq) & Ors [2012] QLAC 2

Mio Art Pty Ltd v Brisbane City Council (No 3); Greener Investments Pty Ltd (in liq) v Brisbane City Council (No 3) [2013] QLAC 3

Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72

Ostroco v Department of Main Roads (No. 2) [2012] QLAC 007

PT Limited & Westfield Management Limited v Department of Natural Resources and Mines [2007] QLAC 0121

Queensland Fish Board v Bunny; ex parte Queensland Fish Board [1979] Qd R 301

Re JJT & Ors; ex parte Victoria Legal Aid [1998] HCA 44; (1998) 195 CLR 184

Tamawood Limited & Anor v Panns [2005] QCA 111; [2005] 2 Qd R 101

The Appellants v Council of the Law Society of the Act and Anor [2011] ACTSC 133; (2011) 252 FLR 209

Vass and Lambert v Coordinator-General (No. 2) [2015] QLAC 2

Wyatt v Albert Shire Council [1987] 1 Qd R 486

YMCA v Chief Executive, Department of Transport and Main Roads (No 2) [2012] QLAC 004

Acts Interpretation Act 1954

Civil Proceedings Act 2011

Land Court Act 2000

Land Court Rules 2000

Mineral Resources Act 1989

Property Law Act 1974

Supreme Court of Queensland Act 1991

Uniform Civil Procedure Rules 1999

Valuation of Land Act 1944

Water Act 2000

[1] The successful respondent in this appeal seeks its costs on the indemnity basis under s 34(2) and s 72 of the Land Court Act 2000 (Qld) (LC Act). It seeks those costs both in the appeal, and in the Land Court, on the basis that the Land Court had not determined an application made by the respondent for costs.

[2] In the Land Court, the respondent successfully sought an amendment of the compensation payable to him by the appellant under the provisions of the Mineral Resources Act 1989 (Qld) (MR Act).

[3] The respondent contended (and it was not contested by the appellant) that the effect of the Land Court's determination was that he received an additional sum of $75,476, being an amount of $37,907.10 compensation for the period up to 13 July 2015, with additional monthly compensation of $3,954.62 for a further 9.5 months.

[4] On 19 June 2014, on 30 June 2014, and again on 11 July 2014 the respondent made offers to settle the proceedings; as well as some other proceedings and some other outstanding matters between the parties.

[5] On 15 September 2015, after the appellant had appealed against the Land Court's determination of compensation, the respondent offered to settle the matter on the basis that the appellant pay the respondent $70,000, with each party to bear its own costs of the proceedings in the Land Court, and in this Court. The offer invoked r 358 and r 360 of the Uniform Civil Procedure Rules 1999 (QLD) (UCPR); as well as Calderbank v Calderbank[1]; foreshadowing that if it was refused, costs would be sought on the indemnity basis. It was open for acceptance until 30 September 2015.

[6] None of these offers was accepted.

[7] Jurisdiction was conferred on the Land Court to hear the respondent's claim for amended compensation by s 283B of the MR Act. The respondent also sought relief under s 363 of the MR Act, which conferred jurisdiction on the Land Court to hear certain types of proceedings, though it was unnecessary to determine whether such relief should be granted[2].

[8] Under s 5 of the LC Act, the Land Court[3] has the jurisdiction given to it under that Act, or another Act.

[9] Section 34 of the LC Act gives the Land Court the power to award costs. It is in the following terms:

(1) Subject to the provisions of this or another Act to the contrary, the Land Court may order costs for a proceeding in the court as it considers appropriate.

(2) If the court does not make an order under subsection (1), each party to the proceeding must bear the party's own costs for the proceeding."

[10] By s 72 of the LC Act, s 34 of that Act is taken to apply, with necessary changes, to this Court.

[11] There has been no suggestion that any provision of the MR Act is relevant for the present application.

[12] For the respondent, it was submitted that costs should follow the event, relying on a statement by Keane JA in Tamawood Limited & Anor v Panns[4]; and on Hegira Limited v Department of Natural Resources and Water[5]. Reliance was also placed on a passage from the judgment of McHugh J in Latoudis v Casey[6]. It was submitted that the respondent was forced to incur costs by the conduct of the appellant, and its refusal to pay compensation; and that the respondent had acted reasonably and responsibly in conducting the litigation. It was also submitted that the result was more favourable to the respondent than his offers, and accordingly that he should be awarded indemnity costs[7].

[13] For the appellant it was submitted that each party should bear its own costs. The Explanatory Notes to the bill which lead to the enactment of the LC Act confirmed that under s 34, the general rule was that each party should bear their own costs[8]. PT Limited & Westfield Management Limited v Department of Natural Resources and Mines[9] (PT Ltd) did not deal with s 34 of the LC Act, but with s 66 of the Valuation of Land Act 1944 (Qld) (VL Act). Referring to PT Ltd, it was submitted that parties should not be discouraged from seeking to assert rights by the fear of adverse costs. Reliance was placed on a passage from the Court of Appeal's decision in Chief Executive, Department of Natural Resources and Mines v Kent Street Pty Ltd & Ors[10] (Kent Street) which stated that there are obvious reasons for the imposition of limitations on the power of the Land Court and the Land Appeal Court to impose costs, these Courts being intended to give members of the public a broad opportunity to litigate determinations made under a statute which may have adverse consequences for them. It was submitted that the prima facie position under s 34 of the LC Act was that each party bear its own costs[11].

[14] It was also submitted for the appellant that this Court has no power to make an order for costs in the Land Court proceedings; and in particular, s 57 of the LC Act did not confer such a power on it. The UCPR provisions relating to offers had no application[12].

[15] In reply, it was submitted for the respondent that it was established that s 34 conferred an unfettered discretion to award costs, regularly resulting in costs following the event[13]. Oshlack v Richmond River Council[14] was relied upon as support for a submission that the most important factor guiding the exercise of a discretion to award costs is the result of the litigation, the successful litigant generally being awarded its costs. The legislation considered in Kent Street was similar in form to s 34. This Court should follow its previous decision in Gallo v Department of Environment and Resource Management (No 2)[15] (Gallo), where it was held that this Court, when determining an appeal from the Land Court, had the power to award the costs of the proceedings in that court. It would be an unduly narrow reading of s 57 to hold that this Court does not have power to make orders with respect to the costs of the Land Court proceeding in an appeal from that Court[16].

[16] In Mentech Resources Pty Ltd v MCG Resources Pty Ltd (in liq) & Ors (No 2)[17] this Court considered the effect of s 34 of the LC Act. It said[18],

"Hence the Land Appeal Court may order costs 'as it considers appropriate'. The discretion to award costs is unfettered. However the rule often followed, and the rule incorporated in r 689 of the Uniform Civil Procedure Rules 1999, is that costs follow the event. That rule, while it does not govern the exercise of the discretion here, nonetheless informs it, as there is justice in that approach. It protects those put to unnecessary and substantial expense at the behest of others." (references omitted)

[17] That reasoning has been applied by this Court in YMCA v Chief Executive, Department of Transport and Main Roads (No 2)[19]; Ostroco v Department of Main Roads (No 2)[20]; and Mio Art Pty Ltd v Brisbane City Council (No 3); Greener Investments Pty Ltd (in liq) v Brisbane City Council (No 3)[21]; and is at least implicit in the approach taken in this Court to the award of costs in respect of the appeal to it in Gallo & Ors v Chief Executive, Department of Environment and Resource Management (No. 2)[22]. That approach is consistent with the principle stated in Oshlack that a successful litigant is generally entitled to an award of costs. It is also consistent with the following statement from his Honour's judgment in Latoudis[23]:-

"...even when the discretion (to award costs) is uncontrolled, civil courts act on the basis that a successful party has a reasonable expectation of obtaining an order for costs and that the discretion to refuse to award costs should not be exercised against the successful party except for a reason connected with the case."

[18] The appellant relied upon the Explanatory Note to the Bill which preceded the enactment of the LC Act. Relevantly, it includes the following:

"Clause 34 the general rule is that parties to a proceeding bear their own costs.

However, the Court may make an order as to costs it considers appropriate. For example, a successful party may be granted an order that the other side pay all or part of their (the successful party's) costs."

[19] The appellant's submissions did not identify the basis on which it was said recourse might be had to this material. Under s 14B of the Acts Interpretation Act 1954 (Qld) (AI Act) that may occur where a statutory provision is ambiguous or obscure; of if the ordinary meaning of the provision leads to a result that is manifestly absurd or unreasonable. Recourse might also be had to such material to confirm the interpretation conveyed by the ordinary meaning of the provision.

[20] There is no ambiguity about the language of s 34 of the LC Act. Nor as the result of the adoption of the ordinary meaning of its language is it manifestly absurd or unreasonable.

[21] Nor has it been suggested that reference to the note was necessary to identify the purpose of s 34, so that effect might be given to s 14A of the AI Act. The purpose of s 34 is made plain by its language, being, relevantly, to confer a discretionary power on the Land Court (and by extension, this Court) to award costs. No basis has been shown on which recourse might be had to the Explanatory Note for the purpose of construing s 34.

[22] In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue[24] Hayne, Heydon, Crennan and Kiefel JJ said

"This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy." (references omitted)

[23] Section 34(1) makes clear that the Court has the power to make an order for costs, which it considers appropriate. The range of considerations relevant to the exercise of that power, and the weight to be given to them, is not identified by the provision, these matters being left to the Court itself. Section 34(2) does not alter the effect of s 34(1). It simply states the consequence of the Court not making an order for costs. The Explanatory Note, if recourse to it were permissible, cannot affect the plain meaning of these provisions. As was pointed out by the High Court in Baini v The Queen[25], paraphrases of the statutory language, whether found in parliamentary or other extrinsic materials, are apt to mislead if attention strays from the statutory text. Still less can they be said to alter its effect.

[24] While s 34 does not accord pre-eminence to the rule that the costs follow the event, in contrast to r 681 of the UCPR, equally, it does not create a general rule that parties bear their own costs. When an application is made for costs under it, the Court is required to determine what order (if any) is appropriate. In carrying out that task, the Court is to have regard to established principles relating to the exercise of such a discretion, to the extent they are relevant to the facts of the case before the Court. One such principle is the "rule often followed" that costs follow the event. The passage quoted from the judgment of McHugh J in Latoudis is also relevant. It follows that a party's success will often be a significant, though not necessarily decisive, factor in its application for an order for costs.

[25] The appellant relied on a statement of Callinan J in Re JJT & Ors; ex parte Victoria Legal Aid[26] about the effect of s 117 of the Family Law Act 1975 (Cth). The statement was relied upon in support of a submission that, under s 34 of the LC Act, "the 'prima facie' position is that each party bears its own costs of the proceeding, which involves an express departure from the approach to a general discretion to award costs that follow the event"[27]. The statement of Callinan J was, relevantly, that "authorises a departure from what may be taken as the usual course in litigation, that costs follow the event, to provide that parties will (subject to certain provision of the Family Law Act) be required to bear their own costs". His Honour's statement reflects the structure of s 117, which gives primacy to the provision requiring each party to bear his or her own costs; and conditions the power of the Court to award costs on its opinion that there are circumstances which justify it in doing so. The statement is of no real assistance in determining the effect of s 34.

[26] In support of its submission as to the "prima facie position", the respondent relied upon the statement in Kent Street as to limitations imposed by statute on the circumstances in which the Land Court might make an order for costs. The passage relied upon by the respondent[28] sought to explain why the provisions in s 70 of the VL Act did not bind the Court of Appeal when making a costs order. Again, the statement is of no assistance in relation to the exercise of the much broader discretion conferred by s 34.

[27] The appellant also relied upon a passage from the judgment of this Court in PT Ltd[29], as follows

"Contemporary legislation in Queensland tends to make express provision about costs if it is thought desirable that parties not be discouraged from seeking to assert rights by the fear of adverse costs orders".

[28] The statement was made about s 341 of the Property Law Act 1974 (Qld), analogous to s 117 of the Family Law Act. In that case, this Court recognised that in revenue appeals (of which it was an example) a cautious approach should be taken to the awarding of costs; but that the words of the statutory provision conferring the power to award costs must be kept firmly in mind, and costs should be awarded in an appropriate case[30]. The present case is not a revenue appeal.

[29] As was recognised in PT Ltd by reference to Wyatt v Albert Shire Council[31], where a broader discretion is conferred to award costs, the power is to be exercised judicially, but the Court can have regard to "settled practice". It specifically recognised the relevance of the outcome of litigation[32].

[30] It follows that the appellant's submission that the prima facie position under s 34 of the LC Act is that each party is to bear its own costs should be rejected. A party's success will often be a significant factor in the exercise of the discretion to award costs under that section.

[31] There is no reason to think that the respondent's success should not be regarded as significant in determining the application for costs. Section 34 is not drafted as an express provision intended to ensure that parties are not discouraged from seeking to assert rights by the fear of an adverse costs order. While there might be cases where this consideration is important, there is no reason to think that this is one of them. It follows that the respondent should have its costs of the appeal.

[32] Since several of the respondent's offers incorporate terms which go beyond the resolution of his claim for compensation, and the effect of which it is difficult to evaluate, they cannot be measured against the respondent's ultimate success. The most that can be said is that they displayed a willingness on the part of the respondent to attempt to resolve his dispute with the appellant without further litigation.

[33] The only offer capable of being measured against the respondent's ultimate success is that of 15 September 2005.

[34] The appellant submitted that this offer should not be tested against the provisions of r 360 of the UCPR, r 4 of the Land Court Rules 2000 (LCR) not being apt to incorporate it into those rules. Rule 360 is not an isolated provision, being one of a number of rules found in Part 5 of Chapter 9 of the UCPR. Its operation is confined to cases where there are pleadings, or, as the result of an order or direction, documents in the nature of pleadings[33]. For this reason alone, the applicability of r 360 to an appeal to this Court may be doubted.

[35] More significantly, s 34 confers an unfettered discretion to award costs. Power is conferred, in bare terms, on the Supreme Court, the District Court and the Magistrates Court to award costs by s 15 of the Civil Proceedings Act 2011 (Qld)[34], the section making no provision for the manner in which the power is to be exercised. However, s 85 of the Supreme Court of Queensland Act 1991 (together with s 21 of Schedule 1 to that Act) authorises the Governor in Council to make rules as to costs in civil proceedings. It is as a result of these statutory provisions that the power to award costs is regulated, for example, by r 360 and r 681. It is hardly to be thought that the rule making power conferred by s 21 of the LC Act was intended to authorise the making of a rule altering the effect of s 34. It follows that r 360 of the UCPR does not apply to this appeal.

[36] Nevertheless, it is well established that a failure to accept an offer to settle a matter may result in an award of costs on the indemnity basis. The principle was established in Calderbank. The policy which lies behind the provisions of the UCPR previously mentioned would encourage its application. Although the fact that the offer was made but not accepted is a weighty factor, an order for indemnity costs does not follow as of course[35]. Where the result is more favourable to the offeror, than the offer was, it has been said that there is a persuasive burden on the offeree to show that its failure to accept the offer was (objectively[36]) reasonable[37]. A number of factors have been identified as relevant where a Calderbank offer has been made[38]. They will be considered shortly. The following proposition appears in Dal Pont[39], based on some authorities:

"If, say, the offer is a genuine attempt to compromise, is clearly expressed, is open for sufficient time that the offeree can give it due consideration, and is made at a stage of the proceedings when the offeree has access to sufficient information to assess its merit, the court will likely order the offeree to pay the offeror's costs after the date of the offer, probably on the indemnity basis, should the offer prove more favourable to the offeror than the judgment." (references omitted).

[37] The statement recognises the fact that the range of options available to a court will vary depending on whether the offeror is the successful or unsuccessful party. If it is the successful party, in most cases the only advantage to be secured by the offer is an award of indemnity costs from the time of the offer. If it is the unsuccessful party, the offer may protect it from an order for costs from that time; or even secure a favourable order, whether on the standard basis or the indemnity basis. Where the offeror is the successful party, an indemnity order is more likely than when it is the unsuccessful party. There is much to be said for the proposition that, when the offeror is ultimately the successful party in the litigation, it should have the benefit of an indemnity order. Otherwise the incentive to make such an offer is significantly reduced, as is the encouragement to the offeree to accept it; and effect is not given to the policy of encouraging the early resolution of litigation.

[38] The proposition just quoted makes no express reference to the reasonableness of the offeree's failure to accept the offer. It may be said that the factors referred to are relevant in determining whether that failure is reasonable, but they may not be exhaustive. For example, it would appear that a reasonable belief, after proper consideration, that there are strong prospects of success may make the failure reasonable[40].

[39] In the present case, the September offer was made well before the hearing of the appeal; but at a time when, because there had been a determination in the Land Court, the appellant was well able to assess the merits of the case. Moreover, it knew that there was already a determination adverse to it, giving it reason for some caution in the assessment of the merits of its appeal. It has not suggested that it had good reason to think it had substantial prospects of success. Nor is it inherently likely that it took that view. There was no obvious error in the Land Court's determination. Indeed, it might be thought that the appellant faced significant difficulties in these proceedings. The respondent's claim arose from the fact that the appellant had placed a fence across the respondent's principle means of access to his leasehold property, Flat Creek Station, on which he also conducted a camping ground for tourists. The compensation agreement which the appellant's predecessor had entered into with the respondent included a condition that roads in the area should be maintained in good order[41]; and its mining lease was subject to a condition that, without the prior approval of the relevant Minister, the appellant was not to obstruct or interfere with any right of access had any person in respect of the area of the mining lease, under s 276(1)(d) of the MR Act. The appellant sought to contend that its conduct was not a material change of circumstances. It obviously faced considerable difficulties in its contention.

[40] The appellant was given a reasonable period of time in which to consider the offer. There is no reason to doubt that the offer was a genuine attempt to compromise the litigation. It was clearly expressed, and it gave notice that indemnity costs would be sought if it was refused. It might also be said that the result is substantially more favourable to the respondent. Although the compensation is only a little higher than the amount which the respondent was prepared to accept, the respondent was prepared to forego costs. The costs of the proceedings in the Land Court are likely to be significant, particularly in comparison with the amount in issue. There was a three day hearing (with expert witnesses) in a remote location producing an appeal record in this Court of six volumes. The costs of the appeal are also likely to be significant.

[41] For the appellant it was contended that it had legitimate concern about the findings of the learned Member; with the possibility that the lease might be cancelled, or that a penalty might be imposed. The submission did not refer to evidence that the appellant in fact had such a concern; or that there was any real risk of the cancellation of the lease or the imposition of a penalty. The risk of either of these events would seem quite low, given that the appellant had reinstated the respondent's access, it would seem with some direction from the Department of Natural Resources and Mines, by about 29 April 2015.

[42] When these considerations are weighed up, they favour the making of an order for costs on the indemnity basis.

[43] Accordingly, the appellant should be ordered to pay the respondent's costs of the appeal; on the standard basis until 15 September 2015, and thereafter on the indemnity basis.

[44] After substantial reasons on this question were prepared, it came to the notice of the Court that the Land Court had made an order for the costs of the proceedings before it. There being no appeal from that order, and the appeal against the Land Court's determination of the proceedings before it having been dismissed, there is no occasion for this Court to make an order for the costs of the proceedings in the Land Court.

[45] This Court should make an order that the appellant pay the respondent's costs of and incidental to the appeal to this Court, to be assessed on the standard basis until 15 September 2015, and thereafter on the indemnity basis.

1. The appellant pay the respondent's costs of and incidental to the appeal in this Court, to be assessed on the standard basis until 15 September 2015, and thereafter on the indemnity basis.

[1] [1976] Fam. 93.

[2] See ERO Georgetown Gold Operations Pty Ltd v Henry [2015] QLAC 4 at [77]- [78].

[3] No submissions were made as to the version of this Act to which reference should be made for this application. It seems appropriate to rely on that which was current in September 2013.

[4] [2005] QCA 111; [2005] 2 Qd R 101 at [30], [32], [33].

[5] [2006] QLC 0079.

[6] [1990] HCA 59; (1990) 170 CLR 534, 566-570.

[7] Respondent's Submissions on Costs, 4 December 2015, paras 12, 13, 23.

[8] Written Submissions of the Appellant as to Costs, 18 December 2013, para 3 (ASC).

[9] [2007] QLAC 0121.

[10] [2010] QCA 56; [2011] 2 Qd R 417 at [14].

[13] Respondent's Reply Submissions on Costs, 22 December 2015, para 2 (RRS).

[14] [1998] HCA 11; (1998) 193 CLR 72, 96.

[15] [2014] QLAC 11.

[17] [2012] QLAC 2.

[19] [2012] QLAC 004.

[20] [2012] QLAC 007.

[21] [2013] QLAC 3.

[22] (2014) 206 LGERA 342.

[24] [2009] HCA 41; (2009) 239 CLR 27 at [47].

[25] [2012] HCA 59; (2012) 246 CLR 469 at [14]; see also [35].

[26] [1998] HCA 44; (1998) 195 CLR 184 at [125].

[29] [2007] QLAC 0121 at [22].

[30] See PT Ltd at [15], [18], [23].

[31] [1987] 1 Qd R 486.

[35] G.E. Dal Pont, Law of Costs (3rd ed, 2013, LexisNexis Butterworths: Australia) para 13.72 (Dal Pont).

[38] Dal Pont paras [13.73]-[13.86], [13.88].

[41] ERO Georgetown Gold Operations Pty Ltd v Henry [2015] QLAC 4 at [12].