EVDO P/L, EVELYN MAZZONE & RAY MAZZONE v MEYER No. SCCIV-00-452 [2001] SASC 32

2 DUGGAN J. In this matter there is an appeal and a cross-appeal from a judgment and order of a judge of the Environment Resources and Development Court (the ERD Court) sitting in that court's appellate jurisdiction to hear appeals from the Warden's Court pursuant to s 65(3) of the Mining Act 1971. The matter arose out of an opal mining dispute and the Warden's Court purported to exercise jurisdiction given to it under the Opal Mining Act 1995.

3 The original proceedings in the Warden's Court were commenced by the respondent, Gerda Meyer. At all relevant times Ms Meyer was engaged in opal mining in the Coober Pedy area. In November 1994 she formed a partnership with members of the Mazzone family and interests associated with them. Although the position is not altogether clear on the evidence given before the Warden's Court, it would appear that the Mazzone partners were Sandra Mazzone, Ray Mazzone, Dom Mazzone, Evdo Pty Ltd as trustee of the Mazzone family trust and Cobweld Industries Pty Ltd which was a company controlled by the Mazzone family. The company was in liquidation at the time of the litigation. The partnership worked a number of claims at a location known as Dead Horse Gully.

4 The proceedings before the Warden's Court were commenced by a plaint filed by Ms Meyer on 8 October 1997. Ms Meyer complained in the plaint that her partnership with the Mazzone family had been "cancelled" by the Mazzones without her permission and that she had not received her share of a parcel of opal valued at $300,000 which had been taken out of a claim being worked by the partnership. The plaint also alleged that a claim which had been granted to Sandra Mazzone had not been worked for over one year. Forfeiture was sought in relation to that claim. The plaint was issued against Sandra Mazzone only. At this stage Ms Meyer was unrepresented.

5 The matter was called on before the Warden's Court on 16 March 1998. After some evidence had been given it became apparent that, instead of proceeding against Sandra Mazzone alone, Ms Meyer should have been seeking relief from her other partners as well. When this discovery was made the Warden decided to permit Ms Meyer to amend her plaint and the matter was adjourned.

6 Ms Meyer obtained legal representation and an amended plaint was filed on 6 April 1998. The defendants in this plaint were Sandra Mazzone, Ray Mazzone, Cobweld Industries Pty Ltd, Evdo Pty Ltd as trustee for the Mazzone family trust and Evelyn Mazzone as executor of the estate of Dom Mazzone. Mr Dom Mazzone had died on 21 October 1996. The relief sought by Ms Meyer in this plaint included delivery up of the parcel of opal previously referred to or, in the alternative, an order for payment of $75,000 together with an order forfeiting Sandra Mazzone's claim which was referred to in the previous plaint.

7 During the course of the hearing which was resumed on 8 February 1999, Ms Meyer claimed that she had paid an amount by way of partnership expenses to Dom Mazzone when those expenses had already been paid by a man named Rudin, a former partner of Ms Meyer. Although the claim for expenses was not referred to in the plaint, it became an issue during the trial and the Warden ruled on the claim in the course of his reasons for decision.

8 The Warden delivered an ex tempore judgment on 18 March 1999. He found that Ms Meyer had fabricated the assertion that a parcel of opal worth $300,000 had been discovered and he dismissed this part of her claim. He refused to make any order for the repayment of the expenses which Ms Meyer alleged she had paid twice. He dismissed all other claims made by Ms Meyer, but ordered that Sandra Mazzone's opal mining claim be forfeited. He found that Ms Meyer had a preferential right to peg this claim. He decided that each party should bear its own costs.

9 There was an appeal and cross-appeal against the Warden's decision to the ERD Court. Sandra Mazzone, Ray Mazzone, Evdo Pty Ltd (as trustee of the Mazzone family trust), Evelyn Mazzone and Evelyn Mazzone (as executor of the estate of Dom Mazzone) appealed on the issue of costs. The appeal was upheld to the extent that Sandra Mazzone was awarded costs of the initial hearing on 16 and 17 March 1998 which was adjourned so as to allow the plaint to be amended. The cross-appeal of Ms Meyer against all the abovenamed appellants as respondents to the cross-appeal was successful on one issue, namely, that relating to the expenses allegedly paid by her. The ERD Court ordered that she be paid the sum of $12,154.12 by Evdo Pty Ltd or Evelyn Mazzone as executor of the estate of Dom Mazzone. The other grounds of appeal which included a complaint that the Warden should have found in Ms Meyer's favour in relation to the alleged $300,000 opal find were dismissed.

10 The appeal and cross-appeal to this court come within a narrow compass. Evdo Pty Ltd, Evelyn Mazzone as executor of the will of Dom Mazzone and Ray Mazzone appeal against the finding that Ms Meyer paid twice for partnership expenses and seek to set aside the consequential order for the payment of $12,154.12 to her. The cross-appeal is by Ms Meyer against the order for costs arising out of the first hearing before the Warden in favour of Sandra Mazzone.

11 Evidence was given before the Warden that there were two partnerships between Ms Meyer and the Mazzone family which existed at different times. The first partnership commenced in 1993 and was wound up in October 1994. Ms Meyer's former husband Wally Rudin was a member of that partnership but she and Mr Rudin separated in October 1994. The second partnership involving the Mazzone interests and Ms Meyer commenced in November 1994. Ms Meyer claimed that after the second partnership was formed the Mazzone interests billed her for various expenses which were expenses of the former partnership and which had been paid for by Rudin. However the Mazzones claimed that the expenses for which she was billed related to purchases of equipment and stock acquired during the former partnership but kept in store and not used until after the second partnership had been formed. It was alleged that these items were used by the second partnership so that their cost was an expense of that partnership.

12 The first matter which arises for consideration is the appellants' contention that it was not within the jurisdiction of the Warden's Court to order the payment of the amount claimed to be due to Ms Meyer by reason of overpayment of partnership expenses. This argument was not raised before the Warden's Court or the ERD Court. However, having been raised before this court, it requires determination.

13 The Warden's Court exercises a somewhat unique and specialist jurisdiction. The Wardens apply industry knowledge and may employ a wide range of remedies (Carr v Simnovec (1986) 26 SASR 263.) However, the extent of the Warden's jurisdiction remains a matter of statutory interpretation. The starting point is s 72(1) of the Opal Mining Act which provides as follows:

"The Warden's Court has jurisdiction to determine, in the manner it thinks just, all suits concerning a right claimed in, under, or in relation to, a tenement, or a purported tenement, or a precious stones prospecting permit, or otherwise arising under this Act."

Section 72(3) declares that the court will also have jurisdiction in any matter in which it is vested with jurisdiction by regulation, but it would appear that there has been no relevant exercise of that power.

14 Section 3(1) of the Opal Mining Act provides that:

" 'precious stones tenement' or 'tenement' means -

In the present case the existence or otherwise of jurisdiction to hear the claim based on the overpayment of expenses depends upon the proper construction of the words in s72(1) "all suits concerning a right claimed in, under, or in relation to, a tenement".

15 The judgments in the case of O'Grady v Northern Queensland Co Ltd [1990] HCA 16; (1990) 169 CLR 356 provide considerable assistance in construing this provision. In that case a dispute arose in relation to an agreement between various parties in what was claimed to be a joint venture for the purpose of conducting exploration and mining operations on a mining lease in Queensland. The appellant claimed that there were various breaches of the agreement which were largely related to the failure of the respondent to acquire another's interest in the lease and the respondent's failure to carry out mining operations on the lease. The appellant claimed a declaration that the appellant and one Crowley, another party to the agreement, had rescinded the agreement. A counterclaim sought a declaration that the purported rescission of the agreement by the appellant and Crowley was invalid. The agreement provided for the constitution of a joint venture committee to supervise the activities of the respondent in its exploration and mining activities on the lease and the counterclaim also sought an order that the appellant and Crowley designate their representatives to the joint venture committee pursuant to the agreement.

16 The only question before the High Court was whether the relief sought in the counterclaim was within the jurisdiction of the Supreme Court or the Warden's Court. The Mining Act 1968 (Q.) conferred jurisdiction in various matters on the Warden's Court and that jurisdiction was exclusive. The action had been commenced in the Supreme Court. The High Court, by a majority, held that the subject matter of the counterclaim was not within the jurisdiction of the Warden's Court.

17 Section 80 of the Queensland Mining Act conferred jurisdiction on the Warden's Court. So far as is relevant it read:

"(1) Subject to section 80A, a Wardens Court shall have jurisdiction to hear and determine all actions, suits and proceedings arising in relation to mining or to any mining tenement."

The Act then provided that, without limiting the generality of the foregoing jurisdiction, the court was to have jurisdiction to hear and determine certain specified matters. None are relevant for present purposes.

18 It will be seen that the Queensland provision was similar in its wording to the relevant South Australian provision. If anything, the South Australian provision is narrower in that it does not refer to "mining" but is relevantly confined to "a tenement".

19 In rejecting the argument that the relief sought in the counterclaim came within s 80(1) Toohey and Gaudron JJ observed that whilst it is true that the phrase "in relation to" is of wide import, it "presupposes a direct connexion between a presently existing action, suit or proceeding and ... a mining tenement, not, merely an incidental connexion". (p374)

"In the Full Court Demack J. (with whom Andrews C.J. and McPherson J. concurred on the point) was of opinion that the facts asserted in the statement of claim 'necessarily related both to mining and to a mining tenement'. But, in his Honour's view, the counterclaim was 'simply a claim about personal obligations under a contract' and the facts, both as asserted and as found, 'involved no reference to mining or to mining tenements.

As already indicated, the relief sought by the respondent in its counterclaim was in part declaratory - in each of pars (a) and (b), that purported rescissions of the agreement of 25 October 1983 were of no effect. The respondent also sought an order aimed at constituting the joint venture committee in accordance with the agreement. The relief sought did not, in Demack J's words, necessarily relate to mining or to a mining tenement. The counterclaim is distinguishable from a claim for specific performance of a contract for the sale of a mining tenement or for an order for sale of such a tenement. Neither mining nor a mining tenement is directly the subject of the counterclaim. It may well be true, as counsel for the appellant contended, that the appointment of the joint committee is a prerequisite to the operation of the rest of the agreement and therefore a prerequisite to a 'joint venture ... for the purpose of conducting exploration and mining operations on the mining lease' (recital E of the agreement). But an order that the parties 'designate their representatives to the joint venture committee' is precisely that - a prerequisite to mining operations on the lease. Such an order would have only an incidental rather than a direction connexion with mining or a mining tenement."

20 Dawson J agreed with Toohey and Gaudron JJ. He said (p367):

"The crucial question is whether the proceedings constituted by the respondent's counterclaim were proceedings in relation to mining or to any mining tenement. The words 'in relation to', read out of context, are wide enough to cover every conceivable connexion. But those words should not be read out of context, which in this case is provided by the Mining Act 1968 (Q.). What is required is a relevant relationship, having regard to the scope of the Act. Where jurisdiction is dependent upon a relation with some matter or thing, something more than a coincidental or mere connexion - something in the nature of a relevant relationship - is necessary: see Reg. v Ross-Jones; Ex parte Green (1984) 156 CLR 185 at pp. 196-197, 210.

True it is that here the definition of 'mine' in s 7(1) of the Act, both as a noun and as a verb, is so wide as to offer little assistance, but the scope of the Act is otherwise sufficiently apparent. It is concerned with the regulation of mining and the right to mine in a practical and direct sense. It assumes a substratum of law which applies indifferently to matters whether connected or unconnected with mining. The law of contract is an example. A contract may deal with mining or a mining tenement, but proceedings arising out of the contract may raise only questions of personal obligations under a contract rather than questions related to mining or a mining tenement. That is to say, the proceedings may raise questions which are quite outside the area within which the Act purports to operate and which, for that reason, exhibit no relevant relationship with mining or a mining tenement. That was the case with these proceedings where the questions raised turned on facts which involved no reference to mining or to mining tenements. The questions which they raised were only coincidentally connected with mining or a mining tenement."

21 O'Grady's case was followed by Derrington J in International Oil Lease Service Corp. v Australian Energy Limited [1991] 2 Qd. R. 166. In that case application was made for declarations and consequential orders relating to contracts which provided for royalties to be fixed in respect of the exploitation of an authority to prospect held under the Petroleum Act 1923 (Q.). Derrington J was of the view that the proceedings were outside the jurisdiction of the Warden's Court. After referring to s 80(1) of the Mining Act (Q.) he said (169):

"Although royalties have a close and direct relationship with mining, these proceedings concern only the rights of the various parties inter se to those royalties. In O'Grady v Northern Queensland Co. Ltd [1990] HCA 16; (1990) 169 CLR 356 the High Court held that a counter-claim seeking declaratory relief (particularly that purported rescissions of an agreement relating to mining were of no effect) and other relief not relating to actual mining operations or tantamount to seeking specific performance of a contract relating to mining was only a claim about personal obligations under a contract. They were not proceedings 'arising in relation to' mining or an Authority to Prospect and so did not fall within the exclusive jurisdiction of the Warden's Court. Whilst the land in that case was certainly held under a mining tenement under the Mining Act, it was because the proceedings related only to the rights between the parties in connection with the subject matter that it did not come within the jurisdiction of the Warden's Court, even though that subject matter itself related to mining.

In the present case, royalties, although closely connected with mining, are not part of the mining process; and in an action concerned only with the rights of the parties in respect of those royalties, it is manifest how, in accordance with the reasoning of the High Court, the position here is identical in principle with the position in that case. Consequently, the jurisdiction of this Court in these proceedings is not touched by the legislation, and the declarations and orders could be validly made."

22 In my view the reasoning of the High Court in O'Grady's case is applicable also to the present case. As Olsson J pointed out in the course of argument, the order that Ms Meyer be paid an amount by reason of an overpayment to a partner is akin to an order consequent upon the taking of an account in a partnership. Indeed this is what was suggested by the mining Warden at the first hearing prior to the amendment of the plaint when he indicated to Ms Meyer the choices which were available to her. He said:

"If we go on with it, I need to know whether you are going on with it on the present basis, which is a plaint for forfeiture for labour, or whether you want to broaden the target, include the whole Mazzone partnership and make it an accounting exercise for what happened in the Mazzone partnership. They are your choices all right?"

23 The question as to whether Ms Meyer's partners were entitled to charge her for certain expenses is concerned with personal obligations arising out of the partnership agreement. The mere fact that the partnership was formed to conduct opal mining operations on a tenement is insufficient to establish a relevant relationship between the dispute and the mining tenement for the purposes of the Act. The circumstances in which the dispute arose and the resolution of it could not be said to bear upon the mining tenement in any way relevant to the Act.

24 It follows that the order subsequently made in the ERD Court for the payment to Ms Meyer, based as it was on the judge's view that there had been an overpayment of expenses to other partners, was outside the jurisdiction of the Warden's court and, therefore, the ERD Court.

25 Although this conclusion resolves this aspect of the matter in favour of the appellants, I propose to comment on the merits of the claim for overpaid expenses. The Warden dealt with this issue in the following passage in his reasons for decision:

"In relation to 'expenses overpaid', there is a blue book which is the only record that has been produced, which is the Dom Mazzone record of the relationships between the Mazzone partnership and Gerda Meyer. The Rudin partnership was finalised as between the Rudins and the Mazzones at the end of October 1994. Within the blue book are items purchased prior to the end of the Rudin partnership. The answer from the Mazzones is that that is because those items were held in stock by them. They might have been purchased earlier but they had not been brought to account against any partnership because they were just held in stock. If an item of stock was then applied to the Komatsu bulldozer or other mining activities in which Gerda Meyer was in partnership, then they are entitled to call it into account at the time when it was used.

On the evidence available to me, that must be a sufficient answer. I have nothing to rebut that and so the plaintiff cannot prove on the evidence before me that they are a double charge rather than, as the Mazzones have explained, a stock item purchased earlier but not previously called into account because it had not previously been used."

26 The learned ERD Court judge took a different view in relation to some of these purchases. Her Honour said:

"We come now to the ground of the cross-appeal which alleged error on the part of the learned Senior Warden in that he failed to award the respondent the money for the expenses for which she was, it is said, double-billed, meaning that she was charged and paid for, expenses which she and he ex husband Wally Rudin, had paid in the final accounting at the conclusion of their partnership with Evdo Pty Ltd, on or about 31 October 1994.

The difficulty facing the Senior Warden was that a number of apparently vital records, were missing. In addition, the respondent had not kept any records herself, nor was her former husband called to give evidence in respect of the finalisation of accounts between him and the respondent on the one part, and Dom Mazzone on the other part, at the conclusion in 1994 of the partnership between the parties. Ray Mazzone did not keep any records in relation to dealings between the appellant Cobweld Industries Pty Ltd, of which he was a director, and the respondent. Evelyn Mazzone, the widow of the late Dom Mazzone, appears to have written invoices as directed by her husband, and kept some records in relation to both Cobweld and Evdo Pty Ltd. However, clearly the principal record-keeper in financial matters concerning the partnership between the respondent and the appellant company or companies was Dom Mazzone. The evidence indicates that he was meticulous, but not necessarily comprehensive, tidy or timely, in his record-keeping. No-one can now say whether his record-keeping was honest, as it appears that much of the information about the arrangements he had with partners of himself or Cobweld, or Evdo, passed with him - that is, in the absence of the missing 'Red Book'.

The respondent was unable to support her assertions with respect to the records. In the absence of any better explanation, the learned Senior Warden accepted the evidence of Evelyn Mazzone as being the most plausible explanation for the apparent double charging of the respondent by Dom Mazzone on behalf of Evdo or another Mazzone entity. The learned Senior Warden had the advantage, which I have not had, of seeing Evelyn Mazzone give her evidence. However, in the morass of documents showing figures and accounts, tendered at the hearing, it seems obvious that the respondent was charged for items totalling $17,408.23, which were acquired during the period of the partnership between her and her ex husband, and Evdo. The explanation of Evelyn Mazzone might have accounted for some of the items, but it is difficult to understand how the respondent could be charged for fuel purchases made well prior to the commencement of her partnership with Evdo or a Mazzone entity, which commenced on 1 November 1994. The purchases to which I refer were made in 1994, on 6 April, 3 June, 6 August and 23 September. I think the Senior Warden erred in accepting that purchases of this nature were made, not once prior to the partnership, but on several occasions, up to 7 months earlier, but were not used, and therefore brought to account, until the partnership with the respondent. On the balance of probabilities, I think the evidence points to the amount of $12,154.12 being incorrectly deducted from moneys due to the respondent, by Dom Mazzone, on behalf of Evdo or another entity. The issue of the other expenses is more problematic. Evelyn Mazzone's evidence was a plausible explanation, and there is no reason for me to disturb the Senior Warden's findings in this regard."

27 As the learned judge pointed out, the business records of the partnerships were incomplete. It cannot be determined whether the record-keeping was honest and Dom Mazzone is now dead. Much depended, therefore, on the Warden's assessment of the credibility of the witnesses who gave evidence. The decision of the judge appealed from was based on her view that it is unlikely that fuel would have been kept in store over this period. Evelyn Mazzone was asked why oil would have been kept over a period and she gave an answer which appears to have been accepted. However, it does not appear that she was asked any questions about the storage of fuel. In the absence of any direct evidence on the issue I think it was inappropriate for the ERD Court judge to decide the matter on the basis of her assumption about the length of time fuel would be stored. The Warden was in a much better position to assess this issue and, in my view, there was insufficient reason to interfere with his finding in this respect. If I had found that there was jurisdiction in the Warden to decide this particular matter I would have allowed the appeal against the ERD Court's decision on the merits.

28 I have said that the learned judge awarded costs in favour of Sandra Mazzone for the hearing on 16 and 17 March 1998 which ended with the adjournment to amend the plaint. It was also decided that there be no order as to costs in relation to the remainder of the hearing in the Warden's Court. The notice of cross-appeal complains about the award of costs in relation to the hearing on 16 and 17 March. It is not in dispute that the plaint was not in order at that time having regard to what the court was told about the relief being sought. If the proceedings were to remain on foot it was necessary for an adjournment to be ordered while the plaint was being amended. As this was in no way the fault of Sandra Mazzone it was appropriate that costs should be awarded in her favour. The subsequent decision on the merits of the amended plaint does not affect her entitlement to costs in relation to the initial hearing. However, the further argument that Ms Meyer should have been entitled to part of her costs by reason of the decision of the ERD Court to award her $12,154.12 cannot be supported if that aspect of the decision is set aside.

29 In any event, it was conceded by counsel for Ms Meyer at the conclusion of the hearing of the present appeal that the notice of cross-appeal had not been served on Sandra Mazzone and that she had not been advised of the hearing of the appeal. For all these reasons it follows that no order adverse to her interests can be made. The cross-appeal against costs cannot succeed and should be dismissed.

30 In my view the appeal should be allowed and the cross-appeal dismissed. I would set aside the order that Ms Meyer be paid the amount of $12,154.12 by the respondents to the cross-appeal. I would also set aside the order that Ms Meyer be entitled to three-quarters of the costs of the appeal to be paid by the appellants.

31 MARTIN J. I agree with the orders proposed by Duggan J and with his reasons.