Maitland Main Collieries Pty Ltd v Hunter Valley Coal Corporation Pty Ltd

5169/05 - MAITLAND MAIN COLLIERIES PTY LTD v HUNTER VALLEY COAL CORPORATION PTY LTD JUDGMENT 1 HIS HONOUR: This is a dispute between two mining companies over land at Glennies Creek in the Upper Hunter Valley. The plaintiff, with others, operates the Glennies Creek Coal Mine. The defendant operates another coal mine in the vicinity at Mount Owen. Coal is moved from Mount Owen to the Great Northern Railway by rail and for this purpose the defendant constructed a spur railway line, which passes over the surface of part of the plaintiff's mine. The line was constructed in 1996. 2 It was necessary in 1995/96 for the defendant to secure the approval of a development application by the Singleton Shire Council in order to construct its railway line. The plaintiff objected to that development application. 3 The matter was resolved by the parties entering into a deed of release and indemnity bearing date 13 December 1995. I will simply refer to this document as "the deed". 4 The deed recites that the defendant wished to construct a rail line above coal lease 382, where the plaintiff intended to operate multi-seam longwall panels. The plaintiff referred to in the deed as MMC, the holder of that coal lease, would withdraw its objection to the Singleton Shire Council to the construction of the rail line provided that the defendant (HVCC) entered into the deed. 5 The operative part of the deed is as follows: "1. MMC agrees to withdraw immediately its objection lodged with the Singleton Shire Council to the construction of the Rail Line by HVCC over the Land. 2. MMC will advise HVCC of its proposed second working applications and plans so as to give HVCC at least 6 months notice of extraction near the Rail Line and HVCC will not object to the proposed second working applications so disclosed to HVCC in accordance with this clause. 3. HVCC its contractors and agents shall abide by the conditions imposed by the Singleton Shire Council, the Department of Mineral Resources and the Mine Subsidence Board of New South Wales on the use of its Rail Line to allow MMC to maximise second workings. 4. HVCC hereby releases and indemnifies MMC from all claims costs demands losses or expenses in connection with damage to the Rail Line due to subsidence arising out of or in connection with MMC's underground mining activities carried out under Coal Lease No. 382 on the Land provided that the mining is carried out by MMC legally in accordance with approvals from the Department of Mineral Resources. Without limiting the generality of the above provisions of this clause, HVCC also indemnifies MMC from all costs that it may incur due to the need for extra remedial drainage work ("the incremental works") occasioned by the existence of the Rail Line beyond those works that would otherwise have been necessary. Should a dispute arise as to the necessity or extent of the incremental works it will be determined by an independent expert appointed by the President of the Australian Institute of Mining and Metallurgy whose decision shall be final and binding on the parties. 5. The parties acknowledge that HVCC intends to purchase certain land over which Coal Lease No 382 is held by MMC. In consideration for MMC entering into this Deed, HVCC shall not unreasonably withhold its consent or agreement to MMC entering upon any land owned by HVCC over which Coal Lease No. 382 exists for the purpose of exploration and development of roads or other services and infrastructure subject to the parties entering into a written agreement in relation to such entry on terms which are acceptable to both parties. Such agreement shall be binding on the successors and assigns of each party. 6. The provisions of this Deed shall bind the parties named in this Deed and their respective successors and assigns." 6 The negotiations which brought about the deed showed that the Department of Mineral Resources made it abundantly clear that it considered it essential that the coal in the plaintiff's mine was to be exploited to the full, and it also notified its objection to the line if it was going to impede the full exploitation of that coal. 7 Since December 1995 the procedure for approval of the second working of coal mines has changed and that brings about the present problem. 8 In 1995 the way in which one obtained consent of the relevant Minister to second working mining applications was to follow the guidelines which were issued by the Department, and which are AX02 in these proceedings. 9 Section 138(1) of the Coal Mines Regulation Act 1982, which has remained unchanged at all relevant periods, provides: "1. No method of mining other than the bord and pillar system shall be used in an underground mine except with the approval of the Minister given on the recommendation of the Chief Inspector and subject to such conditions as the Minister may impose." 10 The application was made by letter, including a comprehensive report dealing with all technical and societal impact matters and a plan; the written report covered aspects of mine safety, resource recovery on mining subsidence and land use issues. The prime thrust of the Coal Mines Regulation Act was for the safety of coal mining and people working therein, but it is true that subsidence issues also had to be addressed in order to get the necessary Minister's approval. 11 However, by 2005 the way in which one could get permission for second working was changed. The procedure is set out in AX59 and AX60. The changed procedure involved a two-stage process. An approval under section 138 of the Coal Mines Regulation Act was not, as a matter of policy, to be granted until a subsidence management plan (SMP) had been prepared and approved by the Director-General of the Department of Primary Industries. The procedure to get an SMP was more procedurally difficult than it was under the 1995 procedure. 12 The application for an SMP was to be by letter addressed to the Director-General, with a written report, which not only was to deal with the proposed mining system and resource recovery, but was to deal with community consultation about the matter. The "plain English" version of the new policy makes it clear that not only must the title holder advertise its application, but it must also, before filing the application, fully report and discuss the views that it has obtained from affected landholders, local councils, the local aboriginal community and the general community, and discuss in the application how those views have been taken into account in the draft SMP. Moreover, the SMP was to include proposals for a subsidence community consultation process to continue after the plan had been approved by the Director-General. It is noted that it was to be approved by the Director-General, not by the Chief Inspector nor the Minister. 13 The new policy was also reinforced by adding conditions to the leases, including the relevant leases, requiring the lease holder to prepare an SMP prior to commencing any underground mining operations which will potentially lead to subsidence of the land surface. This could mean some first mining operations, as well as all second workings. 14 It is common ground that in the coal industry one first works an underground coal mine by bord and pillar, that is, one extracts the coal by cutting underground roadways or bords into the coal, while leaving blocks of coal or pillars to support the overlying rock strata from collapsing. This is known as first workings. 15 "Second workings" is a term used to refer to the total or partial extraction of the pillars. Longwall mining is one of the methods used to mine as a second working activity. As I understand, two parallel roadways are constructed on each side of the pillar or large blocks of coal and that coal is extracted using longwall mining equipment. This includes a shearer which moves backwards and forwards above an open conveyor to cut the coal face of the longwall block. Longwall removal almost always brings about subsidence. 16 The plaintiff has removed longwalls 1 and 6 from its mine and now proposes to remove longwalls 7 to 9. However, 7 to 9 are beneath the defendant's rail spur line and it is not at all happy with the proposal. In order to commence longwall mining the plaintiff needs (a) to submit an SMP, and (b) to obtain ministerial approval under s 138. It cannot, however, as I have said, obtain the latter until it has first had the SMP approved by the Director-General. 17 The plaintiff says that all that has really happened is that the 1995 procedure has been split into two parts; (a) the SMP and (b) the Minister's approval, so that the second working application referred it in cl 2 of the deed means both of those processes. 18 On the other hand, the defendant says that cl 2 only applies to the actual application to the Minister under s 138 and that it cannot be considered that an SMP application, which is a condition precedent to an application to the Minister, is an application under cl 2 of the deed. 19 The surface land above longwalls 7, 8 and 9 appears to be owned as to part by the defendant, part by some of its associated companies, Glendell Tenements Pty Ltd, Enex Foydell and Enex Ravenswood Pty Ltd, and also by an AC Noble and GJ Donnellan. Enex Foydell appears to own the surface over which the defendant had its spur line. 20 On the plaintiff's side of the record, the plaintiff is only a co-venturer in the Glennies Creek Colliery. This has been the situation at all times. However, in June 2005 the joint venture was reconstituted by the plaintiff transferring two-thirds of its interest to some Japanese and Korean interests. However, there was no novation under the deed. 21 The question before me is principally one of construction and was fully argued yesterday, Mr T F Robertson SC and Mr T G R Parker SC appearing for the plaintiff and Mr B R McClintock SC and Mr R Beasley appearing for the defendant. 22 Four issues arise for my determination:

Has the plaintiff an entitlement to sue? 23 I will deal with these in turn, but I should first state a complaint which is not uncommon in this sort of case. It is nowadays necessary to look at the factual matrix and the commercial purpose of an agreement such as the present. That requires the court to look at documents which under the pre-Codelfa law were not considered. However, I have been afflicted with six volumes of paper, very little of which really goes to the factual matrix or commercial purpose. For instance, I have minutes of project control groups, which, although some key executives were present, are dealing with the outworking of actual building work, rather than matters of policy. 24 It is necessary for solicitors, when preparing cases of this nature, to use all their skills to be selective and to only put before the court relevant material. It is extremely easy for a solicitor preparing documents like this to say to himself or herself, "this piece of paper might be relevant, I might as well put it in", and not only does that usually cost the clients something like $10 a sheet, it also slows down the process of the judge going through all the material. Really for a relatively simple construction case like this, six volumes is just ridiculous. Having got that off my chest, I will now deal with the actual issues. 25 1. This question raises two matters; (a) the semantic significance of "its"; and (b) whether an SMP approval application is a second working application. 26 As to (a), the defendant says that the joint venture is now differently constituted. There was no novation and, accordingly, the application being made by the plaintiff is not within the meaning of the deed because it is not "its" application. That is, it is not the application of the same joint venture as 1995 and it is not the application of the plaintiff alone, rather it is an application on behalf of a different joint venture. 27 I reject this submission. In my view "its" was present to denote an application with which the plaintiff is substantially concerned. At all times the plaintiff was part of a joint venture and it does not seem to me that it matters that there has been some internal assignment of 15 percent in the joint venture to interests who were not around in 1995. 28 (b) I have already briefly set out the opposing contentions, that is, the plaintiff says the present procedure is really the same as the former procedure, it is just split into two. One looks to see what at 1995 the parties contemplated by a second working application and one can see that at that stage they were talking about the rolled-up application that involved the application under s 138, in which the matters of mine subsidence were a part. The commercial purpose of the deed was to ensure there would be no barrier to the plaintiff obtaining permission to conduct second working; and the only way in which this can be secured is to construe the words "second working applications" as including the current procedure for obtaining an SMP. 29 On the other hand, the defendant says that when one looks closely at the way in which applications have to be made in 2005 there are two separate and distinct applications, and that the ground rules have changed since 1995. It says that it is impossible merely to consider that the present application for an SMP is merely something that was hived off from the s 138 application. When one looks at it, it is to be decided by a completely different person, it is to only be made after there is public consultation, and it is a matter where instead of the prime focus being on mine safety, the focus is on the use of the land generally, and, indeed, there is far more focus on subsidence matters. 30 Under the 1995 guidelines, there does not appear to be any particular procedure for people to put in objections to the Department. The whole document seems to be based around proper investigation by the Department and other government authorities. The guidelines say that it is strongly recommended that there be early consultation with a district inspector, the senior inspector and the principal subsidence engineer. There are requirements that the various government departments are to look at different issues, but that seems to be as far as it goes. 31 Doubtless, someone who had an interest could make that interest known to the relevant government authorities, whether positively or negatively. 32 However, on the present system, not only must the SMP be advertised, but before that happens there is a requirement on the mining company actually to go out and consult people who might be affected. 33 There are substantial considerations in favour of both points of view. However, in my view, the proper analysis is that there is under the revised scheme what Mr McClintock properly called an application which was a condition precedent to a second working application. 34 Although it is true that the 1995 situation and the present situation have great similarities, and the same sort of subject matters are covered, in my view, the present application for an SMP is not a second working application. 35 It should be noted that when dealing with subsidence, although second workings are more likely to cause subsidence than any other working, some first workings might also be a problem to the owner of the surface. 36 I should note that no argument was put to me that there was any implied term of co-operation or non-derogation from the grant, or the like, so that my task is merely to construe what the words "second working applications cover and, in my view, they do not cover an application for approval of an SMP. 37 2. What I have just said really concludes the case, but I should deal with the other aspects in case the matter goes further. 38 As to the word "object" the plaintiff says that the defendant has objected to the application and, if it has not already done so, it clearly threatened to do so. Mr Robertson SC says the word "object" must be construed in its wider sense. I think that is right. The etymology in the Oxford English dictionary is that "object" means a barrier from somebody throwing something, and these days one looks at an objection as a barrier from someone establishing a proposition or an application. There are, however, cases where courts have considered the word "object" in other contexts. Merely for a barrister to say "I object" without reasons, or to say, "I don't see the relevancy of that" has been held in Georgia not to be an objection, (Pylant v State 13 SE (2d) 380, (1941), Supreme Court of Georgia) and whilst that court is not necessarily the mightiest authority, that case seems to be a good illustration of the point that merely using the word "object" is not enough for what one does to be classified as an objection. 39 On the other hand, when one is making an objection one does not actually have to use the word "object"; see for instance, Commonwealth v O'Donohue [1979] VR 441. 40 In Spurling v Development Underwriting (Victoria) Pty Ltd [1973] VR 1 at 13 to 15, Stephen J, when a member of the Victorian Supreme Court, said there were three elements in a valid objection; (i) a notification that the particular objector opposed, and the grounds of that opposition; (ii) that the objector was a legal entity; and (iii) that the objector had provided sufficient information about himself or herself to permit a response. Thus, there can be an objection if one can see that the relevant authority has been informed of the substance of views which are inimical to the proposal. 41 On the other hand, in R v Howard [1902] 2 KB 363 it was held that if the responsible body warns all applicants for the renewal of a liquor licence that they are likely to have to prove their case as to why their licence should not be removed under a licensing reduction programme, the warning that there might be opposition is not an objection. 42 However, in the instant case, there is no doubt that the defendant has made representations with respect to the SMP application, which would be a barrier for the plaintiff to overcome. Accordingly, had the SMP application been an application for second workings, I would have held that the defendant had objected contrary to cl 2 of the deed. 43 3. Mr McClintock said that there were two aspects to this; (a) other people have objected, so that it matters not whether the defendant objected; (b) that "the horse has already bolted" because once the Minister or Director-General has been given the information then it would be his or her public duty to investigate the matter and withdrawal of objection at this time would be quite futile. 44 The riposte to this was that, first, the defendant had covenanted not to put in an objection; that covenant has been made for valuable consideration, in that the objection to the rail line had been withdrawn. Accordingly, one had a fully executed contract and that was something that equity would normally enforce. 45 There have been some cases under the old Parliamentary procedure for private Bills to install railways in the 19th century, where there have been disputes over the agreements not to object to the Bill by land owners, and it is true that in cases in that area the Equity Court has been careful to ensure that people do keep to their bargains, notwithstanding the arguments about difficulty of fulfilment or futility; see for instance, Greene v West Cheshire Railway Company (1871) LR 13 Eq 44. I bear this strongly in mind. 46 The second objection is that because the defendant is who it is, that is, a land owner and a subsidiary of one of Australia's largest companies, its objection is likely to be given far more weight than other people's objections. I think, with respect, this is so much speculation. In any event, the other companies which have put in objections are associated with the defendant and are equally subsidiaries of that large corporation and I am not at all impressed with that argument. 47 So far as the horse having bolted, I think that is right. Once a government authority has been given material then it is its duty to consider that material and give it such weight as it thinks it should give it. Even if an objection were withdrawn at this stage, I would not be satisfied, on the balance of probabilities, that it would achieve any purpose, and as the old maxim goes "Equity like nature does nothing in vain". 48 Had it been relevant to do so, I would have thought that there is a lot to be said for not making any declaration on the ground of lack of utility. A fortiori, the court would not have made a mandatory injunction bearing in mind the principles in Redland Brick Ltd v Morris [1970] AC 652 and Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499. However, the whole matter is academic because of my determination in 1(b). 49 4. Again this is academic. The point is the plaintiff is not the only body which is seeking to mine. Ordinarily, all persons who are affected by proceedings should be joined as parties. However, generally speaking, where there is an action on the deed only the parties to the deed are necessary. 50 In the instant case, it is an application to enforce contractual rights under a deed; both parties to the deed are parties to the suit, and it seems to me that that is sufficient. 51 Accordingly, for the reasons I have given, the proceedings are dismissed with costs. The exhibits may be returned after twenty-eight days.

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