Reed v Department of Natural Resources and Mines & Ors No. 3 [2014] QLC 13

Chrismel Pty Ltd v Department of Natural Resources and Mines [2005] 26 QLCR 87

Cilli v Abbott (19810 [1981] FCA 70; 53 FLR 108, 111

Ebis Enterprises Pty Ltd v Sunshine Coast Regional Council [2011] QCA 15

Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, 543

Mudie v Gainriver Pty Ltd (No. 2) [2002] QCA 546; (2003) 2 QdR 271

Oceanic Sun Line Special Shipping Company Inc v Fay [1988] HCA 32; (1988) 165 CLR 197, 247

Reed v Department of Natural Resources and Mines & Ors [2014] QLC 1

Reed v Department of Natural Resources and Mines & Ors (No. 2) [2014] QLC 6

Stevenson Group Investments Pty Ltd v Nunn [2012] QCA 351

Vanbrogue Pty Ltd v Department of Environment and Resource Management (No. 3) [2013] QLC 52

M Johnston instructed by McCullough Robertson Lawyers for the second respondents

[1] The appellant brought an appeal against a review decision that a licence should be granted under the Water Act 2000 (the Act) to vary the course of Coral Creek. The appeal was dismissed and the review decision confirmed.[1]

[2] The second respondents have filed a General Application on 4 March 2014 for an order that the appellant pay their costs of and incidental to the appeal as assessed on a standard basis. There has been no application from the first respondent. The second respondent carried the primary burden at the appeal.

[3] Along with the application, the second respondents filed the sixth affidavit of Peter William Stokes, a partner in the solicitors' firm acting for them. Exhibited to the affidavit are copies of three letters. These are:

1. Letter dated 3 July 2013 from Mr Stokes to Ms R Spiller of p&e Law. The letter refers to a contemplated "without prejudice" conference and requests a copy of what the appellant seeks by way of amended conditions of the water licence.
2. Letter dated 13 December 2013 from Ms Spiller to Mr Stokes. The letter, sent as "without prejudice save as to costs", contained a settlement proposal. The letter commenced as follows:

"We write to request your response to the settlement proposal below.

In our view, given the state of expert evidence filed in the present proceeding, it is more likely than not that the Land Court will uphold the review decision maker's decision to grant the water licence to QCoal but with amended conditions which address our client's grounds of appeal concerning:

(a) the adequacy of the hydraulic modelling conducted for QCoal; and

(b) the certainty attaching to the conditions of the water licence as presently formulated.

We wish to explore settlement by the formulation of agreed conditions to address each of these matters."

The letter went on to suggest that an appropriately worded condition for the licence would resolve the appeal, which was listed for hearing on 8 to 10 January 2014. Those were the dates on which the appeal was heard.

3. Letter dated 23 December 2013 from Mr Stokes to Mr L Manning at p&e Law. This letter was also sent "without prejudice save as to costs". Inter alia, it noted agreement that it was seen as likely that the Court would "uphold the review decision maker's decision to grant the water licence". It was not accepted that the expert evidence filed would warrant the Court imposing amended conditions on the licence. The letter stated the view that the second respondents had sought the appellant's proposed amendments to the licence much earlier and had grounds to seek their costs of the appeal from the appellant.

[4] The second respondents are seeking an order pursuant to s 882(4)(b) of the Act on the basis that the appeal was "frivolous or vexatious".

[5] The presently relevant parts of s 882 are 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."

[6] The Act first states that the parties must bear their own costs and then gives the Court a discretion to make an appropriate order in a number of circumstances. The present claim is based upon those set out in (b).

[7] The second respondents note the decision of the learned President in their successful application for costs at an earlier stage in the appeal.[2] It is submitted that there was no reasonable basis for starting the appeal and for continuing it. They point to the letter dated 13 December 2013 where the appellant's solicitors disclose their view that it was more likely than not that the appeal would not be successful in respect of the primary relief sought, the setting aside of the review decision.

[8] The second respondents direct particular attention to s 882(4)(b) and the meaning of the words "frivolous or vexatious" which was looked at by the Court of Appeal in Mudie v Gainriver Pty Ltd (No. 2).[3] In that case the Court considered the expression as it then appeared in s 7.6(1A)(a) in the now repealed Local Government (Planning and Environment) Act 1990. McMurdo P and Atkinson J said that the words should be given their ordinary meaning.[4] In that case Williams JA gave the example of a party relying on groundless assertions as something that could be described as frivolous or vexatious.[5] His Honour referred to the meaning attributed to vexatious by Deane J in Oceanic Sun Line Special Shipping Company Inc v Fay[6] of being productive of serious and unjustifiable trouble and harassment.

[9] The Macquarie Dictionary, revised third edition, defines frivolous as:

1. of little or no weight, worth or importance, not worthy of serious notice;
2. characterised by lack of seriousness or sense;
3. given to trifling or levity.

1. causing vexation, vexing or annoying;
2. law (of legal actions) instituted without sufficient grounds, and serving only to cause annoyance.

The definitions in the Shorter Oxford English Dictionary are effectively the same.

[10] The Land Appeal Court in Chismel Pty Ltd v Department of Natural Resources and Mines[7] recognised that it was appropriate to have regard to decisions considering the relevant expression in planning legislation, taking into account any differences in the drafting. The learned President also considered in Reed v Department of Natural Resources and Mines & Ors[8] that assistance could be gained from a decision of the Planning and Environment Court on the question of whether ss 882(3) and (4) of the Act applied to interlocutory costs. In that case the President decided that the appellant had failed to comply with the Court's procedural requirements under s 882(4)(e) and had not properly discharged his responsibilities within the meaning of s 882(4)(g). The learned President also noted that the Land Appeal Court in Chrismel Pty Ltd v Department of Natural Resources and Mines[9] was of the view that s 882(4)(g) was directed to unmeritorious conduct.[10] I note the breadth of that concept. At [18] of the President's decision, paragraph [50] of the Land Appeal Court's decision is set out in full. The Land Appeal Court indicated that s 882(4)(g) could extend to a wide variety of unmeritorious conduct. In the present case, reliance is placed on another provision.

[11] The second respondents refer to the judgment of Williams JA to which reference has already been made in support of the proposition that an appeal based on wholly unmeritorious grounds would "in ordinary parlance, be described as 'frivolous and vexatious'."[11]

[12] In Ebis Enterprises Pty Ltd v Sunshine Coast Regional Council[12] Chesterman JA, with whom McMurdo P and Philippides J agreed, said:

"... a proceeding will be frivolous if it lacked substance, so there was no reasonable basis for starting it so that its prosecution produced unjustified trouble for the other party."[13]

[13] The second respondents contend that the appellant's case was lacking in substance and wholly unmeritorious such that it is properly able to be characterised as frivolous with no reasonable basis for starting it or continuing with it. Doing so produced serious and unjustified trouble and harassment for them such that the appeal is also vexatious.

[14] The second respondents point to deficiencies in the appellant's case which were addressed in the decision on the appeal and which it is unnecessary to repeat here. They particularly note that while it was asserted that incorrect values for Mannings n, a measure of friction, were used in calculations, the appellant did not lead any evidence of what the correct value would be. Additionally, while being critical of the lack of flow measurements of the creek and asserting that collecting this data was able to be done with very little effort, the appellant's expert had not done so although he said that measurements could have been made on the day he visited the site.

[15] The appellant's letter of 13 December 2013 is pointed to as showing the realisation, at a time prior to the hearing, that the main thrust of the appeal was not likely to be met with success. It was persisted with despite this assessment made by the appellant's solicitors.

[16] The second ground of appeal, that condition 1 of the licence sought should be amended to make it certain, was not, it is argued, supported by any evidence. Condition 1 relates to the design of the Coral Creek Diversion, which interferes with flow in Coral Creek. Grounds of appeal in a similar vein relating to conditions 2 and 3 of the licence were withdrawn at the hearing.

[17] After the letter of 13 December 2013, the appellant, despite its own assessment of its case, continued to seek the setting aside of the review decision instead of narrowing the appeal to seeking amended conditions on the licence.

[18] The second respondents also point out that the grounds of appeal seeking amendments to conditions 2 and 3 of the licence were abandoned only when the hearing had commenced. Also, that the suitability of a modelling means and an aerial surveying technique were criticisms not followed through at the hearing, putting the second respondents to unnecessary expense. It is also pointed out that the grounds relied on in the appeal differed from those raised by the appellant at the stage of internal review which led to the decision under appeal. Although the appeal is a rehearing, it is submitted that not raising hydraulic modelling at the internal review stage indicates that there was a lack of confidence in that point, supporting a conclusion that reliance on it at the appeal was frivolous or vexatious.

[19] The orders sought by the second respondent are that the appellant pay their costs of and incidental to the appeal on the standard basis. If unsuccessful in this, they seek costs either from 16 September 2013 which is the date of the first report from Dr Connor or from 13 December 2013 which is the date of the letter from the appellant's solicitors. Dr Connor was an expert called by the second respondents.

[20] The appellant's solicitor, Ms Spiller, has made her fourth affidavit, filed on 24 March 2014. The affidavit exhibits a letter dated 8 January 2014 to p&e Law from McCullough Robertson. It was received by e-mail on 8 January 2014. Referring to the cross-examination of the appellant's expert witness, it expresses the opinion that the appeal did not have a proper basis and invites the appellant to immediately withdraw the appeal.

[21] The submissions for the appellant draw attention to the proper function of costs as compensatory and not punitive.[14] "They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings".[15] It is correctly submitted that lack of success by the appellant does not establish that the appeal was not worth prosecuting.

[22] It is submitted that as recognised by the Land Appeal Court in Chrismel Pty Ltd v Department of Natural Resources and Mines[16] the primary rule that each party bear its own costs is there to avoid discouraging otherwise proper proceedings being brought. The rule also recognises that the wider public interest is likely to be involved. It is accepted that the words "frivolous or vexatious" should be given their ordinary meaning and that more than a lack of success would need to be shown.[17] Whether the case is frivolous or vexatious is "primarily a factual issue".[18] The appellant reminds the Court of the caution which the Land Appeal Court said was to be exercised in relying on Planning and Environment Court cases due to different wordings.[19]

[23] It is submitted that the appellant's letter of 13 December 2013 cannot be characterised as acknowledging that there were fundamental problems with the appeal. The letter, it is submitted, shows responsible conduct. The submissions made at the internal review are not relevant to the appeal, it is submitted, so no use can be made of differences in approach in the different process.

[24] The letter of 23 December 2013, the appellant's note, contains in its third paragraph the statement that the second respondents' view of the evidence was such that it did not accept that the evidence "would necessarily warrant the Land Court imposing amended conditions ...". This indicating a more tentative view than that urged on behalf of the second respondents in the present application.

[25] Attention is also drawn to paragraph 4 of the letter of 23 December 2013 wherein the second respondents declined to settle the appeal on terms advanced by the appellant and to paragraph 5 where the substance of the proposed types of conditions was addressed. It is submitted that the appellant's offer in the letter of 13 December 2013 was an invitation to treat. The letter dated 8 January 2014, it is submitted, shows that the dispute was one of expert evidence where experts might disagree. The second respondents did not continue with a challenge to Dr Rayburg as an expert and the Court may have accepted his evidence.

[26] It is submitted that Chrismel Pty Ltd v Department of Natural Resources and Mines is distinguishable as in that case there was unreasonable conduct. It is submitted that the letter of 13 December 2013 should not be construed as a concession that the appellant's case was unmeritorious. The withdrawal of parts of ground 2 of the appeal did not, it is submitted, meaningfully change the scope of the issues on appeal.

[27] Referring to Ebis Enterprises Pty Ltd v Sunshine Coast Regional Council[20] it is submitted that there is in this case, similarly, no evidence that the appellant had advice which was ignored. In Mudie v Gainriver Pty Ltd (No. 2)[21] the conduct of the developer and Council was categorised as frivolous or vexatious where the developer had created a public nuisance abutting the appellant's land and the Council's officers had purported to retrospectively approve it.

[28] The appellant refers to Vanbrogue Pty Ltd v Department of Environment and Resource Management (No. 3).[22] There the learned Member considered that the respondent's actions in raising a point were not frivolous or vexatious. His Honour said:

"Although DERM was ultimately unsuccessful on this point, that does not mean that it was not properly raised and arguable."[23]

[29] The appellant's submission is that the contentions of fact and law argued in the appeal were not contrary to established law but simply did not meet with success. It was not a case where the proceeding was commenced without any prospect of success.[24] There was no element of delay or futility in the appeal in the present case and no novel legal arguments.

[30] It is pointed out that the second respondents did not provide some material, in exhibit 5, until the hearing so no adverse conclusion can be drawn from the appellant not considering the material relating to other projects.

[31] The appellant reminds the Court that it was not the appellant's case that a particular Mannings n or flow data should have been used. Rather it was that the results of the modelling used were not reliable so that the Court could not be satisfied that the application should be granted. This Court's evaluation of the expert evidence, it is submitted, demonstrates that the appellant's case was at least arguable and not "frivolous or vexatious". The appellant accordingly submits that the Court should make no order as to costs.

[32] The Court must consider the totality of the ordinary meanings of the words "frivolous or vexatious" and do so in the context of the facts of the present case. It must be borne steadily in mind that there is no punitive element in an award of costs but they are to indemnify a successful party for the expense to which they have been put. It is important that the starting point is that set out in s 882(3) of the Act, that each party must bear their own costs. The discretion in s 882(4) is enlivened once it is shown that the appeal, or part of it, was frivolous or vexatious.

[33] The appellant's differing approaches in the review decision process and the appeal ought not be considered relevant for present purposes as the present provision refers specifically to the appeal. It would be going beyond the statutory provision to consider other process for present purposes.

[34] The letter of 8 January 2014, sent during the hearing, gives the second respondents' view of how the case is developing and invites the appellant to withdraw. It does not assist in the task now before the Court.

[35] The letter of 23 December 2013 which, in paragraph 3 states the view that the evidence would not "necessarily" warrant the Court imposing amended conditions is indicative of a less than absolute confidence but is not consistent with a "frivolous or vexatious" case being seen to exist in the opinion of the writer of that letter. The Court must form its own view of the matter so such an opinion would be most likely useful only to draw attention to any facts which may be relevant for the Court's consideration.

[36] The letter of 3 July 2013 is an attempt to work towards a narrowing of the issues and consequent saving of costs and makes clear the interest in so doing.

[37] The letter of 13 December 2013 discloses the view then held by the solicitors for the appellant that:

"In our view, given the state of expert evidence filed in the present proceeding, it is more likely than not that the Land Court will uphold the review decision maker's decision to grant the water licence to QCoal but with amended conditions which address our client's grounds of appeal ...".

[38] From 13 December 2013, the appellant did not, on the evidence, hold any contrary view. The Court does not find that such a view ought to have been held from a certain time, such as when Dr Connor's first report, dated 16 September 2013, came to attention. This is because the appeal did not become frivolous, of little weight or acquire a lack of seriousness upon that event. Neither did it then become a case carried on without sufficient grounds, serving only to cause annoyance. There were opposing expert views.

[39] From and after the letter of 13 December 2013, the appellant's considered view, expressed in writing by his solicitor, was that it was more likely than not that it would not be successful in what was its primary thrust in the appeal, having the decision to grant the licence set aside. It was submitted that this was not a concession that the case was unmeritorious. To proceed with this aspect of the appeal while holding this opinion does however as a fact require the Court to characterise the part of the appeal so directed as frivolous in that it became of little weight, worth or importance and not worthy of serious notice since the appellant did not believe it was likely to be successful. It was also then and thereafter characterised by a lack of seriousness and sense for the same reason.

[40] The Court is not satisfied on the evidence presented that the appeal could properly thereafter be characterised as vexatious as although carried on without sufficient grounds in relation to the attempt to set aside the decision, there is no evidence that it was carried on only to cause annoyance and such would not be the only inference able to be drawn. Accordingly, it ought not to be.

[41] The position set out in s 882(3) of the Act, that each party should bear their own costs is not displaced prior to the letter of 13 December 2013 as prior to that the parties had a dispute, each side with their own view, in relation to everything in issue in the appeal. From and after that letter, the appellant's pursuit of having the licence set aside became frivolous. Section 882(4) then provides that the Court may order costs of the appeal, including allowances to witnesses attending for giving evidence at the appeal, as it considers appropriate where the Court considers the appeal or part of it to be frivolous.

[42] From 13 December 2013 the appeal was frivolous to the extent only that it related to the setting aside of the decision. On the evidence, there was still an area of dispute in relation to licence conditions which was unaffected by the part of the appeal which concerned granting the licence. In view of the nature of costs as an indemnity to the party put to expense, the Court considers that it ought to exercise its discretion in favour of ordering costs in favour of the second respondents from 13 December 2013. This will apply to those costs which are of and incidental to the appeal so far as it relates to the decision to issue the licence and not the matter of licence conditions. Allowances to witnesses attending to give evidence for the second respondents should be included.

1. The appellant pay on the standard basis the costs of the second respondents of and incidental to the appeal from 13 December 2013 to the extent that those costs relate to Ground 1 of the appeal, namely setting aside the review decision. These costs will include allowances to witnesses attending for giving evidence at the appeal in relation to Ground 1.
2. Such costs are to be agreed between the parties within one month of the making of this order.
3. In the absence of agreement within one month, the costs and the appropriate scale to be used are to be decided by the appropriate assessing officer of the Supreme Court.

[1] Reed v Department of Natural Resources and Mines & Ors (No. 2) [2014] QLC 6.

[2] Reed v Department of Natural Resources and Mines & Ors [2014] QLC 1.

[3] [2002] QCA 546; [2003] 2 Qd R 271.

[4] [2002] QCA 546; [2003] 2 Qd R 271, 283 [35].

[5] [2002] QCA 546; [2003] 2 Qd R 271, 291 [61].

[6] [1988] HCA 32; (1988) 165 CLR 197, 247.

[7] [2005] 26 QLCR 87.

[8] [2014] QLC 1.

[9] [2005] 26 QLCR 87.

[10] [2014] QLC 1 [33].

[11] Mudie v Gainriver Pty Ltd (No. 2) [2002] QCA 546; [2003] 2 Qd R 271, 291 [61].

[12] [2011] QCA 15.

[13] [2011] QCA 15 [7].

[14] Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, 543.

[15] Ibid per Mason CJ; see also Cilli v Abbott [1981] FCA 70; (1981) 53 FLR 108, 111.

[16] [2005] 26 QLCR 87 at [46].

[17] Mudie v Gainriver Pty Ltd (No. 2) [2002] QCA 546; [2003] 2 Qd R 271 [35] - [37].

[18] Stevenson Group Investments Pty Ltd v Nunn [2012] QCA 351 [87] per McMurdo P, with whose reasons Fraser JA and Mullins J agreed.

[19] Chrismel Pty Ltd v Department of Natural Resources and Mines [2005] 26 QLCR 87 at [47].

[20] [2011] QCA 15 at [7], [11], [13], [14] and [15].

[21] [2002] QCA 546; [2003] 2 Qd R 271.

[22] [2013] QLC 52.

[23] [2013] QLC 52 [12].

[24] Stevenson Group Investments Pty Ltd v Nunn [2012] QPEC 7.